8-K/A - JANL - Equibles

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): September 21, 2021

JANEL CORPORATION

(Exact name of registrant as specified in its charter)

Nevada	333-60608	86-1005291
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

80 Eighth Avenue, New York, New York 10011

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (212) 373-5895

Inapplicable

(Former Name or Former Address if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol	Name of each exchange on which registered
N/A	N/A	N/A

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

EXPLANATORY NOTE

This Amendment No. 1 to Current Report on Form 8-K amends the Current Report on Form 8-K filed by Janel Corporation (the “Company”) with the Securities and Exchange Commission (the “SEC”) on September 27, 2021 to file the information required by Items 9.01(a) and (b) of Form 8-K related to the completion of the previously announced acquisition of the outstanding membership interests of Expedited Logistics and Freight Services, LLC (“ELFS”) and ELFS Brokerage LLC, a wholly-owned subsidiary of ELFS. Except as otherwise stated above, all other information in the initial Form 8-K remains unchanged.

Item 9.01	Financial Statements and Exhibits
(a)	Financial Statements of Business Acquired.
---	---

The audited combined financial statements of ELFS and its affiliates for the years ended December 31, 2020 and 2019 and unaudited combined financial statements of ELFS and its affiliates for the three and six months ended June 30, 2021 are attached as Exhibit 99.1 and Exhibit 99.2, respectively, to this Amendment No. 1 to Form 8-K and incorporated herein by reference.

(b)	Pro Forma Financial Information.

The unaudited pro forma combined financial information giving effect to the acquisition of the outstanding membership interests of ELFS and its affiliates is attached as Exhibit 99.3 to this Amendment No. 1 to Form 8-K and incorporated herein by reference:

•	Pro forma balance sheet as of June 30, 2021
•	Pro forma combined statement of operations for the fiscal year ended September 30, 2020
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•	Pro forma combined statement of operations for the nine months ended June 30, 2021
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(c)	None
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(d)	Exhibits.
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Exhibit No.	Description
---	---
23	Consent of ABIP, CPA’s
99.1	Audited combined financial statements of Expedited Logistics and Freight Services, LLC and affiliates for the years ended December 31, 2020 and 2019
99.2	Unaudited combined financial statements of Expedited Logistics and Freight Services, LLC and affiliates for the three and six months ended June 30, 2021 and<br> 2020
99.3	Unaudited pro forma combined financial information
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	JANEL CORPORATION
	(Registrant)
Date: November 3, 2021	By:	/s/ Dominique Schulte
		Name: Dominique Schulte
		Title: Chief Executive Officer

Exhibit 23

Consent of Independent Accounting Firm

To:	The Members of

Expedited Logistics and Freight Services, LLC and Affiliates

Houston, Texas

We consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-222791 and 333-253400) of Janel Corporation of our report dated April 30, 2021 relating to the combined financial statements of Expedited Logistics and Freight Services, LLC and Affiliates for the years ended December 31, 2020 and 2019 appearing in this Current Report on Form 8-K/A of Janel Corporation.

Houston, Texas

November 2, 2021

Exhibit 99.1

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES TABLE OF CONTENTS

December 31, 2020 and 2019

	Page
INDEPENDENT AUDITOR’S REPORT	1
COMBINED FINANCIAL STATEMENTS:
Combined Balance Sheets	2
Combined Statements of Income and Changes in Members’ Equity	3
Combined Statements of Cash Flows	4
Notes to Combined Financial Statements	5-10

INDEPENDENT AUDITOR’S REPORT

To:	The Members of

Expedited Logistics and Freight Services, LLC and Affiliates

Houston, Texas

We have audited the accompanying combined financial statements of Expedited Logistics and Freight Services, LLC and Affiliates (the “Company”), which are comprised of the combined balance sheets as of December 31, 2020 and 2019, the related combined statements of income and changes in members’ equity, and cash flows for each of the years then ended, and the related notes to the combined financial statements.

Management’s Responsibility for the Combined Financial Statements

Management is responsible for the preparation and fair presentation of the combined financial statements in accordance with accounting

    principles generally accepted in the United States of
    America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the combined financial
    statements that are free from material misstatement, whether

    due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these combined financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the combined financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the combined financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose

  of expressing an opinion on the effectiveness of the entity’s internal
    control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the combined financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the combined financial statements referred to above

    present fairly, in all material respects, the financial position of Expedited Logistics and Freight Services, LLC and Affiliates as of December 31, 2020 and 2019, and the results of its
  operations and its cash flows for each of the years then ended

  in accordance with accounting principles generally accepted in the United States of America.

Houston, Texas

April 30, 2021

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

COMBINED BALANCE SHEETS

December 31, 2020 and 2019

ASSETS
	2020		2019
CURRENT ASSETS:
Cash and cash equivalents	$	41,946	$	789,385
Accounts receivable, net		13,962,419		14,334,141
Prepaid expenses		373,224		534,216
Total current assets		14,377,589		15,657,742
PROPERTY AND EQUIPMENT, net		173,899		257,535
OTHER ASSETS		274,724		299,995
TOTAL ASSETS	$	14,826,212	$	16,215,272
LIABILITIES AND MEMBERSʼ EQUITY
CURRENT LIABILITIES:
Line of credit	$	2,896,926	$	-
Current maturities of long-term debt		1,038,835		67,508
Accounts payable - trade		1,601,726		1,632,224
Accrued liabilities		547,315		929,453
Deposits from contractors		249,465		330,251
Total current liabilities		6,334,267		2,959,436
LONG-TERM DEBT, net of current maturities		1,039,355		66,889
TOTAL LIABILITIES		7,373,622		3,026,325
MEMBERSʼ EQUITY		7,452,590		13,188,947
TOTAL LIABILITIES AND MEMBERSʼ EQUITY	$	14,826,212	$	16,215,272

The accompanying notes are in integral part of these combined financial statements.

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

  COMBINED STATEMENTS OF INCOME AND CHANGES IN MEMBERS’ EQUITY

For the years ended December 31, 2020 and 2019

	2020			2019
SERVICE REVENUE	$	68,851,405		$	81,529,953
COST OF SERVICE REVENUE		48,612,267			59,874,092
GROSS PROFIT		20,239,138			21,655,861
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		17,227,790			19,793,009
INCOME FROM OPERATIONS		3,011,348			1,862,852
OTHER INCOME (EXPENSE):
Other income (expense)		208,084			(2,370	)
Interest expense		(74,094	)		(59,500	)
Gain on sale of property and equipment		1,000			5,350
Total other income (expense)		134,990			(56,520	)
INCOME BEFORE STATE INCOME TAXES		3,146,338			1,806,332
PROVISION FOR STATE INCOME TAXES		218,105			242,103
NET INCOME		2,928,233			1,564,229
MEMBERSʼ EQUITY, at beginning of year		13,188,947			13,327,250
MEMBER DISTRIBUTIONS		(8,664,590	)		(1,702,532	)
MEMBERSʼ EQUITY, at end of year	$	7,452,590		$	13,188,947

The accompanying notes are in integral part of these combined financial statements.

