UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

☒

          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15\(d\) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission file number: 333-60608

JANEL CORPORATION

(Exact name of registrant as specified in its charter)

Nevada	86-1005291
(State or other jurisdiction of<br><br> <br>incorporation or organization)	(I.R.S. Employer<br><br> <br>Identification No.)
80 Eighth Avenue
---	---
New York, New York	10011
(Address of principal executive offices)	(Zip Code)

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

Former name, former address and former fiscal year, if changed from last report: N/A

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbols(s)	Name of each exchange<br><br> <br>on which registered
None	None	None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer	☐
Non-accelerated filer ☐	Smaller reporting company	☒
	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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐ No ☒

The number of shares of Common Stock outstanding as of August 2, 2024 was 1,186,354.

JANEL CORPORATION

QUARTERLY REPORT ON FORM 10-Q

For Quarterly Period Ended June 30, 2024

			Page
Part I - Financial Information			3
	Item 1.	Financial Statements	3
		Condensed Consolidated Balance Sheets as of June 30, 2024<br> (unaudited) and September 30, 2023	3
		Condensed Consolidated Statements of Operations for the<br> three and nine months ended June 30, 2024 and 2023 (unaudited)	4
		Condensed Consolidated Statement of Stockholders’ Equity for<br> the three and nine months ended June 30, 2024 and 2023 (unaudited)	5
		Condensed Consolidated Statements of Cash Flows for the nine months<br> ended June 30, 2024 and 2023 (unaudited)	6
		Notes to Condensed Consolidated Financial Statements<br> (unaudited)	7
	Item 2.	Management’s Discussion and Analysis of Financial<br> Condition and Results of Operations	19
	Item 4.	Controls and Procedures	28
Part II - Other Information			29
	Item 1.	Legal Proceedings	29
	Item 1A.	Risk Factors	29
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
	Item 6.	Exhibit Index	29
		Signatures	30

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PART I - FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS

JANEL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED

        BALANCE SHEETS

(in thousands, except share and per share data)

(Unaudited)

			September 30,<br><br> <br>2023
ASSETS
Current Assets:
Cash	3,054		$	2,461
Accounts receivable, net of allowance for doubtful accounts	32,627			27,518
Inventory, net	4,556			4,850
Prepaid expenses and other current assets	4,477			4,459
Total current assets	44,714			39,288
Property and Equipment, net	5,296			4,922
Other Assets:
Intangible assets, net	23,830			22,683
Goodwill	23,946			20,317
Restricted cash	250			—
Investment in Rubicon at fair value	831			1,573
Operating lease right of use asset	9,113			7,460
Security deposits and other long-term assets	586			591
Total other assets	58,556			52,624
Total assets	108,566		$	96,834
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Lines of credit	22,081		$	19,709
Accounts payable - trade	32,058			25,447
Accrued expenses and other current liabilities	6,973			6,337
Dividends payable	2,271			2,029
Current portion of earnout	1,149			592
Current portion of long-term debt	716			715
Current portion of subordinated promissory notes-related party	1,683			1,988
Current portion of operating lease liabilities	2,445			2,020
Total current liabilities	69,376			58,837
Other Liabilities:
Long-term debt	4,282			5,784
Long-term portion of earnout	2,011			1,738
Subordinated promissory notes-related party	3,790			3,424
Mandatorily redeemable non-controlling interest	965			565
Deferred income taxes	1,341			1,341
Long-term operating lease liabilities	7,034			5,689
Other liabilities	529			483
Total other liabilities	19,952			19,024
Total liabilities	89,328			77,861
Stockholders’ Equity:
Preferred Stock, 0.001 par value; 100,000 shares authorized
Series C 30,000 shares authorized and 11,368 shares issued and outstanding at June 30, 2024 and September 30,<br> 2023, liquidation value of 7,955 and 7,713 at June 30, 2024 and September 30, 2023, respectively	—			—
Common stock, 0.001 par value; 4,500,000 shares authorized, 1,206,354<br> issued and 1,186,354 outstanding as of June 30, 2024 and September 30, 2023, respectively	1			1
Paid-in capital	17,068			17,107
Common treasury stock, at cost, 20,000 shares	(240	)		(240	)
Accumulated earnings	2,409			2,105
Total stockholders’ equity	19,238			18,973
Total liabilities and stockholders’ equity	108,566		$	96,834

All values are in US Dollars.

The accompanying notes are an integral part of these condensed consolidated financial statements.

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JANEL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

	Three Months Ended<br><br> <br>June 30,						Nine Months Ended<br><br> <br>June 30,
	2024			2023			2024			2023
Revenues	$	46,724		$	42,557		$	129,881		$	144,979
Forwarding expenses and cost of revenues		31,633			28,898			86,822			102,654
Gross profit		15,091			13,659			43,059			42,325
Cost and Expenses:
Selling, general and administrative		13,358			12,948			38,664			38,261
Amortization of intangible assets		555			524			1,635			1,593
Total Costs and Expenses		13,913			13,472			40,299			39,854
Income from Operations		1,178			187			2,760			2,471
Other Items:
Interest expense		(589	)		(528	)		(1,663	)		(1,476	)
Other expense		(437	)		(269	)		(381	)		(779	)
Income (Loss) Before Income Taxes		152			(610	)		716			216
Income tax benefit (expense)		(343	)		180			(412	)		(68	)
Net Income (Loss)		(191	)		(430	)		304			148
Preferred stock dividends		(85	)		(70	)		(242	)		(212	)
Net Income (Loss) Available to Common Stockholders	$	(276	)	$	(500	)	$	62		$	(64	)
Net income (loss) per share
Basic	$	(0.16	)	$	(0.36	)	$	0.25		$	0.12
Diluted	$	(0.16	)	$	(0.36	)	$	0.25		$	0.12
Net income (loss) per share attributable to common stockholders:
Basic	$	(0.23	)	$	(0.42	)	$	0.05		$	(0.05	)
Diluted	$	(0.23	)	$	(0.42	)	$	0.05		$	(0.05	)
Weighted average number of shares outstanding:
Basic		1,186.4			1,186.4			1,186.4			1,186.4
Diluted		1,186.4			1,186.4			1,205.9			1,186.4

The accompanying notes are an integral part of these condensed consolidated financial statements.

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JANEL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(in thousands, except share and per share data)

(Unaudited)

	PREFERRED<br><br> <br>STOCK		COMMON STOCK			COMMON TREASURY<br><br> <br>STOCK
	SHARES		SHARES			SHARES
Balance - September 30, 2023		11,368		1,206,354			20,000	)
Net Income		—		—			—
Dividends to preferred stockholders		—		—	)		—			)
Stock-based compensation		—		—			—
Balance - December 31, 2023		11,368		1,206,354			20,000	)
Net Income		—		—			—
Dividends to preferred stockholders		—		—	)		—			)
Stock based compensation		—		—			—
Balance - March 31, 2024		11,368		1,206,354			20,000	)
Net Loss		—		—			—		)	)
Dividends to preferred stockholders		—		—	)		—			)
Stock based compensation		—		—			—
Balance – June 30, 2024		11,368		1,206,354			20,000	)

All values are in US Dollars.

	PREFERRED<br><br> <br>STOCK		COMMON STOCK			COMMON TREASURY<br><br> <br>STOCK
	SHARES		SHARES			SHARES
Balance - September 30, 2022		11,368		1,206,354			20,000	)
Net Income		—		—			—
Dividends to preferred stockholders		—		—	)		—			)
Stock-based compensation		—		—			—
Balance - December 31, 2022		11,368		1,206,354			20,000	)
Net Income		—		—			—
Dividends to preferred stockholders		—		—	)		—			)
Stock based compensation		—		—			—
Balance - March 31, 2023		11,368		1,206,354			20,000	)
Net Loss		—		—			—		)	)
Dividends to preferred stockholders		—		—	)		—			)
Stock based compensation		—		—			—
Balance - June 30, 2023		11,368		1,206,354			20,000	)

All values are in US Dollars.

The accompanying notes are an integral part of these condensed consolidated financial statements.

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JANEL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Nine Months Ended<br><br> <br>June 30,
	2024			2023
Cash flows from operating activities:
Net income	$	304		$	148
Adjustments to reconcile net income to net cash provided by operating activities:
Recovery of uncollectible accounts		(71	)		(292	)
Depreciation		404			373
Deferred income tax provision		—			(8	)
Amortization of intangible assets		1,635			1,593
Amortization of acquired inventory valuation		264			320
Amortization of loan costs		72			63
Stock-based compensation		214			185
Unrealized loss on marketable securities		742			779
Change in fair value of mandatorily redeemable noncontrolling interest		400			—
Fair value adjustments of contingent earnout liabilities		553			—
Gain on extinguishment of debt		(21	)		—
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		(3,292	)		27,056
Inventory		38			(106	)
Prepaid expenses and other current assets		102			(1,151	)
Security deposits and other long-term assets		4			(82	)
Accounts payable and accrued expenses		4,844			(17,996	)
Other liabilities		162			174
Net cash provided by operating activities		6,354			11,056
Cash flows from investing activities:
Acquisition of property and equipment, net of disposals		(658	)		(267	)
Earnout payment		(740	)		(1,693	)
Acquisitions, net of cash acquired		(3,795	)		(4,401	)
Net cash used in investing activities		(5,193	)		(6,361	)
Cash flows from financing activities:
Repayments of term loan		(1,573	)		(1,113	)
Proceeds from (Payments to) Lines of credit, net		2,372			(7,101	)
Repayment of subordinate promissory notes, net		(1,117	)		(299	)
Net cash used in financing activities		(318	)		(8,513	)
Net increase (decrease) in cash		843			(3,818	)
Cash at beginning of the period		2,461			6,591
Cash and restricted cash at end of period		3,304			2,773
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	1,442		$	1,208
Income taxes	$	556		$	1,300
Non-cash operating activities:
Contingent earnout acquisition	$	64		$	300
Due to former owners	$	740		$	455
Non-cash investing activities:
Airschott subordinated promissory note	$	1,200		$	—
Airschott contingent deferred consideration	$	952		$	—
Non-cash financing activities:
Dividends declared to preferred stockholders	$	242		$	212

The accompanying notes are an integral part of these condensed consolidated financial statements.

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JANEL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except per share data)

(Unaudited)

1.	BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying interim unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of Article 8 of Regulation S-X and the instructions to Form 10-Q of the Securities and Exchange Commission. As a result, certain information and footnote disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Janel Corporation (the “Company” or “Janel”) believes that the disclosures made are adequate to make the information presented not misleading. The condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for a full fiscal year, or any other period. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Form 10-K as filed with the Securities and Exchange Commission.

Business Description

Janel is a holding company with subsidiaries in three business segments: Logistics, Life Sciences and Manufacturing. The Company strives to create shareholder value primarily through three strategic priorities: supporting its businesses’ efforts to make investments and to build long-term profits; allocating Janel’s capital at high risk-adjusted rates of return; and attracting and retaining exceptional talent.

Management at the holding company focuses on significant capital allocation decisions, corporate governance and supporting Janel’s subsidiaries where appropriate. Janel expects to grow through its subsidiaries’ organic growth and by completing acquisitions. We plan to either acquire businesses within our existing segments or expand our portfolio into new strategic segments. Our acquisition strategy focuses on reasonably-priced companies with strong and capable management teams, attractive existing business economics and stable and predictable earnings power.

Restricted Cash

Commencing in the second half of 2024, the Company insures certain risks through a newly formed wholly-owned captive insurance company, Gainesville Insurance Company, Inc. (“Gainesville”). In addition, we also maintain some of our normal, historical insurance policies with third-party insurers. Restricted cash represents deposits held by Gainesville that are required by state insurance regulations to remain in the captive insurance company as cash or cash equivalents. The Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents.

Revenue and revenue recognition

Logistics

Revenues are recognized upon transfer of control of promised services to customers. With respect to its Logistics segment, the Company has determined that, in general, each shipment transaction or service order constitutes a separate contract with the customer. When the Company provides multiple services to a customer, different contracts may be present for different services.

The Company typically satisfies its performance obligations as services are rendered at a point in time. A typical shipment would include services rendered at origin, such as pick-up and delivery to port, freight services from origin to destination port and destination services, such as customs clearance and final delivery. The Company measures the performance of its obligations as services are completed at a point in time during the life of a shipment, including services at origin, freight and destination. The Company fulfills nearly all of its performance obligations within a one- to two-month period.

The Company evaluates whether amounts billed to customers should be reported as gross or net revenues. Generally, revenues are recorded on a gross basis when the Company is acting as principal and is primarily responsible for fulfilling the promise to provide the services, when it has discretion in setting the prices for the services to the customers, and the Company has the ability to direct the use of the services provided by the third party. Revenues are recognized on a net basis when the Company is acting as agent, and we do not have latitude in carrier selection or in establishing rates with the carrier.

In the Logistics segment, the Company disaggregates its revenue by its four primary service categories: Trucking, Ocean, Air, Customs Brokerage and Other. A summary of the Company’s revenues disaggregated by major service lines for the three and nine months ended June 30, 2024 and 2023 is as follows (in thousands):

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	Three Months Ended<br><br> <br>June 30,				Nine<br> Months Ended<br><br> <br>June 30,
	2024		2023		2024		2023
Service Type
Trucking	$	18,689	$	19,314	$	55,040	$	61,671
Ocean		10,443		7,502		25,204		34,908
Air		6,733		5,638		19,261		17,096
Customs Brokerage and Other		4,812		5,030		12,486		15,487
Total	$	40,677	$	37,484	$	111,991	$	129,162

Life Sciences and Manufacturing

Revenues from the Life Sciences segment are derived from the sale of high-quality monoclonal and polyclonal antibodies, diagnostic reagents and diagnostic kits and other immunoreagents for biomedical research and antibody manufacturing. Revenues from the Company’s Manufacturing segment, which is comprised of Indco, a majority-owned subsidiary of the Company that manufactures and distributes mixing equipment and apparatus for specific applications within various industries (“Indco”), are derived from the engineering, manufacture and delivery of specialty mixing equipment and accessories. Revenues for Life Sciences and Manufacturing are recognized when products are shipped and the risk of loss is transferred to the carrier(s) used.

