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, 2025

☐ 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 9, 2025 was 1,186,354.

JANEL CORPORATION

QUARTERLY REPORT ON FORM 10-Q

For Quarterly Period Ended March 31, 2025


TABLE OF CONTENTS

			Page

Part I - Financial Information			3

	Item 1.	Financial Statements (Unaudited)	3

		Condensed Consolidated Balance Sheets as of March 31, 2025 and September 30, 2024	3

		Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2025 and 2024	4

		Condensed Consolidated Statement of Stockholders’ Equity for the three and six months ended March 31, 2025 and 2024	5

		Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2025 and 2024	6

		Notes to Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

	Item 4.	Controls and Procedures	29

Part II - Other Information			30

	Item 1.	Legal Proceedings	30

	Item 1A.	Risk Factors	30

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	30

	Item 6.	Exhibit Index	30

		Signatures	31

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, 2025			September 30, 2024
ASSETS
Current Assets:
Cash	$	3,004		$	2,832
Accounts receivable, net of allowance for doubtful accounts		35,969			33,815
Note receivable		840			—
Inventory, net		4,363			4,478
Prepaid expenses and other current assets		5,102			4,829
Total current assets		49,278			45,954
Property and Equipment, net		5,553			5,492
Other Assets:
Intangible assets, net		23,834			25,117
Goodwill		23,227			23,030
Restricted cash		1,351			250
Investment in marketable securities at fair value		2,510			1,574
Operating lease right of use asset		7,523			8,621
Security deposits and other long-term assets including related party promissory notes		1,038			572
Total other assets		59,483			59,164
Total assets	$	114,314		$	110,610
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Lines of credit	$	16,938		$	23,013
Accounts payable - trade		37,010			32,000
Accrued expenses and other current liabilities		7,924			7,489
Dividends payable		2,275			2,271
Current portion of earnout		1,277			1,262
Current portion of long-term debt		1,445			1,276
Current portion of subordinated promissory notes-related party		1,574			1,628
Current portion of operating lease liabilities		2,172			2,419
Total current liabilities		70,615			71,358
Other Liabilities:
Long-term debt		7,065			3,028
Long-term portion of earnout		1,118			2,119
Subordinated promissory notes-related party		2,755			3,445
Mandatorily redeemable non-controlling interest		1,866			1,529
Deferred income taxes		2,514			2,514
Long-term operating lease liabilities		6,014			6,585
Other liabilities		177			531
Total other liabilities		21,509			19,751
Total liabilities		92,124			91,109
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, 2025 and September 30, 2024, liquidation value of $7,959 at March 31, 2025 and $7,957 at September 30, 2024		—			—
Common stock, $0.001 par value; 4,500,000 shares authorized, 1,206,354 issued and 1,186,354 outstanding as of March 31, 2025 and September 30, 2024, respectively		1			1
Paid-in capital		17,675			17,084
Common treasury stock, at cost, 20,000 shares		(240	)		(240	)
Accumulated earnings		4,754			2,656
Total stockholders' equity		22,190			19,501
Total liabilities and stockholders’ equity	$	114,314		$	110,610

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

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,
	2025			2024			2025			2024
Revenues:
Logistics	$	44,044		$	36,099		$	90,130		$	71,314
Life Sciences and Manufacturing		6,687			6,023			11,955			11,843
Total Revenues		50,731			42,122			102,085			83,157
Forwarding expenses and cost of revenues:
Forwarding expenses - Logistics		32,188			26,293			66,896			51,507
Cost of revenues - Life Sciences and Manufacturing		1,972			2,006			3,476			3,682
Total forwarding expenses and cost of revenues		34,160			28,299			70,372			55,189
Gross profit		16,571			13,823			31,713			27,968
Operating Expenses:
Selling, general and administrative		13,759			12,701			27,051			25,306
Amortization of intangible assets		642			542			1,283			1,080
Total Operating Expenses		14,401			13,243			28,334			26,386
Income from Operations		2,170			580			3,379			1,582
Other Items:
Interest expense		(560	)		(550	)		(1,226	)		(1,074	)
Other income		245			66			559			56
Income Before Income Taxes		1,855			96			2,712			564
Income tax benefit (expense)		(415	)		123			(613	)		(69	)
Net Income		1,440			219			2,099			495
Preferred stock dividends		(108	)		(85	)		(194	)		(157	)
Non-controlling interest dividends		—			—			(243	)		—
Net Income Available to Common Stockholders	$	1,332		$	134		$	1,662		$	338

Net income per share:
Basic		1.21			0.18			1.77			0.42
Diluted		1.19			0.18			1.74			0.41
Net income per share attributable to common stockholders:
Basic		1.12			0.11			1.41			0.29
Diluted		1.10			0.11			1.38			0.28
Weighted average number of shares outstanding:
Basic		1,186.4			1,186.4			1,186.4			1,186.4
Diluted		1,206.4			1,204.3			1,206.0			1,203.3

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

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, 2024		11,368	$	—		1,206,354	$	1	$	17,084			20,000	$	(240	)	$	2,656	$	19,501
Net Income		—		—		—		—		—			—		—			658		658
Dividends to preferred stockholders		—		—		—		—		(86	)		—		—			—		(86	)
Dividends to non-controlling interest		—		—		—		—		(243	)		—		—			—		(243	)
Stock based compensation		—		—		—		—		122			—		—			—		122
Balance - December 31, 2024		11,368	$	—		1,206,354	$	1	$	16,877			20,000	$	(240	)	$	3,314	$	19,952
Net Income		—		—		—		—		—			—		—			1,440		1,440
Dividends to preferred stockholders		—		—		—		—		(108	)		—		—			—		(108	)
Stock based compensation		—		—		—		—		123			—		—			—		123
Indco stock option exercise		—		—		—		—		783			—		—			—		783
Balance - March 31, 2025		11,368	$	—		1,206,354	$	1	$	17,675			20,000	$	(240	)	$	4,754	$	22,190


