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 March 31, 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 incorporation or organization)		(I.R.S. Employer 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 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 May 3, 2024 was 1,186,354.

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)

	March 31, 2024			September 30, 2023
ASSETS
Current Assets:
Cash	$	1,781		$	2,461
Accounts receivable, net of allowance for doubtful accounts		27,272			27,518
Inventory, net		4,697			4,850
Prepaid expenses and other current assets		4,695			4,459
Total current assets		38,445			39,288
Property and Equipment, net		5,103			4,922
Other Assets:
Intangible assets, net		22,015			22,683
Goodwill		20,392			20,317
Restricted cash		250			—
Investment in Rubicon at fair value		931			1,573
Operating lease right of use asset		9,313			7,460
Security deposits and other long-term assets		455			591
Total other assets		53,356			52,624
Total assets	$	96,904		$	96,834
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Lines of credit	$	18,523		$	19,709
Accounts payable - trade		25,636			25,447
Accrued expenses and other current liabilities		6,739			6,337
Dividends payable		2,185			2,029
Current portion of earnout		1,012			592
Current portion of long-term debt		716			715
Current portion of subordinated promissory note-related party		1,339			1,988
Current portion of operating lease liabilities		2,384			2,020
Total current liabilities		58,534			58,837
Other Liabilities:
Long-term debt		4,752			5,784
Long-term portion of earnout		1,078			1,738
Subordinated promissory notes-related party		3,235			3,424
Mandatorily redeemable non-controlling interest		711			565
Deferred income taxes		1,341			1,341
Long-term operating lease liabilities		7,284			5,689
Other liabilities		522			483
Total other liabilities		18,923			19,024
Total liabilities		77,457			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 March 31, 2024 and September 30, 2023, liquidation value of $7,870 and $7,713 at March 31, 2024 and September 30, 2023, respectively		—			—
Common stock, $0.001 par value; 4,500,000 shares authorized, 1,206,354 issued and 1,186,354 outstanding as of March 31, 2024 and September 30, 2023, respectively		1			1
Paid-in capital		17,086			17,107
Common treasury stock, at cost, 20,000 shares		(240	)		(240	)
Accumulated earnings		2,600			2,105
Total stockholders’ equity		19,447			18,973
Total liabilities and stockholders’ equity	$	96,904		$	96,834

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

Table of Contents

JANEL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,						Six Months Ended March 31,
	2024			2023			2024			2023
Revenues	$	42,122		$	45,378		$	83,157		$	102,422
Forwarding expenses and cost of revenues		28,299			31,629			55,189			73,756
Gross profit		13,823			13,749			27,968			28,666
Cost and Expenses:
Selling, general and administrative		12,701			12,302			25,306			25,313
Amortization of intangible assets		542			543			1,080			1,069
Total Costs and Expenses		13,243			12,845			26,386			26,382
Income from Operations		580			904			1,582			2,284
Other Items:
Interest expense		(550	)		(474	)		(1,074	)		(948	)
Other income (expense)		66			(111	)		56			(510	)
Income Before Income Taxes		96			319			564			826
Income tax benefit (expense)		123			(101	)		(69	)		(248	)
Net Income		219			218			495			578
Preferred stock dividends		(85	)		(70	)		(157	)		(142	)
Net Income Available to Common Stockholders	$	134		$	148		$	338		$	436

Net income per share
Basic	$	0.18		$	0.18		$	0.42		$	0.49
Diluted	$	0.18		$	0.18		$	0.41		$	0.48
Net income per share attributable to common stockholders:
Basic	$	0.11		$	0.12		$	0.29		$	0.37
Diluted	$	0.11		$	0.12		$	0.28		$	0.36
Weighted average number of shares outstanding:
Basic		1,186.4			1,186.4			1,186.4			1,186.4
Diluted		1,204.3			1,206.1			1,203.3			1,207.2

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

Table of Contents

JANEL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(in thousands, except share and per share data)

(Unaudited)

	PREFERRED STOCK				COMMON STOCK				PAID-IN CAPITAL			COMMON TREASURY STOCK					ACCUMULATED EARNINGS		TOTAL EQUITY
	SHARES			$	SHARES		$			$		SHARES		$				$		$
Balance - September 30, 2023		11,368		—		1,206,354	$	1	$	17,107			20,000	$	(240	)	$	2,105	$	18,973
Net Income		—		—		—		—		—			—		—			276		276
Dividends to preferred stockholders		—		—		—		—		(72	)		—		—			—		(72	)
Stock based compensation		—		—		—		—		68			—		—			—		68
Balance - December 31, 2023		11,368		—		1,206,354		1		17,103			20,000		(240	)		2,381		19,245
Net Income		—		—		—		—		—			—		—			219		219
Dividends to preferred stockholders		—		—		—		—		(85	)		—		—			—		(85	)
Stock based compensation		—		—		—		—		68			—		—			—		68
Balance - March 31, 2024		11,368	$	—		1,206,354	$	1	$	17,086			20,000	$	(240	)	$	2,600	$	19,447