2.	ACQUISITIONS

Fiscal 2024 Acquisitions

Logistics

On June 5, 2024, the Company completed a business combination whereby it acquired a majority ownership position in Airschott, Inc. (“Airschott”), a non-asset-based freight forwarder and customs broker, for an aggregate purchase price of $5,900. At closing, the Company purchased 80% of the outstanding stock of Airschott for $3,600 in cash, a $1,200 floating-rate seller’s note, and net liabilities assumed of $170. The Company also agreed to purchase the remaining 20% of Airschott stock in three years for deferred consideration of the greater of 20% of 1.25 times the trailing twelve months gross profit of Airschott and $1,200. The acquisition was funded by our existing acquisition draw facility with First Merchants Bank (“First Merchants”) and through our existing asset-backed facility with Santander Bank, N.A. (“Santander”). In connection with the combination, the Company recorded an aggregate of $3,500 in goodwill and $2,400 in other identifiable intangibles. Supplemental pro forma information has not been provided as the acquisition did not have a significant impact on Janel’s condensed consolidated results of operations, individually or in aggregate. Airschott was founded in 1977 and is headquartered in Dulles, Virginia. The acquisition of Airschott was completed to expand our service offerings in our Logistics segment.

The Company is still finalizing the valuation of assets acquired, liabilities assumed, and the deferred consideration for Airschott, and, as such, the fair value amounts are preliminary and subject to change. Primary amounts subject to adjustment include, but are not limited to, intangible assets, fair value of accounts receivable or a change in the goodwill balance.

Life Sciences

On February 1, 2024, the Company completed a business combination whereby it acquired all of the outstanding stock of ViraQuest, Inc. (“ViraQuest”), for an aggregate purchase price of $635, net of $29 cash received. At closing, $600 was paid in cash and $64 was recorded as a preliminary earnout consideration. The acquisition was funded with cash provided by operating activities, and the results of operations of ViraQuest are included in Janel’s condensed consolidated results of operations since the date of the acquisition. In connection with the combination, the Company recorded an aggregate of $74 in goodwill and $412 in other identifiable intangibles. Supplemental pro forma information has not been provided as the acquisition did not have a significant impact on Janel’s condensed consolidated results of operations, individually or in aggregate. ViraQuest is a biotechnology custom service provider specializing in adenovirus production services. ViraQuest was founded in 2000 and is headquartered in North Liberty, Iowa. The acquisition of ViraQuest was completed to expand our service offerings in our Life Sciences segment.

The Company is still finalizing the valuation of assets acquired and liabilities assumed for ViraQuest, and, as such, the fair value amounts are preliminary and subject to change. Primary amounts subject to adjustment include, but are not limited to, intangible assets, fair value of accounts receivable or a change in the goodwill balance.

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Fiscal 2023 Acquisitions

Life Sciences

On November 1, 2022, the Company completed a business combination whereby it acquired all of the outstanding stock of ImmunoBioScience Corporation (“IBS”), for an aggregate purchase price of $3,602, net of $153 cash received. At closing, $3,000 was paid in cash, $250 was due to the former stockholder of IBS as a deferred acquisition payment upon integration, $300 was recorded as a preliminary earnout consideration (not to exceed $750) and $205 was recorded as a preliminary working capital adjustment. The acquisition was funded with cash provided by normal operations, and the results of operations of IBS are included in Janel’s condensed consolidated results of operations since the date of the acquisition. In connection with the combination, the Company recorded an aggregate of $1,468 in goodwill and $1,680 in other identifiable intangibles. Supplemental pro forma information has not been provided as the acquisition did not have a significant impact on Janel’s condensed consolidated results of operations, individually or in aggregate. IBS is a developer and manufacturer of high-quality reagents used by research and diagnostic customers. IBS was founded in 2007 and is headquartered in Mukilteo, Washington. The acquisition of IBS was completed to expand our product offerings in our Life Sciences segment.

On March 2, 2023, the Company completed a business combination whereby it acquired all of the outstanding stock of Stephen Hall PhD, Ltd. (“SH”) for an aggregate purchase price of $600. At closing, $500 was paid in cash and $100 was due to the former stockholder of SH as a deferred acquisition payment upon integration. The acquisition was funded with cash provided by normal operations, and the results of operations of SH are included in Janel’s condensed consolidated results of operations since the date of the acquisition. In connection with the combination, the Company recorded an aggregate of $181 in goodwill and $202 in other identifiable intangibles. SH is a developer and manufacturer of antibodies and cell culture media for research and diagnostic uses. SH was founded in 2011 and is headquartered in Lafayette, Indiana. The acquisition of SH was completed to expand our product offerings in our Life Sciences segment.

On May 22, 2023, the Company acquired all the rights, title and interests to a royalty agreement for certain antibody products for a purchase price of $500. The Company recorded this acquisition as a royalty asset, which is included in intangible assets in the accompanying condensed consolidated balance sheet (reclassed from Security deposits and other long-term assets in the current period) and will be amortized over the estimated life of ten years.

3.	INVENTORY

Inventories consisted of the following (in thousands):

	June 30,<br><br> <br>2024			September 30,<br><br> <br>2023
Finished goods	$	1,998		$	2,095
Work-in-process		800			969
Raw materials		1,789			1,811
Gross inventory		4,587			4,875
Less – reserve for inventory valuation		(31	)		(25	)
Inventory net	$	4,556		$	4,850
4.	INTANGIBLE ASSETS
---	---

A summary of intangible assets and the estimated useful lives used in the computation of amortization is as follows (in thousands):

	June 30,<br><br> <br>2024			September 30,<br><br> <br>2023			Life
Customer relationships	$	27,939		$	25,238		10-24 Years
Trademarks/names		4,541			4,559		1-20 Years
Trademarks/names		541			521		Indefinite
Other		2,007			1,929		2-22 Years
		35,028			32,247
Less: Accumulated Amortization		(11,198	)		(9,564	)
Intangible assets, net	$	23,830		$	22,683

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The composition of the intangible assets balance at June 30, 2024 and September 30, 2023 is as follows (in thousands):

	June 30,<br><br> <br>2024			September 30,<br><br> <br>2023
Logistics	$	20,543		$	18,174
Life Sciences		6,785			6,373
Manufacturing		7,700			7,700
		35,028			32,247
Less: Accumulated Amortization		(11,198	)		(9,564	)
Intangible assets, net	$	23,830		$	22,683

Amortization expense for the nine months ended June 30, 2024 and 2023 was $1,635 and $1,593, respectively.

5.	GOODWILL

The Company’s goodwill carrying amounts relate to acquisitions in the Logistics, Life Sciences and Manufacturing business segments.

The composition of the goodwill balance at June 30, 2024 and September 30, 2023 was as follows (in thousands):

	June 30,<br><br> <br>2024		September 30,<br><br> <br>2023
Logistics	$	12,729	$	9,175
Life Sciences		6,171		6,096
Manufacturing		5,046		5,046
Total	$	23,946	$	20,317
6.	NOTES PAYABLE – BANKS
---	---
(A)	Santander Bank Facility
---	---

The wholly-owned subsidiaries that comprise the Company’s Logistics segment (collectively, the “Janel Group Borrowers”), with the Company as a guarantor, have a Loan and Security Agreement (as amended, the “Santander Loan Agreement”) with Santander with respect to a revolving line of credit facility (the “Santander Facility”).

On January 30, 2023, the Santander Loan Agreement was further amended by the Third Amendment to the Amended and Restated Loan and Security Agreement (the “Third Santander Amendment”). As amended by the terms of the Third Santander Amendment, the percentage of the Borrowers’ eligible accounts receivable used to calculate the borrowing base under the Santander Loan Agreement was increased from 85% to 90% for Domestic Insured Accounts (as defined in the Third Santander Amendment), subject to adjustments set forth in the Santander Loan Agreement.

On April 25, 2023, in connection with an amendment to the Credit Agreement entered into with First Merchants as described further below, we entered into the Fourth Amendment to the Amended and Restated Loan and Security Agreement (the “Fourth Santander Amendment”). The Fourth Santander Amendment (i) included modifications to address the amendments made to the First Merchants Credit Facilities (as defined below) and the consolidation of the debt thereunder and (ii) terminated the subordination agreement relating to the Company’s guarantee of the First Merchants Credit Facilities (as defined below).

On August 22, 2023, we entered into the Fifth Amendment to the Santander Loan Agreement (the “Fifth Santander Amendment”). The Fifth Santander Amendment permitted certain unsecured guaranties by the Company in the ordinary course of business guarantying obligations of subsidiaries in an aggregate amount not to exceed $4,000 and related modifications to certain negative covenants.

On December 1, 2023, in connection with an amendment (the “Purchase Agreement Amendment”) to that certain Membership Interest Purchase Agreement dated as of September 21, 2021 (the “Purchase Agreement”) among Janel Group, Inc. (“Janel Group”), a wholly-owned subsidiary of the Company, Expedited Logistics and Freight Services, LLC (“ELFS”) and former shareholders of ELFS (the “ELFS Sellers”), (i) the Janel Group Borrowers and Santander entered into an Acknowledgment and Consent Agreement pursuant to which Santander consented to the Purchase Agreement Amendment and the effect of the modifications thereunder on the Santander Loan Agreement and (ii) the ELFS Sellers and Santander entered into an Acknowledgment and Consent Agreement pursuant to which Santander consented to the Purchase Agreement Amendment and the effect of the modifications thereunder on the Subordination Agreement (as defined in the Santander Loan Agreement) between Santander and the ELFS Sellers.

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On December 21, 2023, we entered into the Sixth Amendment to the Santander Loan Agreement (the “Sixth Santander Amendment”). The Sixth Santander Amendment modified the reporting due date of the monthly borrowing base calculation from the fifth day to the fifteenth day of each month.

On June 5, 2024, we entered into the Seventh Amendment to the Santander Loan Agreement (the “Seventh Santander Amendment”). The Seventh Santander Amendment added Airschott as a loan party obligor and borrower.

The

              Santander Loan Agreement matures on September 21, 2026.  Interest accrues on the Santander Facility at an annual rate equal to
              the one-month SOFR
              plus 2.75%. The Janel Group Borrowers’ obligations under the Santander Facility are secured by all of the assets of the Janel
              Group Borrowers, while the Santander Loan Agreement contains customary terms and covenants. As a result of its terms, the Santander Facility is classified as a current liability on the consolidated balance sheet.

At June 30, 2024, outstanding borrowings under the Santander Facility were $18,231, representing 52.1% of the $35,000 available subject to limitations thereunder, and interest was accruing at an effective interest rate of 7.69%.

At September 30, 2023, outstanding borrowings under the Santander Facility were $18,759, representing 53.6% of the $35,000 available thereunder, and interest was accruing at an effective interest rate of 7.60%.

The Company was in compliance with the financial covenants defined in the Santander Loan Agreement at both June

            30, 2024 and September 30, 2023.

(B)	First Merchants Bank Credit Facility

On February 29, 2016, Indco entered into a Credit Agreement (as amended, the “Prior First Merchants Credit Agreement”) with First Merchants.

On April 25, 2023, Indco and certain other Subsidiaries of the Company that

          are part of the Life Sciences and Manufacturing segments  \(together with Indco, the “Borrowers” and each, a “Borrower”\), entered into a Credit Agreement \(the “First Merchants Credit Agreement”\) with First Merchants.  The First Merchants
          Credit Agreement constitutes an amendment and restatement of  the Prior First Merchants Credit Agreement.  The credit facilities provided under the First Merchants Credit Agreement \(the “First Merchants Credit Facilities”\) consist of a $3,000 revolving loan \(limited to the borrowing base and reserves\), a $5,000 acquisition loan, a $6,905 Term A loan and a $620 Term B loan as a continuation of the mortgage loan under the Prior First Merchants Credit Agreement.  Interest accrues on the outstanding
          revolving loan, Term A loan and acquisition loan at an annual rate equal to one-month adjusted term SOFR plus either \(i\) 2.75% \(if
          the Borrowers’ total funded debt to EBITDA ratio is less or equal to 1.75:1.00\) or \(ii\) 3.50% \(if the Borrowers’ total funded debt to EBITDA ratio is greater than to 1.75:1.00\).  Interest accrues on the Term B loan at an annual rate of 4.19%. 

          The Borrowers’ obligations under the First Merchants Credit Facilities are secured by all of the Borrowers’ real property and other assets, and are guaranteed by the Company, and the Company’s guarantee of the Borrowers’ obligations is
          secured by a pledge of the Company’s equity interests in certain of the Borrowers.  The revolving loan portion will expire on August 1, 2027,
          the Term A loan portion will mature on April 25, 2033, and the Term B loan portion will mature on July 1, 2025. The acquisition loan will permit multiple draws until October 25, 2024, at which point the outstanding principal amount will
          amortize, with all remaining amounts of the acquisition loan due at maturity on April 25, 2029.

On January 10, 2024, the First Merchants Credit Facilities was amended to provide for, among other changes, permitted affiliate loans provided availability on its revolving loan both before and after giving effect to any such loan, is not less than $1,000 and maturity of such permitted affiliate loans are not to exceed fourteen days from disbursement.

As of June 30, 2024, there were $3,850 of outstanding borrowings under the acquisition loan, $4,725 of outstanding borrowings under the Term A loan and $591 of outstanding borrowings under the Term B loan, with interest accruing on the acquisition loan and revolving loan at an effective interest rate of 8.20% each, and on the Term A loan and Term B loan at an effective interest rate of 8.20% and 4.19%, respectively.