	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

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

JANEL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Six Months Ended March 31,
	2025			2024
Cash flows from operating activities:
Net income	$	2,099		$	495
Adjustments to reconcile net income to net cash provided by operating activities:
(Recovery of) Provision for uncollectible accounts		25			(164	)
Depreciation		313			265
Amortization of intangible assets		1,283			1,080
Amortization of acquired inventory valuation		148			171
Amortization of loan costs		96			52
Stock-based compensation		245			143
Unrealized (gain) loss on marketable securities		(873	)		642
Change in fair value of mandatorily redeemable noncontrolling interest		337			146
Fair value adjustments of contingent earnout liabilities		189			435
Gain on extinguishment		—			(21	)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		(2,179	)		430
Inventory		(32	)		(9	)
Prepaid expenses and other current assets		(274	)		(236	)
Security deposits and other long-term assets		(32	)		136
Accounts payable and accrued expenses		5,446			585
Other liabilities		276			144
Net cash provided by operating activities		7,067			4,294
Cash flows from investing activities:
Acquisition of property and equipment, net of disposals		(375	)		(327	)
Investment in marketable securities (net of dividends)		(63	)		—
Earnout Payment		(1,078	)		(740	)
Acquisitions, net of cash acquired		(197	)		(571	)
Net cash used in investing activities		(1,713	)		(1,638	)
Cash flows from financing activities:
Proceeds from (Repayments of) term loan		4,174			(1,083	)
Issuance of Note Receivable		(840	)		—
Payments to Lines of credit, net		(2,438	)		(1,186	)
Repayment of subordinate promissory notes, net		(841	)		(817	)
Repayment of acquisition loan		(3,700	)		—
Dividends paid to non-controlling interest		(244	)		—
Dividends paid to preferred shareholders		(192	)		—
Net cash used in financing activities		(4,081	)		(3,086	)
Net increase (decrease) in cash		1,273			(430	)
Cash at beginning of the period		3,082			2,461
Cash and restricted cash at end of period		4,355			2,031

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest		951			963
Income taxes		178			320
Non-cash operating activities:
Contingent earnout acquisition		-			64
Due to former owners		-			740
Non-cash financing activities:
Dividends declared to preferred stockholders		194			157

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

JANEL CORPORATION AND SUBSIDIARIES

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

(Unaudited)

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.

Note Receivable

On January 16, 2025, the Company issued a Promissory Note to a third-party borrower for principal of $450 at an effective interest rate of 8.00% with a maturity date of January 16, 2027. The borrower has the option to borrow an additional $490 and has since borrowed an additional $390. At March 31, 2025, the outstanding note receivable balance was $840.

Restricted Cash

Commencing in the second half of 2024, the Company insures certain risks through a newly formed wholly-owned captive insurance company, Gainesville Insurance Company, Inc. (“Gainesville”). In addition, we also maintain some of our normal, historical insurance policies with third-party insurers. $250 in restricted cash is held by Gainesville as required by state insurance regulations to remain in the captive insurance company as cash or cash equivalents.

During the first quarter of 2025, as part of the Eighth Amendment (the “Eighth Santander Amendment”) to the Santander Loan Agreement (as defined herein), the Company deposited $2,164 into a restricted cash account. Following a pre-approved earnout payment in January 2025, the Company holds $1,101 in a restricted cash account as of March 31, 2025.

The Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents.

Investment in Marketable Securities at fair value

The Company has investments in assets that are measured at their fair value.

As of March 31, 2025 and September 30, 2024, the Company owned 1,108,000 shares, or approximately 46.6%, of the common stock of Rubicon Technology, Inc. (“Rubicon”). Rubicon is an advanced materials provider specializing in monocrystalline sapphire for applications in optical and industrial systems. The purpose of our investment in Rubicon was 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. As of each of March 31, 2025 and September 30, 2024, the fair value of the Rubicon investment was $2,415 and $1,518, respectively.

The Company also has other investments in marketable securities whose fair value as of March 31, 2025 and September 30, 2024 was $95 and $56, respectively.

Revenue and revenue recognition

Logistics

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

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

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

In the Logistics segment, the Company disaggregates its revenue by its four primary service categories: trucking, ocean freight, air freight, and 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, 2025 and 2024 is as follows (in thousands):


	Three Months Ended March 31,				Six Months Ended March 31,
	2025		2024		2025		2024
Service Type
Trucking	$	17,992	$	18,354	$	35,712	$	36,351
Ocean		11,720		8,312		24,883		14,761
Air		6,184		5,818		13,860		12,528
Customs Brokerage and Other		8,148		3,615		15,675		7,674
Total	$	44,044	$	36,099	$	90,130	$	71,314

Life Sciences and Manufacturing

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

Mandatorily Redeemable Non-Controlling Interests

On January 14, 2025, two minority owners of Indco exercised 21,778 and 13,829 options to purchase Indco’s common stock at an average exercise price of $11.60 and $13.19, respectively, for an aggregate purchase price of $253 and $182, respectively. In conjunction with the exercise, Indco issued related party promissory notes to the two minority owners for amounts totaling the aggregate purchase price. The notes are included in security deposits and other long-term assets. As a result of the exercise of options to purchase Indco’s stock, the mandatorily redeemable non-controlling interest percentage increased from 9.8% to 14.4% as of the exercise date.

ACQUISITIONS

Fiscal 2024 Acquisitions

Logistics

On June 5, 2024, the Company completed a business combination whereby it acquired a majority ownership position in Airschott, Inc. (“Airschott”), a non-asset-based freight forwarder and customs broker, for an aggregate purchase price of $5,810. At closing, the Company purchased 80% of the outstanding stock of Airschott for $3,600 in cash, a $1,200 floating-rate seller’s note, and net liabilities assumed of $170. The Company also agreed to purchase the remaining 20% of Airschott stock in three years for deferred consideration of the greater of 20% of 1.25 times the trailing twelve months gross profit of Airschott and $1,200. The acquisition was funded by our existing acquisition draw facility with First Merchants Bank (“First Merchants”) and through our existing asset-backed facility with Santander Bank, N.A. (“Santander”). In connection with the combination, the Company recorded an aggregate of $1,661 in goodwill and $4,320 in other identifiable intangibles. Subsequently, the Company recorded a deferred tax liability of $977. In the three months ended December 31, 2024, an additional payment of $197 was made on liabilities that existed prior to the date of acquisition, increasing the goodwill related to the acquisition by the same amounts. Supplemental pro forma information has not been provided as the acquisition did not have a significant impact on Janel’s consolidated results of operations, individually or in aggregate. Airschott was founded in 1977 and is headquartered in Dulles, Virginia. The acquisition of Airschott was completed to expand our service offerings in our Logistics segment.

Life Sciences

On February 1, 2024, the Company completed a business combination whereby it acquired all 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 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 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 was headquartered in North Liberty, Iowa. The acquisition of ViraQuest was completed to expand our service offerings in our Life Sciences segment.