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

  COMBINED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2020 and 2019

	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,928,233		$	1,564,229
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt expense		780,132			199,458
Depreciation and amortization		91,636			128,465
Gain on sale of property and equipment		(1,000	)		(5,350	)
Changes in operating assets and liabilities:
Accounts receivable		(408,410	)		3,140,505
Prepaid expenses		160,992			(169,407	)
Other assets		25,271			(32,752	)
Accounts payable - trade		(30,498	)		(1,180,218	)
Accrued liabilities		(382,138	)		232,768
Deposits from contractors		(80,786	)		(42,451	)
Total adjustments		155,199			2,271,018
Net cash provided by operating activities		3,083,432			3,835,247
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment		1,000			5,350
Purchase of property and equipment		(8,000	)		(30,949	)
Net cash used in investing activities		(7,000	)		(25,599	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances on line of credit		3,632,800			-
Payments on line of credit		(735,874	)		(1,667,651	)
Payments on long-term debt		(67,507	)		(91,784	)
Proceeds from issuance of long-term debt		2,011,300			-
Member distributions		(8,664,590	)		(1,702,532	)
Net cash used in financing activities		(3,823,871	)		(3,461,967	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(747,439	)		347,681
CASH AND CASH EQUIVALENTS, beginning of year		789,385			441,704
CASH AND CASH EQUIVALENTS, end of year	$	41,946		$	789,385
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	58,809		$	54,347
Cash paid for state income taxes	$	191,156		$	215,671

The accompanying notes are in integral part of these combined financial statements.

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

December 31, 2020 and 2019

(1) Summary of operations and significant accounting policies

Nature of operations

Expedited Logistics and Freight Services, LLC provides a variety of logistic services, which include domestic and international freight shipping and forwarding and hazardous material warehousing and distribution. The Company is headquartered in Houston, Texas and also has offices in Texas, Louisiana, Colorado, and Oklahoma.

The Company has dedicated agents, those who work in specific areas to assist in logistics, in the following locations: Texas, Louisiana, North Dakota, and Oklahoma.

Basis of presentation

The combined financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as codified by the Financial Accounting Standards Board (“FASB”) in its Accounting Standards Codification (“ASC”).

Principles of consolidation

The combined financial statements consist of three companies that are affiliated by common control and shared management and are collectively referred to in these combined financial statements as (“Expedited Logistics and Freight Services, LLC and Affiliates” and the “Company”). The entities included are Expedited Logistics and Freight Services, LLC, ELFS Management, Inc., and ELFS Brokerage, LLC. All significant intercompany accounts and transactions have been eliminated.

Recently adopted accounting standards

In March 2020, FASB issued ASU 2020-04 Reference Rate Reform (Topic 848): Facilitation of The Effects of Reference Rate Reform on Financial Reporting. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform by virtue of referencing LIBOR or another reference rate expected to be discontinued. As a result, the guidance was effective for all reporting entities immediately upon issuance on March 12, 2020 and through December 31, 2022. Both the optional expedients and election can be made after March 12, 2020, but no later than December 31, 2022. The Company adopted ASU 2020-04 and elected the practical expedients in connection with its modification of its note receivable agreement.

Accounting standards not yet adopted

In February 2016, FASB issued ASU 2016-02, Leases. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases (with the exception of short-term leases) at the commencement date. The provisions of ASU 2016-02 are effective for the Company on January 1, 2022 and must apply a modified retrospective transition approach for leases existing at, or entered into, after the beginning of the earliest comparative period presented in the combined financial statements. Lessees and lessors may not apply a full retrospective transition approach. Management is in the process of evaluating the impact of adopting ASU 2016-02 on the Company’s combined financial statements.

Use of estimates

The preparation of combined financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the balance sheet dates and the amounts of revenue and expenses recognized during the reporting period.

Areas where accounting estimates are made by management include allowance for doubtful accounts and depreciation and amortization of property and equipment.

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

December 31, 2020 and 2019

(1) Summary of operations and significant accounting policies (continued)

Use of estimates (continued)

The Company analyzes its estimates based on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Under different assumptions or conditions, the actual results could differ, possibly materially from those previously estimated. Many of the conditions impacting these assumptions are outside of the Company’s control.

Cash and cash equivalents

For purposes of the combined statements of cash flows, the Company considers all highly liquid debt instruments and other similar short-term investments purchased with an original maturity of three months or less to be cash equivalents.

Concentration of credit risk

The Company primarily invests its excess cash in deposits with various banks, and at times, these deposits may exceed federally insured limits. The Company manages this risk by selecting depository institutions based, in part, upon its review of the financial stability of the institutions and has not experienced any losses on such accounts.

Accounts receivable

The Company maintains an allowance for potential credit losses based on management’s expectations of future losses in relation to the outstanding balance. The Company extends credit based on established terms and limits, and generally, does not require collateral. Accounts are written off at 180 days without continued business unless payment arrangements have been made. The allowance for doubtful accounts as of December 31, 2020 and 2019 was $270,387 and $179,870, respectively.

Property and equipment

Property and equipment are stated at cost. Additions of new equipment and major renewals and replacements of existing equipment are capitalized. Repairs and minor replacements are charged to operations as incurred. The cost and related accumulated depreciation of assets retired or sold are removed from the appropriate asset and depreciation accounts, and the resulting gain or loss is reflected in income.

Depreciation of property and equipment is provided using the straight-line method applied to the expected useful lives of the various assets. Leasehold improvements are amortized over the shorter of the life of the lease or the life of the improvement.

Income taxes

The Company is subject to income and margin taxes in various states throughout the country but primarily in Texas. As a result, the Company recorded state income tax expense of $218,105 and $242,103 as of December 31, 2020 and 2019, respectively.

Management evaluated the Company’s tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the current or prior year combined financial statements to comply with the provisions of this guidance. With few exceptions, the Company is no longer subject to income tax examinations by the U.S. federal or state tax authorities for years before 2017. No authorities have commenced income tax examinations as of April 30, 2021.

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

December 31, 2020 and 2019

(1) Summary of operations and significant accounting policies (continued)

Revenue recognition

The Company’s revenue streams are from domestic and international freight services, which includes trucking, air freight, ocean freight, customs clearance and warehousing. In addition to these revenue streams are accessorial revenue to the core services. Accessorial revenue includes, but is not limited to, fuel service charges, wait time fees, hazardous cargo fees, labor charges, handling, cartage, bonding and additional labor charges. Warehousing contracts are treated by the Company as operating lease revenue. The Company recognizes all other revenue when (or as) the Company satisfies a performance obligation. The Company records revenue from contracts on a gross basis as a principal in the presentation of revenue and expenses.

Contracts with customers are created using an agreed-upon sales price in fixed rate and cost plus margin contracts. The Company recognizes revenue for trucking, air freight and ocean freight over time as the service is being performed. Accessorial and customs brokerage services are recognized using the point in time method.

For purposes of disaggregation, the revenue streams are as follows for the years ended December 31, 2020 and 2019.

	2020		2019
Trucking	$	45,866,217	$	58,755,010
Air freight		8,863,339		8,957,848
Accessorial and other revenue		5,910,699		9,280,682
Warehousing		4,210,694		2,812,969
Ocean freight		3,662,188		1,125,151
Customs clearance services		338,268		598,293
Total revenue	$	68,851,405	$	81,529,953

Long-lived assets

The Company’s long-lived assets and other assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. The Company has determined there are no impairment losses for the years ended December 31, 2020 and 2019.

Subsequent events

The Company has evaluated all events or transactions that occurred after December 31, 2020 through April 30, 2021, the date the combined financial statements were available to be issued. Other than the event noted in note 5 below, no events have occurred that would have a material effect on the combined financial statements.

