March 31, 2018
| Nevada | 86-1005291 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
| 303 Merrick Road | ||
| Lynbrook, New York | 11563 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
(Former name, former address and former fiscal year if changed from last report.)
| Large accelerated filer | Accelerated filer | ||
| Non-accelerated filer | Smaller reporting company | ||
| (Do not check if a smaller reporting company) | Emerging growth company | ||
March 31, 2018
| Page | |||
| Part I - Financial Information | |||
| Item 1. | Financial Statements: | ||
| 3 | |||
| 4 | |||
| 5 | |||
| 6 | |||
| 7 | |||
| Item 2. | |||
| Item 4. | |||
| Part II - Other Information | |||
| Item 1. | |||
| Item 6. | |||
PART I - FINANCIAL INFORMATION
| June 30, | September 30, | |||||||
| 2017 | 2016 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 1,889,468 | $ | 965,115 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $242,270 and $230,000, respectively | 13,323,679 | 12,353,582 | ||||||
| Inventory | 332,365 | 356,875 | ||||||
| Prepaid expenses and sundry current assets | 314,059 | 233,716 | ||||||
| Total current assets | 15,859,571 | 13,909,288 | ||||||
| PROPERTY AND EQUIPMENT, NET | 338,218 | 287,391 | ||||||
| OTHER ASSETS | ||||||||
| Intangible assets, net (Note 3) | 12,041,771 | 12,373,266 | ||||||
| Goodwill | 9,101,858 | 8,443,477 | ||||||
| Deferred income taxes | 587,983 | 844,977 | ||||||
| Security deposits | 122,246 | 99,658 | ||||||
| Total other assets | 21,853,858 | 21,761,378 | ||||||
| Total assets | $ | 38,051,647 | $ | 35,958,057 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Notes payable - banks (Note 4) | $ | 6,674,311 | $ | 6,498,403 | ||||
| Note payable - related party, net of imputed interest (Note 5) | 492,635 | 500,000 | ||||||
| Accounts payable - trade | 11,635,006 | 9,298,029 | ||||||
| Accrued expenses and other current liabilities | 1,832,335 | 1,254,926 | ||||||
| Dividends payable | 994,945 | 623,077 | ||||||
| Note payable – other | - | - | ||||||
| Current portion of long-term debt | 857,148 | 857,148 | ||||||
| Total current liabilities | 22,486,380 | 19,031,583 | ||||||
| OTHER LIABILTIES | ||||||||
| LONG-TERM DEBT – BANK | ||||||||
| Long-term debt (Note 4) | 3,640,179 | 4,616,540 | ||||||
| Long-term debt - related party, net of imputed interest (Note 5) | - | 471,108 | ||||||
| Deferred compensation | 78,568 | 78,568 | ||||||
| Total other liabilities | 3,718,747 | 5,166,216 | ||||||
| Total liabilities | 26,205,127 | 24,197,799 | ||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Preferred stock, $0.001 par value; 100,000 shares authorized | ||||||||
| Series A 20,000 shares authorized and 20,000 shares issued and outstanding at both dates | 20 | 20 | ||||||
| Series B 5,700 shares authorized and 1,271 shares issued and outstanding at both dates | 1 | 1 | ||||||
| Series C 20,000 shares authorized and 14,205 shares issued and outstanding at both dates | 15 | 15 | ||||||
| Common stock, $0.001 par value; 4,500,000 shares authorized, 573,951 shares issued and 553,951 and 573,951 shares outstanding, respectively | 574 | 574 | ||||||
| Paid-in capital | 12,710,441 | 12,920,416 | ||||||
| Treasury stock, at cost 20,000 shares (Note 6) | (240,000 | ) | - | |||||
| Accumulated deficit | (1,700,803 | ) | (2,161,994 | ) | ||||
| Total Janel Corporation stockholders' equity | 10,770,248 | 10,759,032 | ||||||
| Non-controlling interest | 1,076,272 | 1,001,226 | ||||||
| Total stockholders' equity | 11,846,520 | 11,760,258 | ||||||
| Total liabilities and stockholders' equity | $ | 38,051,647 | $ | 35,958,057 | ||||
| March 31, | September 30, | |||||||
| 2018 | 2017 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 746,252 | $ | 987,848 | ||||
| Accounts receivable, net of allowance for doubtful accounts | 14,054,133 | 14,983,100 | ||||||
| Inventory | 1,622,311 | 349,813 | ||||||
| Prepaid expenses and other current assets | 424,588 | 324,745 | ||||||
| Total current assets | 16,847,284 | 16,645,506 | ||||||
| Propert and Equipment, net | 411,991 | 392,827 | ||||||
| Other Assets: | ||||||||
| Intangible assets, net | 11,975,473 | 11,848,598 | ||||||
| Goodwill | 10,621,111 | 9,745,191 | ||||||
| Security deposits | 135,541 | 115,493 | ||||||
| Total other assets | 22,732,125 | 21,709,282 | ||||||
| Total assets | $ | 39,991,400 | $ | 38,747,615 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Line of credit | $ | 6,642,524 | $ | 6,138,537 | ||||
| Note payable - related party | - | 500,000 | ||||||
| Accounts payable - trade | 12,321,679 | 13,325,689 | ||||||
| Accrued expenses and other current liabilities | 2,561,600 | 1,572,124 | ||||||
| Dividends payable | 1,314,825 | 1,125,291 | ||||||
| Current portion of long-term debt | 857,148 | 857,148 | ||||||
| Total current liabilities | 23,697,776 | 23,518,789 | ||||||
| Other Liabilities: | ||||||||
| Long-term debt | 2,379,818 | 3,003,392 | ||||||
| Mandatorily redeemable non-controlling interest | 671,110 | 671,110 | ||||||
| Deferred income taxes | 217,153 | 257,072 | ||||||
| Other liabilities | 199,223 | 78,568 | ||||||
| Total other liabilities | 3,467,304 | 4,010,142 | ||||||
| Total liabilities | $ | 27,165,080 | $ | 27,528,931 | ||||
| Stockholders' Equity: | ||||||||
| Preferred Stock, $0.001 par value; 100,000 shares authorized | ||||||||
| Series A 20,000 shares authorized and 20,000 shares issued and outstanding | 20 | 20 | ||||||
| Series B 5,700 shares authorized and 1,271 shares issued and outstanding | 1 | 1 | ||||||
| Series C 20,000 shares authorized and 17,205 shares issued and outstanding at March 31, 2018 and 14,205 shares issued and outstanding at September 30, 2017 liquidation value $9,913,738 and $8,224,204 as of March 31, 2018 and September 30, 2017, respectively | 18 | 15 | ||||||
| Common stock, $0.001 par value; 4,500,000 shares authorized, 587,951 issued and 567,951 outstanding as of March 31, 2018 and 573,951 issued and 553,951 outstanding as of September 30, 2017 | 588 | 574 | ||||||
| Paid-in capital | 13,956,316 | 12,312,054 | ||||||
| Treasury stock, at cost, 20,000 shares | (240,000 | ) | (240,000 | ) | ||||
| Accumulated deficit | (890,623 | ) | (853,980 | ) | ||||
| Total stockholders' equity | 12,826,320 | 11,218,684 | ||||||
| Total liabilities and stockholders' equity | $ | 39,991,400 | $ | 38,747,615 | ||||
| Three months ended June 30, | Nine months ended June 30, | |||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| REVENUES | ||||||||||||||||||||
| Global Logistics Services | $ | 17,963,837 | $ | 15,425,092 | $ | 49,499,193 | $ | 53,935,789 | ||||||||||||