INVENTORY

Inventories consisted of the following (in thousands):


	March 31, 2025			September 30, 2024
Finished goods	$	1,886		$	1,860
Work-in-process		1,165			1,236
Raw materials		1,711			1,884
Gross inventory		4,762			4,980
Less – reserve for inventory valuation		(399	)		(502	)
Inventory net	$	4,363		$	4,478

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, 2025			September 30, 2024			Life
Customer relationships	$	29,790		$	29,790		10-24 Years
Trademarks/names		4,661			4,661		1-20 Years
Trademarks/names		521			521		Indefinite
Other		2,007			2,007		2-22 Years
		36,979			36,979
Less: Accumulated Amortization		(13,145	)		(11,862	)
Intangible assets, net	$	23,834		$	25,117

The composition of the intangible assets balance at March 31, 2025 and September 30, 2024 is as follows (in thousands):


	March 31, 2025			September 30, 2024
Logistics	$	22,494		$	22,494
Life Sciences		6,785			6,785
Manufacturing		7,700			7,700
		36,979			36,979
Less: Accumulated Amortization		(13,145	)		(11,862	)
Intangible assets, net	$	23,834		$	25,117

Amortization expense for the six months ended March 31, 2025 and 2024 was $1,283 and $1,080, 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, 2025 and September 30, 2024 was as follows (in thousands):


	March 31, 2025		September 30, 2024
Logistics	$	12,010	$	11,813
Life Sciences		6,171		6,171
Manufacturing		5,046		5,046
Total	$	23,227	$	23,030

NOTES PAYABLE – BANKS

Logistics

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 Bank, N.A. (“Santander”) with respect to a revolving line of credit facility (the “Santander Facility”).

The Santander Loan Agreement matures on September 21, 2026. 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. The Santander Facility is classified as a current liability on the consolidated balance sheet.

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.

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

On November 1, 2024, we entered into the Eighth Amendment to the Santander Loan Agreement. The Eighth Santander Amendment changed terms to modify the structure of our debt covenant and borrowing base calculation, including: (i) the maximum revolving facility amount available was modified to $35,000 (limited to 90% of the Janel Group Borrowers’ eligible accounts receivable borrowing base and reserves, subject to adjustments set forth in the Santander Loan Agreement); (ii) the LIBOR basis on which interest under the Santander Loan Agreement was calculated under certain circumstances was changed to the Secured Overnight Financing Rate (“SOFR”) and interest on the Santander Facility accrues at an annual rate equal to the one-month SOFR plus 2.75%; (iii) the amount the Company is permitted to distribute to holders of the Company’s Series C Preferred Stock if specified conditions are met received a one-time increase from $1,000 to $3,000; and (iv) the amount of indebtedness of the Company’s Antibodies Incorporated subsidiary that the Company was permitted to guaranty was increased from $2,920 to $5,000.

At March 31, 2025, outstanding borrowings under the Santander Facility were $15,345, representing 43.8% of the $35,000 available subject to limitations thereunder, and interest was accruing at an effective interest rate of 7.10%.

At September 30, 2024, outstanding borrowings under the Santander Facility were $19,313, representing 55.2% of the $35,000 available thereunder, and interest was accruing at an effective interest rate of 7.65%.

The Company was in compliance with the financial covenants defined in the Santander Loan Agreement at both March 31, 2025 and September 30, 2024.

Life Sciences and Manufacturing

First Merchants Bank Credit Facility

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

On April 25, 2023, Indco and certain other Subsidiaries of the Company that are part of the Life Science and Manufacturing segments (together with Indco, the “Borrowers” and each, a “Borrower”), entered into a Credit Agreement (the “Credit Agreement”) with First Merchants. The Credit Agreement constituted an amendment and restatement of the Prior First Merchants Credit Agreement. The credit facilities provided under the Credit Agreement (the “First Merchants Credit Facilities”) consisted of a $3,000 revolving loan (limited to the borrowing base and reserves), a $5,000 Acquisition A 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.

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.

On November 22, 2024, the First Merchants Credit Facilities was amended to provide for, among other changes, the conversion and extinguishment of the $3,700 under the existing Acquisition A loan into the Term A loan, an incremental increase to the Term A loan of $1,000, and the establishment of a new Acquisition B loan with a borrowing capacity of $7,000.

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. Pursuant to the November 22, 2024 amendment, the revolving loan portion will expire on November 22, 2029, the Term A loan portion will mature on November 22, 2029, the Term B loan portion will mature on July 1, 2025 and the Acquisition B loan will permit multiple draws until November 22, 2026, at which point the outstanding principal amount will amortize, with all remaining amounts due at maturity of the Acquisition B loan on November 22, 2031; each of the foregoing maturities are subject to earlier termination as provided in the Credit Agreement and unless renewed or extended.

As of March 31, 2025, there were no outstanding borrowings under the Acquisition B loan, $8,322 of outstanding borrowings under the Term A loan, $572 of outstanding borrowings under the Term B loan, $1,593 of outstanding borrowings on the revolving loan, with interest accruing on revolving loan, Acquisition B loan and the Term A loan at an effective interest rate of 7.07% and on the Term B loan at an effective interest rate of 4.19%.

As of September 30, 2024, there were $3,700 of outstanding borrowings under the Acquisition A loan, $4,028 of outstanding borrowings under the Term A loan and $585 of outstanding borrowings under the Term B loan, with interest accruing on the Acquisition A loan and revolving loan at an effective interest rate of 7.82% each, and on the Term A loan and Term B loan at an effective interest rate of 7.82% and 4.19%, respectively.

The Company was in compliance with the financial covenants defined in the First Merchants Credit Agreement at March 31, 2025 and September 30, 2024.

The table below sets forth the total long-term debt, net of capitalized loan fees of $384 and $309 for the First Merchants Credit Agreement as of March 31, 2025 and September 30, 2024, respectively (in thousands):


(in thousands)	March 31, 2025			September 30, 2024
Total Debt	$	8,510		$	4,304
Less Current Portion		(1,445	)		(1,276	)
Long-term Portion	$	7,065		$	3,028

SUBORDINATED PROMISSORY NOTES - RELATED PARTY

(A)

ICT Subordinated Promissory Note

Aves Labs, Inc., a wholly-owned subsidiary of the Company, was 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 was payable in sixteen scheduled quarterly installments of principal and interest beginning March 4, 2021 and matured on December 4, 2024 when it was fully paid.

As of September 30, 2024, the amount outstanding under the ICT Subordinated Promissory Note was $55, all of which was included in the current portion of subordinated promissory notes.