	PREFERRED STOCK				COMMON STOCK				PAID-IN CAPITAL			COMMON TREASURY STOCK					ACCUMULATED EARNINGS		TOTAL EQUITY
	SHARES			$	SHARES		$			$		SHARES		$				$		$
Balance - September 30, 2022		11,368	$	—		1,206,354	$	1	$	17,184			20,000	$	(240	)	$	1,382	$	18,327
Net Income		—		—		—		—		—			—		—			360		360
Dividends to preferred stockholders		—		—		—		—		(72	)		—		—			—		(72	)
Stock based compensation		—		—		—		—		51			—		—			—		51
Balance - December 31, 2022		11,368	$	—		1,206,354		1		17,163			20,000		(240	)		1,742		18,666
Net Income		—		—		—		—		—			—		—			218		218
Dividends to preferred stockholders		—		—		—		—		(70	)		—		—			—		(70	)
Stock based compensation		—		—		—		—		53			—		—			—		53
Balance - March 31, 2023		11,368	$	—		1,206,354	$	1	$	17,146			20,000	$	(240	)	$	1,960	$	18,867

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

Table of Contents

JANEL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Six Months Ended March 31,
	2024			2023
Cash flows from operating activities:
Net income	$	495		$	578
Adjustments to reconcile net income to net cash provided by operating activities:
Recovery of uncollectible accounts		(164	)		(237	)
Depreciation		265			243
Deferred income tax provision		—			(23	)
Amortization of intangible assets		1,080			1,069
Amortization of acquired inventory valuation		171			217
Amortization of loan costs		52			8
Stock-based compensation		143			123
Unrealized loss on marketable securities		642			510
Change in fair value of mandatorily redeemable noncontrolling interest		146			—
Fair value adjustments of contingent earnout liabilities		435			—
Gain on extinguishment		(21	)		—
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		430			27,112
Inventory		(9	)		(145	)
Prepaid expenses and other current assets		(236	)		(1,729	)
Security deposits and other long-term assets		136			(116	)
Accounts payable and accrued expenses		585			(17,563	)
Other liabilities		144			53
Net cash provided by operating activities		4,294			10,100
Cash flows from investing activities:
Acquisition of property and equipment, net of disposals		(327	)		(178	)
Earnout payment		(740	)		(1,693	)
Acquisitions, net of cash acquired		(571	)		(3,911	)
Net cash used in investing activities		(1,638	)		(5,782	)
Cash flows from financing activities:
Repayments of term loan		(1,083	)		(725	)
Lines of credit payments, net		(1,186	)		(7,663	)
Repayment of subordinate promissory notes, net		(817	)		(208	)
Net cash used in financing activities		(3,086	)		(8,596	)
Net (decrease) in cash		(430	)		(4,278	)
Cash at beginning of the period		2,461			6,591
Cash and restricted cash at end of period		2,031			2,313

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	963		$	781
Income taxes	$	320		$	1,047
Non-cash operating activities:
Contingent earnout acquisition	$	64		$	600
Due to former owners	$	740		$	455
Non-cash financing activities:
Dividends declared to preferred stockholders	$	157		$	142

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

Table of Contents

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

In the second half of 2024, the Company plans to insure certain risks through a newly formed wholly-owned captive insurance company, Gainesville Insurance Company, Inc. (“Gainesville”), certain self-insured or deductible amounts. In addition, we will also maintain some of our normal, historical insurance policies with third party insurers. Restricted cash represents deposited 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. As of March 31, 2024, Gainesville has not received any insurance premiums, paid any claims, or provided any insurance coverage to the Company.

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.

Table of Contents

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 six months ended March 31, 2024 and 2023 is as follows (in thousands):

	Three Months Ended March 31,				Six Months Ended March 31,
	2024		2023		2024		2023
Service Type
Trucking	$	18,354	$	19,596	$	36,351	$	42,357
Ocean		8,312		9,240		14,761		27,406
Air		5,818		5,219		12,528		11,458
Customs brokerage and other		3,615		5,823		7,674		10,457
Total	$	36,099	$	39,878	$	71,314	$	91,678

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

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.

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.

Table of Contents

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.

INVENTORY

Inventories consisted of the following (in thousands):

	March 31, 2024			September 30, 2023
Finished goods	$	1,960		$	2,095
Work-in-process		864			969
Raw materials		1,901			1,811
Gross inventory		4,725			4,875
Less – reserve for inventory valuation		(28	)		(25	)
Inventory net	$	4,697		$	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):

	March 31, 2024			September 30, 2023			Life
Customer relationships	$	25,570		$	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
		32,659			32,247
Less: Accumulated Amortization		(10,644	)		(9,564	)
Intangible assets, net	$	22,015		$	22,683

The composition of the intangible assets balance at March 31, 2024 and September 30, 2023 is as follows (in thousands):

	March 31, 2024			September 30, 2023
Logistics	$	18,174		$	18,174
Life Sciences		6,785			6,373
Manufacturing		7,700			7,700
		32,659			32,247
Less: Accumulated Amortization		(10,644	)		(9,564	)
Intangible assets, net	$	22,015		$	22,683

Amortization expense for the six months ended March 31, 2024 and 2023 was $1,080 and $1,069, respectively.