          As of September 30, 2023, there were $500 of outstanding borrowings under the acquisition loan, $450 of outstanding borrowings under the revolving loan, $6,235 of outstanding borrowings under the Term A loan and $610 of outstanding borrowings under
          the Term B loan, with interest accruing on the acquisition loan and revolving loan at an effective interest rate of 8.18% and
          on the Term A loan and Term B loan at an effective interest rate of 8.18% and 4.19%, respectively.

The Company was in compliance with the financial covenants defined in the First Merchants Credit Agreement at June 30, 2024 and September 30, 2023.

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The table below sets forth the total long-term debt, net of capitalized loan fees of $319 for the First Merchants Credit Agreement (in thousands):

(in thousands)	June 30,<br><br> <br>2024			September 30,<br><br> <br>2023
Total Debt	$	4,998		$	6,499
Less Current Portion		(716	)		(715	)
Long-term Portion	$	4,282		$	5,784
7.	SUBORDINATED PROMISSORY NOTES - RELATED PARTY
---	---
(A)	ICT Subordinated Promissory Note
---	---

Aves

              Labs, Inc., a wholly-owned subsidiary of the Company, is the obligor on a fixed 0.5% subordinated promissory note in the
              amount of $1,850 \(the “ICT Subordinated Promissory Note”\) issued to the former owner of ImmunoChemistry Technologies, LLC
              \(“ICT”\), in connection with a business combination whereby the Company acquired all of the membership interests of ICT. The ICT Subordinated Promissory Note is payable in sixteen scheduled quarterly installments of principal and interest
              beginning March 4, 2021, matures on December 4, 2024, and may be prepaid, in whole or in part, without premium or penalty.

The

              ICT Subordinated Promissory Note is subordinate to and junior in right of payment for principal interest premiums and other amounts payable to Santander and First Merchants.

As of June 30, 2024, the amount outstanding under the ICT Subordinated Promissory Note was $110, net of a $28 discount, which is included in the current portion of subordinated promissory notes.

As of September 30, 2023, the amount outstanding under the ICT Subordinated Promissory Note was $312, of which $288 is included in the current portion of subordinated promissory notes and $24 is included in the long-term portion of subordinated promissory notes.

(B)	ELFS Subordinated Promissory Notes

Janel Group is the obligor on four fixed 4% subordinated promissory notes totaling $6,000 in the aggregate (together, the “ELFS Subordinated Promissory Notes”), payable to certain former shareholders of

ELFS, in connection with the Company’s business combination whereby it acquired all the membership interest of ELFS and its related subsidiaries.

All of the ELFS Subordinated Promissory Notes are guaranteed by the Company and are subordinate to and junior in right of payment for principal, interest, premiums and other amounts payable to the Santander Facility and the First Merchants Credit Facility. The ELFS Subordinated Promissory Notes are payable in twelve equal consecutive quarterly installments of principal together with accrued interest. Beginning October 15, 2021 and on the same day of the next eight consecutive calendar quarters, thereafter payment of accrued interest and unpaid interest is due to the former shareholders. Beginning October 15, 2023, and on the same day of the next twelve consecutive calendar quarters thereafter payment of principal together with accrued interest and unpaid interest is due to the former shareholders. In June 2022, the principal amount of the ELFS Subordinated Promissory Notes was adjusted to $5,100 due to a revised working capital adjustment of $900.

On December 1, 2023, in connection with the Purchase Agreement Amendment among Janel Group and the ELFS Sellers, the Company extended the ELFS Subordinated Promissory Notes maturity by two years and restored the working capital adjustment (as defined in the Purchase Agreement) by $900 which increased the principal amount of the ELFS Subordinated Promissory Notes to $6,000. The Company evaluated the accounting treatment related to the amendment and determined the agreements are substantially different and extinguished the original subordinated promissory notes and recorded the amended subordinated promissory notes at fair value of $4,654. As a result, the Company recorded a debt discount of approximately $921 and a $21 gain on extinguishment.

As of June 30, 2024, the gross amount outstanding under the ELFS Subordinated Promissory Notes was $4,164, ($3,340 net of $824 unamortized discount), of which $1,174 was included in the current portion of subordinated promissory notes and $2,990 was included in the long-term portion of subordinated promissory notes.

As of September 30, 2023, the amount outstanding under the ELFS Subordinated Promissory Notes was $5,100, of which $1,700 was included in the current portion of subordinated promissory notes and $3,400 was included in the long-term portion of subordinated promissory notes.

(C)	Airschott Subordinated Promissory Note

Janel Group is the obligor on a floating rate (Prime Rate plus 2%) subordinated promissory note in the amount of $1,200 issued (the “Airschott Subordinated Promissory Note”), to a former owner of Airschott, in connection with the business combination whereby Janel Group acquired Airschott. The note is payable in twelve consecutive quarterly payments, commencing in July 2024, of $100 together with accrued interest on the outstanding principal balance.

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As of June 30, 2024, the amount outstanding under the Airschott Subordinated Promissory Note was $1,200, $400 which is included in the current portion of subordinated promissory notes.

The table below sets forth the total long-term portion of subordinated promissory notes (in thousands):

(in thousands)	June 30,<br><br> <br>2024			September 30,<br><br> <br>2023
Total subordinated promissory notes	$	5,473		$	5,412
Less current portion of subordinated promissory notes		(1,683	)		(1,988	)
Long-term portion of subordinated promissory notes	$	3,790		$	3,424
8.	STOCKHOLDERS’ EQUITY
---	---

(in thousands, except share and per share data)

Preferred Stock

Series C Cumulative Preferred Stock

Shares of the Company’s Series C Cumulative Preferred Stock (the “Series C Stock”) were initially entitled to receive annual dividends at a rate of 7% per annum of the original issuance price of $500, when and if declared by the Company’s board of directors, with such rate to increase by 2% annually beginning on the third anniversary of issuance of such Series C Stock to a maximum rate of 13%. By the filing of the Certificate of Amendment to the Company’s Certificate of Incorporation on March 31, 2022, the annual dividend rate decreased to 5% per annum of the original issuance price, when and if declared by the Company’s board of directors, and increased by 1% on January 1, 2024. Such rate is to increase on each January 1 thereafter for four years to a maximum rate of 9%. The dividend rate of the Series C Stock as of June 30, 2024 and September 30, 2023 was 6% and 5%, respectively.

9.	STOCK-BASED COMPENSATION

(in thousands, except share and per share data)

              October 30, 2013, the board of directors of the Company adopted the Company’s 2013 Non-Qualified Stock Option Plan \(the “2013 Option Plan”\) providing for options to purchase up to 100,000 shares of common stock for issuance to directors, officers, employees of and consultants to the Company and its subsidiaries.

On September 21, 2021, the board of directors of the Company adopted the Amended and Restated 2017 Janel Corporation Equity Incentive Plan (the “Amended Plan”) pursuant to which non-statutory stock options, restricted stock awards and stock appreciation rights of the Company’s Common Stock may be granted to employees, directors and consultants to the Company and its subsidiaries. The Amended Plan increased the number of shares of Common Stock that may be issued pursuant to the Amended Plan from 100,000 to 200,000 shares of Common Stock of the Company and was updated to reflect certain other non-substantive amendments.

Total stock-based compensation for the nine months ended June 30, 2024 and 2023 amounted to $214 and $185, respectively, and is included in selling, general and administrative expense in the Company’s statements of operations.

Options

			Weighted<br><br> <br>Average<br><br> <br>Exercise<br><br> <br>Price			Aggregate<br><br> <br>Intrinsic<br><br> <br>Value<br><br> <br>(in thousands)
Outstanding balance at September 30, 2023	40,993		$	22.53	6.6	$	962.27
Granted	12,500		$	28.25	9.3	$	193.50
Expired	(3,500	)	$	3.25	—	$	—
Outstanding balance at June 30, 2024	49,993		$	25.31	7.1	$	1,014.09
Exercisable at June 30, 2024	24,162		$	12.63	5.5	$	751.52

The

            aggregate intrinsic value in the above table was calculated as the difference between the closing price of the Company’s common stock at June 30, 2024 of $43.73 per share and the exercise price of the stock options that had strike prices below such closing price.

As of June 30, 2024, there was approximately $344 of total unrecognized compensation expense related to the unvested employee stock options, which is expected to be recognized over a weighted average period of two years.

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Liability classified share-based awards

During the nine months ended June 30, 2024 and fiscal year ended September 30, 2023, there were no options granted and no options were exercised with respect to Indco’s common stock.

10.	INCOME PER COMMON SHARE

The following table provides a reconciliation of the basic and diluted earnings per share (“EPS”) computations for the three and nine months ended June 30, 2024 and 2023:

	Three Months Ended<br><br> <br>June 30,						Nine Months Ended<br><br> <br>June 30,
(in thousands, except per share data)	2024			2023			2024			2023
Income:
Net income (loss)	$	(191	)	$	(430	)	$	304		$	148
Preferred stock dividends		(85	)		(70	)		(242	)		(212	)
Net income (loss) available to common stockholders	$	(276	)	$	(500	)	$	62		$	(64	)
Common Shares:
Basic - weighted average common shares		1,186.4			1,186.4			1,186.4			1,186.4
Effect of dilutive securities:
Stock options		—			—			19.5			—
Diluted - weighted average common stock		1,186.4			1,186.4			1,205.9			1,186.4
Income per Common Share:
Basic -
Net income (loss)	$	(0.16	)	$	(0.36	)	$	0.25		$	0.12
Preferred stock dividends		(0.07	)		(0.06	)		(0.20	)		(0.17	)
Net income (loss) available to common stockholders	$	(0.23	)	$	(0.42	)	$	0.05		$	(0.05	)
Diluted -
Net income (loss)	$	(0.16	)	$	(0.36	)	$	0.25		$	0.12
Preferred stock dividends		(0.07	)		(0.06	)		(0.20	)		(0.17	)
Net income (loss) available to common stockholders	$	(0.23	)	$	(0.42	)	$	0.05		$	(0.05	)

The computation for the diluted number of shares excludes unexercised stock options that are anti-dilutive. There were 10 anti-dilutive shares for each of the three- and nine-month periods ended June 30, 2023. There were 22.5 anti-dilutive shares for each of the three- and nine-month periods ended June 30, 2024.

11.	INCOME TAXES

The reconciliation of income tax computed at the Federal statutory rate to the provision for income taxes from continuing operations for the three- and nine-month periods ended June 30, 2024 and 2023 was as follows (in thousands):

	Three Months Ended<br><br> <br>June 30,					Nine Months Ended<br><br> <br>June 30,
	2024			2023		2024			2023
Federal taxes at statutory rates	$	(32	)	$	129	$	(150	)	$	(45	)
Permanent differences and other		(184	)		31		(91	)		(5	)
State and local taxes, net of Federal benefit		(127	)		20		(171	)		(18	)
Total	$	(343	)	$	180	$	(412	)	$	(68	)
12.	BUSINESS SEGMENT INFORMATION
---	---

As referenced above in Note 1, the Company operates in three reportable segments: Logistics, Life Sciences and Manufacturing.

The Company’s Chief Executive Officer regularly reviews financial information at the reporting segment level in order to make decisions about resources to be allocated to the segments and to assess their performance.

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The following tables present selected financial information about the Company’s reportable segments and Corporate for the purpose of reconciling to the consolidated totals for the three and nine months ended June 30, 2024:

For the three months ended June 30, 2024<br><br> <br>(in thousands)	Consolidated		Logistics		Life Sciences		Manufacturing		Corporate
Revenues	$	46,724	$	40,677	$	3,208	$	2,839	$	—
Forwarding expenses and cost of revenues		31,633		29,725		609		1,299		—
Gross profit		15,091		10,952		2,599		1,540		—
Selling, general and administrative		13,358		9,444		1,812		793		1,309
Amortization of intangible assets		555		—		—		—		555
Income (loss) from operations		1,178		1,508		787		747		(1,864	)
Interest expense		589		426		97		66		—
Identifiable assets		108,566		42,025		12,075		4,374		50,092
Capital expenditures, net of disposals		331		21		302		8		—
For the nine months ended June 30, 2024<br><br> <br>(in thousands)	Consolidated		Logistics		Life Sciences		Manufacturing		Corporate
---	---	---	---	---	---	---	---	---	---	---	---
Revenues	$	129,881	$	111,991	$	10,213	$	7,677	$	—
Forwarding expenses and cost of revenues		86,822		81,232		2,065		3,525		—
Gross profit		43,059		30,759		8,148		4,152		—
Selling, general and administrative		38,664		27,186		5,307		2,364		3,807
Amortization of intangible assets		1,635		—		—		—		1,635
Income (loss) from operations		2,760		3,573		2,841		1,788		(5,442	)
Interest expense		1,663		1,188		245		230		—
Identifiable assets		108,566		42,025		12,075		4,374		50,092
Capital expenditures, net of disposals		658		47		603		8		—

For the three months ended June 30, 2023<br><br> <br>(in thousands)	Consolidated		Logistics		Life Sciences		Manufacturing		Corporate
Revenues	$	42,557	$	37,484	$	2,811	$	2,262	$	—
Forwarding expenses and cost of revenues		28,898		27,241		575		1,082		—
Gross profit		13,659		10,243		2,236		1,180		—
Selling, general and administrative		12,948		9,629		1,512		717		1,090
Amortization of intangible assets		524		—		—		—		524
Income (loss) from operations		187		614		724		463		(1,614	)
Interest expense		528		347		86		95		—
Identifiable assets		99,566		38,066		11,025		4,228		46,247
Capital expenditures, net of disposals		89		89		—		—		—
For the nine months ended June 30, 2023<br><br> <br>(in thousands)	Consolidated		Logistics		Life Sciences		Manufacturing		Corporate
---	---	---	---	---	---	---	---	---	---	---	---
Revenues	$	144,979	$	129,162	$	8,717	$	7,100	$	—
Forwarding expenses and cost of revenues		102,654		97,339		1,930		3,385		—
Gross profit		42,325		31,823		6,787		3,715		—
Selling, general and administrative		38,261		27,891		4,592		2,267		3,511
Amortization of intangible assets		1,593		—		—		—		1,593
Income (loss) from operations		2,471		3,932		2,195		1,448		(5,104	)
Interest expense		1,476		1,006		165		305		—
Identifiable assets		99,566		38,066		11,025		4,228		46,247
Capital expenditures, net of disposals		267		214		51		2		—

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13.	FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following table presents the Company’s assets that are measured at fair value on a recurring basis based on the three-level valuation hierarchy (in thousands):

Assets	June 30,<br><br> 2024		September 30,<br><br> <br>2023
Level 1 Investment in Rubicon at fair value	$	831		1,573

On August 19, 2022, the Company acquired 1,108,000 shares of the common stock, par value $0.001 per share, of Rubicon Technology, Inc. (“Rubicon”), at a price per share of $20.00, in a cash tender offer. As of each of June 30, 2024 and September 30, 2023, the Company held 46.6% of the total issued and outstanding shares of Rubicon and reported its investment under the fair value method pursuant to ASC 320. Management determined that it was appropriate to carry its investment in Rubicon at fair value because the investment was traded on the NASDAQ stock exchange through January 2, 2023, began trading on the OTCQB Capital Market on January 3, 2023 and had daily trading activity, the combination of which provide a better indicator of value. The investment in Rubicon is re-measured at the end of each quarter based on the trading price and any change in the value is reported on the income statement as an unrealized gain or loss on marketable securities in other income (expense).