(B)

ELFS Subordinated Promissory Notes

Janel Group is the obligor on four fixed 4% subordinated promissory notes totaling $6,000 in the aggregate (together, the “ELFS Subordinated Promissory Notes”), payable to certain former shareholders of ELFS, in connection with the Company’s business combination whereby it acquired all the membership interest of ELFS and its related subsidiaries. All of the ELFS Subordinated Promissory Notes are guaranteed by the Company and are subordinate to and junior in right of payment for principal, interest, premiums and other amounts payable to the Santander Facility and the First Merchants Credit Facility. The ELFS Subordinated Promissory Notes are payable in twelve equal consecutive quarterly installments of principal together with accrued interest. Beginning October 15, 2021 and on the same day of the next eight consecutive calendar quarters, thereafter payment of accrued interest and unpaid interest is due to the former shareholders. Beginning October 15, 2023, and on the same day of the next twelve consecutive calendar quarters thereafter payment of principal together with accrued interest and unpaid interest is due to the former shareholders. In June 2022, the principal amount of the ELFS Subordinated Promissory Notes was adjusted to $5,100 due to a revised working capital adjustment of $900.

On December 1, 2023, in connection with the Purchase Agreement Amendment among Janel Group and the ELFS Sellers, the Company extended the ELFS Subordinated Promissory Notes maturity by two years and restored the working capital adjustment (as defined in the Purchase Agreement) by $900 which increased the principal amount of the ELFS Subordinated Promissory Notes to $6,000. The Company evaluated the accounting treatment related to the amendment and determined the agreements are substantially different. Therefore, the Company 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, 2025, the gross amount outstanding under the ELFS Subordinated Promissory Notes was $3,429, of which $1,174 was included in the current portion of subordinated promissory notes and $2,255 was included in the long-term portion of subordinated promissory notes.

As of September 30, 2024, the amount outstanding under the ELFS Subordinated Promissory Notes was $3,918, of which $1,173 was included in the current portion of subordinated promissory notes and $2,745 was included in the long-term portion of subordinated promissory notes.

(C)

Airschott Subordinated Promissory Note

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

As of March 31, 2025, the amount outstanding under the Airschott Subordinated Promissory Note was $900, $400 of which was included in the current portion of subordinated promissory notes.

As of September 30, 2024, the amount outstanding under the Airschott Subordinated Promissory Note was $1,100, of which $400 was included in the current portion of subordinated promissory notes and $700 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, 2025			September 30, 2024
Total subordinated promissory notes	$	4,329		$	5,073
Less current portion of subordinated promissory notes		(1,574	)		(1,628	)
Long-term portion of subordinated promissory notes	$	2,755		$	3,445

STOCKHOLDERS’ EQUITY

(in thousands, except share and per share data)

Janel is authorized to issue 4,500,000 shares of common stock, par value $0.001. In addition, the Company is authorized to issue 100,000 shares of preferred stock, par value $0.001. The preferred stock is issuable in series with such voting rights, if any, designations, powers, preferences and other rights and such qualifications, limitations and restrictions as may be determined by the Company’s Board of Directors or a duly authorized committee thereof, without stockholder approval. The Board of Directors may fix the number of shares constituting each series and increase or decrease the number of shares of any series.

(A)

Preferred Stock

Series C Cumulative Preferred Stock

Shares of the Company’s Series C Cumulative Preferred Stock (the “Series C Stock”) are entitled to receive annual dividends at a rate of 5% per annum of the original issuance price of $500, 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, 2025 and September 30, 2024 was 7% and 6%, respectively. In the event of liquidation, holders of Series C Stock shall be paid an amount equal to the original issuance price, plus any accrued dividends thereon. Shares of Series C Stock may be redeemed by the Company at any time upon notice and payment of the original issuance price, plus any accrued dividends thereon. The liquidation value of Series C Stock was $7,959 and $7,957 as of March 31, 2025 and September 30, 2024, respectively.

For the six months ended March 31, 2025 and 2024, the Company declared dividends on Series C Stock of $194 and $157, respectively. At March 31, 2025 and September 30, 2024, the Company had accrued dividends of $2,275 and $2,271, respectively.

(B)

Equity Incentive Plan

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 May 12, 2017, the Company adopted the 2017 Equity Incentive Plan (the “2017 Plan”) pursuant to which the Company may grant (i) incentive stock options, (ii) non-statutory stock options, (iii) restricted stock awards and (iv) stock appreciation rights with respect to shares of the Company’s common stock, par value of $0.001 per share (“Common Stock”), to directors, officers, employees of and consultants to the Company. 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 the Company may grant non-statutory stock options, restricted stock awards and stock appreciation rights of Common Stock 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 reflected certain other non-substantive amendments.

Participants and all terms of any grant under the Amended Plan within the discretion of the Company’s Compensation Committee.

STOCK-BASED COMPENSATION

(in thousands, except share and per share data)

Total stock-based compensation for the six months ended March 31, 2025 and 2024 amounted to $245 and $143, 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, 2024		49,993	$	25.31		6.9	$	544.96
Granted		12,500	$	40.50		5.3	$	—
Outstanding balance at March 31, 2025		62,493	$	28.35		7.0	$	544.96
Exercisable at March 31, 2025		27,493	$	13.88		5.0	$	498.09

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, 2025 of $32.00 per share and the exercise price of the stock options that had strike prices below such closing price.

As of March 31, 2025, there was approximately $245 of total unrecognized compensation expense related to the unvested employee stock options, which is expected to be recognized in fiscal year 2025.

Liability classified share-based awards

During the six months ended March 31, 2025, 35,607 options were exercised with respect to Indco’s common stock. The Company uses the Black-Scholes option pricing model to estimate the fair value of Indco’s share-based awards. In applying this model, the Company used the following assumptions:


	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding balance at September 30, 2024		35,607		$	12.22		4.8	$	375.02
Exercised		(35,607	)	$	12.22		—	$	—
Outstanding balance at March 31, 2025		—		$	—		—	$	—
Exercisable at March 31, 2025		—		$	—		—	$	—

The aggregate intrinsic value in the above table was calculated as the difference between the valuation of Indco’s common stock at September 30, 2024 of $22.75 per share and the exercise price of the stock options that had strike prices below such closing price.

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, 2025 and 2024:


	Three Months Ended March 31,						Six Months Ended March 31,
(in thousands, except per share data)	2025			2024			2025			2024
Income:
Net income	$	1,440		$	219		$	2,099		$	495
Preferred stock dividends		(108	)		(85	)		(194	)		(157	)
Non-controlling interest dividends		—			—			(243	)		—
Net income available to common stockholders	$	1,332		$	134		$	1,662		$	338

Common Shares:
Basic - weighted average common shares		1,186.4			1,186.4			1,186.4			1,186.4
Effect of dilutive securities:
Stock options		20.0			17.9			19.6			16.9
Diluted - weighted average common stock		1,206.4			1,204.3			1,206.0			1,203.3

Income per Common Share:
Basic -
Net income	$	1.21		$	0.18		$$	1.77		$	0.42
Preferred stock dividends		(0.09	)		(0.07	)		(0.16	)		(0.13	)
Non-controlling interest dividends		—			—			(0.20	)		—
Net income available to common stockholders	$	1.12		$	0.11		$	1.41		$	0.29

Diluted -
Net income	$	1.19		$	0.18		$	1.74		$	0.41
Preferred stock dividends		(0.09	)		(0.07	)		(0.16	)		(0.13	)
Non-controlling interest dividends		—			—			(0.20	)		—
Net income available to common stockholders	$	1.10		$	0.11		$	1.38		$	0.28

The computation for the diluted number of shares excludes unexercised stock options that are anti-dilutive. There were 22.5 anti-dilutive shares for each of the three- and six-month periods ended March 31, 2025 and March 31, 2024.