| Manufacturing | 2,283,041 | 2,080,361 | 6,444,205 | 2,792,667 | ||||||||||||||||
| TOTAL REVENUES | 20,246,878 | 17,505,453 | 55,943,398 | 56,728,456 | ||||||||||||||||
| COST AND EXPENSES | ||||||||||||||||||||
| Forwarding expenses | 14,455,926 | 12,157,139 | 39,810,183 | 44,171,758 | ||||||||||||||||
| Cost of revenues - manufacturing | 989,313 | 961,587 | 2,888,458 | 1,266,878 | ||||||||||||||||
| Selling, general and administrative | 4,002,311 | 3,460,936 | 11,206,459 | 9,798,908 | ||||||||||||||||
| Amortization of intangible assets | 195,666 | 203,237 | 578,997 | 402,915 | ||||||||||||||||
| TOTAL COSTS AND EXPENSES | 19,643,216 | 16,782,899 | 54,484,097 | 55,640,459 | ||||||||||||||||
| INCOME FROM OPERATIONS | 603,662 | 722,554 | 1,459,301 | 1,087,997 | ||||||||||||||||
| OTHER ITEMS | ||||||||||||||||||||
| Interest expense, net of interest income | (184,280 | ) | (199,892 | ) | (566,807 | ) | (476,665 | ) | ||||||||||||
| INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 419,382 | 522,662 | 892,494 | 611,332 | ||||||||||||||||
| Income taxes | (129,419 | ) | (36,604 | ) | (356,257 | ) | (75,181 | ) | ||||||||||||
| NET INCOME FROM CONTINUING OPERATIONS | 289,963 | 486,058 | 536,237 | 536,151 | ||||||||||||||||
| Loss from discontinued operations, net of tax | - | (1,668 | ) | - | (184,845 | ) | ||||||||||||||
| NET INCOME | 289,963 | 484,390 | 536,237 | 351,306 | ||||||||||||||||
| Less: net income attributable to non-controlling interests | 30,943 | 35,331 | 75,046 | 49,636 | ||||||||||||||||
| NET INCOME ATTRIBUTABLE TO JANEL CORPORATION STOCKHOLDERS | 259,020 | 449,059 | 461,191 | 301,670 | ||||||||||||||||
| Preferred stock dividends | (127,706 | ) | (133,819 | ) | (383,118 | ) | (262,165 | ) | ||||||||||||
| NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | 131,314 | $ | 315,240 | $ | 78,073 | $ | 39,505 | ||||||||||||
| Income per share from continuing operations attributable to common stockholders: | Basic | $ | 0.52 | $ | 0.85 | $ | 0.95 | $ | 0.93 | |||||||||||
| Diluted | $ | 0.42 | $ | 0.78 | $ | 0.77 | $ | 0.87 | ||||||||||||
| (Loss) per share from discontinued operations attributable to common stockholders: | Basic | $ | - | $ | - | $ | - | $ | (0.32 | ) | ||||||||||
| Diluted | $ | - | $ | - | $ | - | $ | (0.32 | ) | |||||||||||
| Net income (loss) per share attributable to common stockholders: | Basic | $ | 0.24 | $ | 0.55 | $ | 0.14 | $ | 0.07 | |||||||||||
| Diluted | $ | 0.19 | $ | 0.51 | $ | 0.11 | $ | 0.06 | ||||||||||||
| Basic weighted average number of shares outstanding | 553,951 | 573,951 | 567,309 | 573,951 | ||||||||||||||||
| Fully-diluted weighted average number of shares outstanding | 686,699 | 622,624 | 693,332 | 613,865 | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| March 31, | March 31, | March 31, | March 31, | |||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenue: | ||||||||||||||||
| Global logistic services | $ | 18,180,140 | $ | 15,482,185 | $ | 35,528,158 | $ | 31,535,356 | ||||||||
| Manufacturing | 2,175,284 | 2,358,838 | 4,100,384 | 4,161,164 | ||||||||||||
| Total Revenues | 20,355,424 | 17,841,023 | 39,628,542 | 35,696,520 | ||||||||||||
| Cost and Expenses: | ||||||||||||||||
| Forwarding expenses | 14,653,410 | 12,415,154 | 28,610,090 | 25,354,257 | ||||||||||||
| Cost of revenues - manufacturing | 859,925 | 1,086,218 | 1,587,720 | 1,899,145 | ||||||||||||
| Selling, general and administrative | 4,781,495 | 3,552,083 | 8,879,540 | 7,154,145 | ||||||||||||
| Amortization of intangible assets | 200,959 | 191,665 | 394,125 | 383,331 | ||||||||||||
| Total Costs and Expenses | 20,495,789 | 17,245,120 | 39,471,475 | 34,790,878 | ||||||||||||
| (Loss) income from Operations | (140,365 | ) | 595,903 | 157,067 | 905,642 | |||||||||||
| Other Items: | ||||||||||||||||
| Interest expense net of interest income | (116,893 | ) | (192,222 | ) | (233,828 | ) | (382,527 | ) | ||||||||
| (Loss) income from Continuing Operations Before Income Taxes | (257,258 | ) | 403,681 | (76,761 | ) | 523,115 | ||||||||||
| Income tax benefit (expense) | 40,921 | (137,911 | ) | 40,118 | (179,663 | ) | ||||||||||
| (Loss) income from Continuing Operations | (216,337 | ) | 265,770 | (36,643 | ) | 343,452 | ||||||||||
| Loss from discontinued operations, net of tax | - | (25,563 | ) | - | (37,547 | ) | ||||||||||
| Net (loss) income | (216,337 | ) | 240,207 | (36,643 | ) | 305,905 | ||||||||||
| Preferred stock dividends | (91,317 | ) | (126,344 | ) | (197,034 | ) | (255,412 | ) | ||||||||
| Gain on extinguishment of Preferred Stock dividends Series C | - | - | 1,311,712 | - | ||||||||||||
| Net (Loss) Income Available to Common Shareholders | $ | (307,654 | ) | $ | 113,863 | $ | 1,078,035 | $ | 50,493 | |||||||
| (Loss) income per share from continuing operations: | ||||||||||||||||
| Basic | $ | (0.38 | ) | $ | 0.46 | $ | (0.06 | ) | $ | 0.60 | ||||||
| Diluted | $ | (0.38 | ) | $ | 0.39 | $ | (0.06 | ) | $ | 0.49 | ||||||
| Loss per share from discontinued operations: | ||||||||||||||||
| Basic | $ | - | $ | (0.04 | ) | $ | - | $ | (0.07 | ) | ||||||
| Diluted | $ | - | $ | (0.04 | ) | $ | - | $ | (0.05 | ) | ||||||
| Net (loss) income per share attributable to common stockholders: | ||||||||||||||||
| Basic | $ | (0.54 | ) | $ | 0.20 | $ | 1.91 | $ | 0.09 | |||||||
| Diluted | $ | (0.54 | ) | $ | 0.17 | $ | 1.91 | $ | 0.07 | |||||||
| Weighted average number of shares outstanding: | ||||||||||||||||
| Basic | 568,974 | 573,951 | 565,629 | 573,951 | ||||||||||||
| Diluted | 568,974 | 679,377 | 565,629 | 696,630 | ||||||||||||
assets acquired and liabilities assumed. GTRI provides full-service cargo transportation logistics management services, including freight forwarding via air-, ocean- and land-based carriers, customs brokerage services, warehousing and distribution services, and other value-added logistics services. GTRI was established in 1994 and is headquartered in Portland, Oregon. The results of operations for GTRI will be in the Global Logistics Service reporting segment. Acquisition expenses associated with GTRI acquisition amounted to $23,916 for the three and six months ended March 31, 2018 and is included in selling general and administrative expenses. For the three months ended March 31, 2018, the net revenues, selling general and administrative expense and loss from operations of GTRI amounted to $186,093, $192,105 and ($6,012), respectively. on January 3, 2018, the Company is still finalizing the valuation of assets acquired and liabilities assumed, and, as such, the fair value amounts noted in the table below are preliminary and subject to change. Primary amounts subject to adjustment include, but are not limited to, intangible assets, fair value of accounts receivable and the potential for the recognition of a gain on bargain purchase or a change in the goodwill balance. Such changes in the fair values from those listed below could be significant. Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and identifiable intangible assets. $9,695, respectively. and the end of the period to finalize the analysis. The Santander Loan Agreement requires the Company to maintain a lock box with Santander in addition to containing certain subjective acceleration clauses. As a result of these terms, the loan is classified as a current liability on the consolidated balance sheet. Agreement as of March 31, 2018. Agreement. Regulation D promulgated thereunder. The 2017 Plan was amended and restated on May 8, 2018, as discussed in more detail in note 14. cost to the recipient is zero. Restricted stock compensation expense, which is a non-cash item, is being recognized in the Company's financial statements over the vesting period of each restricted stock grant. Common Stock Preferred Stock Paid-in Accumulated Treasury Stock Non-
Controlling Total Shares $ Shares $ Capital Deficit Shares $ TOTAL Interest Equity Balance - September 30, 2016 573,951 $ 574 35,476 $ 36 $ 12,920,416 $ (2,161,994 ) - - $ 10,759,032 $ 1,001,226 $ 11,760,258 Net income - - - - - 461,191 - - 461,191 75,046 $ 536,237 Dividends to preferred stockholders - - - - (383,118 ) - - - (383,118 ) - $ (383,118 ) Stock-based compensation - - - - 173,143 - - - 173,143 - $ 173,143 Treasury stock acquired - - - - - - 20,000 (240,000 ) (240,000 ) - $ (240,000 ) Balance - June 30, 2017 573,951 $ 574 35,476 $ 36 $ 12,710,441 $ (1,700,803 ) 20,000 $ (240,000 ) $ 10,770,248 $ 1,076,272 $ 11,846,520 PREFERRED STOCK COMMON STOCK PAID-IN TREASURY STOCK RETAINED TOTAL SHARES $ SHARES $ CAPITAL SHARES $ EARNINGS EQUITY Balance - September 30, 2017 35,476 $ 36 573,951 $ 574 $ 12,312,054 20,000 $ (240,000 ) $ (853,980 ) $ 11,218,684 Issuance of Series C preferred stock 3,000 3 - - 1,499,997 - - - 1,500,000 Net loss - - - - - - - (36,643 ) (36,643 ) Dividends to preferred stockholders - - - - (197,034 ) - - - (197,034 ) Stock based compensation - - - - 295,813 - - - 295,813 Stock option exercise - - 14,000 14 45,486 - - - 45,500 Balance - March 31, 2018 38,476 $ 39 587,951 $ 588 $ 13,956,316 20,000 $ (240,000 ) $ (890,623 ) $ 12,826,320 - 5 - Nine months ended June 30, 2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 536,237 $ 351,306 Plus (loss) from discontinued operations - 184,845 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Bad debt expense 82,460 341 Depreciation 85,291 62,592 Deferred income tax 256,994 - Amortization of intangible assets 578,997 402,915 Amortization of imputed interest 21,526 41,954 Stock based compensation 173,143 91,492 Changes in operating assets and liabilities: Accounts receivable (753,754 ) 1,942,323 Inventory 24,510 (49,397 ) Prepaid expenses and sundry current assets (87,655 ) (64,279 ) Accounts payable and accrued expenses 1,910,937 (1,924,522 ) NET CASH PROVIDED BY OPERATING ACTIVITIES 2,828,686 1,039,570 NET CASH USED IN DISCONTINUED OPERATIONS - (184,845 ) 2,828,686 854,725 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment (136,118 ) (307,550 ) Cash acquired from acquisition 115,986 - Acquisition of subsidiary (100,000 ) (10,734,663 ) NET CASH USED IN INVESTING ACTIVITIES (120,132 ) (11,042,213 ) CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid (11,250 ) (11,250 ) Proceeds (payments) from bank loans (1,032,951 ) 5,479,229 Proceeds from sale of preferred series C shares - 4,352,663 Repayment of notes payable - related party (500,000 ) - Treasury stock acquisition (240,000 ) - NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (1,784,201 ) 9,820,642 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 924,353 (366,846 ) CASH AND CASH EQUIVALENTS, beginning of the period 965,115 942,748 CASH AND CASH EQUIVALENTS, end of period $ 1,889,468 $ 575,901 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 545,281 $ 476,665 Income taxes $ 145,470 $ 75,181 Non-cash financing activities: Dividends declared to preferred stockholders $ 371,868 $ 262,165 Acquisition of business: Intangible assets acquired $ 898,381 $ 12,102,838 Six Months Ended March 31, 2018 2017 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (36,643 ) $ 305,905 Plus (loss) from discontinued operations - 37,547 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Bad debt expense (7,487 ) 60,403 Depreciation 50,557 56,959 Deferred income tax (39,919 ) 133,868 Amortization of intangible assets 394,125 383,331 Amortization of imputed interest - 14,257 Amortization of loan costs 5,000 - Stock based compensation 416,468 59,923 Changes in operating assets and liabilities, net of effect of acquisitions: Accounts receivable 1,355,115 636,208 Inventory 19,364 (19,316 ) Prepaid expenses and sundry current assets (91,579 ) (62,059 ) Security deposits (20,048 ) - Accounts payable and accrued expenses (840,760 ) (596,252 ) Net cash provided by continuing operations 1,204,193 1,010,774 Net cash used in discontinued operations - (37,547 ) Net cash provided by operating activities 1,204,193 973,227 Cash Flows From Investing Activities: Acquisition of property and equipment (38,143 ) (130,607 ) Acquisition of Aves, net of cash acquired (1,902,910 ) - Acquisition of GTRI, net of cash acquired (418,149 ) - Net cash used in investing activities (2,359,202 ) (130,607 ) Cash Flows From Financing Activities: Dividends paid (7,500 ) (7,500 ) Repayment of notes payable (628,574 ) (535,676 ) Proceeds from sale of Series C Preferred Stock 1,500,000 - Proceeds from stock option exercise 45,500 - Line of credit, proceeds, net 503,987 - Repayment of notes payable - related party (500,000 ) (500,000 ) Net cash provided by (used in) in financing activities 913,413 (1,043,176 ) Net decrease in cash (241,596 ) (200,556 ) Cash at beginning of the period 987,848 965,115 Cash at end of period $ 746,252 $ 764,559 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 229,265 $ 368,270 Income taxes $ 61,650 $ 75,484 Non-cash investing activities: Contingent earn-out acquisition of Aves $ 497,600 $ - Non-cash financing activities: Dividends declared to preferred stockholders $ 189,534 $ 247,912 Acquisition of treasury stock $ - $ (240,000 ) - 6 -(together with its subsidiaries, “the Company”("the Company" or "Janel") believes that the disclosures made are adequate to make the information presented not misleading. The 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 consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’sCompany's