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

December 31, 2020 and 2019

(2) Property and equipment

As of December 31, 2020 and 2019, property and equipment consisted of the following:

	Estimated<br><br> <br>useful lives	2020			2019
Machinery and equipment	3 - 5 years	$	994,187		$	1,014,326
Computer hardware and software	3 - 5 years		510,572			510,572
Office furniture and equipment	3 - 5 years		334,683			334,683
Vehicles	5 years		303,264			303,264
Leasehold improvements	10 years		41,077			41,077
			2,183,783			2,203,922
Less: accumulated depreciation and amortization			(2,009,884	)		(1,946,387	)
		$	173,899		$	257,535

Depreciation and amortization expense totaled $91,636 and $128,465 for the years ended December 31, 2020 and 2019, respectively, and is included in selling, general and administrative expenses.

(3) Line of credit

The Company maintains a line of credit with a bank that provided for maximum borrowings of $10,000,000, of which $2,826,926 and $-0- was outstanding as of December 31, 2020 and 2019, respectively. Interest on outstanding balances at the London Interbank Offered Rate (“LIBOR”) plus an applicable margin of 2.2% as of December 31, 2020 and 2019, is payable monthly. The agreement includes further clarifications for potential LIBOR loan market rate issues and retains all other aspects of the original agreement. The line of credit is collateralized by substantially all assets of the Company and include personal guarantees of each of the members.

As of December 31, 2020 and 2019, the Company was in compliance with the line of credit’s restrictive and financial covenants.

(Bottom of Page Intentionally Left Blank)

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

December 31, 2020 and 2019

(4) Long-term debt

As of December 31, 2020 and 2019, long-term debt consisted of the following:

			2019
Note payable to a bank under the Small Business Administration Paycheck Protection Program (“PPP”). Interest is fixed at 1% and<br> accrues from the date the proceeds are received. Principal and interest payments are deferred for sixteen months from the date of the loan with monthly principal and interest payments commencing September 1, 2021. The loan will mature on<br> April 16, 2022; however, the loan may be fully or partially forgiven depending on certain criteria being met as defined by the PPP.	2,011,300		$	-
Notes payable to a bank in monthly installments of 2,111 including interest at 4%, through maturity in May 2023,<br> collateralized by a vehicle.	57,421			80,203
Note payable to a finance company in monthly installments of<br> 1,340 including interest at 2.98% through maturity in March 2021, collateralized by personal guarantee of members, vehicles<br> and equipment. The note payable matured and was paid in full during 2021.	5,327			20,995
Note payable to a bank in monthly installments of 1,388 including interest at 3.28% through maturity in March 2021,<br> collateralized by personal guarantee of members, vehicles and equipment. The note payable matured and was paid in full during 2021.	4,142			20,371
Note payable to a finance company in monthly installments of 1,294 including interest at 1.95% through maturity in October<br> 2020, collateralized by personal guarantee of members and vehicle.	-			12,828
Long-term debt	2,078,190			134,397
Less: current maturities	(1,038,835	)		(67,508	)
Long-term debt, net of current maturities	1,039,355		$	66,889

All values are in US Dollars.

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

December 31, 2020 and 2019

(4) Long-term debt (continued)

Future principal payments of long-term debt as of December 31, 2020 are expected to be as follows:

Year ending December 31,
2021	$	1,038,835
2022		1,030,330
2023		9,025
Total	$	2,078,190

(5) Leases

The Company leases office space and equipment under short and long-term operating leases expiring on various dates through 2028. Rent expense under these leases approximated $1,222,000 and $1,216,000 for the years ended December 31, 2020 and 2019, respectively. A summary of non-cancelable future minimum base rent lease commitments, including required minimum operating expenses is as follows:

Year ending December 31,
2021	$	1,215,767
2022		1,176,315
2023		1,116,450
2024		821,613
2025		736,596
Thereafter		2,085,565
Total	$	7,152,306

In February 2021, the Company entered into a lease commencing in October 2021 ending in September 2028 for a new corporate headquarters. The effect of this new lease on future contingencies has been reflected above.

(6) Employee retirement plan

The Company provides a 401(k) retirement savings plan to substantially all employees, who meet certain eligibility requirements. The plan allows each employee to contribute pre-tax dollars within prevailing Internal Revenue Service regulations. No discretionary 401(k) contribution was made for the 2020 plan year. The Company made a discretionary 401(k) contribution of $54,580 in August 2020 for the 2019 plan year.

(7) COVID-19 Pandemic

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic.

The full impact of the COVID-19 outbreak continues to evolve as of the date of this report and likewise the full impact of the pandemic on the Company’s financial condition, liquidity, and future results of operations is uncertain. Management is actively monitoring the global situation on its financial condition, liquidity, operations, suppliers, industry and workforce. Although the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have a material adverse effect on the Company’s results of operations, financial position and liquidity for the year ending December 31, 2021.

Exhibit 99.2

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

TABLE OF CONTENTS

June 30, 2021 and December 31, 2020

	Page
INTERIM COMBINED FINANCIAL STATEMENTS:
Interim Combined Balance Sheets	1
Interim Combined Statements of Income	2
Interim Combined Statements of Changes in Members’ Equity	3
Interim Combined Statements of Cash Flows	4
Notes to Interim Combined Financial Statements	5-11

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

  INTERIM COMBINED BALANCE SHEETS

June 30, 2021 and December 31, 2020

ASSETS

	June 30,<br><br> <br>2021		December 31,<br><br> <br>2020
CURRENT ASSETS:
Cash and cash equivalents	$	1,456,305	$	41,946
Accounts receivable, net		11,850,418		13,962,419
Prepaid expenses		700,684		373,224
Total current assets		14,007,407		14,377,589
PROPERTY AND EQUIPMENT, net		127,547		173,899
OTHER ASSETS		332,728		274,724
TOTAL ASSETS	$	14,467,682	$	14,826,212
LIABILITIES AND MEMBERSʼ EQUITY
CURRENT LIABILITIES:
Accounts payable - trade	$	2,973,557	$	1,601,726
Accrued liabilities and other		1,002,251		796,780
Line of credit		-		2,896,926
Current maturities of long-term debt		2,035,492		1,038,835
Total current liabilities		6,011,300		6,334,267
LONG-TERM DEBT, net of current maturities		21,486		1,039,355
TOTAL LIABILITIES		6,032,786		7,373,622
MEMBERSʼ EQUITY		8,434,896		7,452,590
TOTAL LIABILITIES AND MEMBERSʼ EQUITY	$	14,467,682	$	14,826,212

See independent accountant’s review report and accompanying notes to the interim combined financial statements.

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

INTERIM COMBINED STATEMENTS OF INCOME

For the Three and Six Month Periods Ended June 30, 2021 and 2020

	Three Month Period Ended						Six Month Period Ended
	June 30,<br><br> <br>2021			June 30,<br><br> <br>2020			June 30,<br><br> <br>2021			June 30,<br><br> <br>2020
SERVICE REVENUE	$	19,414,111		$	15,513,939		$	36,689,648		$	35,236,908
COST OF SERVICE REVENUE		13,781,112			10,247,558			26,168,465			24,475,060
GROSS PROFIT		5,632,999			5,266,381			10,521,183			10,761,848
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		4,453,722			3,924,336			8,519,408			8,714,208
INCOME FROM OPERATIONS		1,179,277			1,342,045			2,001,775			2,047,640
OTHER INCOME (EXPENSE):
Interest income		2,022			1,775			3,501			4,879
Miscellaneous income		(22,565	)		161,688			2,122			212,184
Interest expense		(29,070	)		(15,677	)		(42,236	)		(22,781	)
Gain on sale of property and equipment		60,000			-			60,000			-
Total other income		10,387			147,786			23,387			194,282
INCOME BEFORE STATE INCOME TAXES		1,189,664			1,489,831			2,025,162			2,241,922
PROVISION FOR STATE INCOME TAXES		47,870			55,004			81,770			129,824
NET INCOME	$	1,141,794		$	1,434,827		$	1,943,392		$	2,112,098

See independent accountant’s review report and accompanying notes to the interim combined financial statements.