11.

INCOME TAXES

The reconciliation of income tax computed at the Federal statutory rate to the provision for income taxes from continuing operations for the three- and six-month periods ended March 31, 2025 and 2024 was as follows (in thousands):


	Three Months Ended March 31,						Six Months Ended March 31,
	2025			2024			2025			2024
Federal taxes at statutory rates	$	(396	)	$	(20	)	$	(576	)	$	(118	)
Permanent differences		93			151			143			93
State and local taxes, net of Federal benefit		(112	)		(8	)		(180	)		(44	)
Total	$	(415	)	$	123		$	(613	)	$	(69	)

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, 2025:


For the three months ended March 31, 2025 (in thousands)	Consolidated		Logistics		Life Sciences		Manufacturing		Corporate
Revenues	$	50,731	$	44,044	$	4,166	$	2,521	$	—
Forwarding expenses and cost of revenues		34,160		32,188		796		1,176		—
Gross profit		16,571		11,856		3,370		1,345		—
Selling, general and administrative		13,759		9,524		1,918		802		1,515
Amortization of intangible assets		642		—		—		—		642
Income (loss) from operations		2,170		2,332		1,452		543		(2,157	)
Interest expense		560		395		90		75		—
Identifiable assets		114,314		44,603		12,629		4,794		52,288
Capital expenditures, net of disposals		284		14		255		15		—


For the six months ended March 31, 2025 (in thousands)	Consolidated		Logistics		Life Sciences		Manufacturing		Corporate
Revenues	$	102,085	$	90,130	$	7,149	$	4,806	$	—
Forwarding expenses and cost of revenues		70,372		66,896		1,246		2,230		—
Gross profit		31,713		23,234		5,903		2,576		—
Selling, general and administrative		27,051		18,892		3,917		1,743		2,499
Amortization of intangible assets		1,283		—		—		—		1,283
Income (loss) from operations		3,379		4,342		1,986		833		(3,782	)
Interest expense		1,226		879		207		140		—
Identifiable assets		114,314		44,603		12,629		4,794		52,288
Capital expenditures, net of disposals		375		25		333		17		—


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		—		—

13.

FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

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


Assets	March 31, 2025		September 30, 2024
Level 1 Investment in Rubicon at fair value	$	2,415		1,518
Level 1 Investment in other marketable securities at fair value		95		56
Total Investment in marketable securities at fair value		2,510		1,574

On August 19, 2022, the Company acquired 1,108,000 shares of the common stock, par value $0.001 per share, of Rubicon at a price per share of $20.00, in a cash tender offer. As of each of March 31, 2025 and September 30, 2024, 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, 2025		September 30, 2024
Balance beginning of period	$	1,518	$	1,573
Fair value adjustment to Rubicon investment		897		(55	)
Balance end of period	$	2,415	$	1,518

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


Contingent earnout liabilities	March 31, 2025		September 30, 2024
Level 1 Contingent earnout liabilities	$	1,082	$	2,100
Level 3 Contingent earnout liabilities		1,313		1,281
Total	$	2,395	$	3,381

These liabilities relate to the estimated fair value of earnout payments to former ImmunoBioScience Corp. (“IBSC”), ViraQuest, ELFS, and Airschott owners as of March 31, 2025 and September 30, 2024.

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

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

The current and non-current portions of the fair value of the contingent earnout liabilities at March 31, 2025 were $1,277 and $1,118, respectively. The current and non-current portions of the fair value of the contingent earnout liabilities at September 30, 2024 were $1,262 and $2,119, 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, 2025			September 30, 2024
Balance beginning of period	$	3,381		$	2,330
Fair value of contingent consideration recorded in connection with business combinations		—			1,017
Earnout payment		(1,078	)		(740	)
Fair value adjustment of contingent earnout liabilities		92			774
Balance end of period	$	2,395		$	3,381

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 determines if an arrangement is a lease at inception. Assets and obligations related to operating leases are included in operating lease right-of-use (“ROU”) assets; current portion of operating lease liability; and operating lease liability, net of current portion in our consolidated balance sheets. Assets and obligations related to finance leases are included in property, technology and equipment, net; current portion of finance lease liability; and finance lease liability, net of current portion in our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the incremental borrowing rate based on the information available at commencement date is used in determining the present value of lease payments. We use the implicit rate when readily determinable. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

The Company’s agreements with lease and non-lease components are each accounted for as a single lease component.

For leases with an initial term of twelve months or less, the Company elected the exemption from recording ROU assets and lease liabilities for all leases that qualify and records rent expense on a straight-line basis over the lease term.

The Company has operating leases for office and warehouse space in certain locations where it conducts business. As of March 31, 2025, the remaining terms of the Company’s operating leases were between 1 and 107 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, 2025 and 2024 were as follows (in thousands):


	Three Months Ended March 31,				Six Months Ended March 31,
	2025		2024		2025		2024
Operating lease cost	$	646	$	614	$	1,301	$	1,213
Short-term lease cost		97		85		149		185
Total lease cost	$	743	$	699	$	1,450	$	1,398

Rent expense for the six months ended March 31, 2025 and 2024 was $1,450 and $1,398, respectively.

Operating lease ROU 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, 2025 were $7,523, $2,172 and $6,014, respectively.

Operating lease ROU 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, 2024 were $8,621, $2,419 and $6,585, respectively.

As of March 31, 2025 and September 30, 2024, the weighted-average remaining lease term and the weighted-average discount rate related to the Company’s operating leases were 5.0 years and 6.48% and 5.3 years and 5.72%, respectively.