Form 10-K10-K/A as filed with the Securities and Exchange Commission on or about December 22, 2016.2.ACQUISITIONSINDCO, Inc. (“INDCO”)General. On March 21, 2016,Commission.executedpurchased Global Trading Resources, Inc. ("GTRI"), a full-service cargo transportation logistics management services provider, which provides freight forwarding via air-, ocean- and closedland-based carriers, customs brokerage services, warehousing and distribution services, and other value-added logistics services. See note 3.Stock Purchase Agreement (the “INDCO Purchase Agreement”) forglobal logistics services provider with five U.S. locations.purchase by the Company acquired all of the outstanding common stock (the “INDCO Shares”) of INDCO,Aves Labs, Inc. ("Aves"). Aves provides high-quality antibodies and other immunoreagents for biomedical research and antibody manufacturing.industrial mixing equipment.equipment and apparatus for specific applications within various industries. The INDCO Shares represent approximatelycustomer base is comprised of small- to mid-sized businesses as well as repetitive production orders for other larger customers.the beneficial ownership of INDCO. The remaining 8.35% ownership was retainedwith a non-controlling interest held by existing INDCOIndco management.Under The Indco non-controlling interest is mandatory redeemable and is recorded as a liability. See note 2. All intercompany transactions and balances have been eliminated in consolidation.termspreparation of financial statementsINDCO Purchase Agreement,accounts receivable balances, credit quality of the Company's customers, any specific customer collection issues that have been identified, current economic conditions, and other factors that may affect the customers' ability to pay. The Company writes off accounts receivable balances that have aged significantly once all collection efforts have been exhausted and the receivables are no longer deemed collectible from the customer. The allowance for doubtful accounts as of March 31, 2018 and September 30, 2017 was $202,000 and $230,000, respectively.INDCOservice we provide and the goods we sell. In these transactions, we are the primary obligor, we have credit risk, we have discretion to select the supplier, and we have latitude in pricing decisions. Certain transactions in customs brokerage, managed services, freight forwarding, and sourcing are recorded at the net amount we charge our customers for the service we provide because many of the factors stated above are not present.was $11,000,000, subjectoutstanding, excluding unvested restricted stock, during the period. Diluted net income (loss) per share reflects the additional dilution from potential issuances of common stock, such as stock issuable pursuant to the exercise of stock options or warrants or the vesting of restricted stock units. The treasury stock method is used to calculate the potential dilutive effect of these common stock equivalents. Potentially dilutive shares are excluded from the computation of diluted net income (loss) per share when their effect is anti-dilutive.closingput features where the Company is either required or expects to settle vested awards on a cash basis.customary indemnifications, representationsearnings to other income and warranties.expense in the caption " change in fair value of mandatorily redeemable non-controlling interest."2. PROPERTY AND EQUIPMENT March 31, September 30, 2018 2017 Life Furniture & fixtures $ 167,097 $ 167,097 3-7 years Computer equipment 265,974 234,396 3-5 years Machinery & equipment 757,091 721,125 3-15 years Leasehold improvements 86,291 86,291 Shorter of lease term or asset life 1,276,453 1,208,909 Less: accumulated depreciation (864,462 ) (816,082 ) $ 411,991 $ 392,827 3. ACQUISITIONS was paid at closing in cash.INDCO comprisesallocation has been prepared on a preliminary basis and is subject to change as additional information becomes available concerning the Manufacturing segmentfair value of the Company.Price Allocation. price allocationvalues, which were determined by an independent valuation performed by a third party, asvalues. Due to the timing of the effective acquisition date, March 1, 2016.Accounts receivable $ 307,569 Other assets 8,264 Property & equipment 133 Intangibles - customer relationships 75,000 Intangibles - trademark 7,000 Intangibles - non-compete 39,000 Goodwill 310,409 Accounts payable (265,871 ) Accrued expenses (63,355 ) Purchase price, net of cash received $ 418,149 table summarizesthe end of the earnout period, which is one hundred eighty days following the closing. A 338(h)10 election was made in connection with the Aves acquisition, and this acquisition will be treated as an asset purchase for income tax purposes, which will allow for the deduction of Aves goodwill. The purchase price allocation has been prepared on a preliminary basis and is subject to change as additional information becomes available concerning the fair values assigned tovalue of the assets acquired and liabilities assumed. Fair Value Cash $ 377,653 Accounts receivable, net 620,632 Inventory 372,212 Prepaid expenses and other current assets 109,333 Fixed assets 155,050 Accounts payable and other liabilities (1,690,202 ) Note payable - related party (129,258 ) Customer relationships and other intangibles 7,700,000 Goodwill 4,402,838 Non-controlling interest (918,258 ) Purchase price $ 11,000,000 - 7 -W.J. Byrnes & Co. (“Byrnes”)General.On April 1, 2017, the Company executed Aves provides high-quality antibodies and closed a Stock Purchase Agreement (the “Byrnes Purchase Agreement”)other immunoreagents for biomedical research and antibody manufacturing. Aves was established in 1997 and is headquartered in Tigard, Oregon. The results of operations for Aves will be reported in our Manufacturing segment. Acquisition expenses associated with Aves acquisition amounted to $72,852 for the purchase by the Company of 100% of the outstanding common stock (the “Byrnes Shares”) of W.J. Byrnes & Co., a global logistics services provider with five U.S. locations.Under the terms of the Byrnes Purchase Agreement, the purchase pricethree and six months ended March 31, 2018 and is included in selling general and administrative expenses. Aves results for the Byrnes Shares was $100,000period from acquisition through March 31, 2018 are included in cash, paid at the closing, plusresults of operations for the assumptionthree-month and six-month periods ended March 31, 2018. This includes revenues, cost of Byrnes’goods sold, selling, general and administrative expense and net liabilities, subjectincome from