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 March 31, 2024 and September 30, 2023 was as follows (in thousands):

	March 31, 2024		September 30, 2023
Logistics	$	9,175	$	9,175
Life Sciences		6,171		6,096
Manufacturing		5,046		5,046
Total	$	20,392	$	20,317

Table of Contents

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 Bank (“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.

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.

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 March 31, 2024, outstanding borrowings under the Santander Facility were $17,173, representing 49.1% of the $35,000 available subject to limitations thereunder, and interest was accruing at an effective interest rate of 7.68%.

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 March 31, 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.

Table of Contents

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 March 31, 2024, there were $1,350 of outstanding borrowings under the acquisition loan, $5,198 of outstanding borrowings under the Term A loan and $598 of outstanding borrowings under the Term B loan, with interest accruing on the acquisition loan at an effective interest rate of 8.19% and on the Term A loan and Term B loan at an effective interest rate of 8.19% 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 March 31, 2024 and September 30, 2023.

The table below sets forth the total long-term debt, net of capitalized loan fees of $349 for the First Merchants Credit Agreement (in thousands):

(in thousands)	March 31, 2024			September 30, 2023
Total Debt	$	5,468		$	6,499
Less Current Portion		(716	)		(715	)
Long-term Portion	$	4,752		$	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 March 31, 2024, the amount outstanding under the ICT Subordinated Promissory Note was $165, 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.

Table of Contents

(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 March 31, 2024, the gross amount outstanding under the ELFS Subordinated Promissory Notes was $5,282, ($4,409 net of $873 unamortized discount), of which $1,174 was included in the current portion of subordinated promissory notes and $3,235 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.

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

(in thousands)	March 31, 2024			September 30, 2023
Total subordinated promissory notes	$	4,574		$	5,412
Less current portion of subordinated promissory notes		(1,339	)		(1,988	)
Long-term portion of subordinated promissory notes	$	3,235		$	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 March 31, 2024 and September 30, 2023 was 6% and 5%, respectively.

9.	STOCK-BASED COMPENSATION

(in thousands, except share and per share data)

On 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.

Table of Contents

Total stock-based compensation for the six months ended March 31, 2024 and 2023 amounted to $143 and $123, respectively, and is included in selling, general and administrative expense in the Company’s statements of operations.

Options

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding balance at September 30, 2023		40,993		$	22.53		6.6	$	773.02
Granted		12,500		$	28.30		9.5	$	171.88
Expired		(3,500	)	$	3.25		—	$	—
Outstanding balance at March 31, 2024		49,993		$	25.30		7.4	$	944.90
Exercisable at March 31, 2024		24,162		$	12.60		5.8	$	709.72

The aggregate intrinsic value in the above table was calculated as the difference between the closing price of the Company’s common stock at March 31, 2024 of $42.00 per share and the exercise price of the stock options that had strike prices below such closing price.

As of March 31, 2024, there was approximately $411 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.

Liability classified share-based awards

During the six months ended March 31, 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 six months ended March 31, 2024 and 2023:

	Three Months Ended March 31,						Six Months Ended March 31,
(in thousands, except per share data)	2024			2023			2024			2023
Income:
Net income	$	219		$	218		$	495		$	578
Preferred stock dividends		(85	)		(70	)		(157	)		(142	)
Net income available to common stockholders	$	134		$	148		$	338		$	436

Common Shares:
Basic - weighted average common shares		1,186.4			1,186.4			1,186.4			1,186.4
Effect of dilutive stock options		17.9			19.7			16.9			20.8
Diluted - weighted average common stock		1,204.3			1,206.1			1,203.3			1,207.2

Income per Common Share:
Basic -
Net income	$	0.18		$	0.18		$	0.42		$	0.49
Preferred stock dividends		(0.07	)		(0.06	)		(0.13	)		(0.12	)
Net income available to common stockholders	$	0.11		$	0.12		$	0.29		$	0.37

Diluted -
Net income	$	0.18		$	0.18		$	0.41		$	0.48
Preferred stock dividends		(0.07	)		(0.06	)		(0.13	)		(0.12	)
Net income available to common stockholders	$	0.11		$	0.12		$	0.28		$	0.36

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 six-month periods ended March 31, 2023. There were 22.5 anti-dilutive shares for each of the three- and six-month periods ended March 31, 2024.

Table of Contents

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 six-month periods ended March 31, 2024 and 2023 is as follows (in thousands):

	Three Months Ended March 31,						Six Months Ended March 31,
	2024			2023			2024			2023
Federal taxes at statutory rates	$	(20	)	$	(67	)	$	(118	)	$	(174	)
Permanent differences and other		151			(35	)		93			(36	)
State and local taxes, net of Federal benefit		(8	)		1			(44	)		(38	)
Total	$	123		$	(101	)	$	(69	)	$	(248	)

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.