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

  INTERIM COMBINED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY

For the Three and Six Month Periods Ended June 30, 2021 and June 30, 2020

	Membersʼ<br><br> <br>Equity
Balance, January 1, 2021	$	7,452,590
Distributions		(893,909	)
Net income		801,598
Balance, March 31, 2021		7,360,279
Distributions		(67,177	)
Net income		1,141,794
Balance, June 30, 2021	$	8,434,896
	Membersʼ Equity
---	---	---	---
Balance, January 1, 2020	$	1,318,947
Distributions		(1,157,410	)
Net income		677,271
Balance, March 31, 2020		838,808
Distributions		(67,178	)
Net income		1,434,827
Balance, June 30, 2020	$	2,206,457

See independent accountant’s review report and accompanying notes to the interim combined financial statements.

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

INTERIM COMBINED STATEMENTS OF CASH FLOWS

For the Six Month Periods Ended June 30, 2021 and 2020

	Six Months Ended
	June 30,<br><br> <br>2021			June 30,<br><br> <br>2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,943,392		$	2,112,098
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt expense		170,470			140,775
Depreciation and amortization		46,352			45,551
Gain on sale of property and equipment		(60,000	)		-
Changes in operating assets and liabilities:
Accounts receivable		1,941,531			4,847,132
Prepaid expenses		(327,460	)		(87,113	)
Other assets		(58,004	)		4,844
Accounts payable - trade		1,371,831			226,345
Accrued liabilities and other		205,471			(271,982	)
Total adjustments		3,290,191			4,905,552
Net cash provided by operating activities		5,233,583			7,017,650
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment		60,000			-
Net cash provided by investing activities		60,000			-
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances on line of credit		1,021,988			-
Payments on line of credit		(3,918,914	)		-
Payments on long-term debt		(21,212	)		(34,724	)
Proceeds from issuance of long-term debt		-			2,011,300
Member distributions		(961,086	)		(1,224,588	)
Net cash provided by (used in) financing activities		(3,879,224	)		751,988
NET INCREASE IN CASH AND CASH EQUIVALENTS		1,414,359			7,769,638
CASH AND CASH EQUIVALENTS, beginning of period		41,946			789,385
CASH AND CASH EQUIVALENTS, end of period	$	1,456,305		$	8,559,023
Cash paid for interest	$	32,262		$	18,665
Cash paid for state income taxes	$	143,853		$	116,000

See independent accountant’s review report and accompanying notes to the interim combined financial statements.

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

NOTES TO INTERIM COMBINED FINANCIAL STATEMENTS

June 30, 2021 and December 31, 2020

(1) Summary of operations and significant accounting policies

Nature of operations

Expedited Logistics and Freight Services, LLC (the “Company”) provides a variety of logistics services, which include domestic and international freight shipping and forwarding and hazardous material warehousing and distribution. The Company is headquartered in Houston, Texas and has other offices in Texas, Louisiana, Colorado, and Oklahoma.

The Company has dedicated agents, those who work in specific areas to assist in logistics, in the following locations: Texas, Louisiana, North Dakota, and Oklahoma.

Basis of presentation

The interim combined financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as codified by the Financial Accounting Standards Board (“FASB”) in its Accounting Standards Codification (“ASC”).

Principles of combination

The interim combined financial statements consist of three companies that are affiliated by common control and shared management and are collectively referred to in these interim combined financial statements as the Company. The entities included are Expedited Logistics and Freight Services, LLC, ELFS Management, Inc., and ELFS Brokerage, LLC. All significant intercompany accounts and transactions have been eliminated.

Recently adopted accounting standards

Accounting standards not yet adopted

In February 2016, FASB issued ASU 2016-02, Leases. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases (with the exception of short-term leases) at the commencement date. The provisions of ASU 2016-02 are effective for the Company on January 1, 2022 and must apply a modified retrospective transition approach for leases existing at, or entered into, after the beginning of the earliest comparative period presented in the interim combined financial statements. Lessees and lessors may not apply a full retrospective transition approach. Management is in the process of evaluating the impact of adopting ASU 2016-02 on the Company’s interim combined financial statements.

Use of estimates

The preparation of interim combined financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the balance sheet dates and the amounts of revenue and expenses recognized during the reporting period.

Areas where accounting estimates are made by management include allowance for doubtful accounts and depreciation and amortization of property and equipment.

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

NOTES TO INTERIM COMBINED FINANCIAL STATEMENTS

June 30, 2021 and December 31, 2020

(1) Summary of operations and significant accounting policies (continued)

Use of estimates (continued)

Cash and cash equivalents

For purposes of the interim combined statements of cash flows, the Company considers all highly liquid debt instruments and other similar short-term investments purchased with an original maturity of three months or less to be cash equivalents.

Concentration of credit risk

Accounts receivable

The Company maintains an allowance for potential credit losses based on management’s expectations of future losses in relation to the outstanding balance. The Company extends credit based on established terms and limits, and generally, does not require collateral. Accounts are written off at 180 days without continued business unless payment arrangements have been made. The allowance for doubtful accounts as of June 30, 2021 and December 31, 2020 was $433,008 and $270,387, respectively.

Property and equipment

Income taxes

As a limited liability company, the Company’s taxable income or loss is allocated to members in accordance with their respective percentage ownership. Therefore, no provision or liability for federal income taxes has been included in the interim combined financial statements. The Company is however subject to income and margin taxes in various states throughout the country but primarily in Texas.

Management evaluated the Company’s tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the current or prior period interim combined financial statements to comply with the provisions of this guidance. With few exceptions, the Company is no longer subject to income tax examinations by the U.S. federal or state tax authorities for years before 2017. No authorities have commenced income tax examinations as of November 2, 2021.

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

NOTES TO INTERIM COMBINED FINANCIAL STATEMENTS

June 30, 2021 and December 31, 2020

(1) Summary of operations and significant accounting policies (continued)

Revenue recognition

For purposes of disaggregation, the revenue streams are as follows:

		Three Month Period Ended			Six Month Period Ended
		June 30,<br><br> <br>2021	June 30,<br><br> 2020		June 30,<br><br> 2021		June 30,<br><br> 2020
Trucking	$	12,038,515	$	10,268,663	$	23,436,292	$	24,501,962
Air freight		2,409,305		1,978,531		4,869,549		3,828,047
Accessorial and other revenue		1,741,370		1,276,998		3,042,920		3,229,603
Warehousing		1,828,794		1,009,735		3,060,800		1,794,793
Ocean freight		1,331,072		900,702		2,148,962		1,699,905
Customs clearance services		65,055		79,310		131,125		182,598
Total revenue	$	19,414,111	$	15,513,939	$	36,689,648	$	35,236,908

Long-lived assets

Subsequent events

The Company has evaluated all events or transactions that occurred after June 30, 2021 through November 2, 2021, the date the interim combined financial statements were available to be issued. Other than the event described in note 8, no events have occurred that would have a material effect on the interim combined financial statements.