On October 4, 2023, Rubicon announced that it had authorized a cash dividend of $1.10 per share of common stock of Rubicon and set October 16, 2023 as the record date for the distribution. On October 23, 2023, the Company received $1,219 in dividends and recorded a fair value adjustment to its investment in Rubicon of $709, which is included in other income and expense.

The following table sets forth a summary of the changes in the fair value of the Company’s investment in Rubicon, which is measured at fair value on a recurring basis utilizing Level 1 assumptions in its valuation (in thousands):

	June 30,<br><br> <br>2024			September 30,<br><br> <br>2023
Balance beginning of period	$	1,573		$	2,371
Fair value adjustment to Rubicon investment		(742	)		(798	)
Balance end of period	$	831		$	1,573

The following table presents the Company’s liabilities that are measured at fair value on a recurring basis based on the three-level valuation hierarchy (in thousands):

Contingent earnout liabilities	June 30,<br><br> <br>2024		September 30,<br><br> <br>2023
Level 1 Contingent earnout liabilities	$	2,070	$	—
Level 3 Contingent earnout liabilities		1,090		2,330
Total	$	3,160	$	2,330

These liabilities relate to the estimated fair value of earnout payments to former IBS, ViraQuest, ELFS, and Airschott owners for the periods ending June 30, 2024 and September 30, 2023.

On December 1, 2023, in connection with the Purchase Agreement Amendment among Janel Group and the ELFS Sellers described above, the parties agreed to certain modifications fixing the amount of the remaining earnout payments to ELFS in earnout years three and four to $1,078 each year. As a result, the measurement of the earnout liability became a Level 1 fair value measurement based on the present value of the negotiated payments.

On June 5, 2024, the Company completed a business combination whereby it acquired a majority ownership position in Airschott, a non-asset-based freight forwarder and customs broker. As part of the business combination, the Company agreed to purchase the remaining 20% of Airschott stock in three years for deferred consideration of the greater of 20% of 1.25 times the trailing twelve months gross profit of Airschott and $1,200.

The current and non-current portions of the fair value of the contingent earnout liabilities at June 30, 2024 were $1,149 and $2,011, respectively. The current and non-current portions of the fair value of the contingent earnout liabilities at September 30, 2023 were $592 and $1,738, respectively.

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The following table sets forth a summary of the changes in the fair value of the Company’s contingent earnout liabilities, which are measured at fair value on a recurring basis utilizing Level 1 and Level 3 assumptions in their valuation (in thousands):

	June 30,<br><br> <br>2024			September 30,<br><br> <br>2023
Balance beginning of period	$	2,330		$	4,580
Fair value of contingent consideration recorded in connection with business combinations		1,017			300
Earnout payment		(740	)		(1,693	)
Adjustments to earnout		435			—
Fair value adjustment of contingent earnout liabilities		118			(857	)
Balance end of period	$	3,160		$	2,330

The Company determined the fair value of the Level 3 contingent earnout liability using forecasted results through the expected earnout periods. The principal inputs to the approach include expectations of the specific business’s revenues in fiscal years 2024 through 2025 using an appropriate discount rate. Given the use of significant inputs that are not observable in the market, the contingent earnout liability is classified within Level 3 of the fair value hierarchy.

14.	LEASES

The Company has operating leases for office and warehouse space in certain locations where it conducts business. As of June 30, 2024, the remaining terms of the Company’s operating leases were between one and 116 months, and certain lease agreements contain provisions for future rent increases. Payments due under the lease contracts include the minimum lease payments that the Company is obligated to make under the non-cancelable initial terms of the leases as the renewal terms are at the Company’s option and the Company is not reasonably certain to exercise those renewal options at lease commencement.

The components of lease cost for the three- and nine-month periods ended June 30, 2024 and 2023 were as follows (in thousands):

	Three Months Ended<br><br> <br>June 30,				Nine Months Ended<br><br> <br>June 30,
	2024		2023		2024		2023
Operating lease cost	$	644	$	523	$	1,857	$	1,540
Short-term lease cost		38		150		125		283
Total lease cost	$	682	$	673	$	1,982	$	1,823

Rent expense for the nine months ended June 30, 2024 and 2023 was $1,982 and $1,823, respectively.

Operating lease right of use assets, current portion of operating lease liabilities and long-term operating lease liabilities reported in the condensed consolidated balance sheets for operating leases as of June 30, 2024 were $9,113, $2,445 and $7,034, respectively.

Operating lease right of use assets, current portion of operating lease liabilities and long-term operating lease liabilities reported in the condensed consolidated balance sheets for operating leases as of September 30, 2023 were $7,460, $2,020 and $5,689, respectively.

As of June 30, 2024 and September 30, 2023, the weighted-average remaining lease term and the weighted-average discount rate related to the Company’s operating leases were 5.7 years and 4.46% and 5.9 years and 4.01%, respectively.

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Future minimum lease payments under non-cancelable operating leases as of June 30, 2024 were as follows (in thousands):

2025	$	2,906
2026		2,543
2027		1,812
2028		1,540
2029		769
Thereafter		1,656
Total undiscounted lease payments		11,226
Less imputed interest		(1,747	)
Total lease obligations	$	9,479

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ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes thereto as of and for the three and nine months ended June 30, 2024, which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Amounts presented in this section are in thousands, except share and per share data.

As used throughout this Report, “we,” “us”, “our,” “Janel,” “the Company,” “Registrant” and similar words refer to Janel Corporation and its subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Report”) contains certain statements that are, or may deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and that reflect management’s current expectations with respect to our operations, performance, financial condition, and other developments. These forward – looking statements may generally be identified using the words “may,” “will,” “intends,” “plans,” projects,” “believes,” “should,” “expects,” “predicts,” “anticipates,” “estimates,” and similar expressions or the negative of these terms or other comparable terminology. These statements are necessarily estimates reflecting management’s best judgment based upon current information and involve several risks, uncertainties and assumptions. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and readers are advised that various factors, including, but not limited to, those set forth elsewhere in this Report, could affect our financial performance and could cause our actual results for future periods to differ materially from those anticipated or projected. While it is impossible to identify all such factors, such factors include, but are not limited to, our strategy of expanding our business through acquisitions of other businesses; we may be required to record a significant charge to earnings related to the impairment of acquired assets; we may fail to realize the expected benefits or strategic objectives of any acquisition, or that we spend resources exploring acquisitions that are not consummated; risks associated with litigation, including contingent auto liability and insurance coverage, and indemnification claims and other unforeseen claims and liabilities that may arise from an acquisition; changes in tax rates, laws or regulations and our acquired companies and subsidiaries’ ability to utilize anticipated tax benefits; the impact of inflation and rising interest rates on our investments, business and operations; conflicts of interest with the minority shareholders of our business; economic and other conditions in the markets in which we operate; we may not have sufficient working capital to continue operations; we may lose customers who are not obligated to long-term contracts to transact with us; instability in the financial markets; changes or developments in U.S. laws or policies; competition from companies with greater financial resources and from companies that operate in areas in which we plan to expand; our dependence on technically skilled employees; impacts from climate change, including the increased focus by third-parties on sustainability issues and our ability to comply therewith; the impact of increases in shipping costs, long lead times, supply shortages and supply changes; competition from parties who sell their businesses to us and from professionals who cease working for us; terrorist attacks and other acts of violence or war; security breaches or cybersecurity attacks; the level of our insurance coverage, including related to product and other liability risks; our compliance with applicable privacy, security and data laws; risks related to the diverse platforms and geographies which host our management information and financial reporting systems; our dependence on the availability of cargo space from third parties; the impact of claims arising from transportation of freight by the carriers with which we contract, including an increase in premium costs; risks related to the classification of owner-operators in the transportation industry; recessions and other economic developments that reduce freight volumes; other events affecting the volume of international trade and international operations; risks arising from our ability to comply with governmental permit and licensing requirements or statutory and regulatory requirements; the impact of seasonal trends and other factors beyond our control on our Logistics business; changes in governmental regulations applicable to our Life Sciences business; the ability of our Life Sciences business to continually produce products that meet high-quality standards such as purity, reproducibility and/or absence of cross-reactivity; the ability of our Life Sciences business to maintain, determine the scope of and defend its and its competitors’ intellectual property rights; the impact of pressures in the life sciences industry to increase the predictability of or reduce healthcare costs; any decrease in the availability, or increase in the cost or supply shortages, of raw materials used by Indco; risks arising from the environmental, health and safety regulations applicable to Indco; the reliance of our Indco business on a single location to manufacture their products; the controlling influence exerted by our officers and directors and one of our stockholders; the unlikelihood that we will issue dividends in the foreseeable future; and risks related to ownership of our common stock, including share price volatility, the lack of a guaranteed continued public trading market for our common stock, our ability to issue shares of preferred stock with greater rights than our common stock and costs related to maintaining our status as a public company; and such other factors that may be identified from time to time in our Securities and Exchange Commission (“SEC”) filings. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those projected. You should not place undue reliance on any of our forward-looking statements which speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a more detailed discussion of these factors, see our periodic reports filed with the SEC, including our most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

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OVERVIEW

Janel Corporation ("Janel," the "Company," or the "Registrant") is a holding company with subsidiaries in three business segments: Logistics, Life Sciences and Manufacturing. The Company strives to create shareholder value primarily through three strategic priorities: supporting its businesses’ efforts to make investments and to build long-term profits; allocating Janel's capital at high risk-adjusted rates of return; and attracting and retaining exceptional talent.

Management at the Janel holding company focuses on significant capital allocation decisions, corporate governance and supporting Janel’s subsidiaries where appropriate. Janel expects to grow through its subsidiaries’ organic growth and by completing acquisitions. We plan to either acquire businesses within our existing segments or expand our portfolio into new strategic segments. Our acquisition strategy focuses on reasonably priced companies with strong and capable management teams, attractive existing business economics and stable and predictable earnings power.

Logistics

The Company’s Logistics segment is comprised of several wholly-owned subsidiaries. The Logistics segment is a non-asset based, full-service provider of cargo transportation logistics management services, including freight forwarding via air, ocean and land-based carriers; customs brokerage services; warehousing and distribution services; trucking and other value-added logistics services. In addition to these revenue streams, the Company earns accessorial revenues in connection with its core services. Accessorial revenues include, but are not limited to, fuel service charges, wait time fees, hazardous cargo fees, labor charges, handling, cartage, bonding and additional labor charges.

On June 5, 2024, the Company completed a business combination whereby it acquired a majority ownership position in Airschott, a non-asset-based freight forwarder and customs broker. At closing, the Company purchased 80% of the outstanding stock of Airschott. The Company also agreed to purchase the remaining 20% of Airschott stock in three years.

Life Sciences

The Company’s Life Sciences segment is comprised of several wholly-owned subsidiaries. The Company’s Life Sciences segment manufactures and distributes antibodies, research and diagnostic reagents, and provides custom services, for academic, non-profit and commercial customers.

On November 1, 2022, the Company completed a business combination whereby it acquired all of the outstanding stock of ImmunoBioScience Corporation, which we include in our Life Sciences segment.

On March 2, 2023, the Company completed a business combination whereby it acquired all of the outstanding stock of Stephen Hall, PhD Ltd., which we include in our Life Sciences segment.

On May 22, 2023, the Company acquired all the rights, title and interests to a royalty agreement for certain antibody products, which we include in our Life Sciences segment.

On February 1, 2024, the Company completed a business combination whereby it acquired all of the outstanding stock of ViraQuest Inc., which we include in our Life Sciences segment.

Manufacturing

The Company’s Manufacturing segment is comprised of Indco, Inc. (“Indco”). Indco is a majority-owned subsidiary of the Company that manufactures and distributes mixing equipment and apparatus for specific applications within various industries. Indco’s customer base is comprised of small- to mid-sized businesses as well as other larger customers for which Indco fulfills repetitive production orders.

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Investment in Marketable Securities - Rubicon

On August 19, 2022, the Company acquired 1,108,000 shares of the common stock, par value $0.001 per share, of Rubicon Technology, Inc. (“Rubicon”), at a price per share of $20.00, in a cash tender offer made pursuant to the Stock Purchase and Sale Agreement, dated July 1, 2022, between the Company and Rubicon (the “Rubicon Purchase Agreement”). Pursuant to the terms of the Rubicon Purchase Agreement, the acquired shares represented 45.0% of Rubicon’s issued and outstanding shares of common stock as of August 3, 2022, as reported in Rubicon’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022, filed with the SEC on August 12, 2022. The Company owned approximately 46.6% of Rubicon’s total issued and outstanding shares of common stock as of June 30, 2024 and September 30, 2023.