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 six months ended March 31, 2024:

For the three months ended March 31, 2024 (in thousands)	Consolidated		Logistics		Life Sciences		Manufacturing		Corporate
Revenues	$	42,122	$	36,099	$	3,524	$	2,499	$	—
Forwarding expenses and cost of revenues		28,299		26,293		850		1,156		—
Gross profit		13,823		9,806		2,674		1,343		—
Selling, general and administrative		12,701		8,877		1,745		787		1,292
Amortization of intangible assets		542		—		—		—		542
Income (loss) from operations		580		929		929		556		(1,834	)
Interest expense		550		405		70		75		—
Identifiable assets		96,904		35,318		12,370		4,142		45,074
Capital expenditures, net of disposals		274		8		266		—		—

For the six months ended March 31, 2024 (in thousands)	Consolidated		Logistics		Life Sciences		Manufacturing		Corporate
Revenues	$	83,157	$	71,314	$	7,005	$	4,838	$	—
Forwarding expenses and cost of revenues		55,189		51,507		1,456		2,226		—
Gross profit		27,968		19,807		5,549		2,612		—
Selling, general and administrative		25,306		17,742		3,495		1,571		2,498
Amortization of intangible assets		1,080		—		—		—		1,080
Income (loss) from operations		1,582		2,065		2,054		1,041		(3,578	)
Interest expense		1,074		762		148		164		—
Identifiable assets		96,904		35,318		12,370		4,142		45,074
Capital expenditures, net of disposals		327		26		301		—		—

For the three months ended March 31, 2023 (in thousands)	Consolidated		Logistics		Life Sciences		Manufacturing		Corporate
Revenues	$	45,378	$	39,878	$	3,068	$	2,432	$	—
Forwarding expenses and cost of revenues		31,629		29,831		627		1,171		—
Gross profit		13,749		10,047		2,441		1,261		—
Selling, general and administrative		12,302		8,734		1,570		776		1,222
Amortization of intangible assets		543		—		—		—		543
Income (loss) from operations		904		1,313		871		485		(1,765	)
Interest expense		474		325		42		107		—
Identifiable assets		99,539		36,726		11,402		4,305		47,106
Capital expenditures, net of disposals		98		35		63		—		—

Table of Contents

For the six months ended March 31, 2023 (in thousands)	Consolidated		Logistics		Life Sciences		Manufacturing		Corporate
Revenues	$	102,422	$	91,678	$	5,906	$	4,838	$	—
Forwarding expenses and cost of revenues		73,756		70,098		1,355		2,303		—
Gross profit		28,666		21,580		4,551		2,535		—
Selling, general and administrative		25,313		18,262		3,080		1,550		2,421
Amortization of intangible assets		1,069		—		—		—		1,069
Income (loss) from operations		2,284		3,318		1,471		985		(3,490	)
Interest expense		948		659		79		210		—
Identifiable assets		99,539		36,726		11,402		4,305		47,106
Capital expenditures, net of disposals		178		103		73		2		—

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):

Level 1 Assets		March 31, 2024				September 30, 2023
Investment in Rubicon at fair value		$	931				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 March 31, 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):

	March 31, 2024			September 30, 2023
Balance beginning of period	$	1,573		$	2,371
Fair value adjustment to Rubicon investment		(642	)		(798	)
Balance end of period	$	931		$	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):

	March 31, 2024		September 30, 2023
Level 1 Contingent earnout liabilities		2,040		—
Level 3 Contingent earnout liabilities		50		2,330
Total		2,090		2,330

These liabilities relate to the estimated fair value of earnout payments to former IBS, ViraQuest, and ELFS owners for the periods ending March 31, 2024 and September 30, 2023.

Table of Contents

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.

The current and non-current portions of the fair value of the contingent earnout liabilities at March 31, 2024 were $1,012 and $1,078, 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.

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):

	March 31, 2024			September 30, 2023
Balance beginning of period	$	2,330		$	4,580
Fair value of contingent consideration recorded in connection with business combinations		64			300
Earnout payment		(739	)		(1,693	)
Adjustments to earnout		435			—
Fair value adjustment of contingent earnout liabilities		—			(857	)
Balance end of period	$	2,090		$	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 March 31, 2024, the remaining terms of the Company’s operating leases were between one and 119 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 six-month periods ended March 31, 2024 and 2023 were as follows (in thousands):

	Three Months Ended March 31,				Six Months Ended March 31,
	2024		2023		2024		2023
Operating lease cost	$	614	$	466	$	1,213	$	1,017
Short-term lease cost		85		113		185		133
Total lease cost	$	699	$	579	$	1,398	$	1,150

Rent expense for the six months ended March 31, 2024 and 2023 was $1,398 and $1,150, 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 March 31, 2024 were $9,313, $2,384 and $7,284, 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 March 31, 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 5.58% and 5.9 years and 4.01%, respectively.