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

NOTES TO INTERIM COMBINED FINANCIAL STATEMENTS

June 30, 2021 and December 31, 2020

(2) Property and equipment

As of June 30, 2021 and December 31, 2020, property and equipment consisted of the following:

	Estimated<br><br> <br>useful lives	June 30,<br><br> <br>2021			December 31,<br><br> <br>2020
Machinery and equipment	3 - 5 years	$	838,278		$	994,187
Computer hardware and software	3 - 5 years		510,572			510,572
Office furniture and equipment	3 - 5 years		334,683			334,683
Vehicles	5 years		303,264			303,264
Leasehold improvements	10 years		41,077			41,077
			2,027,874			2,183,783
Less: accumulated depreciation and amortization			(1,900,327	)		(2,009,884	)
		$	127,547		$	173,899

Depreciation and amortization expense totaled $23,175 and $22,775 for the three months ended June 30, 2021 and 2020, respectively. Depreciation and amortization expense totaled $46,352 and $45,551 for the six months ended June 30, 2021 and 2020, respectively.

(3) Line of credit

The Company maintains a line of credit with a bank that provided for maximum borrowings of $10,000,000. Interest on outstanding balances are at the London Interbank Offered Rate (“LIBOR”) plus an applicable margin of 2.2% (2.30% and 2.34% as of June 30, 2021 and December 31, 2020, respectively) is payable monthly. The agreement includes further clarifications for potential LIBOR loan market rate issues and retains all other aspects of the original agreement. The line of credit is collateralized by substantially all assets of the Company and include personal guarantees of each of the members.

As of June 30, 2021 and December 31, 2020, the Company was in compliance with the line of credit’s restrictive and financial covenants.

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EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

NOTES TO INTERIM COMBINED FINANCIAL STATEMENTS

June 30, 2021 and December 31, 2020

(4) Long-term debt

As of June 30, 2021 and December 31, 2020, long-term debt consisted of the following:

			December 31,<br><br> <br>2020
Note payable to a bank under the Small Business Administration Paycheck Protection Program (“PPP”). Interest is fixed at 1% and<br> accrues from the date the proceeds are received. Principal and interest payments are deferred for sixteen months from the date of the loan with monthly principal and interest payments commencing September 1, 2021. The loan will mature on<br> April 16, 2022; however, the loan may be fully or partially forgiven depending on certain criteria being met as defined by the PPP.	2,011,300		$	2,011,300
Notes payable to a bank in monthly installments of 2,111 including interest at 4%, through maturity in May 2023,<br> collateralized by a vehicle.	45,678			57,421
Note payable to a finance company in monthly installments of 1,340 including interest at 2.98% through maturity in March 2021,<br> collateralized by personal guarantee of members, vehicles and equipment. The note payable matured and was paid in full during 2021.	-			5,327
Note payable to a bank in monthly installments of 1,388 including interest at 3.28% through maturity in March 2021,<br> collateralized by personal guarantee of members, vehicles and equipment. The note payable matured and was paid in full during 2021.	-			4,142
Long-term debt	2,056,978			2,078,190
Less: current maturities	(2,035,492	)		(1,038,835	)
Long-term debt, net of current maturities	21,486		$	1,039,355

All values are in US Dollars.

Future principal payments of long-term debt as of June 30, 2021 are expected to be as follows:

Twelve Months Ending June 30,
2022	$	2,035,492
2023		21,486
Total	$	2,056,978

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

NOTES TO INTERIM COMBINED FINANCIAL STATEMENTS

June 30, 2021 and December 31, 2020

(5) Leases

The Company leases office space and equipment under short and long-term operating leases expiring on various dates through 2028. Rent expense under these leases approximated $309,000 and $311,000 for the three month periods ended June 30, 2021 and June 30, 2020, respectively. Rent expense under these leases approximated $611,000 and $614,000 for the six month periods ended June 30, 2021 and June 30, 2020, respectively. A summary of non-cancelable future minimum base rent lease commitments, including required minimum operating expenses is as follows:

2021	$	626,822
2022		1,176,315
2023		1,116,450
2024		821,613
2025		736,596
Thereafter		2,085,565
Total	$	6,563,361

In February 2021, the Company entered into a lease commencing in October 2021 and ending in September 2028 for a new corporate headquarters. The effect of this new lease on future contingencies has been reflected above.

(6) Employee retirement plan

(7) COVID-19 pandemic

The worldwide outbreak of COVID-19 (Coronavirus), which was declared a pandemic by the World Health Organization on March 11, 2020, has impacted and may continue to impact our business operations, including employees, customers, financial condition, liquidity and cash flow for an extended period of time. In particular, we have experienced significant changes in demand among our various customers depending on their industry. Federal and state governments have implemented measures in an effort to contain the virus, including social distancing, travel restrictions, border closures, limitations on public gatherings, work from home, supply chain logistical changes, and closure of nonessential businesses, which measures have adversely impacted our business operations in the fiscal year 2020 and 2021. Although some of the states and foreign markets in which we operate have begun to reopen on a phased basis, the United States and other countries continue to struggle with rolling outbreaks of the virus.

The full impact of the COVID-19 outbreak continues to evolve as of the date of this filing. As such, it is uncertain as to the full magnitude that the pandemic will have on the Company’s financial condition, liquidity, and future results of operations. Management is actively monitoring the impact of the global situation on its financial condition, liquidity, operations, industry, and workforce.

EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC AND AFFILIATES

NOTES TO INTERIM COMBINED FINANCIAL STATEMENTS

June 30, 2021 and December 31, 2020

(8) Sale of company

On September 21, 2021, Janel Corporation (the “Janel Corp.”), through its wholly owned subsidiary Janel Group, Inc. (“Janel Group”), executed a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Expedited Logistics and Freight Services, LLC (“ELFS”), a Texas limited liability company based in Houston which provides non-asset-based logistics services, and the principal members of ELFS (the “Members”) for the purchase by Janel Group of 100% of the issued and outstanding membership interests of ELFS and ELFS Brokerage LLC, a Texas limited liability company and wholly-owned subsidiary of ELFS (collectively, the “Interests”). The acquisition was consummated immediately following the execution of the Purchase Agreement. Under the terms of the Purchase Agreement, the purchase price for the Interests was $19,000,000, subject to certain closing adjustments as set forth in the Purchase Agreement. Further payments in an amount not anticipated to exceed $4,500,000 will be due to the Members based on the operating profit earned by ELFS. The transaction closed on September 21, 2021, upon which the former Members of ELFS were paid $13,000,000 in cash and were issued an aggregate amount of $6,000,000 in subordinated promissory notes. This acquisition was funded with cash provided by normal operations, borrowings under the Janel Corp.’s Loan Agreement, as well as subordinated promissory notes issued to the Members.

Exhibit 99.3

JANEL CORPORATION

UNAUDITED PRO FORMA COMBINED

FINANCIAL INFORMATION

On September 21, 2021, Janel Corporation (the “Company” or “Janel”), through its wholly owned subsidiary Janel Group, Inc. (“Janel”), executed a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Expedited Logistics and Freight Services, LLC (“ELFS”), a Texas limited liability company based in Houston which provides non-asset-based logistics services, and the principal members of ELFS (the “Members”) for the purchase by Janel of 100% of the issued and outstanding membership interests of ELFS and ELFS Brokerage LLC, a Texas limited liability company and wholly-owned subsidiary of ELFS (collectively, the “Interests”). The acquisition was consummated immediately following the execution of the Purchase Agreement.