Rubicon is an advanced materials provider specializing in monocrystalline sapphire for applications in optical and industrial systems. The purpose of our investment in Rubicon is for Janel to acquire a significant ownership interest in Rubicon, together with representation on Rubicon’s board, in an attempt to (i) restructure the Rubicon business to achieve profitability and (ii) assist Rubicon in utilizing its net operating loss carry-forward assets. Although we are optimistic about our investment in Rubicon, our investment involves risks and uncertainties that are beyond our control.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States. These generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses during the reporting period.

Our senior management has reviewed the critical accounting policies and estimates with the Audit Committee of our board of directors. For a description of the Company’s critical accounting policies and estimates, refer to “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our Annual Report on Form 10-K filed with the SEC on December 8, 2023. Critical accounting policies are those that are most important to the portrayal of our financial condition, results of operations and cash flows and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. If actual results were to differ significantly from estimates made, the reported results could be materially affected. There were no significant changes to our critical accounting policies during the nine months ended June 30, 2024.

NON-GAAP FINANCIAL MEASURES

While we prepare our financial statements in accordance with U.S. GAAP, we also utilize and present certain financial measures, in particular adjusted operating income, which is not based on or included in U.S. GAAP (we refer to these as “non-GAAP financial measures”).

Organic Growth

Our non-GAAP financial measure of organic growth represents revenue growth excluding revenues from acquisitions within the preceding 12 months. The organic growth presentation provides useful period-to-period comparison of revenue results as it excludes revenues from acquisitions that would not be included in the comparable prior period.

Adjusted Operating Income

As a result of our acquisition strategy, our net income includes material non-cash charges relating to the amortization of customer-related intangible assets in the ordinary course of business as well as other intangible assets acquired in our acquisitions. Although these charges may increase as we complete more acquisitions, we believe we will be growing the value of our intangible assets such as customer relationships. Because these charges are not indicative of our operations, we believe that adjusted operating income is a useful financial measure for investors because it eliminates the effect of these non-cash costs and provides an important metric for our business that is more representative of the actual results of our operations.

Adjusted operating income (which excludes the non-cash impact of amortization of intangible assets, stock-based compensation and cost recognized on the sale of acquired inventory valuation) is used by management as a supplemental performance measure to assess our business’s ability to generate cash and economic returns.

Adjusted operating income is a non-GAAP measure of income and does not include the effects of preferred stock dividends, interest and taxes.

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We believe that organic growth and adjusted operating income provide useful information in understanding and evaluating our operating results in the same manner as management. However, organic growth and adjusted operating income are not financial measures calculated in accordance with U.S. GAAP and should not be considered as a substitute for total revenues, operating income or any other operating performance measures calculated in accordance with U.S. GAAP. Using these non-GAAP financial measures to analyze our business has material limitations because the calculations are based on the subjective determination of management regarding the nature and classification of events and circumstances that users of the financial statements may find significant.

In addition, although other companies may report measures titled organic growth, adjusted operating income or similar measures, such non-GAAP financial measures may be calculated differently from how we calculate our non-GAAP financial measures, which reduces their overall usefulness as comparative measures. Because of these limitations, you should consider organic growth and adjusted operating income alongside other financial performance measures, including total revenues, operating income and our other financial results presented in accordance with U.S. GAAP.

Results of Operations – Janel Corporation - Three and Nine Months Ended June 30, 2024 and 2023

Our results of operations and period-over-period changes are discussed in the following section. The tables and discussion should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and the notes thereto.

Our consolidated results of operations are as follows:

	Three Months Ended<br><br> <br>June 30,						Nine Months Ended<br><br> <br>June 30,
(in thousands)	2024			2023			2024		2023
Revenues	$	46,724		$	42,557		$	129,881	$	144,979
Forwarding expenses and cost of revenues		31,633			28,898			86,822		102,654
Gross profit		15,091			13,659			43,059		42,325
Total costs and expenses		13,913			13,472			40,299		39,854
Income from operations		1,178			187			2,760		2,471
Net income (loss)		(191	)		(430	)		304		148
Adjusted operating income	$	1,897		$	876		$	4,873	$	4,569

Consolidated revenues for the three months ended June 30, 2024 were $46,724, which was $4,167 or 9.8% higher than the prior year period. Consolidated revenues for the nine months ended June 30, 2024 were $129,881, which was $15,098 or 10.4% lower than the prior year period. Revenues increased for the three months ended June 30, 2024 primarily due to a recent increase in freight rates and increased project business in the quarter. Revenues decreased for the nine months ended June 30, 2024 primarily due to a reduction in transportation rates over prior year as lower freight demand aligned more closely with global transportation capacity.

Income from operations for the three months ended June 30, 2024 was $1,178 compared with $187 in the prior year period. Income from operations for the nine months ended June 30, 2024 was $2,760 compared with $2,471 in the prior year period. The increase for both the three and nine months ended June 30, 2024 resulted from greater revenues in the applicable recently completed period from product demand at Manufacturing as well as product mix improvements at Life Sciences.

Net loss for the three months ended June 30, 2024 totaled $191 or ($0.16) per diluted share, compared to net loss of $430 or ($0.36) per diluted share for the three months ended June 30, 2023. Net income for the nine months ended June 30, 2024 totaled $304 or $0.25 per diluted share, compared to net income of $148 or $0.12 per diluted share for the nine months ended June 30, 2023. The change in net income (loss) for the three and nine months ended June 30, 2024 was largely due to greater revenues in the applicable recently completed period from product demand at Manufacturing, and product mix improvements at Life Sciences, which was partially offset by a fair value adjustment to the mandatorily redeemable non-controlling interest.

Adjusted operating income for the three months ended June 30, 2024 increased to $1,897 versus $876 in the prior year period. Adjusted operating income for the nine months ended June 30, 2024 increased to $4,873 versus $4,569 in the prior year period. The increase for the three months ended June 30, 2024 was primarily the result of higher revenues and profits across all segments. The increase for the nine months ended June 30, 2024 related to higher revenues and profits in the Life Sciences and Manufacturing segments.

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The following table sets forth a reconciliation of operating income to adjusted operating income:

	Three Months Ended<br><br> <br>June 30,				Nine Months Ended<br><br> <br>June 30,
(in thousands)	2024		2023		2024		2023
Income from operations	$	1,178	$	187	$	2,760	$	2,471
Amortization of intangible assets		555		524		1,635		1,593
Stock-based compensation		71		62		214		185
Cost recognized on sale of acquired inventory		93		103		264		320
Adjusted operating income	$	1,897	$	876	$	4,873	$	4,569

Results of Operations – Logistics – Three and Nine Months Ended June 30, 2024 and 2023

Our Logistics business helps its clients move and manage freight efficiently to reduce inventories and to increase supply chain speed and reliability. Key services include arrangement of freight forwarding by air, ocean and ground, customs entry filing, warehousing, cargo insurance procurement, logistics planning, product repackaging and online shipment tracking.

	Three Months Ended<br><br> <br>June 30,						Nine Months Ended<br><br> <br>June 30,
	2024			2023			2024			2023
(in thousands)
Revenues	$	40,677		$	37,484		$	111,991		$	129,162
Forwarding expenses		29,725			27,241			81,232			97,339
Gross profit		10,952			10,243			30,759			31,823
Gross profit margin		26.9	%		27.3	%		27.5	%		24.6	%
Selling, general and administrative expenses		9,444			9,629			27,186			27,891
Income from operations	$	1,508		$	614		$	3,573		$	3,932

Revenues

Total revenues for the three months ended June 30, 2024 was $40,677 as compared to $37,484 for the three months ended June 30, 2023, an increase of $3,193, or 8.5%. Total revenues for the nine months ended June 30, 2024 was $111,991 as compared to $129,162 for the nine months ended June 30, 2023, a decrease of $17,171 or 13.3%. Revenues increased for the three months ended June 30, 2024 primarily due to a recent increase in freight rates and increased project business during the quarter. Revenues decreased for the nine months ended June 30, 2024 primarily due to a reduction in transportation rates over the prior year period as lower freight demand aligned more closely with global transportation capacity. Organic growth for the three months ended June 30, 2024 was similar to the overall growth in the prior year period as the acquisition of Airschott on June 5, 2024 did not contribute a material amount to the quarter.

Gross Profit

Gross profit for the three months ended June 30, 2024 was $10,952, an increase of $709, or 6.9%, as compared to $10,243 for the three months ended June 30, 2023. Gross profit margin as a percentage of revenues decreased to 26.9% for the three months ended June 30, 2024, compared to 27.3% for the prior year period, primarily due to the impact of increased rate prices on forwarding expenses.

Gross profit for the nine months ended June 30, 2024 was $30,759, a decrease of $1,064, or 3.3%, as compared to $31,823 for the nine months ended June 30, 2023. Gross profit margin as a percentage of revenue increased to 27.5% compared to 24.6% for the prior year period, primarily due to the impact of lower freight prices on forwarding expenses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended June 30, 2024 were $9,444, as compared to $9,629 for the three months ended June 30, 2023. This decrease of $185, or 1.9%, was mainly due to decreases across several selling, general and administrative categories, largely offset by an increase in bad debt expense. Selling, general and administrative expenses as a percentage of revenue were 23.2% and 25.7% for the three months ended June 30, 2024 and 2023, respectively. The decrease in selling, general and administrative expenses as a percentage of revenue was due to the reduction in costs combined with the increase in revenues.

Selling, general and administrative expenses for the nine months ended June 30, 2024 were $27,186, as compared to $27,891 for the nine months ended June 30, 2023. This decrease of $705, or 2.5%, was mainly due to a reduction in various costs including insurance claims and premiums. Selling, general and administrative expenses as a percentage of revenues were 24.3% and 21.6% of revenues for the nine months ended June 30, 2024 and 2023, respectively. The increase in selling, general and administrative expenses as a percentage of revenues for the nine-month period was due to the decrease in revenues for the period.

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Income from Operations

Income from operations increased to $1,508 for the three months ended June 30, 2024, as compared to income from operations of $614 for the three months ended June 30, 2023, an increase of $894, or 145.6%. Operating margin as a percentage of gross profit for the three months ended June 30, 2024 was 13.8% compared to 6.0% in the prior year period. These increases were the result of an increase in revenues and a decrease in selling, general and administrative expenses.

Income from operations decreased to $3,573 for the nine months ended June 30, 2024, as compared to $3,932 for the nine months ended June 30, 2023, a decrease of $359, or 9.1%. Operating margin as a percentage of gross profit for the nine months ended June 30, 2024 was 11.6% compared to 12.4% in the prior year. These decreases were a result of lower transportation demands.

Results of Operations – Life Sciences – Three and Nine Months Ended June 30, 2024 and 2023

The Company’s Life Sciences segment manufactures and distributes antibodies, research and diagnostic reagents, and provides custom services, for academic, non-profit and commercial customers.

	Three Months Ended<br><br> <br>June 30,						Nine Months Ended<br><br> <br>June 30,
	2024			2023			2024			2023
(in thousands)
Revenues	$	3,208		$	2,811		$	10,213		$	8,717
Cost of sales		521			472			1,801			1,610
Cost recognized upon sale of acquired inventory		88			103			264			320
Gross profit		2,599			2,236			8,148			6,787
Gross profit margin		81.0	%		79.5	%		79.8	%		77.9	%
Selling, general and administrative expenses		1,812			1,512			5,307			4,592
Income from operations	$	787		$	724		$	2,841		$	2,195

Revenues

Total revenues were $3,208 and $2,811 for the three months ended June 30, 2024 and 2023, respectively, reflecting an increase of $397, or 14.1%, compared to the prior year period, primarily due to increased sales of research and diagnostic reagents to commercial customers. Organic growth excluding acquisition revenue increased $324, or 11.5%.

Total revenues were $10,213 and $8,717 for the nine months ended June 30, 2024 and 2023, respectively, reflecting an increase of $1,496, or 17.2%, compared to the prior year period, primarily due to increased sales of research and diagnostic reagents to commercial customers. Organic growth excluding acquisition revenue increased $1,209, or 13.9%.

Gross Profit

Gross profit was $2,599 and $2,236 for the three months ended June 30, 2024 and 2023, respectively, an increase of $363, or 16.2%. During the three months ended June 30, 2024 and 2023, gross profit margin was 81.0% and 79.5%, respectively, with higher margins primarily due to product mix improvement.

Gross profit was $8,148 and $6,787 for the nine months ended June 30, 2024 and 2023, respectively, an increase of $1,361 or 20.1%. In the nine months ended June 30, 2024 and 2023, gross profit margin was 79.8% and 77.9%, respectively. Gross profit margin increased primarily due to product mix improvement.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the Life Sciences segment were $1,812 and $1,512 for the three months ended June 30, 2024 and 2023, respectively. Selling, general and administrative expenses were $5,307 and $4,592 for the nine months ended June 30, 2024 and 2023, respectively. The year-over-year increases for both periods were largely due to additional expenses from acquired businesses and increased expenses supporting organic growth.

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Income from Operations

Income from operations for the three months ended June 30, 2024 and 2023 was $787 and $724, respectively, an increase of $63, or 8.7%. Income from operations for the nine months ended June 30, 2024 and 2023 was $2,841 and $2,195, respectively, an increase of $646, or 29.4%. Both the three-month and nine-month periods were impacted by higher sales of research and diagnostic reagents and product mix improvements.

Results of Operations - Manufacturing – Three and Nine Months Ended June 30, 2024 and 2023

The Company’s Manufacturing segment reflects its majority-owned Indco subsidiary, which manufactures and distributes industrial mixing equipment.