Future minimum lease payments under non-cancelable operating leases as of March 31, 2024 were as follows (in thousands):

2025	$	2,444
2026		2,162
2027		1,852
2028		1,881
2029		1,408
Thereafter		1,752
Total undiscounted lease payments		11,499
Less imputed interest		(1,831	)
Total lease obligations	$	9,668

Table of Contents

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 six months ended March 31, 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.

Table of Contents

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.

Life Sciences

The Company’s Life Sciences segment is comprised of several wholly-owned subsidiaries. The Company’s Life Sciences segment manufactures and distributes high-quality monoclonal and polyclonal antibodies, diagnostic reagents and other immunoreagents for biomedical research and provides antibody manufacturing for academic and industry research scientists. Our Life Sciences segment also produces products for other life science companies on an original equipment manufacturer (OEM) basis.

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.

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 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 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.

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.

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 represent 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 issued and outstanding shares of common stock as of March 31, 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.

Table of Contents

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 six months ended March 31, 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.

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.

Table of Contents

Results of Operations – Janel Corporation - Three and Six Months Ended March 31, 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 March 31,				Six Months Ended March 31,
(in thousands)	2024		2023		2024		2023
Revenues	$	42,122	$	45,378	$	83,157	$	102,422
Forwarding expenses and cost of revenues		28,299		31,629		55,189		73,756
Gross profit		13,823		13,749		27,968		28,666
Operating expenses		13,243		12,845		26,386		26,382
Income from operations		580		904		1,582		2,284
Net income		219		218		495		578
Adjusted operating income	$	1,282	$	1,636	$	2,976	$	3,693

Consolidated revenues for the three months ended March 31, 2024 were $42,122, which was $3,256 or 7.1% lower than the prior year period. Consolidated revenues for the six months ended March 31, 2024 were $83,157, which was $19,265 or 18.8% lower than the prior year period. Revenues for both the three and six months ended March 31, 2024 decreased primarily due to lower freight prices in our Logistics segment as a result of lower freight demand aligned more closely with global transportation capacity.

Income from operations for the three months ended March 31, 2024 was $580 compared with $904 in the prior year period. Income from operations for the six months ended March 31, 2024 was $1,582 compared with $2,284 in the prior year period. The decrease for both the three and six months ended March 31, 2024 resulted from lower profits primarily in our Logistics segment.

Net income for the three months ended March 31, 2024 totaled $219 or $0.18 per diluted share, compared to net income of $218 or $0.18 per diluted share for the three months ended March 31, 2023. Net income for the six months ended March 31, 2024 totaled $495 or $0.41 per diluted share, compared to net income of $578 or $0.48 per diluted share for the six months ended March 31, 2023. The decline in net income for the six months ended March 31, 2024 was largely due to lower profits (primarily in our Logistics segment) and higher interest expense.

Adjusted operating income for the three months ended March 31, 2024 decreased to $1,282 versus $1,636 in the prior year period. Adjusted operating income for the six months ended March 31, 2024 decreased to $2,976 versus $3,693 in the prior year period. The decrease for both the three and six months ended March 31, 2024 resulted primarily from a decline in profits in our Logistics segment partially offset by an increase in profits at our other businesses.

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

	Three Months Ended March 31,				Six Months Ended March 31,
(in thousands)	2024		2023		2024		2023
Income from operations	$	580	$	904	$	1,582	$	2,284
Amortization of intangible assets		542		543		1,080		1,069
Stock-based compensation		72		62		143		123
Cost recognized on sale of acquired inventory		88		127		171		217
Adjusted operating income	$	1,282	$	1,636	$	2,976	$	3,693

Results of Operations – Logistics – Three and Six Months Ended March 31, 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 March 31,						Six Months Ended March 31,
	2024			2023			2024			2023
(in thousands)
Revenues	$	36,099		$	39,878		$	71,314		$	91,678
Forwarding expenses		26,293			29,831			51,507			70,098
Gross profit		9,806			10,047			19,807			21,580
Gross profit margin		27.2	%		25.2	%		27.8	%		23.5	%
Selling, general and administrative expenses		8,877			8,734			17,742			18,262
Income from operations	$	929		$	1,313		$	2,065		$	3,318

Table of Contents

Revenues

Total revenues for the three months ended March 31, 2024 was $36,099 as compared to $39,878 for the three months ended March 31, 2023, a decrease of $3,779, or 9.5%. Total revenues for the six months ended March 31, 2024 was $71,314 as compared to $91,678 for the six months ended March 31, 2023, a decrease of $20,364 or 22.2%. Revenues decreased for both the three and six months ended March 31, 2024 primarily due to a reduction in transportation rates as lower freight demand aligned more closely with global transportation capacity.

Gross Profit

Gross profit for the three months ended March 31, 2024 was $9,806, a decrease of $241, or 2.4%, as compared to $10,047 for the three months ended March 31, 2023. Gross profit margin as a percentage of revenues increased to 27.2% for the three months ended March 31, 2024, compared to 25.2% for the prior year period. While revenues were down primarily due to a reduction in transportation rates, our gross profit margin was not negatively impacted given our pricing model.