Future minimum lease payments under non-cancelable operating leases as of March 31, 2025 were as follows (in thousands):


2026	$	2,349
2027		2,013
2028		1,977
2029		1,586
2030		559
Thereafter		1,084
Total undiscounted lease payments		9,568
Less imputed interest		(1,382	)
Total lease obligations	$	8,186

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 six months ended March 31, 2025, 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 rising interest rates on our investments, business and operations; conflicts of interest with the minority shareholders of our business; 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 (including the imposition of tariffs and any resulting counter-tariffs as well as reductions in federal government funding, such as budget cuts for the National Institutes of Health and funding reductions for universities); 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; competition from parties who sell their businesses to us and from professionals who cease working for us; 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; higher carrier prices may result in decreased adjusted gross profit; 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, our ability to issue shares of preferred stock with greater rights than our common stock, the lack of a guaranteed continued public trading market for our common stock, and costs related to maintaining our status as a public company; terrorist attacks and other acts of violence or war 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, 2024.

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.

Our Business Segments

Logistics

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

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

Life Sciences

The Company’s Life Sciences segment is comprised of several wholly-owned subsidiaries. The Company’s Life Sciences segment manufactures and distributes 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 sciences companies on an original equipment manufacturer 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.

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 represented 45.0% of Rubicon’s issued and outstanding shares of common stock as of August 3, 2022, as reported in Rubicon’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022, filed with the SEC on August 12, 2022. The Company owned approximately 46.6% of Rubicon’s total issued and outstanding shares of common stock as of March 31, 2025 and September 30, 2024.

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 6, 2024. 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, 2025.

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 are 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 revenues and gross profit excluding those from acquisitions within the preceding 12 months. The organic growth presentation provides useful period-to-period comparison of revenues and gross profit as it excludes revenues and gross profit 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 a subjective determination by management regarding the nature and classification of events and circumstances that users of the financial statements may find significant.

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

Results of Operations – Janel Corporation - Three and Six Months Ended March 31, 2025 and 2024

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)	2025		2024		2025		2024
Revenues	$	50,731	$	42,122	$	102,085	$	83,157
Forwarding expenses and cost of revenues		34,160		28,299		70,372		55,189
Gross profit		16,571		13,823		31,713		27,968
Total operating expenses		14,401		13,243		28,334		26,386
Income from operations		2,170		580		3,379		1,582
Net income		1,440		219		2,099		495
Adjusted operating income	$	3,014	$	1,282	$	5,055	$	2,976

Consolidated revenues for the three months ended March 31, 2025 were $50,731, which was $8,609 or 20.4% higher than the prior year period. Consolidated revenues for the six months ended March 31, 2025 were $102,085, which was $18,928 or 22.8% higher than the prior year period. The increase in revenues for both the three and six months ended March 31, 2025 was primarily due to our Logistics business segment.

Income from operations for the three months ended March 31, 2025 was $2,170 compared with $580 in the prior year period. Income from operations for the six months ended March 31, 2025 was $3,379 compared with $1,582 in the prior year period. The increase in income from operations for both the three and six months ended March 31, 2025 resulted from higher profits in our Logistics segment.

Net income for the three months ended March 31, 2025 totaled $1,440 or $1.19 per diluted share, compared to net income of $219 or $0.18 per diluted share for the three months ended March 31, 2024. Net income for the six months ended March 31, 2025 totaled $2,099 or $1.74 per diluted share, compared to net income of $495 or $0.41 per diluted share for the six months ended March 31, 2024. The increase in net income for the three and six months ended March 31, 2025 was largely due to higher profits in our Logistics segment.

Adjusted operating income for the three months ended March 31, 2025 increased to $3,014 versus $1,282 in the prior year period. Adjusted operating income for the six months ended March 31, 2025 increased to $5,055 versus $2,976 in the prior year period. The increase in adjusted operating income for both the three and six months ended March 31, 2025 resulted primarily from higher profits in our Logistics segment.

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)	2025		2024		2025		2024
Income from operations	$	2,170	$	580	$	3,379	$	1,582
Amortization of intangible assets		642		542		1,283		1,080
Stock-based compensation		123		72		245		143
Cost recognized on sale of acquired inventory		79		88		148		171
Adjusted operating income	$	3,014	$	1,282	$	5,055	$	2,976

Results of Operations – Logistics – Three and Six Months Ended March 31, 2025 and 2024

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 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.


	Three Months Ended March 31,						Six Months Ended March 31,
	2025			2024			2025			2024
(in thousands)
Revenues	$	44,044		$	36,099		$	90,130		$	71,314
Forwarding expenses		32,188			26,293			66,896			51,507
Gross profit		11,856			9,806			23,234			19,807
Gross profit margin		26.9	%		27.2	%		25.8	%		27.8	%
Selling, general and administrative expenses		9,524			8,877			18,892			17,742
Income from operations	$	2,332		$	929		$	4,342		$	2,065

Revenues

Total revenues for the three months ended March 31, 2025 was $44,044 as compared to $36,099 for the three months ended March 31, 2024, an increase of $7,945, or 22.0%. Total revenues for the six months ended March 31, 2025 was $90,130 as compared to $71,314 for the six months ended March 31, 2024, an increase of $18,816 or 26.4%. Revenues in both periods increased due to higher freight rates, the inclusion of acquired revenue from an acquisition and higher demand as customers prepared for tariff increases.

Gross Profit

Gross profit for the three months ended March 31, 2025 was $11,856, an increase of $2,050, or 20.9%, as compared to $9,806 for the three months ended March 31, 2024. The increase in gross profit for the three months ended March 31, 2025 compared to the prior year was primarily related to $1,009 of gross profit from the Airschott acquisition. Excluding the acquisition, organic growth in gross profit increased 10.6% versus the prior year period. Gross profit likely benefited in the quarter from customer preparations for anticipated increases in tariffs. Gross profit margin as a percentage of revenues decreased to 26.9% for the three months ended March 31, 2025, compared to 27.2% for the prior year period.

Gross profit for the six months ended March 31, 2025 was $23,234, an increase of $3,427, or 17.3%, as compared to $19,807 for the six months ended March 31, 2024. The increase in gross profit for the six months ended March 31, 2025, compared to the prior year period was due to $2,169 in gross profit from the Airschott acquisition. Excluding the acquisition, organic growth in gross profit increased 6.4% in the six months versus the prior year period. Gross profit likely benefited from customer preparations for anticipated increases in tariffs. Gross profit margin as a percentage of revenue decreased to 25.8% compared to 27.8% for the prior year period, primarily due to increased revenues due to higher freight prices relative to forwarding expenses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended March 31, 2025 were $9,524, as compared to $8,877 for the three months ended March 31, 2024. This increase of $647, or 7.3%, was mainly due to the Airschott acquisition. Selling, general and administrative expenses as a percentage of revenue were 21.6% and 24.6% for the three months ended March 31, 2025 and 2024, respectively. The decrease in selling, general and administrative expenses as a percentage of revenue was due to a reduction in various expenses including personnel costs and higher freight prices.