operations of Aves amounted to certain closing adjustments$81,052, $40,262, $31,095 and customary indemnifications, representations and warranties.The Byrnes acquisition expands the domestic network of the Company’s Global Logistics Services segment.Price Allocation. price allocationwhich were determined by an independent valuation performed by a third party,from those listed below could be significant. The Company made preliminary estimates as of March 31, 2018 since there was insufficient time between the effective acquisition date April 1, 2017.The following table summarizes the fair values assigned to the assets acquired and liabilities assumed. Fair Value Cash $ 115,986 Accounts receivable, net of allowance for doubtful accounts 298,803 Customer relationships and other intangibles 240,000 Goodwill 658,381 Security deposits 15,275 Note payable - bank (224,998 ) Accounts payable - trade (891,169 ) Accrued expenses and other current liabilities (112,278 ) Purchase price $ 100,000 Accounts receivable $ 111,092 Inventory 1,291,862 Property & equipment 31,445 Intangibles - customer relationships 180,000 Intangibles - trademark 40,000 Intangibles - customer relationships 180,000 Goodwill 565,511 Purchase price, net of cash received $ 2,399,910 - 8 -3.4.INTANGIBLE ASSETS June 30, September 30, 2017 2016 Life Customer relationships $ 11,690,000 $ 11,450,000 15-20 years Trademarks / names 1,770,000 1,770,000 20 years Other 60,000 60,000 2-5 years 13,520,000 13,280,000 Less: accumulated amortization (1,478,229 ) (906,734 ) $ 12,041,771 $ 12,373,266 March 31, September 30, 2018 2017 Life Customer relationships $ 11,945,000 $ 11,690,000 15-20 years Trademarks / names 1,817,000 1,770,000 20 years Other 279,000 60,000 2-5 years 14,041,000 13,520,000 Less: accumulated amortization (2,065,527 ) (1,671,402 ) $ 11,975,473 $ 11,848,598 4.5.NOTES PAYABLE –- BANKSPresidential Financial Corporation Borrowing Facility(A) Presidential Financial Corporation Facility within its Global Logistics Services segment (collectively, the “Janel Borrowers”"Janel Borrowers"), entered into a Loan and Security Agreement (the "Presidential Loan Agreement") with Presidential Financial Corporation (“Presidential”) with respect to a revolving line of credit facility (the “Presidential Facility”"Presidential Facility"). As currently amended,At September 30, 2017, the Presidential Facility providesprovided that the Janel Borrowers cancould borrow up to $10,000,000,$10.0 million, limited to 85% of the Janel Borrowers’Borrowers' aggregate outstanding eligible accounts receivable, subject to adjustment as set forth in the Presidential Loan and Security Agreement. Interest will accrueaccrued at an annual rate equal to five percent5% above the greater of (a) the prime rate of interest quoted in The Wall Street Journal from time to time, or (b) 3.25%. The Janel Borrowers’Borrowers' obligations under the Presidential Facility arewere secured by all of the assets of the Janel Borrowers. The Presidential Facility was terminated on October 17, 2017, and the Company replaced the Presidential Facility with the Santander Bank Facility (see below).(B) Santander Bank Facility Company,Janel Group Borrowers, on a monthlyquarterly basis, maintain a “minimum fixed charge covenant ratio” and “tangible net worth,” bothMinimum Debt Service Coverage ratio, as defined.defined in the Santander Loan Agreement. The Presidential Facility will expire on March 27, 2018,loan is subject to earlier termination as provided in the Santander Loan Agreement and Security Agreement,matures on October 17, 2020, unless renewed.June 30, 2017, there were outstanding borrowingsMarch 31, 2018, Santander had granted the Janel Group Borrowers a one-time waiver until May 31, 2018 for an event of $6,442,500 underdefault related to the Presidential Facility, representing 90.7%delivery of the $7,104,942 available thereunder. Thequarterly financial statements for the fiscal quarter ended December 31, 2017. Such event of default was subsequently remedied. Other than as specifically referenced above, the Janel Group Borrowers arewere in compliance with the covenants defined in the Santander Loan and Security Agreement.First Merchants Bank Borrowing Facility(C) First Merchants Bank Credit Facility INDCOIndco executed a Credit Agreement (the "First Merchants Credit Agreement") with First Merchants Bank (“First Merchants”) with respect to a $6,000,000 term loan and $1,500,000 (limited to the borrowing base and reserves) revolving loan(together, (together, the “First"First Merchants Facility”Facility"). Interest will accrueaccrues on the term loan at an annual rate equal to the one-month LIBOR plus either 3.75% (if INDCO’sIndco's cash flow leverage ratio is less than or equal to 2:1) or 4.75% (if INDCO’sIndco's cash flow leverage ratio is greater than 2:1). Interest accrues on the revolving loan at an annual rate equal to the one-month LIBOR plus 2.75%. INDCO’sIndco's obligations under theFirst Merchants Facilityare secured by all of INDCO’sIndco's assets and are guaranteed by the Company. The First Merchants Credit Agreement requires, among other things, that INDCO,Indco, on a monthly basis, not exceed a “maximum"maximum total funded debt to EBITDA ratio”ratio" and maintain a “minimum"minimum fixed charge covenant ratio,”" both as defined.defined in the First Merchants Credit Agreement. TheFirst Merchants Facilityrequires monthly payments until the expiration date on the fifth anniversary of the loan. The loan is subject to earlier termination as provided in the First Merchants Credit Agreement, unless renewed.JuneSeptember 30, 2017, there were no outstanding borrowings under the revolving loan and there were outstanding$3,860,540 of borrowings of $4,533,994 under the term loan. INDCO isloan, and interest was accruing on the term loan at an effective interest rate of 4.98%.Agreement.Agreement at both September 30, 2017 and March 31, 2018. March 31, September 30, 2018 2017 Long term debt is due in monthly installments of $71,429 plus monthly interest, at LIBOR plus 3.75% to 4.75% per annum. The note is collateralized by all of Indco's assets and guaranteed by Janel. $ 3,236,966 $ 3,860,540 Less current portion (857,148 ) (857,148 ) $ 2,379,818 $ 3,003,392 6. 5.LONG-TERM DEBT –- RELATED PARTYLong-term debt June 30, September 30, 2017 2016 Non-interest bearing note payable to a related party, net of imputed interest due $ 492,635 $ 971,108 Less current portion (492,635 ) (500,000 ) $ - $ 471,108 Non-interest-bearing note payable to a related party, net of imputed interest due when earned $ - $ 500,000 Less current portion - (500,000 ) $ - $ - - 9 -7. DISCONTINUED OPERATIONS CASH FLOWS FROM OPERATING ACTIVITIES Loss from discontinued operations $ (25,563 ) $ (37,547 ) Net cash used in discontinued operations $ (25,563 ) $ (37,547 ) 8. 