Gross profit for the six months ended March 31, 2024 was $19,807, a decrease of $1,773, or 8.2%, as compared to $21,580 for the six months ended March 31, 2023. Gross profit margin as a percentage of revenue increased to 27.8% compared to 23.5% for the prior year period. While revenues were down primarily due to a reduction in transportation rates, our gross profit margin was not negatively impacted given our pricing model.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended March 31, 2024 were $8,877, as compared to $8,734 for the three months ended March 31, 2023. This increase of $143, or 1.6%, was mainly due to higher insurance expenses and bad debt expense. Selling, general and administrative expenses as a percentage of revenue were 24.6% and 21.9% for the three months ended March 31, 2024 and 2023, respectively. The increase in selling, general and administrative expenses as a percentage of revenue largely reflected the reduction in transportation rates.

Selling, general and administrative expenses for the six months ended March 31, 2024 were $17,742, as compared to $18,262 for the six months ended March 31, 2023. This decrease of $520, or 2.8%, was mainly due to lower professional service fees during the period. Selling, general and administrative expenses as a percentage of revenue were 24.9% and 19.9% of revenue for the six months ended March 31, 2024 and 2023, respectively. The increase in selling, general and administrative expenses as a percentage of revenues largely reflected the decrease in transportation rates.

Income from Operations

Income from operations decreased to $929 for the three months ended March 31, 2024, as compared to income from operations of $1,313 for the three months ended March 31, 2023, a decrease of $384, or 29.2%. Income from operations decreased as a result of lower transportation demand. Operating margin as a percentage of gross profit for the three months ended March 31, 2024 was 9.5% compared to 13.1% in the prior year period due to lower income from operations.

Income from operations decreased to $2,065 for the six months ended March 31, 2024, as compared to $3,318 for the six months ended March 31, 2023, a decrease of $1,253, or 37.8%. Income from operations decreased during the six months ended March 31, 2024 as a result of lower transportation demand. Our operating margin as a percentage of gross profit for the six months ended March 31, 2024 was 10.4% compared to 15.4% in the prior year period largely due to lower income from operations.

Results of Operations – Life Sciences – Three and Six Months Ended March 31, 2024 and 2023

The Company’s Life Sciences segment manufactures and distributes high-quality monoclonal and polyclonal antibodies, diagnostic reagents and other immunoreagents for biomedical research and provides antibody manufacturing for academic and industry research scientists. Our Life Sciences business also produces products for other life science companies on an OEM basis.

	Three Months Ended March 31,						Six Months Ended March 31,
	2024			2023			2024			2023
(in thousands)
Revenues	$	3,524		$	3,068		$	7,005		$	5,906
Cost of sales		762			500			1,285			1,138
Cost recognized upon sale of acquired inventory		88			127			171			217
Gross profit		2,674			2,441			5,549			4,551
Gross profit margin		75.9	%		79.6	%		79.2	%		77.1	%
Selling, general and administrative expenses		1,745			1,570			3,495			3,080
Income from operations	$	929		$	871		$	2,054		$	1,471

Table of Contents

Revenues

Total revenues were $3,524 and $3,068 for the three months ended March 31, 2024 and 2023, respectively, reflecting an increase of $456, or 14.9%, compared to the prior year period due to increased OEM sales. Organic revenues excluding acquisition revenue increased $328, or 10.7%.

Total revenues were $7,005 and $5,906 for the six months ended March 31, 2024 and 2023, respectively, reflecting an increase of $1,099, or 18.6%, compared to the prior year period due to increased OEM sales. Organic revenues excluding acquisition revenue increased $884, or 15.0%.

Gross Profit

Gross profit was $2,674 and $2,441 for the three months ended March 31, 2024 and 2023, respectively, an increase of $233, or 9.5%. During the three months ended March 31, 2024 and 2023, gross profit margin was 75.9% and 79.6%, respectively, as cost of sales increased.

Gross profit was $5,549 and $4,551 for the six months ended March 31, 2024 and 2023, respectively, an increase of $998 or 21.9%. In the six months ended March 31, 2024 and 2023, gross profit margin was 79.2% and 77.1%, respectively. Gross profit margin increased as product mix improvements yielded higher margins.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the Life Sciences segment were $1,745 and $1,570 for the three months ended March 31, 2024 and 2023, respectively. Selling, general and administrative expenses were $3,495 and $3,080 for the six months ended March 31, 2024 and 2023, respectively. The year-over-year increases for both periods were largely due to additional expenses from acquired businesses.

Income from Operations

Income from operations for the three months ended March 31, 2024 and 2023 was $929 and $871, respectively, an increase of $58, or 6.7%. Income from operations for the six months ended March 31, 2024 and 2023 was $2,054 and $1,471, respectively, an increase of $583, or 39.6%. Both the three-month and six-month periods were impacted by greater OEM demand and product mix improvements.