Selling, general and administrative expenses for the six months ended March 31, 2025 were $18,892, as compared to $17,742 for the six months ended March 31, 2024. This increase of $1,150, or 6.5%, was mainly due to the Airschott acquisition, partially offset by a reduction in various expenses, including personnel costs. Selling, general and administrative expenses as a percentage of revenues were 21.0% and 24.9% of revenues for the six months ended March 31, 2025 and 2024, respectively. The decrease in selling, general and administrative expenses as a percentage of revenues for the six-month period was due to a reduction in various expenses including personnel costs and higher freight prices.

Income from Operations

Income from operations increased to $2,332 for the three months ended March 31, 2025, as compared to income from operations of $929 for the three months ended March 31, 2024, an increase of $1,403, or 151.0%. Operating margin as a percentage of gross profit for the three months ended March 31, 2025 was 19.7% compared to 9.5% in the prior year period.

Income from operations increased to $4,342 for the six months ended March 31, 2025, as compared to $2,065 for the six months ended March 31, 2024, an increase of $2,277, or 110.3%. Operating margin as a percentage of gross profit for the six months ended March 31, 2025 was 18.7% compared to 10.4% in the prior year period. The increase in operating margin for the three- and six-month periods was the result of an increase in gross profit due to increased demand and a reduction in various expenses including personnel costs.

Results of Operations – Life Sciences – Three and Six Months Ended March 31, 2025 and 2024

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


	Three Months Ended March 31,						Six Months Ended March 31,
	2025			2024			2025			2024
(in thousands)
Revenues	$	4,166		$	3,524		$	7,149		$	7,005
Cost of sales		717			762			1,098			1,285
Cost recognized upon sale of acquired inventory		79			88			148			171
Gross profit		3,370			2,674			5,903			5,549
Gross profit margin		80.9	%		75.9	%		82.6	%		79.2	%
Selling, general and administrative expenses		1,918			1,745			3,917			3,495
Income from operations	$	1,452		$	929		$	1,986		$	2,054

Revenues

Total revenues were $4,166 and $3,524 for the three months ended March 31, 2025 and 2024, respectively, reflecting an increase of $642, or 18.2%, primarily due to increased diagnostic and research reagent sales. Organic growth excluding acquisition revenue increased $636, or 18.0%.

Total revenues were $7,149 and $7,005 for the six months ended March 31, 2025 and 2024, respectively, reflecting an increase of $144 or 2.1%. Organic growth excluding acquisition revenue increased $98, or 1.4%.

Gross Profit

Gross profit was $3,370 and $2,674 for the three months ended March 31, 2025 and 2024, respectively, an increase of $696, or 26.0%. During the three months ended March 31, 2025 and 2024, gross profit margin was 80.9% and 75.9%, respectively, as product mix improvements and price increases yielded higher margins.

Gross profit was $5,903 and $5,549 for the six months ended March 31, 2025 and 2024, respectively, an increase of $354, or 6.4%. In the six months ended March 31, 2025 and 2024, gross profit margin was 82.6% and 79.2%, respectively. Gross profit margin increased as product mix improvements and price increases yielded higher margins.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the Life Sciences segment were $1,918 and $1,745 for the three months ended March 31, 2025 and 2024, respectively. Selling, general and administrative expenses were $3,917 and $3,495 for the six months ended March 31, 2025 and 2024, respectively. The year-over-year increases for both periods were largely due to additional expenses from acquired business, higher supply costs, and increased throughput.

Income from Operations

Income from operations for the three months ended March 31, 2025 and 2024 was $1,452 and $929, respectively, an increase of $523, or 56.3%. Income from operations for the six months ended March 31, 2025 and 2024 was $1,986 and $2,054, respectively, a decrease of $68, or 3.3%. Both periods were positively impacted by the timing of shipments, product mix improvements, and increased operating expenses.

Results of Operations - Manufacturing – Three and Six Months Ended March 31, 2025 and 2024

The Company’s Manufacturing segment manufactures and distributes mixing equipment and apparatuses for specific applications within various industries. The customer base is comprised of small- to mid-sized businesses as well as other larger customers for which they fulfill repetitive production orders.


	Three Months Ended March 31,						Six Months Ended March 31,
	2025			2024			2025			2024
(in thousands)
Revenues	$	2,521		$	2,499		$	4,806		$	4,838
Cost of sales		1,176			1,156			2,230			2,226
Gross profit		1,345			1,343			2,576			2,612
Gross profit margin		53.4	%		53.7	%		53.6	%		54.0	%
Selling, general and administrative expenses		802			787			1,743			1,571
Income from operations	$	543		$	556		$	833		$	1,041

Revenues

Total revenues were $2,521 and $2,499 for the three months ended March 31, 2025 and 2024, respectively, an increase of $22, or 0.9%. Total revenues were $4,806 and $4,838 for the six months ended March 31, 2025 and 2024, respectively, a decrease of $32, or 0.7%. Total revenues for the three and six months ended March 31, 2025 effectively remained consistent year-over-year.

Gross Profit

Gross profit was $1,345 and $1,343 for the three months ended March 31, 2025 and 2024, respectively, an increase of $2, or 0.1%. Gross profit margin for the three months ended March 31, 2025 and 2024 was 53.4% and 53.7%, respectively. Gross profit was $2,576 and $2,612 for the six months ended March 31, 2025 and 2024, respectively, a decrease of $36, or 1.4%, largely as a result of product mix. Gross profit margin for the six months ended March 31, 2025 and 2024 was 53.6% and 54.0%, respectively.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $802 and $787 for the three months ended March 31, 2025 and 2024, respectively, an increase of $15, or 1.9%. Selling, general and administrative expenses were $1,743 and $1,571 for the six months ended March 31, 2025 and 2024, respectively, an increase of $172, or 10.9%. The increase in selling, general and administrative expenses in both periods was reflective of general economic cost increases.

Income from Operations

Income from operations was $543 for the three months ended March 31, 2025 compared to $556 for the three months ended March 31, 2024, representing a 2.3% decrease from the prior year period. Income from operations was $833 for the six months ended March 31, 2025 compared to $1,041 for the six months ended March 31, 2024, representing a 20.0% decrease from the prior year period, primarily as a result of a decrease in revenues and an increase in costs.