6.STOCKHOLDERS’STOCKHOLDERS' EQUITYOn October 1, 2016, theentered into an agreementis authorized to grant a consultant options to purchase 6,053issue 4,500,000 shares of common stock, ($25,000 worthpar value $0.001. In addition, the Company is authorized to issue 100,000 shares of preferred stock, basedpar 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 2016 closing2017, respectively. The amendment on October 17, 2017 to the annual dividend rate decrease was treated as an extinguishment for accounting purposes and the fair value prior to modification was $7,705,120 and $6,172,898 after modification, for a change of $1,311,712. In accordance with ASC 260, "Earnings Per Share," this incremental benefit is treated as an adjustment to EPS for common stockholders.$4.13) at$500 per share, or an exercise priceaggregate of $4.13 per share.$1,500,000. The options are exercisableCompany issued the shares of Series C Stock to the Investor on the same date. Such shares were sold to the Investor in three installments on eacha private placement in reliance upon the exemption from registration provided by Section 4(a)(2) of October 1, 2017, 2018the Securities Act of 1933 and 2019.(B) Treasury Stock On May 12, 2017, the two executive officers were granted an aggregate of 11,121 options to purchase shares of the Company’s common stock under the Company’s 2013 Non-Qualified Stock Option Plan. The options are exercisable for a period of ten years at an exercise price of $8.01 per share. Eight-thousand options were immediately exercisable, and 3,121 options are exercisable in three equal annual installments commencing on the first anniversary of the grant date.On May 12, 2017, two employees were granted an aggregate of 10,000 options to purchase shares of the Company’s common stock under the Company’s 2013 Non-Qualified Stock Option Plan. The options are exercisable for a period of ten years at an exercise price of $8.01 per share. The shares are exercisable in three equal annual installments commencing on the first anniversary of the grant date.(C) Equity Incentive Plan Company’s 2017 Equity Incentive Plan (the “Plan”"2017 Plan") pursuant to which (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’sCompany's common stock may be granted to directors, officers, employees of and consultants to the Company. Participants and all terms of any awards under the Plan are at the discretion of the Company’s BoardCompany's board of Directorsdirectors in its role as the Compensation Committee.(D) Warrants 9. STOCK-BASED COMPENSATION non-executive directortotal of 84,693 and 66,524 equity options and restricted stock awards, respectively, were outstanding under the 2017 Plan, and 15,307 and 33,476 shares, respectively, were still available for issuance.granted anincluded in selling, general and administrative expense in the Company's statements of operations. Total stock-based compensation for the six months ended March 31, 2018 and 2017 amounted to $416,468 and $59,923, respectively, and was included in selling, general and administrative expense in the Company's statements of operations.(A) Stock Options Six Months Ended March 31, 2018 Risk-free interest rate 1.92 - 2.70% Expected option term in years 5.00-6.50 Expected volatility 91.94% - 99.13% Dividend yield -% Grant date fair value $6.23 - $6.85 Outstanding balance at September 30, 2017 119,645 $ 4.64 7.5 $ 468.28 Granted 7,153 $ 9.07 9.6 $ Exercised (14,000 ) 3.25 Outstanding balance at March 31, 2018 112,798 $ 5.09 7.4 $ 441.62 Exercisable at March 31, 2018 84,693 $ 4.40 6.9 $ 389.65 6,524the Company's common stock at March 31, 2018 of $9.00 per share and the exercise price of the stock options that had strike prices below such closing price.purchase sharesthe unvested employee stock options. This expense is expected to be recognized over a weighted average period of 1.0 years. Outstanding balance at September 30, 2017 51,035 $ 7.58 9.8 $ 49.70 No activity - $ - - $ - Outstanding balance at March 31, 2018 51,053 $ 7.58 9.3 $ 72.68 Exercisable at March 31, 2018 2,018 $ 4.13 8.5 $ 9.83 underat March 31, 2018 of $9.00 per share and the Plan. exercise price of the stock options that had strike prices below such closing price.Risk-free interest rate 2.65 - 2.78% Expected option term in years 4.02-6.27 Expected volatility 98.52% - 102.90% Dividend yield -% Grant date fair value $9.40 - $9.83 Outstanding balance at September 30, 2017 - $ - - $ - Granted 25,321 $ 7.97 8.4 $ Outstanding balance at March 31, 2018 25,321 $ 7.97 8.4 $ 46.81 Exercisable at March 31, 2018 12,384 $ 6.48 8.0 $ 31.21 exercisableclassified as liabilities, and the underlying shares of Indco’s common stock also contain put options which result in their classification as a mandatorily redeemable security. While their redemption does not occur on a fixed date, there is an unconditional obligation for the Company to repurchase the shares upon death, which is certain to occur at some point in time.ten years at an exercise price1.5 years.(B) Restricted Stock $8.01 per share. The shares are exercisable in three equal annual installments commencing on October 1,restricted stock granted. Under the 2017 Plan, each grant of restricted stock vests over a three-year period and the subsequent anniversaries thereafter. Unvested at September 30, 2017 15,000 $ 8.01 Vested (5,000 ) $ 8.01 Unvested at March 31, 2018 10,000 $ 8.01 Unvested at September 30, 2017 45,000 $ 8.04 Vested (3,334 ) $ 8.01 Unvested at March 31, 2018 41,666 $ 8.04 10. INCOME TAXES May 12,December 22, 2017, the Company granted 15,000Tax Reform Act was signed into law. The Tax Reform Act included significant changes to existing law, including, among other items, a reduction to the U.S. federal statutory corporate tax rate from 34% to 21% effective January 1, 2018. ASC 740, "Income Taxes (Topic 740)," ("ASC 740") requires that the effects of changes in tax laws or rates be recognized in the period in which the law is enacted. Those effects, both current and 10,000 Restricted Stock Awardsdeferred, are reported as part of the tax provision, regardless of income in which the underlying pretax income (expense) or asset (liability) was or will be reported.a non-executive directorthe January 1, 2018 effective date and a consultant, respectively, under the Plan. Each grant vests in three equal annual installments commencing on October 1, 2017.post-enactment U.S. federal statutory corporate tax rate of 21% thereafter.11. 