Results of Operations - Manufacturing – Three and Six Months Ended March 31, 2024 and 2023

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

	Three Months Ended March 31,						Six Months Ended March 31,
	2024			2023			2024			2023
(in thousands)
Revenues	$	2,499		$	2,432		$	4,838		$	4,838
Cost of sales		1,156			1,171			2,226			2,303
Gross profit		1,343			1,261			2,612			2,535
Gross profit margin		53.7	%		51.9	%		54.0	%		52.4	%
Selling, general and administrative expenses		787			776			1,571			1,550
Income from operations	$	556		$	485		$	1,041		$	985

Table of Contents

Revenues

Total revenues were $2,499 and $2,432 for the three months ended March 31, 2024 and 2023, respectively, an increase of $67, or 2.8%. Total revenues were $4,838 for each of the six months ended March 31, 2024 and 2023. The increase in revenues for the three months ended March 31, 2024 reflected a slight increase in volume across the business.

Gross Profit

Gross profit was $1,343 and $1,261 for the three months ended March 31, 2024 and 2023, respectively, an increase of $82, or 6.5%. Gross profit margin for the three months ended March 31, 2024 and 2023 was 53.7% and 51.9%, respectively. Gross profit was $2,612 and $2,535 for the six months ended March 31, 2024 and 2023, respectively, an increase of $77, or 3.0%. Gross profit margin for the six months ended March 31, 2024 and 2023 was 54.0% and 52.4%, respectively. The modest year-over-year increase in gross profit margin in both periods was generally due to the mix of business.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were consistent for the three and six months ended March 31, 2024 when compared to March 31, 2023. Selling, general and administrative expenses for the three months ended March 31, 2024 and 2023 were $787 and $776, respectively. Selling, general and administrative expenses for the six months ended March 31, 2024 and 2023 were $1,571 and $1,550, respectively.

Income from Operations

Income from operations was $556 for the three months ended March 31, 2024 compared to $485 for the three months ended March 31, 2023, representing a 14.6% increase from the prior year period due to increases in sales of certain product lines versus the prior year period. Income from operations was $1,041 for the six months ended March 31, 2024 compared to $985 for the six months ended March 31, 2023, representing a 5.7% increase from the prior year period as a result of a decrease in cost of sales.

Results of Operations – Corporate and Other – Three and Six Months Ended March 31, 2024 and 2023

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

	Three Months Ended March 31,						Six Months Ended March 31,
(in thousands)	2024			2023			2024			2023
Total income from operations by segment	$	2,414		$	2,669		$	5,160		$	5,774
Corporate expenses		(1,220	)		(1,160	)		(2,355	)		(2,298	)
Amortization of intangible assets		(542	)		(543	)		(1,080	)		(1,069	)
Stock-based compensation		(72	)		(62	)		(143	)		(123	)
Total corporate expenses		(1,834	)		(1,765	)		(3,578	)		(3,490	)
Interest expense		(550	)		(474	)		(1,074	)		(948	)
Fair value adjustments to Rubicon investment (net of dividends)		66			(111	)		576			(510	)
Fair value adjustments of contingent earnout liabilities		—			—			(395	)		—
Gain on extinguishment		—			—			21			—
Change in fair value of mandatorily redeemable non-controlling interest		—			—			(146	)		—
Net income before taxes		96			319			564			826
Income tax benefit (expense)		123			(101	)		(69	)		(248	)
Net Income		219			218			495			578
Preferred stock dividends		(85	)		(70	)		(157	)		(142	)
Net Income Available to Common Stockholders	$	134		$	148		$	338		$	436

Total Corporate Expenses

Total Corporate expenses, which include amortization of intangible assets, stock-based compensation and merger and acquisition expenses, increased by $69, or 3.9%, to $1,834 in the three months ended March 31, 2024 as compared to $1,765 for the three months ended March 31, 2023. Total Corporate expenses increased by $88, or 2.5%, to $3,578 for the six months ended March 31, 2024 as compared to $3,490 for the six months ended March 31, 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, an increase in executive severance costs, 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.

Table of Contents

Interest Expense

Interest expense for the consolidated company increased $76, or 16.0%, to $550 for the three months ended March 31, 2024 from $474 for the three months ended March 31, 2023. Interest expense for the consolidated company increased by $126, or 13.3%, to $1,074 for the six months ended March 31, 2024 from $948 for the six months ended March 31, 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 benefit of $123 for the three months ended March 31, 2024, as compared to an income tax expense of $101 for the three months ended March 31, 2023. On a consolidated basis, the Company recorded an income tax expense of $69 for the six months ended March 31, 2024, as compared to an income tax expense of $248 for the six months ended March 31, 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 March 31, 2024 and 2023, preferred stock dividends were $85 and $70, respectively, representing an increase of $15, or 21.4%. For the six months ended March 31, 2024 and 2023, preferred stock dividends were $157 and $142, respectively, representing an increase of $15, or 10.6%. 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 March 31, 2024 and September 30, 2023 was 6% and 5%, respectively.