Results of Operations – Corporate and Other – Three and Six Months Ended March 31, 2025 and 2024

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)	2025			2024			2025			2024
Total income from operating segments	$	4,327		$	2,414		$	7,161		$	5,160
Corporate expenses		(1,393	)		(1,220	)		(2,254	)		(2,355	)
Amortization of intangible assets		(642	)		(542	)		(1,283	)		(1,080	)
Stock-based compensation - Corporate		(122	)		(72	)		(245	)		(143	)
Total corporate expenses		(2,157	)		(1,834	)		(3,782	)		(3,578	)
Interest expense		(560	)		(550	)		(1,226	)		(1,074	)
Other income		245			66			559			56
Net income before taxes		1,855			96			2,712			564
Income tax benefit (expense)		(415	)		123			(613	)		(69	)
Net income		1,440			219			2,099			495
Preferred stock dividends		(108	)		(85	)		(194	)		(157	)
Non-controlling interest dividends		—			—			(243	)		—
Net income Available to Common Stockholders	$	1,332		$	134		$	1,662		$	338

Total Corporate Expenses

Total Corporate expenses, which include amortization of intangible assets, stock-based compensation and merger and acquisition expenses, increased by $323, or 17.6%, to $2,157 for the three months ended March 31, 2025 as compared to $1,834 for the three months ended March 31, 2024. Total Corporate expenses increased by $204, or 5.7%, to $3,782 for the six months ended March 31, 2025 as compared to $3,578 for the six months ended March 31, 2024. The increase in total corporate expenses in both periods was primarily due to higher stock-based compensation and higher amortization expense. We incur merger and acquisition deal-related expenses and intangible amortization at the Corporate level rather than at the segment level.

Interest Expense

Interest expense for the consolidated company increased $10, or 1.8%, to $560 for the three months ended March 31, 2025 from $550 for the three months ended March 31, 2024. Interest expense for the consolidated company increased by $152, or 14.2%, to $1,226 for the six months ended March 31, 2025 from $1,074 for the six months ended March 31, 2024. The increase in interest expense in both periods was primarily due to higher average debt balances partially offset by lower interest rates.

Income Tax Expense

On a consolidated basis, the Company recorded an income tax expense of $415 for the three months ended March 31, 2025, as compared to an income tax benefit of $123 for the three months ended March 31, 2024. On a consolidated basis, the Company recorded an income tax expense of $613 for the six months ended March 31, 2025, as compared to an income tax expense of $69 for the six months ended March 31, 2024.

Preferred Stock Dividends

Preferred stock dividends include any dividends accrued on the Company’s Series C Cumulative Preferred Stock (the “Series C Preferred Stock”). For the three months ended March 31, 2025 and 2024, preferred stock dividends were $108 and $85, respectively. For the six months ended March 31, 2025 and 2024, preferred stock dividends were $194 and $157, respectively.

Non-Controlling Interest Dividends

Non-controlling interest dividends include the dividends accrued and paid to the non-controlling interest of Indco (the “Non-controlling interest dividends”). For the six months ended March 31, 2025, non-controlling interest dividends were $243.

Net Income

Net income was $1,440, or $1.19 per diluted share, for the three months ended March 31, 2025 compared to net income of $219 or $0.18 per diluted share, for the three months ended March 31, 2024. The increase in net income for the three months ended March 31, 2025 was largely due to stronger revenues across the Logistics and Life Sciences segments.

Net income was $2,099, or $1.74 per diluted share, for the six months ended March 31, 2025 compared to net income of $495, or $0.41 per diluted share, for the six months ended March 31, 2024. The increase in net income for the six months ended March 31, 2025 was largely due to stronger revenues and profits in the Logistics and Life Sciences segments.

Net Income Available to Common Stockholders

Net income available to Common Stockholders was $1,332, or $1.10 per diluted share, for the three months ended March 31, 2025 compared to net income available to Common Stockholders of $134, or $0.11 per diluted share, for the three months ended March 31, 2024. Net income available to Common Stockholders was $1,662, or $1.38 per diluted share, for the six months ended March 31, 2025 compared to net income available to Common Stockholders of $338, or $0.28 per diluted share, for the six months ended March 31, 2024. The increase in net income available to Common Stockholders for the three and six months ended March 31, 2025 was the result of stronger revenues and profits in the Logistics and Life Sciences segments, partially offset by increases in preferred stock dividends and non-controlling interest dividends.

LIQUIDITY AND CAPITAL RESOURCES

General

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

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

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

Our cash flow performance for the 2025 fiscal year may not necessarily be indicative of future cash flow performance.

Cash flows from operating activities

Net cash provided by operating activities was $7,067 for the six months ended March 31, 2025, versus $4,294 provided by operating activities for the six months ended March 31, 2024. The increase in cash provided by operations for the six months ended March 31, 2025 compared to the prior year period was primarily due to the changes in operating assets and liabilities.

Cash flows from investing activities

Net cash used in investing activities totaled $1,713 for the six months ended March 31, 2025, versus $1,638 for the six months ended March 31, 2024. The change in net cash used in investing activities was primarily due to an increase in earnout payments.

Cash flows from financing activities

Net cash used in financing activities was $4,081 for the six months ended March 31, 2025, versus $3,086 for the six months ended March 31, 2024. The change in net cash used in financing activities was primarily due to the conversion and extinguishment of the acquisition loan into the term loan, dividends paid to preferred stockholders, and dividends paid to non-controlling interest.

Off-Balance Sheet Arrangements

As of March 31, 2025, 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 Principal Executive Officer and Principal 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 Principal Executive Officer and our Principal 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, 2025, the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Principal Executive Officer and our Principal Financial Officer have concluded that as of March 31, 2025, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and our Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There has been no change in the Company’s overall 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, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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, 2024. There have been no material changes to the risk factors disclosed in Part I—Item 1A of the Company’s 2024 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, 2025. In addition, there were no shares of Common Stock purchased by us during the six months ended March 31, 2025.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

On May 8, 2025, the Company’s common stock commenced trading on the OTCQX after previously being quoted on the OTC Pink. The transition to the OTCQX was completed following the satisfaction of all applicable eligibility requirements, including financial standards, corporate governance requirements, and disclosure obligations.

ITEM 6.

EXHIBIT INDEX


31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer (filed herewith).
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith).
32.1	Section 1350 Certification of Principal Executive Officer (filed herewith).
32.2	Section 1350 Certification of Chief Financial Officer (filed herewith).
101	Interactive data files providing financial information from the Company’s Quarterly Report on Form 10-Q for the three and six months ended March 31, 2025 and 2024 in Inline XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Balance Sheets as of March 31, 2025 and September 30, 2024, (ii) Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2025 and 2024, (iii) Condensed Consolidated Statement of Changes in Stockholders’ Equity for the three and six months March 31, 2025 and 2024, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2025 and 2024, 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).

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 9, 2025	JANEL CORPORATION
	(Registrant)

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

Dated: May 9, 2025	/s/ Joseph R. Ferrara
	Joseph R. Ferrara
	Chief Financial Officer, Treasurer and Secretary
	(Principal Financial Officer)