	Three Months Ended<br><br> <br>June 30,						Nine Months Ended<br><br> <br>June 30,
	2024			2023			2024			2023
(in thousands)
Revenues	$	2,839		$	2,262		$	7,677		$	7,100
Cost of sales		1,299			1,082			3,525			3,385
Gross profit		1,540			1,180			4,152			3,715
Gross profit margin		54.2	%		52.2	%		54.1	%		52.3	%
Selling, general and administrative expenses		793			717			2,364			2,267
Income from operations	$	747		$	463		$	1,788		$	1,448

Revenues

Total revenues were $2,839 and $2,262 for the three months ended June 30, 2024 and 2023, respectively, an increase of $577, or 25.5%. Total revenues were $7,677 and $7,100 for the nine months ended June 30, 2024 and 2023, respectively, an increase of $577, or 8.1%. The increase in revenues for the three and nine months ended June 30, 2024 reflected an increase in certain sales categories within the business.

Gross Profit

Gross profit was $1,540 and $1,180 for the three months ended June 30, 2024 and 2023, respectively, an increase of $360, or 30.5%. Gross profit margin for the three months ended June 30, 2024 and 2023 was 54.2% and 52.2%, respectively. Gross profit was $4,152 and $3,715 for the nine months ended June 30, 2024 and 2023, respectively, an increase of $437, or 11.8%. Gross profit margin for the nine months ended June 30, 2024 and 2023 was 54.1% and 52.3%, respectively. The year-over-year increase in gross profit margin in both periods was generally due to the increase in both sales volume and sales mix of business.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $793 and $717 for the three months ended June 30, 2024 and 2023, respectively, an increase of $76, or 10.6%. Selling, general and administrative expenses were $2,364 and $2,267 for the nine months ended June 30, 2024 and 2023, respectively, an increase of $97, or 4.3%. The modest increase in expenses in both periods was reflective of the overall increase in sales volume, the mix of sales and general economic cost increases.

Income from Operations

Income from operations was $747 for the three months ended June 30, 2024 compared to $463 for the three months ended June 30, 2023, representing a 61.3%

increase from the prior year period due to increases in sales of certain product categories versus the prior year period combined with effective
  selling, general and administrative cost management. Income from operations was $1,788 for the nine months ended June 30, 2024 compared to $1,448 for the nine months ended June 30, 2023, representing a 23.5% increase from the prior year period as a result of increased revenues and effective selling, general and administrative cost management.

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Results of Operations – Corporate and Other – Three and Nine Months Ended June 30, 2024 and 2023

Below is a reconciliation of income from operating segments to net income available to common stockholders.

	Three Months Ended<br><br> <br>June 30,						Nine Months Ended<br><br> <br>June 30,
(in thousands)	2024			2023			2024			2023
Total income from operations by segment	$	3,042		$	1,801		$	8,202		$	7,575
Corporate expenses		(1,238	)		(1,028	)		(3,593	)		(3,326	)
Amortization of intangible assets		(555	)		(524	)		(1,635	)		(1,593	)
Stock-based compensation		(71	)		(62	)		(214	)		(185	)
Total corporate expenses		(1,864	)		(1,614	)		(5,442	)		(5,104	)
Interest expense		(589	)		(528	)		(1,663	)		(1,476	)
Fair value adjustments to Rubicon investment (net of dividends)		(95	)		(269	)		481			(779	)
Fair value adjustments of contingent earnout liabilities		(88	)		—			(483	)		—
Gain on extinguishment		—			—			21			—
Change in fair value of mandatorily redeemable non-controlling interest		(254	)		—			(400	)		—
Net income (loss) before taxes		152			(610	)		716			216
Income tax benefit (expense)		(343	)		180			(412	)		(68	)
Net income (loss)		(191	)		(430	)		304			148
Preferred stock dividends		(85	)		(70	)		(242	)		(212	)
Net income (loss) Available to Common Stockholders	$	(276	)	$	(500	)	$	62		$	(64	)

Total Corporate Expenses

Total Corporate expenses, which include amortization of intangible assets, stock-based compensation and merger and acquisition expenses, increased by $210, or 20.4%, to $1,238 in the three months ended June 30, 2024 as compared to $1,028 for the three months ended June 30, 2023. Total Corporate expenses increased by $267, or 8.0%, to $3,593 for the nine months ended June 30, 2024 as compared to $3,326 for the nine months ended June 30, 2023. The increase in both periods was due primarily to higher stock-based compensation related to more issuances of stock options, higher legal-related professional expense, and increased merger and acquisition expenses. We incur merger and acquisition deal-related expenses and intangible amortization at the Corporate level rather than at the segment level.

Interest Expense

Interest expense for the consolidated company increased $61, or 11.6%, to $589 for the three months ended June 30, 2024 from $528 for the three months ended June 30, 2023. Interest expense for the consolidated company increased by $187, or 12.7%, to $1,663 for the nine months ended June 30, 2024 from $1,476 for the nine months ended June 30, 2023. The increase in both periods was primarily due to higher interest rates partially offset by lower average debt balances.

Income Tax Expense

On a consolidated basis, the Company recorded an income tax expense of $343 for the three months ended June 30, 2024, as compared to an income tax benefit of $181 for the three months ended June 30, 2023. On a consolidated basis, the Company recorded an income tax expense of $412 for the nine months ended June 30, 2024, as compared to an income tax expense of $68 for the nine months ended June 30, 2023.

Preferred Stock Dividends

Preferred stock dividends include any dividends accrued but not paid on the Company’s Series C Cumulative Preferred Stock (the “Series C Preferred Stock”). For the three months ended June 30, 2024 and 2023, preferred stock dividends were $85 and $70, respectively, representing an increase of $15, or 21.4%. For the nine months ended June 30, 2024 and 2023, preferred stock dividends were $242 and $212, respectively, representing an increase of $30, or 14.2%. The increase in preferred stock dividends in both periods was the result of the increase in the dividend rate of the Series C Stock by 1% on January 1, 2024. Such rate is set to increase on each January 1 thereafter for four years to a maximum rate of 9%. The dividend rate of the Series C Stock as of each of June 30, 2024 and September 30, 2023 was 6% and 5%, respectively.

Net Income (Loss)

Net loss was $191, or ($0.16) per diluted share, for the three months ended June 30, 2024 compared to net loss of $430 or ($0.36) per diluted share, for the three months ended June 30, 2023. The change in net loss for the three months ended June 30, 2024 was largely due to stronger revenues and profits across all segments.

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Net income was $304, or 0.25 per diluted share, for the nine months ended June 30, 2024 compared to net income of $148, or $0.12 per diluted share, for the nine months ended June 30, 2023. The increase in net income for the nine months ended June 30, 2024 was largely due to stronger revenues and profits in the Life Sciences and Manufacturing segments.

Net Income (Loss) Available to Common Stockholders

Net loss available to holders of Common Stock was $276, or ($0.23) per diluted share, for the three months ended June 30, 2024 compared to net loss available to holders of Common Stock of $500, or ($0.42) per diluted share, for the three months ended June 30, 2023. Net income available to holders of Common Stock was $62, or $0.05 per diluted share, for the nine months ended June 30, 2024 compared to net loss available to holders of Common Stock of $64, or ($0.05) per diluted share, for the nine months ended June 30, 2023. The decrease in net loss available to common stockholders for the three months ended June 30, 2024 was the result of an increase in income across all segments. The increase in net income available to common stockholders for the nine months ended June 30, 2024 was also the result of an increase in income across all segments.

LIQUIDITY AND CAPITAL RESOURCES

General

Our ability to satisfy liquidity requirements—including meeting debt obligations and funding working capital, day-to-day operating expenses, and capital expenditures—depends upon future performance, which is subject to general economic conditions, competition and other factors, some of which are beyond our control. Our Logistics segment depends on commercial credit facilities to fund day-to-day operations as there is a difference between the timing of collection cycles and the timing of payments to vendors.

As a customs broker, our Logistics segment makes significant cash advances for a select group of our credit-worthy customers. These cash advances are for customer obligations such as the payment of duties and taxes to customs authorities primarily in the United States. Increases in duty rates could result in increases in the amounts we advance on behalf of our customers. Cash advances are a “pass through” and are not recorded as a component of revenues and expenses. The billings of such advances to customers are accounted for as a direct increase in accounts receivable from the customer and a corresponding increase in accounts payable to governmental customs authorities. These “pass through” billings can influence our traditional credit collection metrics.

For customers that meet certain criteria, we have agreed to extend payment terms beyond our customary terms. Management believes that it has established effective credit control procedures and has historically experienced relatively insignificant collection problems. Our subsidiaries depend on commercial credit facilities to fund day-to-day operations as there is a difference between the timing of collection cycles and the timing of payments to vendors. Generally, we do not make significant capital expenditures.

Our cash flow performance for the 2024 fiscal year may not necessarily be indicative of future cash flow performance.

Cash flows from operating activities

Net cash provided by operating activities was $6,354 for the nine months ended June 30, 2024, versus $11,056 provided by operating activities for the nine months ended June 30, 2023. The decrease in cash provided by operations for the nine months ended June 30, 2024 compared to the prior year period was driven principally by a lower net working capital benefit at our Logistics segment.

Cash flows from investing activities

Net cash used in investing activities totaled $5,193 for the nine months ended June 30, 2024, versus $6,361 for the nine months ended June 30, 2023. We used $3,795 for the acquisition of two businesses, $740 in earnout payments to the former owners of ELFS and IBS, and $658 for the acquisition of property and equipment for the nine months ended June 30, 2024, compared to $4,401 for the acquisition of two businesses, $1,693 in earnout payment to the former owners of ELFS, and $267 for the acquisition of property and equipment for the nine months ended June 30, 2023.

Cash flows from financing activities

Net cash provided by financing activities was $318 for the nine months ended June 30, 2024, versus net cash used in financing activities of $8,513 for the nine months ended June 30, 2023. Net cash provided in financing activities for the nine months ended June 30, 2024 included repayment of funds from our lines of credit, repayment of funds from our term loan and repayment of subordinated promissory notes. Net cash provided financing activities for the nine months ended June 30, 2023 primarily included repayment of funds from our lines of credit and repayment of term loans.

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Off-Balance Sheet Arrangements

As of June 30, 2024, we had no off-balance sheet arrangements or obligations.

ITEM 4.	CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the specified time periods, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of June 30, 2024, the end of the period covered by this Quarterly Report on Form 10-Q. Consistent with guidance issued by the SEC that an assessment of internal controls over financial reporting of a recently acquired business may be omitted from management’s evaluation of disclosure controls and procedures, management is excluding an assessment of such internal controls of ViraQuest and Airschott from its evaluation of the effectiveness of the Company’s disclosure controls and procedures. ViraQuest, which the Company acquired on February 1, 2024, constituted approximately 1 percent of the Company’s total assets and 4 percent of income before income taxes of the Company as of and for the quarter ended March 31, 2024. Airschott, which the Company acquired on June 5, 2024, constituted approximately 2 percent of the Logistics segment's total assets and a 4 percent of income before income taxes of the Logistics segment as of and for the quarter ended June 30, 2024. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of the end of such period, the Company’s disclosure controls and procedures were effective.

As referenced above, the Company acquired ViraQuest on February 1, 2024 and Airschott on June 5, 2024. The Company is in the process of reviewing the internal control structure of ViraQuest and Airschott and, if necessary, will make appropriate changes as it integrates ViraQuest and Airschott into the Company’s overall internal control over financial reporting process. Other than as described above, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS

Janel is occasionally subject to claims and lawsuits which typically arise in the normal course of business. While the outcome of these claims cannot be predicted with certainty, management does not believe that the outcome of any of these legal matters will have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows.

ITEM 1A.	RISK FACTORS

For a discussion of the Company’s potential risks or uncertainties, please see “Part I—Item 1A—Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023. There have been no material changes to the risk factors disclosed in Part I—Item 1A of the Company’s 2023 Annual Report.

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no unregistered sales of equity securities during the nine months ended June 30, 2024. In addition, there were no shares of Common Stock purchased by us during the nine months ended June 30, 2024.

ITEM 6.	EXHIBIT INDEX
10.1	Consent, Joinder and Seventh Amendment to Amended and Restated Loan and Security Agreement, dated as of June 5, 2024, by and among Santander Bank, N.A., as lender, Janel Group, Inc., Expedited<br> Logistics and Freight Services, LLC, ELFS Brokerage LLC, Janel Corporation, Expedited Logistics and Freight Services, LLC and Airschott, Inc. (filed herewith)
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31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer (filed herewith)
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith)
32.1	Section 1350 Certification of Principal Executive Officer (filed herewith)
32.2	Section 1350 Certification of Chief Financial Officer (filed herewith)
101	Interactive data files providing financial information from the Company’s Quarterly Report on Form 10-Q for the three and nine months ended June 30, 2024 and 2023 in Inline<br> XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Balance Sheets as of June 30, 2024 and September 30, 2023, (ii) Condensed Consolidated Statements of Operations for the three and<br> nine months ended June 30, 2024 and 2023, (iii) Condensed Consolidated Statement of Changes in Stockholders’ Equity for the three and nine months June 30, 2024 and 2023, (iv) Condensed Consolidated Statements of Cash Flows for the nine months<br> ended June 30, 2024 and 2023, and (v) Notes to Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Interactive Data Files submitted as Exhibit 101) (filed herewith)

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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.