Under the terms of the Purchase Agreement, the purchase price for the Interests was $19,000,000, subject to certain closing adjustments as set forth in the Purchase Agreement. Further payments in an amount not anticipated to exceed $4,500,000 will be due to the Members based on the operating profit earned by ELFS. The transaction closed on September 21, 2021, upon which the former Members of ELFS were paid $13,000,000 in cash and were issued an aggregate amount of $6,000,000 in subordinated promissory notes. This acquisition was funded with cash provided by normal operations, borrowings under the Amended Loan Agreement dated September 21, 2021, as well as subordinated promissory notes issued to the Members.

The attached unaudited pro forma combined balance sheet assumes that the acquisition was completed on June 30, 2021. The unaudited pro forma combined statements of operation for the fiscal year ended September 30, 2020 and for the nine months ended June 30, 2021 assume the acquisition was completed on October 1, 2019 and reflect the operating results of Janel for its fiscal year 2020 and the operating results of ELFS and its affiliates for their fiscal 2020, derived from the audited financial statements, and the nine months ended June 30, 2021 financial statements, respectively. These operating results for different annual fiscal year periods are being appropriately combined for pro forma purposes since the fiscal year-end periods are within 93 days of each other, in accordance with Securities and Exchange Commission (“SEC”) guidance.

The unaudited pro forma combined financial statements were prepared in accordance with the rules and regulations of the SEC and should not be considered indicative of the financial position or results of operations that would have occurred if the acquisition had been completed on the dates indicated, nor are they indicative of the future financial position or results of operations of Janel and ELFS following completion of the acquisition. In accordance with the rules and regulations of the SEC, the pro forma combined statements of income do not reflect the potential realization of cost savings, or restructuring, or other costs relating to the integration of ELFS, nor do they include any other items not expected to have a continuing impact on the combined results of the two companies. The historical consolidated financial information of Janel and ELFS has been adjusted in the unaudited pro forma combined financial statements to give effect to pro forma events that are (1) directly attributable to the acquisition, (2) factually supportable, and (3) with respect to the statement of income, expected to have a continuing impact on the combined results.

The unaudited pro forma combined financial information should be read in conjunction with the accompanying notes thereto. In addition, the unaudited pro forma combined financial information was based on, and should be read in conjunction with:

•	Separate historical financial statements of Janel as of and for the fiscal year ended September 30, 2020 and the related notes included in Janel’s Annual Report on Form 10-K for the<br> fiscal year ended September 30, 2020; and the historical financial statements for the quarter ended June 30, 2021, including related notes, as filed on Janel’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.
•	Separate historical financial statements of ELFS as of and for the year ended December 31, 2020 and the related notes; and the historical financial statements for the six months<br> ended June 30, 2021, including related notes, which are attached as Exhibit 99.1 and Exhibit 99.2, respectively, to this Form 8-K/A.
---	---

•

Separate historical financial statements of Janel as of and for the fiscal year ended September 30, 2020 and the related notes included in Janel’s Annual Report on Form 10-K for the<br> fiscal year ended September 30, 2020; and the historical financial statements for the quarter ended June 30, 2021, including related notes, as filed on Janel’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.

•

Separate historical financial statements of ELFS as of and for the year ended December 31, 2020 and the related notes; and the historical financial statements for the six months<br> ended June 30, 2021, including related notes, which are attached as Exhibit 99.1 and Exhibit 99.2, respectively, to this Form 8-K/A.

---

Janel Corporation

Unaudited Pro forma Combined Statement of Operations

For the Year Ended September 30, 2020

(in thousands, except per share amounts)	Janel			ELFS			Proforma<br><br> <br>Adjustments				Proforma<br><br> <br>Combined
Revenue	$	82,429		$	69,034		$	-			$	151,463
Forwarding expenses and cost of revenues		58,908			49,156			-				108,064
Gross profit		23,521			19,878			-				43,399
Selling, general and administrative expenses		24,290			17,152			-				41,442
Amortization of intangible assets		955			-			569		6a		1,524
Total Costs and Expenses		25,245			17,152			569				42,966
(Loss) income from operations		(1,724	)		2,726			(569	)			433
Interest expense net of interest income		(521	)		(70	)		(571	)	6b		(1,162	)
Change in fair value of mandatorily redeemable non-controlling interest		15			-			-				15
(Loss) Income Before Income Taxes		(2,230	)		2,656			(1,140	)			(714	)
Income tax benefit (expense)		505			(284	)		(92	)	6c		129
Net (Loss) Income		(1,725	)		2,372			(1,232	)			(585	)
Preferred stock dividends		(675	)		-			-				(675	)
Net (Loss) Available to Common Stockholders	$	(2,400	)	$	2,372		$	(1,232	)		$	(1,260	)
Net (Loss) Income per share:
Basic	$	(1.98	)	$	-		$	-			$	(0.67	)
Diluted	$	(1.98	)	$	-		$	-			$	(0.67	)
Net (loss) per share attributable to common stockholders:
Basic	$	(2.75	)	$	-		$	-			$	(1.44	)
Diluted	$	(2.75	)	$	-		$	-			$	(1.44	)
Weighted average number of shares:
Basic		872,122			-			-				872,122
Diluted		872,122			-			-				872,122

See the accompanying notes to the unaudited pro forma combined financial statements which are an integral part of these financial statements.

Janel Corporation

Unaudited Pro forma Combined Statement of Operations

For the Nine Months Ended June 30, 2021

(in thousands, except per share amounts)	Janel			ELFS			Pro forma<br><br> <br>Adjustments				Pro forma<br><br> <br>Combined
Revenue	$	91,446		$	54,542		$	-			$	145,988
Forwarding expenses and cost of revenues		68,680			39,251			-				107,931
Gross profit		22,766			15,291			-				38,057
Selling, general and administrative expenses		19,282			12,846			-				32,128
Amortization of intangible assets		832			-			427		6a		1,259
Total Costs and Expenses		20,114			12,846			427				33,387
Income from operations		2,652			2,445			(427	)			4,670
Interest expense net of interest income		(418	)		(59	)		(417	)	6b		(894	)
Gain on Paycheck Protection Program loan forgiveness		135			-			-				135
Income Before Income Taxes		2,369			2,386			(844	)			3,911
Income tax benefit (expense)		(648	)		(124	)		(379	)	6c		(1,151	)
Net Income		1,721			2,262			(1,223	)			2,760
Preferred stock dividends		(566	)		-			-				(566	)
Net Available to Common Stockholders	$	1,155		$	2,262		$	(1,223	)		$	2,194
Net Income per share:
Basic	$	1.84		$	-		$	-			$	2.95
Diluted	$	1.75		$	-		$	-			$	2.81
Net per share attributable to common stockholders:
Basic	$	1.24		$	-		$	-			$	2.34
Diluted	$	1.17		$	-		$	-			$	2.23
Weighted average number of shares:
Basic		936,154			-			-				936,154
Diluted		983,784			-			-				983,784

See the accompanying notes to the unaudited pro forma combined financial statements which are an integral part of these financial statements.