Net Income

Net income was $219, or $0.18 per diluted share, for the three months ended March 31, 2024 compared to net income of $218 or $0.18 per diluted share, for the three months ended March 31, 2023. The flat net income for the three months ended March 31, 2024 compared to March 31, 2023 was largely due to an income tax benefit and an increase in the fair value of our Rubicon investment, offset by lower income from operations and increases in interest expense.

Net income was $495, or $0.41 per diluted share, for the six months ended March 31, 2024 compared to net income of $578, or $0.48 per diluted share, for the six months ended March 31, 2023. The decline in net income for the six months ended March 31, 2024 was largely due to lower profits in our Logistics segment and higher interest expenses.

Income Available to Common Stockholders

Income available to holders of Common Stock was $134, or $0.11 per diluted share, for the three months ended March 31, 2024 compared to income available to holders of Common Stock of $148, or $0.12 per diluted share, for the three months ended March 31, 2023. Income available to holders of Common Stock was $338, or $0.28 per diluted share, for the six months ended March 31, 2024 compared to income available to holders of Common Stock of $436, or $0.36 per diluted share, for the six months ended March 31, 2023. The decrease in net income available to common stockholders for the three months ended March 31, 2024 was the result of an increase in the dividend rate with respect to the Series C Preferred Stock from 5% to 6%. The decrease in net income available to common stockholders for the six months ended March 31, 2024 was the result of lower net income and an increase in the dividend rate with respect to the Series C Preferred Stock from 5% to 6%.

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.

Table of Contents

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 $4,294 for the six months ended March 31, 2024, versus $10,100 provided by operating activities for the six months ended March 31, 2023. The decrease in cash provided by operations for the six months ended March 31, 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 $1,638 for the six months ended March 31, 2024, versus $5,782 for the six months ended March 31, 2023. We used $327 for the acquisition of property and equipment, $571 for the acquisition of one business, and $740 in earnout payments to the former owners of ELFS and IBS for the six months ended March 31, 2024, compared to $178 for the acquisition of property and equipment, $1,693 in earnout payment to the former owners of ELFS and $3,911 for the acquisition of two businesses for the six months ended March 31, 2023.

Cash flows from financing activities

Net cash used in financing activities was $3,086 for the six months ended March 31, 2024, versus net cash used in financing activities of $8,596 for the six months ended March 31, 2023. Net cash used in financing activities for the six months ended March 31, 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 six months ended March 31, 2023 primarily included repayment of funds from our lines of credit and repayment of term loans.

Off-Balance Sheet Arrangements

As of March 31, 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 March 31, 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 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 a 4 percent of income before income taxes of the Company as of and for the quarter ended March 31, 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. The Company is in the process of reviewing the internal control structure of ViraQuest and, if necessary, will make appropriate changes as it integrates ViraQuest 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 March 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

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 six months ended March 31, 2024. In addition, there were no shares of Common Stock purchased by us during the six months ended March 31, 2024.

ITEM 6.

EXHIBIT INDEX

10.1	First Amendment to Amended and Restated Credit Agreement, by and among Indco, Inc. a Tennessee corporation, Antibodies Incorporated, a California corporation, Aves Labs, Inc., an Oregon corporation, PhosphoSolutions LLC, a Nevada limited liability company, ImmunoChemistry Technologies LLC, a Minnesota limited liability company, ECM BioSciences, LLC, a Kentucky limited liability company, Stephen Hall, PHD LTD, an Indiana corporation, ImmunoBioScience Corp., a Washington corporation (collectively as borrowers) and Janel Corporation, a Nevada corporation, as guarantor, and First Merchants Bank, as bank. dated January 10, 2024
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 quarter ended March 31, 2024 for the three and six months ended March 31, 2024 and 2023 in Inline XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Balance Sheets as of March 31, 2024 and September 30, 2023, (ii) Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2024 and 2023, (iii) Condensed Consolidated Statement of Changes in Stockholders’ Equity for the three and six months March 31, 2024 and 2023, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 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)

Table of Contents

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: May 3, 2024	JANEL CORPORATION
	Registrant

	/s/ Darren C. Seirer
	Darren C. Seirer
	Chairman, President and Chief Executive Officer
	(Principal Executive Officer)

Dated: May 3, 2024	JANEL CORPORATION
	Registrant

	/s/ Joseph R. Ferrara
	Joseph R. Ferrara
	Chief Financial Officer, Treasurer and Secretary

			Page

Part I - Financial Information			3

	Item 1.	Financial Statements	3

		Condensed Consolidated Balance Sheets as of March 31, 2024 (unaudited) and September 30, 2023	3

		Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2024 and 2023 (unaudited)	4

		Condensed Consolidated Statement of Stockholders’ Equity for the three and six months ended March 31, 2024 and 2023 (unaudited)	5

		Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2024 and 2023 (unaudited)	6

		Notes to Condensed Consolidated Financial Statements (unaudited)	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

	Item 4.	Controls and Procedures	25

Part II - Other Information			26

	Item 1.	Legal Proceedings	26

	Item 1A.	Risk Factors	26

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

	Item 6.	Exhibit Index	26

		Signatures	27