Dated: August 2, 2024	JANEL CORPORATION
	Registrant
	/s/ Darren C. Seirer
	Darren C. Seirer
	Chairman, President and Chief Executive Officer
	(Principal Executive Officer)
Dated: August 2, 2024	JANEL CORPORATION
	Registrant
	/s/ Joseph R. Ferrara
	Joseph R. Ferrara
	Chief Financial Officer, Treasurer and Secretary

Exhibit 10.1

CONSENT, JOINDER AND SEVENTH AMENDMENT TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This CONSENT, JOINDER AND SEVENTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Seventh Amendment”) is made as of this 4^th^ day of June, 2024, by and among:

SANTANDER BANK, N.A., a national bank having a place of business at 28 State Street, Boston, Massachusetts 02109 (the “Lender”);

JANEL GROUP, INC., a New York corporation (“Janel”), EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC, a Texas limited liability company (“ELFS”), ELFS BROKERAGE LLC, a Texas limited liability company (“ELFS Brokerage”, and together with Janel, ELFS, and ELFS Brokerage, individually and collectively, and jointly and severally referred to herein as “Borrower”);

JANEL CORPORATION, a Nevada corporation (“Parent”) and EXPEDITED LOGISTICS AND FREIGHT SERVICES, LLC, an Oklahoma limited liability company (“ELFS OK, and together with Parent, each, a “Loan Party Obligor” and collectively, the “Loan Party Obligors”); and

AIRSCHOTT, INC., a Virginia corporation (the “New Borrower”),

in consideration of the mutual covenants herein contained and benefits to be derived herefrom.

W I T N E S S E T H:

WHEREAS, the Borrower and the Loan Party Obligors and the Lender entered into that certain Amended and Restated Loan and Security Agreement dated as of September 21, 2021 (together with any further modifications, amendments, and restatements thereof, the “Agreement”);

WHEREAS, the Borrower and the Loan Party Obligors intend to complete the Airschott Acquisition (as defined below), pursuant to which, among other things, New Borrower shall become a Subsidiary of the Borrower, and, in order to complete such acquisition, the Borrower and the Loan Party Obligors have requested that the Lender modify and amend certain terms and conditions of the Agreement;

WHEREAS, in connection therewith, among other things, the New Borrower desires to become a party to and to be bound by the terms of the Agreement and the other Loan Documents and to become a Loan Party Obligor (as a Borrower) in the same capacity and to the same extent as the existing Loan Party Obligors thereunder and, in connection therewith, the parties desire to amend the Agreement as set forth herein; and

WHEREAS, the Lender has agreed to modify and amend certain terms and conditions of the Agreement, all as provided for herein.

NOW, THEREFORE, it is hereby agreed among the parties hereto as follows:

1.	Capitalized Terms. All capitalized terms used herein and not otherwise defined shall have the same meaning herein as in the Agreement.
2.	Amendments to Agreement.
---	---
a.	Schedule B of the Agreement (Definitions) is hereby amended as follows:
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i.	By inserting the following new definitions in their correct alphabetical order:
A)	“Airschott” means Airschott, Inc., a Virginia corporation.
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B)	“Airschott Acquisition” means collectively, (i) the Airschott Acquisition- Closing Date, and (ii) Airschott Acquistion- Future Closing Date.
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C)	“Airschott Acquisition- Closing Date” means, the acquisition, on the Seventh Amendment Effective Date, by Janel of eighty percent (80%) of the outstanding<br> Airschott Stock consisting of the JP Stock and the RJS First Closing Stock, and the satisfaction of the conditions set forth in Section 10 and Section 11 of the Airschott SPA, in accordance with the provisions of this Agreement and the<br> Airschott Acquisition Documentation.
---	---
D)	“Airschott Acquisition- Future Closing Date” means, the acquisition, on the Future Closing Date, by Janel of twenty percent (20%) of the remaining<br> outstanding Airschott Stock consisting of the remaining forty (40) shares of the RJS Stock, in accordance with the provisions of this Agreement and the Airschott Acquisition Documentation.
---	---
E)	“Airschott Acquisition Documentation” means the Airschott SPA, together with any other documents executed and delivered in connection therewith.
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F)	“Airschott Guaranty” means that certain guaranty of the Parent in favor of RJS Seller, dated on or about the Seventh Amendment Effective Date, of the<br> obligations of Janel pursuant to the Airschott Seller Note.
---	---
G)	“Airschott Seller Note” means that certain promissory note dated on or about the Seventh Amendment Effective Date made payable by Janel to RJS Seller in<br> the original principal amount of $1,200,000.
---	---
H)	“Airschott SPA” means that certain Stock Purchase Agreement, dated as of June 4, 2024 by and among Janel, as “Buyer”, and JP Seller and RJS Seller,<br> collectively as “Sellers”, in effect as of the Seventh Amendment Closing Date.
---	---
I)	“Airschott Stock” means the shares of capital stock of Airschott, par value $1.00 per share.
---	---
J)	“Future Closing Date” has the meaning given that term in the Airschott SPA.
---	---
K)	“Future Closing Payment” has the meaning given that term in the Airschott SPA.
---	---
L)	“Future Closing RJS Stock” means forty (40) shares of RJS Stock, constituting twenty percent (20%) of the issued and outstanding shares of Airschott Stock.
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M)	“JP Seller” means Joanne Perlman, Trustee of the Joanne Perlman Revocable Living Trust.
N)	“JP Stock” means all of the shares of Airschott Stock owned by JP Seller, constituting ninety-eight (98) shares of Airschott Stock, equal to forty-nine<br> percent (49%) of the issued and outstanding shares of Airschott Stock.
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O)	“RJS First Closing Stock” means Sixty-two (62) shares of RJS Stock, constituting thirty-one percent (31%) of the issued and outstanding shares of Airschott<br> Stock.
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P)	“RJS Seller” means Robert J. Schott, Trustee of the Robert J. Schott, Revocable Living Trust.
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Q)	“RJS Stock” means all of the shares of Airschott Stock owned by RJS Seller, constituting one hundred and two (102) shares of Airschott Stock, equal to<br> fifty-one percent (51%) of the issued and outstanding shares of Airschott Stock.
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R)	“Sellers” collectively, JP Seller and RJS Seller.
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S)	“Seller Principals” collectively, Joanne Perlman and Robert J. Schott.
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T)	“Seventh Amendment” means that certain Consent, Joinder, and Seventh Amendment to Amended and Restated Loan and Security Agreement dated as of the Seventh<br> Amendment Effective Date by and among the Lender, the Borrower and the Loan Party Obligors.
---	---
U)	“Seventh Amendment Effective Date” means June 4, 2024.
---	---
ii.	The following definitions in Schedule B are hereby amended as follows:
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A)	The definition of “Acquisition Seller Financing” is hereby amended and restated as follows:
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“Acquisition Seller Financing” means any unsecured Indebtedness incurred in connection with an acquisition made by Parent, or any wholly-owned Subsidiary of Parent, and subordinated on terms and conditions satisfactory to the Lender; provided, however, that the aggregate outstanding principal amount of such Indebtedness shall not exceed $8,500,000 at any time. For the avoidance of doubt, the aggregate amount of Acquisition Seller Financing (after giving effect to the Airschott Seller Note) as of the Seventh Amendment Effective Date is $6,188,157, as more particularly described on Schedule H to this Agreement.

B)	The definition of “Parent Ordinary Course Guaranty” is hereby amended by adding the following sentence thereto:

“For avoidance of doubt, the Airschott Guaranty constitutes a Parent Ordinary Course Guaranty.”

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C)	The definition of “Permitted Acquisition” is hereby amended by amending and restating clause (c) thereof in its entirety as follows:

(c) the aggregate consideration for all such acquisitions occurring during any Fiscal Year shall not exceed $4,000,000 (except for Fiscal Year 2024, the aggregate consideration for all such acquisitions occurring during Fiscal Year shall not exceed $4,800,000 in the aggregate);

b.	Section 5.27 of the Agreement (Negative Covenants) is hereby amended as follows:
i.	Subclause (q) is hereby deleted in its entirety and the following substituted in its stead:
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“(q) agree, consent, permit or otherwise undertake to amend or otherwise modify any of the terms or provisions of (i) any Loan Party Obligor’s Organic Documents, (ii) the Aves Guaranty, (iii) the ELFS Notes, (iv) the ELFS Acquisition Documentation, (v) the First Merchants Guaranty, (vi) the Airschott Seller Note, (vii) the Airschott Guaranty, (viii) the Airschott Acquisition Documentation, except, in each instance, for such amendments or other modifications required by applicable law or that are not adverse to Lender, and then, only to the extent such amendments or other modifications are fully disclosed in writing to Lender no less than five (5) Business Days prior to being effectuated, or (vi) any Parent Ordinary Course Guaranty.”

ii.	Subclause (t) is hereby deleted in its entirety and the following substituted in its stead:

“(t) make any payment on account of (i) the Atlantic Deferred Purchase Price Payments, the ELFS Notes, the ELFS Earn-Out Payments, or the Airschott Seller Note, or the Future Closing Payment, unless, in each instance, the Restricted Payment Conditions are satisfied, and/or (ii) the Aves Guaranty in violation of the Aves Subordination Agreement; or”

c.	The Disclosure Schedule is hereby amended and restated by the Disclosure Schedule attached hereto.

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d.	Schedule H to the Agreement (Acquisition Seller Financing) is hereby amended by deleting the table contained therein and substituting the following in its stead:
Obligee	Date of Note/Agreement	Outstanding Balance as<br><br> <br>of Seventh Amendment Effective Date
---	---	---	---
Peter Schlesinger	July 23, 2020	$	0
David W. Flake	September 21, 2021	$	1,448,062
Randall L. Cockrell	September 21, 2021	$	1,448,062
Steven R. Lalumandier	September 21, 2021	$	643,971
Frederick J. Lalulamdier	September 21, 2021	$	1,448,062
Robert J. Schott, Trustee of the Robert J. Schott Revocable Living Trust	June 4, 2024	$	1,200,000
	Total:	$	6,188,157
3.	Additional Representations, Warranties and Covenants Regarding Airschott Acquisition.
---	---
a.	In addition to the representations, warranties and covenants set forth in Article 5 of the Agreement, the Loan Party Obligors make the following representations, warranties and covenants as of the Seventh Amendment<br> Effective Date with respect to the Airschott Acquisition, which representations, warranties and covenants are made on the terms and conditions set forth in the preamble paragraph of Article 5:
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i.	Loan Party Obligors have delivered to Lender a complete and correct copy of the Airschott Acquisition Documents, including all schedules and exhibits thereto. The execution, delivery and performance of each of the<br> Airschott Acquisition Documents has been duly authorized by all necessary action on the part of Janel. Each Airschott Acquisition Document is the legal, valid and binding obligation of Janel, enforceable against Janel in accordance with its<br> terms, in each case, except (i) as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting generally the enforcement of creditors’ rights and (ii) the availability of the<br> remedy of specific performance or injunctive or other equitable relief is subject to the discretion of the court before which any proceeding therefor may be brought. Janel is not in default in the performance or compliance with any<br> provisions thereof. All representations and warranties made by Janel in the Airschott Acquisition Documents and in the certificates delivered in connection therewith are true and correct in all material respects. To the knowledge of Janel,<br> none of the representations or warranties of Sellers and Seller Principals in the Airschott Acquisition Documents contain any untrue statement of a material fact or omit any fact necessary to make the statements therein not misleading, in any<br> case that could reasonably be expected to result in a Material Adverse Effect.
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ii.	No Default or Event of Default exists as of the Seventh Amendment Effective Date or would arise from the consummation of such Airschott Acquisition;
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iii.	The business acquired in connection with such Airschott Acquisition is (A) located in the United States, (B) organized under the laws of any state of the United States or the District of Columbia, and (C) Airschott<br> is engaged in the business of non-asset based transportation logistics;
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iv.	After giving effect to (i) the Airschott Acquisition-Closing Date and this Seventh Amendment, Janel will own, directly, 80% of the equity interests Airschott free and clear of all Liens and shall control all of the<br> voting interests or shall otherwise control the governance of Airschott, will have good title to the assets acquired pursuant to the Airschott Acquisition Agreement, free and clear of all Liens other than Permitted Liens, and Lender shall<br> have a first priority Lien in all of the assets of Airschott, subject to Permitted Liens, and (ii) the Airschott Acquisition-Future Closing Date, Janel will own, directly, the remaining 20% of the equity interests Airschott, free and clear of<br> all Liens;
v.	Such Airschott Acquisition has been approved by the board of directors of Airschott and such board of directors has not announced that it will oppose such Airschott Acquisition or has not commenced any action which<br> alleges that such Airschott Acquisition shall violate applicable law;
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vi.	The Loan Party Obligors have furnished the Lender with historic financial statements of Airschott, pro forma projected financial statements of Airschott, and such other information as the Lender may reasonably<br> require, all of which shall be reasonably satisfactory to the Lender.
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vii.	Contemporaneous with the effectiveness of this Seventh Amendment the Airschott Acquisition-Closing Date shall have been consummated in all material respects, in accordance with all applicable laws and this Agreement<br> and all requisite approvals by Governmental Authorities having jurisdiction over Janel and Airschott and, to Janel’s knowledge, the Seller, with respect to the Airschott Acquisition, have been obtained (including filings or approvals required<br> under the Hart-Scott-Rodino Antitrust Improvements Act), except for any approval the failure to obtain could not reasonably be expected to be material to the interests of the Lender.
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4.	Consents. The Loan Party Obligors have requested that the Lender provide the following consents (the “Consents”) related to the Airschott<br> Acquisition, and the Lender has agreed to provide such Consents, but only on the terms and conditions set forth herein:
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a.	Airschott Acquisition. By entering into this Seventh Amendment, the Lender hereby consents to the modification of the definitions of the “Acquisition Seller Financing” and “Permitted Acquisitions as provided<br> herein; provided however, that Loan Party Obligors acknowledge and agree that (i) the Future Closing Payment is subject to the provisions of clause (c) of Permitted Acquisitions with respect to the Fiscal Year in which such payment is made,<br> and (ii) payment of the Future Closing Payment is subject to the satisfaction of the Payment Conditions. Within five (5) Business Days of the determination of the amount of the Future Closing Payment by Janel and RJS Seller, Janel will<br> provide Lender with calculations with respect thereto and evidence that Janel shall be able to satisfy the Payment Conditions prior to making such payment.
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b.	One Time Consent. The foregoing Consents are a one-time Consents and relate solely to the Airschott Acquisition, and shall not be deemed to constitute an agreement by the Lender to consent to or waive any<br> other provision of the Loan Agreement (i) in the future, or (ii) which do not relate to either of the Airschott Acquisition.
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5.	Joinder and Assumption of Obligations. As of the Seventh Amendment Effective Date, the New Borrower hereby acknowledges that it has received and reviewed a copy of the Agreement and the other Loan Documents,<br> and hereby:
a.	joins in the execution of, and becomes a party to, the Agreement and the other Loan Documents as a Loan Party Obligor thereunder as indicated with its signature below;
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b.	covenants and agrees to be bound by all covenants, agreements, liabilities and acknowledgments of a Loan Party Obligor under the Agreement and the other Loan Documents as of the date hereof (other than covenants,<br> agreements, liabilities and acknowledgments that relate solely to an earlier date), in each case, with the same force and effect as if such New Borrower was a signatory to the Agreement and the other Loan Documents and was expressly named as<br> a Loan Party Obligor therein;
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c.	makes all representations, warranties, and other statements of a Loan Party Obligor under the Agreement and the other Loan Documents, as of the date hereof (other than representations, warranties and other<br> statements that relate solely to an earlier date), in each case, with the same force and effect as if such New Borrower was a signatory to the Agreement and the other Loan Documents and was expressly named as a Loan Party Obligor therein;
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d.	assumes and agrees to perform all applicable duties and Obligations of a Loan Party Obligor under the Agreement and the other Loan Documents; and
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e.	without limiting the provisions of subparagraph (a) above, New Borrower hereby agrees as follows:
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To secure the full payment and performance of all of the Obligations, New Borrower hereby assigns to Lender and grants to Lender a continuing security interest in all property of such New Borrower, whether tangible or intangible, real or personal, now or hereafter owned, existing, acquired or arising and wherever now or hereafter located, and whether or not eligible for lending purposes, including: (i) all Accounts (whether or not Eligible Accounts) and all Goods whose sale, lease or other disposition by such New Borrower has given rise to Accounts and have been returned to, or repossessed or stopped in transit by, such New Borrower; (ii) all Chattel Paper (including Electronic Chattel Paper), Instruments, Documents, and General Intangibles (including all patents, patent applications, trademarks, trademark applications, trade names, trade secrets, goodwill, copyrights, copyright applications, registrations, licenses, software, franchises, customer lists, tax refund claims, claims against carriers and shippers, guarantee claims, contracts rights, payment intangibles, security interests, security deposits and rights to indemnification); (iii) all Inventory; (iv) all Goods (other than Inventory), including Equipment, Farm Products, Health-Care-Insurance Receivables, vehicles, and Fixtures; (v) all Investment Property, including all rights, privileges, authority, and powers of such New Borrower as an owner or as a holder of Pledged Equity, including all economic rights, all control rights, authority and powers, and all status rights of such New Borrower as a member, equity holder or shareholder, as applicable, of each Issuer; (vi) all Deposit Accounts, bank accounts, deposits and cash; (vii) all Letter-of-Credit Rights; (viii) all Commercial Tort Claims; (ix) all Supporting Obligations; (x) any other property of such New Borrower now or hereafter in the possession, custody or control of Lender or any agent or any parent, Affiliate or Subsidiary of Lender or any Participant with Lender in the Loans, for any purpose (whether for safekeeping, deposit, collection, custody, pledge, transmission or otherwise); and (xi) all additions and accessions to, substitutions for, and replacements, products and Proceeds of the foregoing property, including proceeds of all insurance policies insuring the foregoing property, and all of such New Borrower’s books and records relating to any of the foregoing and to such New Borrower’s business.