Janel Corporation

Unaudited Pro forma Combined Balance Sheets

As of June 30, 2021

(in thousands, except per share amounts)
ASSETS
Current assets:			ELFS		Proforma<br><br> <br>Adjustments				Proforma<br><br> <br>Combined
Cash	2,926		$	1,456	$	(1,456	)	4	$	2,926
Accounts receivable, net of allowance for doubtful accounts	27,575			11,850		-				39,425
Inventory, net	3,479			-		-				3,479
Prepaid expenses and other assets	638			701		-				1,339
Total current assets	34,618			14,007		(1,456	)			47,169
Property, plant and equipment, net	4,917			128		-				5,045
Other Assets:
Intangible assets, net	14,461			-		8,380		6d		22,841
Goodwill	15,955			-		5,685		6e		21,640
Operating lease right of use asset	2,280			-		1,156		6f		3,436
Security deposits and other long-term assets	263			333		-				596
Total other assets	32,959			333		15,221				48,513
Total assets	72,494		$	14,468	$	13,765			$	100,727
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Line of credit	12,986		$	-	$	13,000		4	$	25,986
Accounts payable – trade	23,049			2,974		-				26,023
Accrued expense and other current liabilities	4,082			1,003		1,748		4		6,833
Dividends payable	2,228			-		-				2,228
Current portion of Paycheck Protection Program (PPP) loan	1,528			-		-				1,528
Current portion of deferred acquisition payments	176			-		-				176
Current portion of subordinated promissory note-related party	711			-		-				711
Current portion of long-term debt	867			2,035		(2,035	)	4		867
Current portion of operating lease liabilities	809			-		615		6f		1,424
Total current liabilities	46,436			6,012		13,328				65,776
Other Liabilities:
Long-term debt	5,084			21		(21	)	4		5,084
Long-term portion of Paycheck Protection Program (PPP) loan	1,232			-		-				1,232
Subordinated promissory notes-related party	809			-		6,000		4		6,809
Long-term portion of deferred acquisition payments	374			-		-				374
Mandatorily redeemable non-controlling interest	690			-		-				690
Deferred income taxes	2,057			-		-				2,057
Long-term operating lease liabilities	1,495			-		541		6f		2,036
Other liabilities	399			-		3,000		4		3,399
Total other liabilities	12,140			21		9,520				21,681
Total liabilities	58,576			6,033		22,848				87,457
Stockholders’ equity:
Preferred Stock, 0.001 par value; 100,000 shares authorized
Series B 5,700 shares authorized, 31 shares issued and outstanding	-			-		-				-
Series C 20,000 shares authorized and 20,000 shares issued and 19,760 outstanding at June 30, 2021,<br> liquidation value of 12,108 at June 30, 2021	-			-		-				-
Common stock, 0.001 par value; 4,500,000 shares authorized, 927,207 issued and 907,207 outstanding as of<br> June 30, 2021	1			-		-				1
Paid-in capital	14,119			-		-				14,119
Treasury stock, at cost, 20,000 shares	(240	)		-		-				(240	)
Accumulated earnings	38			8,435		(9,083	)	6g		(610	)
Total stockholders’ equity	13,918			8,435		(9,083	)			13,270
Total liabilities and stockholders’ equity	72,494		$	14,468	$	13,765			$	100,727

All values are in US Dollars.

See the accompanying notes to the unaudited pro forma combined financial statements which are an integral part of these financial statements.

Description of Transaction:

On September 27, 2021, Janel Corporation (the “Company”) filed a Current Report on Form 8-K (the “Initial Form 8-K”) with the Securities and Exchange Commission (the “SEC”) reporting that, on September 21, 2021, the Company completed the acquisition of all of the membership interests of Expedited Logistics and Freight Services, LLC (“ELFS”) and ELFS Brokerage LLC, a wholly-owned subsidiary of ELFS. The purchase price for the Interests was $19,000,000, subject to certain closing adjustments as set forth in the purchase agreement. Further payments in an amount not anticipated to exceed $4,500,000 will be due to the principal members of ELFS based on the operating profit earned by ELFS. The transaction closed on September 21, 2021, upon which the former Members of ELFS were paid $13,000,000 in cash and were issued an aggregate amount of $6,000,000 in subordinated promissory notes. This acquisition was funded with cash provided by normal operations, borrowings under an amended loan agreement dated September 21, 2021, as well as subordinated promissory notes issued to the members.

Basis of Presentation:

The acquisition will be accounted for under the acquisition method of accounting in accordance with ASC 805-10. The Company is accounting for the acquisition by using the historical information and accounting policies of Janel and adding the assets and liabilities of ELFS, as applied on a pro forma basis as of June 30, 2021, at their respective fair values. Further, and in accordance with ASC 805, the accounting policies of ELFS have been conformed to those of Janel in determining the results of operations and the amounts of assets and liabilities to be fair valued. The assets and liabilities of ELFS have been measured at fair value based on various assumptions that the Company’s management believes are reasonable utilizing information as of the Acquisition Date.

The process for measuring the fair value of identifiable intangible assets, liabilities and certain tangible assets requires the use of significant assumptions, including estimates of future cash flows and appropriate discount rates. The excess of the purchase price (consideration transferred) over the amount of identifiable assets and liabilities of ELFS acquired, on a pro forma basis as of June 30, 2021, was allocated to goodwill in accordance with ASC 805-10.

For purposes of measuring the fair value of the ELFS assets acquired and liabilities assumed, as reflected in the unaudited pro forma combined financial statements, the Company used the guidance in ASC Topic 820, “Fair Value Measurement and Disclosure”, which establishes a framework for measuring fair values. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Market participants are buyers and sellers in the principal (most advantageous) market for the asset or liability. Additionally, under ASC 820, fair value measurements for an asset assume the highest and best use of that asset by market participants.

The historical balance sheets of Janel and ELFS were used to create the unaudited pro forma combined balance sheet as of June 30, 2021, the last day of the Janel’s third fiscal quarter. Janel and ELFS have different fiscal year ends with Janel following a fiscal year end ending September 30 and ELFS following a calendar year-end ending on December 31. Accordingly, the unaudited pro forma combined statement of operations for the year ended September 30, 2020 has been prepared by combining information derived from Janel’s audited historical consolidated statement of income for the year ended September 30, 2020 with the unaudited historical combined statement of income of ELFS for the twelve months ended September 30, 2020. The historical combined statement of income of ELFS for the twelve months ended September 30, 2020 was calculated by taking the audited combined statement of income for the twelve months ended December 31, 2020 and removing the results of operations for the three months ended December 31, 2020 interim period and adding the results of operations for the three months ended December 31, 2019 interim period. The interim unaudited pro forma combined statement of operations for the nine months ended June 30, 2021 has been prepared by combining Janel’s unaudited historical consolidated statement of income for the nine months ended June 30, 2021, with the unaudited historical combined statement of income of ELFS for the nine months ended June 30, 2021. The unaudited historical combined statement of income of ELFS for the nine months ended June 30, 2021 was calculated by taking the unaudited combined statement of income for the six months ended June 30, 2021 and adding the results of operations for the three months ended December 31, 2020 interim period. In addition, certain line items of the ELFS income statements were combined or reclassified in order to make the information comparable.