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6.	Representations Regarding the Airschott Acquisition. The Loan Party Obligors hereby warrant and represent to the Lender, as of the Seventh Amendment Effective Date, as follows:
a.	The Loan Party Obligors have delivered to the Lender complete, correct and duly executed copies of the Airschott SPA including all schedules and exhibits thereto.
---	---
b.	To the best knowledge of the Loan Party Obligors, representations made by the the Airschott SPA Representations are true and correct in all material respects (or in all respects, if separately qualified by<br> materiality).
---	---
7.	Ratification of Loan Documents/Waiver. Except as provided for herein, all terms and conditions of the Agreement or the other Loan Documents remain in full force and effect. Each Loan Party Obligor each<br> hereby ratifies, confirms, and reaffirms all representations, warranties, and covenants contained therein (including, without limitation, (i) with respect to the Disclosure Schedule, and (ii) representations and warranties set forth in<br> Section 5.11 of the Agreement, each of which the Loan Party Obligors represent and warrant is true and correct as of the date hereof) and acknowledges and agrees that the Obligations, as amended hereby, are and continue to be secured by the<br> Collateral. Each Loan Party Obligor acknowledges and agrees that each such Loan Party Obligor does not have any offsets, defenses, or counterclaims against the Lender arising out of the Agreement or the other Loan Documents, and to the<br> extent that any such offsets, defenses, or counterclaims arising out of the Agreement or the other Loan Documents may exist, each such Loan Party Obligor hereby WAIVES and RELEASES the Lender therefrom.
---	---
8.	[Reserved]
---	---
9.	Conditions to Effectiveness. This Seventh Amendment shall not be effective until each of the following conditions precedent have been fulfilled to the satisfaction of the Lender:
---	---
a.	This Seventh Amendment shall have been duly executed and delivered by the respective parties hereto and, shall be in full force and effect and shall be in form and substance satisfactory to the Lender.
---	---
b.	New Borrower and the other Loan Party Obligors shall have executed and delivered such documents and agreements set forth on the closing checklist, attached hereto as Exhibit A, as required by Lender.
---	---
c.	The Lender shall have received customary opinions; corporate documents and officers’ certifications; organizational documents; customary evidence of authorization to enter into this Seventh Amendment; and good<br> standing certificates in jurisdictions of formation/organization (to the extent such a certificate exists in the applicable jurisdiction) of the Loan Party Obligors.
---	---
d.	The Airschott Acquisition shall occur contemporaneously with the delivery of this Seventh Amendment.
---	---

-8-

10.	Conditions Subsequent to Effectiveness. The Loan Parties agree that, in addition to all other terms, conditions, and provisions set forth in this Seventh Amendment, including, without limitation, those set<br> forth in Paragraph 9, the Loan Parties shall satisfy each of the conditions subsequent set forth below on or before the date applicable thereto:
a.	Within ninety (90) days of the Seventh Amendment Effective Date, or such greater period of time as the Lender shall agree to in its reasonable discretion, the Loan Party Obligors shall close any deposit accounts or<br> securities accounts maintained at any other financial institution other than Lender and transfer any balances in such accounts to an account maintained at Lender.
---	---
b.	Within thirty (30) days of the Seventh Amendment Effective Date, or such greater period of time as the Lender shall agree to in its reasonable discretion, the Loan Party Obligors shall use commercially reasonable<br> efforts to deliver to Lender a collateral access Agreement for the following location(s):
---	---
i.	23901 Cargo Drive Cargo Building 4 Doors 116-119 Dulles, VA 20166 USA.
---	---
c.	Within thirty (30) days of the Seventh Amendment Effective Date, or such greater period of time as the Lender shall agree to in its reasonable discretion, the Loan Party Obligors shall deliver the insurance<br> materials, including, without limitation, certificates and endorsements, required by Section 5.14 of the Loan Agreement, with respect to the insurance policies of the New Borrower.
---	---
11.	Miscellaneous.
---	---
a.	This Seventh Amendment may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, and all of which together shall<br> constitute one instrument.
---	---
b.	The provisions of Section 10.15 (Governing Law) and 10.16 (Consent to Jurisdiction; Waiver of Jury Trial) are specifically<br> incorporated herein by reference.
---	---
c.	This Seventh Amendment expresses the entire understanding of the parties with respect to the transactions contemplated hereby. No prior negotiations or discussions shall limit, modify, or otherwise affect the<br> provisions hereof.
---	---
d.	Any determination that any provision of this Seventh Amendment or any application hereof is invalid, illegal or unenforceable in any respect and in any instance shall not affect the validity, legality, or<br> enforceability of such provision in any other instance, or the validity, legality or enforceability of any other provisions of this Seventh Amendment.
---	---
e.	The Borrower shall pay on demand all costs and expenses of the Lender, including, without limitation, reasonable attorneys’ fees in connection with the preparation, negotiation, execution and delivery of this<br> Seventh Amendment.
---	---
f.	The Loan Party Obligors each warrants and represents that such Person has consulted with independent legal counsel of such Person’s selection in connection with this Seventh Amendment and is not relying on any<br> representations or warranties of the Lender or its counsel in entering into this Seventh Amendment.
---	---

-9-

[remainder of page left intentionally blank]

-10-

IN WITNESS WHEREOF, the parties have hereunto caused this Seventh Amendment to be executed and their seals to be hereto affixed as of the date first above written.

LENDER
SANTANDER BANK, N.A.
By:	/s/ Matthew Cunningham
Name:	Matthew Cunningham
---	---
Its:	Vice President

[Signature Page to Seventh Amendment to Amended and Restated Loan and Security Agreement]

BORROWERS
JANEL GROUP, INC., a New York<br><br> <br>corporation, as Borrower
By:	/s/ William J. Lally
Name:	William J. Lally
Its:	President
EXPEDITED LOGISTICS AND FREIGHT<br><br> <br>SERVICES LLC, a Texas limited liability<br><br> <br>company, as Borrower
By:	/s/ William J. Lally
Name:	William J. Lally
Its:	Vice President
ELFS BROKERAGE LLC, a Texas limited<br><br> <br>liability company, as Borrower
---	---
By:	Janel Group, Inc., its Manager
By:	/s/ William J. Lally
---	---
Name:	William J. Lally
Its:	President
AIRSCHOTT, INC., a Virginia corporation, as<br><br> <br>New Borrower
---	---
By:	/s/ William J. Lally
Name:	William J. Lally
Its:	Vice President

[Signature Page to Seventh Amendment to Amended and Restated Loan and Security Agreement]

LOAN PARTY OBLIGORS
JANEL CORPORATION, a Nevada<br><br> <br>corporation, as a Loan Party Obligor and Term<br><br> <br>Loan Borrower
By:	/s/ Darren. C Seirer
Name:	Darren C. Seirer
Its:	President
EXPEDITED LOGISTICS AND FREIGHT<br><br> <br>SERVICES LLC, an Oklahoma limited liability<br><br> <br>company, as a Loan Party Obligor
By:	Expedited Logistics and Freight Services<br><br> <br>LLC, a Texas limited liability company,<br><br> <br>its manager
By:	/s/ William J. Lally
---	---
Name:	William J. Lally
Its:	Vice President

[Signature Page to Seventh Amendment to Amended and Restated Loan and Security Agreement]

Exhibit 31.1

CERTIFICATION

I, Darren Seirer, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Janel Corporation (the “Registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such<br> statements were made, not misleading with respect to the period covered by this report;
---	---
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the<br> Registrant as of, and for, the periods presented in this report;
---	---
4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control<br> over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
---	---
(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its<br> consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
---	---
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of<br> financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
---	---
(c)	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the<br> period covered by this report based on such evaluation; and
---	---
(d)	Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case<br> of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
---	---
5.	The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the<br> Registrant’s board of directors (or persons performing the equivalent function):
---	---
(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record,<br> process, summarize and report financial information; and
---	---
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
---	---
Date: August 2, 2024	/s/ Darren C. Seirer
---	---
	Darren C. Seirer
	Chairman, President and Chief Executive Officer
	(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION

I, Joseph R. Ferrara, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Janel Corporation (the “Registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such<br> statements were made, not misleading with respect to the period covered by this report;
---	---
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the<br> Registrant as of, and for, the periods presented in this report;
---	---
4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control<br> over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
---	---
(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its<br> consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
---	---
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of<br> financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
---	---
(c)	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the<br> period covered by this report based on such evaluation; and
---	---
(d)	Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case<br> of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
---	---
5.	The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the<br> Registrant’s board of directors (or persons performing the equivalent function):
---	---
(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record,<br> process, summarize and report financial information; and
---	---
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
---	---
Date: August 2, 2024	/s/ Joseph R. Ferrara
---	---
	Joseph R. Ferrara
	Chief Financial Officer, Treasurer and Secretary

Exhibit 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the report on Form 10-Q of Janel Corporation (the “Company”) for the quarter ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Darren Seirer, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
---	---
Date: August 2, 2024	/s/ Darren C. Seirer
---	---
	Darren C. Seirer
	Chairman, President and Chief Executive Officer
	(Principal Executive Officer)

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code) and is not being filed as part of the Report or as a separate disclosure document.

Exhibit 32.2

CERTIFICATION

PURSUANT TO 18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the report on Form 10-Q of Janel Corporation (the “Company”) for the quarter ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph R. Ferrara, Chief Financial Officer, Treasurer and Secretary of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
---	---
Date: August 2, 2024	/s/ Joseph R. Ferrara
---	---
	Joseph R. Ferrara
	Chief Financial Officer, Treasurer and Secretary

10-Q

☒

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

Commission file number: 333-60608

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

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

The accompanying notes are an integral part of these condensed consolidated financial statements.

Amortization expense for the nine months ended June 30, 2024 and 2023 was $1,635 and $1,593, respectively.

The

On April 25, 2023, Indco and certain other Subsidiaries of the Company that

ELFS, in connection with the Company’s business combination whereby it acquired all the membership interest of ELFS and its related subsidiaries.

Preferred Stock

CRITICAL ACCOUNTING POLICIES AND ESTIMATES