The table below summarizes the calculated combined historical statements of ELFS for the twelve months ended September 30, 2020 and nine months ended June 30, 2021:

Twelve months ended September 30, 2020	Audited<br><br> Year Ended			Unaudited<br><br> Three Months Ended			Unaudited<br><br> <br>Three Months Ended			Unaudited<br><br> Twelve Months Ended
(in thousands)	December 31, 2020			December 31, 2020			December 31, 2019			September 30, 2020
Service revenue	$	68,851		$	(17,852	)	$	18,035		$	69,034
Cost of service revenue		48,612			(13,082	)		13,626			49,156
Gross Profit		20,239			(4,770	)		4,409			19,878
Selling, general and administrative expenses		17,228			(4,432	)		4,543			17,339
Income (loss) from operations		3,011			(338	)		(134	)		2,539
Other income (expense)
Other income (expense)		208			(44	)		22			186
Interest expense		(74	)		22			(18	)		(70	)
Gain on sale of property and equipment		1			(1	)		1			1
Total other income (expense)		135			(23	)		5			117
Income (loss) before state income taxes		3,146			(361	)		(129	)		2,656
Provisions for state income taxes		218			(42	)		108			284
Net Income (loss)	$	2,928		$	(319	)	$	(237	)	$	2,372
Nine months ended June 30, 2021<br><br> <br>(in thousands)	Unaudited<br><br> <br>Six Months Ended<br><br> June 30, 2021			Unaudited<br><br> <br>Three Months Ended<br><br> December 31, 2020			Unaudited<br><br> <br>Nine Months Ended<br><br> June 30, 2021
---	---	---	---	---	---	---	---	---	---
Service revenue	$	36,690		$	17,852		$	54,542
Cost of service revenue		26,169			13,082			39,251
Gross profit		10,521			4,770			15,291
Selling, general and administrative expenses		8,519			4,432			12,951
Income from operations		2,002			338			2,340
Other income (expense)
Interest income		3			2			5
Miscellaneous income (expense)		2			42			44
Interest expense		(42	)		(22	)		(64	)
Gain on sale of property and equipment		60			1			61
Total other income		23			23			46
Income before state income taxes		2,025			361			2,386
Provision for state income taxes		82			42			124
Net income	$	1,943		$	319		$	2,262

Accounting Policies:

The unaudited pro forma combined financial statements reflect adjustments to conform the results of ELFS to Janel’s application of generally accepted accounting policies.

These differences resulted in the following income statement line-item reclassifications:

Income Statements<br><br> <br>(in thousands)	Twelve<br><br> <br>Months Ended<br><br> September 30, 2020		Reclass			Revised<br><br> <br>Twelve<br><br> <br>Months Ended<br><br> September 30, 2020		Nine<br><br> <br>Months Ended<br><br> June 30, 2021			Reclass			Revised<br><br> <br>Twelve<br><br> <br>Months Ended<br><br> September 30, 2020
Selling, general and administrative expenses	$	17,339	$	(187	)	$	17,152	$	12,951		$	(105	)	$	12,846
Other income (expense)		186		(186	)		-		-						-
Interest income		-		-			-		5			(5	)		-
Miscellaneous income (expense)		-		-			-		44			(44	)		-
Interest expense		-		-			-		(64	)		5			(59	)
Gain on sale of property and equipment		1		(1	)		-		61			(61	)		-

Consideration Paid:

As noted in Note (1), Janel paid approximately $21,300,000, net of excluded cash of $1,456,000 and excluded debt of $2,056,000, in connection with the ELFS acquisition. This acquisition was funded with cash provided by normal operations, borrowings of $13,000,000 under an amended loan agreement, subordinated promissory notes issued of $6,000,000 to the principal members of ELFS and $4,100,000 in earnout payments to members. The pro forma balance sheet has been adjusted to reflect this financing and ELFS net debt has been removed. accrued expenses and other liabilities includes the current portion of the expected earn-out payment of $1,100,000. Additionally, included in accrued expenses and other liabilities are transaction cost of $648,000. Transaction cost of $339,000 have been incurred, however have not been adjusted in the unaudited pro forma combined statement of operations

Preliminary Allocation of Consideration Transferred to the Net Assets Acquired:

The following summarizes the ELFS assets acquired and the liabilities assumed by Janel in the acquisition, assuming the acquisition had been completed by June 30, 2021, reconciled to the consideration paid to acquire ELFS (in thousands):

Accounts Receivable	$	11,850
Prepaid expenses and other current assets		701
Property, plant and equipment		128
Security deposits and other long-term assets		333
Operating lease right of use asset		1,156
Goodwill		5,685
Intangible assets		8,380
Accounts payable		(2,975	)
Current portion of operating lease liabilities		(615	)
Accrued expenses and other current liabilities		(1,002	)
Long-term operating lease liabilities		(541	)
Total Consideration Paid	$	23,100

Adjustments to Unaudited Pro Forma Combined Income Statements and Balance Sheet:

Adjustments to the unaudited pro forma combined income statements for the nine months ended June 30, 2021 and the fiscal year ended September 30, 2020 for Janel and unaudited pro forma balance sheet as of June 30, 2021 were as follows (in thousands):

a. Amortization of intangibles: Adjustments to amortization of intangibles are comprised of the following:

	Nine months ended<br><br> <br>June 30, 2021			Twelve months ended<br><br> <br>September 30, 2020
Amortization of acquired ELFS intangible assets		$	427		$	569

b. Interest expense: Adjustments to interest expense are comprised of the following:

	Nine months ended<br><br> <br>June 30, 2021			Twelve months ended<br><br> <br>September 30, 2020
Interest expense incurred on subordinated promissory notes to sellers	$	180		$	240
Interest expense incurred on acquisition financing		301			401
Elimination of ELFS interest expense		(64	)		(70	)
	$	417		$	571

c. Income tax benefit (expense): We have reflected the applicable tax provision on the pro forma adjustments presented in the unaudited pro forma combined income statements based on the estimated respective statutory tax rate in the tax jurisdictions of the adjustments. Adjustments to Income tax benefit (expense) are comprised of the following:

	Nine months ended<br><br> <br>June 30, 2021				Twelve months ended<br><br> <br>September 30, 2020
Income tax benefit (expense)		$	(294	)		$	(92	)

Adjustments to the unaudited pro forma combined balance sheet as of June 30, 2021, were as follows:

d. Intangibles: Acquired identifiable intangible assets were measured at fair value determined primarily using the “income approach,” which required a forecast of all expected future cash flows either through the use of the relief-from-royalty method or the multi-period excess earnings method. The estimated fair value of the identifiable intangible assets and their weighted-average useful lives are as follows:

	Fair Value		Useful Lives
Customer and relationships	$	6,070	15 years
Trademarks/tradenames		2,230	15 years
Non-competition agreements		80	5 years
	$	8,380

The estimated future amortization of these intangible assets is expected to be as follows:

Fiscal Year 2022	$	569
Fiscal Year 2023		569
Fiscal Year 2024		565
Fiscal Year 2025		553
Fiscal Year 2026		553
Thereafter		4,575
	$	7,384

e. Goodwill: The new goodwill recorded of $5,685 was calculated as the difference between the acquisition date fair value of the consideration paid for ELFS in the acquisition and the values assigned to the identifiable ELFS assets acquired and liabilities assumed as if the acquisition was completed on June 30, 2021. Goodwill is not amortized but rather is subject to impairment testing on at least an annual basis.

f. Leases: Adjustment to conform ELFS accounting for leases to Janel’s application of generally accepted accounting policy under ASU No. 2016-02, Leases, which requires lessees to recognize lease liabilities and right-of-use assets on the balance sheet for all leases with initial terms longer than 12 months. We have reflected adjustments to increase operating lease right of use asset by $1,156, current portion of operating lease liabilities by $615 and long-term operating lease by $514.

g. Accumulated earnings: Existing equity of $8,435 of ELFS was eliminated.