7.INCOME PER COMMON SHARE Three Months Ended Six Months Ended March 31, March 31, March 31, March 31, 2018 2017 2018 2017 Income: (Loss) income from continuing operations $ (216,337 ) $ 265,770 $ (36,643 ) $ 343,452 Loss from discontinued operations - (25,563 ) - (37,547 ) Net (loss) income (216,337 ) 240,207 (36,643 ) 305,905 Preferred stock dividends (91,317 ) (126,344 ) (197,034 ) (255,412 ) Gain on extinguishment of Preferred stock dividends Series C - - 1,311,712 - Net (loss) income income attributable to common stockholders $ (307,654 ) $ 113,863 $ 1,078,035 $ 50,493 Common Shares: Basic - weighted average common shares 568,974 573,951 565,629 573,951 Effect of dilutive securities: Stock options - 84,155 - 101,408 Restricted stock - - - - Warrants - - - - Convertible preferred stock - 21,271 - 21,271 Diluted - weighted average common stock 568,974 679,377 565,629 696,630 Three Months Ended Six Months Ended March 31, March 31, March 31, March 31, 2018 2017 2018 2017 (Loss) income per Common Share: Basic - (Loss) income from continuing operations $ (0.38 ) $ 0.46 $ (0.06 ) $ 0.60 Loss from discontinued operations - (0.04 ) - (0.07 ) Net (loss) income (0.38 ) 0.42 (0.06 ) 0.53 Preferred stock dividends (0.16 ) (0.22 ) (0.35 ) (0.44 ) Gain on extinguishment of Preferred stock dividends Series C - - 2.32 - Net (loss) income attributable to common stockholders $ (0.54 ) $ 0.20 $ 1.91 $ 0.09 Diluted - (Loss) income from continuing operations $ (0.38 ) $ 0.39 $ (0.06 ) $ 0.49 Loss from discontinued operations - (0.04 ) - (0.05 ) Net (loss) income (0.38 ) 0.35 (0.06 ) 0.44 Preferred stock dividends (0.16 ) (0.18 ) (0.35 ) (0.37 ) Gain on extinguishment of Preferred stock dividends Series C - - 2.32 - Net (loss) income attributable to common stockholders $ (0.54 ) $ 0.17 $ 1.91 $ 0.07 March 31, 2018 2017 Employee stock options 112,798 126,000 Non-employee stock options 51,053 6,053 Indco employee stock options 25,321 - Employee restricted stock 10,000 - Non-employee restricted stock 41,666 - Warrants 250,000 250,000 Convertible preferred stock 21,271 21,271 524,234 403,324 12. June 30, 2017,March 31, 2018, the Company operates in two reportable segments, Global Logistics Services and Manufacturing, supported by a corporate group which conducts activities that are non-segment specific. The following table presents selected financial information about the Company’sCompany's reportable segments for the three and ninesix months ended June 30, 2017March 31, 2018 and 2016:For the three months ended June 30, 2017 Consolidated Global Logistics Services Manufacturing Corporate Revenues $ 20,246,878 $ 17,963,837 $ 2,283,041 $ - Forwarding expenses and cost of revenues 15,445,239 14,455,926 989,313 - Gross margin 4,801,639 3,507,911 1,293,728 - Selling, general and administrative 4,002,311 2,870,235 635,680 496,396 Amortization of intangible assets 195,666 - 2,500 193,166 Income (loss) from operations 603,662 637,676 655,548 (689,562 ) Interest expense 184,280 116,672 67,608 - Identifiable assets 38,051,647 13,976,503 2,343,533 21,731,611 Capital expenditures 5,510 - 5,510 - Consolidated Global Logistics Services Manufacturing Corporate Revenues 20,355,424 18,180,140 2,175,284 - Forwarding expenses and cost of revenues 15,513,335 14,653,410 859,925 - Gross margin 4,842,089 3,526,730 1,315,359 - Selling, general and administrative 4,781,495 3,028,173 927,520 825,802 Amortization of intangible assets 200,959 - - 200,959 (Loss) income from operations (140,365 ) 498,557 387,839 (1,026,761 ) Interest expense 116,893 68,169 48,724 - Identifiable assets 40,704,045 12,084,319 2,158,881 26,460,845 Capital expenditures 743 - 743 - Consolidated Global Logistics Services Manufacturing Corporate Revenues 17,841,023 15,482,185 2,358,838 - Forwarding expenses and cost of revenues 13,501,372 12,415,154 1,086,218 - Gross margin 4,339,651 3,067,031 1,272,620 - Selling, general and administrative 3,552,083 2,486,391 656,806 408,886 Amortization of intangible assets 191,665 - 2,501 189,164 Income (loss) from operations 595,903 580,640 600,857 (585,594 ) Interest expense 192,222 121,757 70,464 - Identifiable assets 35,341,280 12,048,964 2,210,576 21,081,740 Capital expenditures 12,075 - 12,075 - Consolidated Global Logistics Services Manufacturing Corporate Revenues 39,628,542 35,528,158 4,100,384 - Forwarding expenses and cost of revenues 30,197,810 28,610,090 1,587,720 - Gross margin 9,430,732 6,918,068 2,512,664 - Selling, general and administrative 8,879,540 5,783,857 1,698,874 1,396,809 Amortization of intangible assets 394,125 - - 394,125 Income (loss) from operations 157,067 1,134,211 813,790 (1,790,934 ) Interest expense 233,828 134,801 99,027 - Identifiable assets 40,704,045 12,084,319 2,158,881 26,460,845 Capital expenditures 38,143 - 38,143 - Consolidated Global Logistics Services Manufacturing Corporate Revenues 35,696,520 31,535,356 4,161,164 - Forwarding expenses and cost of revenues 27,253,402 25,354,257 1,899,145 - Gross margin 8,443,118 6,181,099 2,262,019 - Selling, general and administrative 7,154,145 5,145,458 1,263,712 744,975 Amortization of intangible assets 383,331 - 5,000 378,331 Income (loss) from operations 905,642 1,035,641 968,395 (1,098,394 ) Interest expense 382,527 239,689 142,837 - Identifiable assets 35,341,280 12,048,964 2,210,576 21,081,740 Capital expenditures 130,608 22,793 107,814 - - 10 -13. RISKS AND UNCERTAINTIES (A) Currency Risks (B) Concentration of Credit Risk (C) Legal Proceedings (D) Concentration of Customers For the three months ended June 30, 2016 Consolidated Global Logistics Services Manufacturing Corporate Revenues $ 17,505,453 $ 15,425,092 $ 2,080,361 $ - Forwarding expenses and cost of revenues 13,118,726 12,157,139 961,587 - Gross margin 4,386,727 3,267,953 1,118,774 - Selling, general and administrative 3,460,936 2,613,697 594,186 253,053 Amortization of intangible assets 203,237 - 2,500 200,737 Income (loss) from operations 722,554 654,256 522,088 (453,790 ) Interest expense 199,892 120,988 78,904 - Identifiable assets 33,761,934 12,338,707 1,744,624 19,678,603 Capital expenditures 19,797 - 19,797 - For the nine months ended June 30, 2017 Consolidated Global Logistics Services Manufacturing Corporate Revenues $ 55,943,398 $ 49,499,193 $ 6,444,205 $ - Forwarding expenses and cost of revenues 42,698,641 39,810,183 2,888,458 - Gross margin 13,244,757 9,689,010 3,555,747 - Selling, general and administrative 11,206,459 8,001,437 1,911,848 1,293,174 Amortization of intangible assets 578,997 - 7,500 571,497 Income (loss) from operations 1,459,301 1,687,573 1,636,399 (1,864,671 ) Interest expense 566,807 356,362 210,445 - Identifiable assets 38,051,647 13,976,503 2,343,533 21,731,611 Capital expenditures 136,118 22,793 113,325 - For the nine months ended June 30, 2016 Consolidated Global Logistics Services Manufacturing Corporate Revenues $ 56,728,456 $ 53,935,789 $ 2,792,667 $ - Forwarding expense and cost of revenues 45,438,636 44,171,758 1,266,878 - Gross margin 11,289,820 9,764,031 1,525,789 - Selling, general and administrative 9,798,908 8,086,749 805,985 906,174 Amortization of intangible assets 402,915 - 3,333 399,582 Income (loss) from operations 1,087,997 1,677,282 716,471 (1,305,756 ) Interest expense 476,665 382,804 93,861 - Identifiable assets 33,761,934 12,338,707 1,744,624 19,678,603 Capital expenditures 307,550 2,905 304,645 - 8.14.SUBSEQUENT EVENTS Companyindemnification obligations of the parties under the Merger Agreement are subject to certain monetary limitations as set forth in the Merger Agreement.evaluateddetermined that there were no other events or transactions occurring after the datesubsequent to March 31, 2018 that would have a material impact on Janel's results of theseoperations or financial statements through the date that these financial statements were issued. There is no material subsequent eventscondition as of that date which would require disclosure in or adjustments to the financial statements.March 31, 2018.- 11 -
| ITEM 2. |
Corporation.
10-K/A.
Janel Corporation is a holding company with subsidiaries
Janel’s management focuses on significant capital allocation decisions, corporate governancethe outstanding common stock of Aves Labs, Inc. ("Aves"). Aves provides high-quality antibodies and support of its subsidiaries where appropriate. The Company expects to grow through its subsidiaries’ organic growthother immunoreagents for biomedical research and by completing acquisitions. Janel either will acquire businesses within its existing segments, or it will expand its portfolio into new segments. Janel’s acquisition strategy focuses on companies with strong and capable management teams, attractive existing business economics and stable and predictable earnings power.
In September 2014,antibody manufacturing.
mid-sized businesses as well as repetitive production orders for other larger customers. Aves provides high-quality antibodies and other immunoreagents for biomedical research and antibody manufacturing.
Results of Operations
Global Logistics Services – Three months ended June 30, 2017 and 2016
Revenues. Total revenues from continuing operations for the three months ended June 30, 2017 were $17,963,837, as compared to $15,425,092 for the three months ended June 30, 2016. This is an increase of $2,538,745, or 16.5%.
Forwarding Expenses. Total forwarding expenses from continuing operations for the three months ended June 30, 2017 were $14,455,926, as compared to $12,157,139 for the three months ended June 30, 2016. This is an increase of $2,298,787, or 18.9%. The increase is due to forwarding expenses of $691,411 attributable to Byrnes customers and $1,607,376 associated with new and existing non-Byrnes customers.
Certain items have been categorized as “corporate” expenses attributable to overall management of the Company and other non-segment specific activities. These expenses are discussed below under “Corporate Selling, General and Administrative Expenses.” The following discussion of selling, general and administrative expenses in the Global Logistics Service segment excludes these “corporate” items.
Selling, General and Administrative Expenses. Total selling, general and administrative expenses from continuing operations for the three months ended June 30, 2017 were $2,870,235, as compared to $2,613,697 for the three months ended June 30, 2016. This is an increase of $256,538, or 9.8%. The increase primarily is due to additional selling, general and administrative costs associated with the integration of the Byrnes offices. As a percentage of revenue, selling, general and administrative expenses for the three months ended June 30, 2017 were 16.0%, as compared to 16.9% for the three months ended June 30, 2016.
Interest Expense. Total interest expense for the three months ended June 30, 2017 was $116,672, as compared to $120,988 for the three months ended June 30, 2016. This is a decrease of ($4,316), or (3.6%). The decrease was due to an improvement in working capital for the period that lowered average borrowings against the Presidential Borrowing Facility referenced below.
Income from Continuing Operations before Income Taxes. As a result of the above, income from continuing operations before income taxes for the three months ended June 30, 2017 was $521,004, as compared to $533,268 for the three months ended June 30, 2016. This is a decrease of ($12,264), or (2.3%).
Manufacturing – Three months ended June 30, 2017 and 2016
Revenues. Total revenues for the three months ended June 30, 2017 were $2,283,041, as compared to $2,080,361 for the three months ended June 30, 2016. This is an increase of $202,680, or 9.7%. The increase primarily is due to growth in demand for core INDCO manufactured mixer products.
Cost of Revenues. Total cost of revenues for the three months ended June 30, 2017 was $989,313 as compared to $961,587 for the three months ended June 30, 2016. This is an increase of $27,726, or 2.9%. The increase primarily is due to costs associated with meeting the growth in demand described above.
Gross Margin. Total gross margin for the three months ended June 30, 2017 was $1,293,728, as compared to $1,118,774 for the three months ended June 30, 2016. This is an increase of $174,954, or 15.6%. As a percentage of revenue, gross margin for the three months ended June 30, 2017 was 56.7%, as compared to 53.8% for the three months ended June 30, 2016. The increase primarily is due to growth in sales of relatively higher margin products.
Selling, General and Administrative Expenses. Total selling, general and administrative expenses for the three months ended June 30, 2017 were $635,680, as compared to $594,186 for the three months ended June 30, 2016. This is an increase of $41,494 or 7.0%. The increase primarily is due to additional sales expenses associated with the growth of the business.
Interest Expense. Total interest expense for the three months ended June 30, 2017 was $67,608 as compared to $78,904 for the three months ended June 30, 2016. This is a decrease of ($11,296), or (14.3%). The decrease is due to paydown of principal on the First Merchants Bank Borrowing Facility referenced below.
Income from Continuing Operations before Income Taxes. As a result of the above, income from continuing operations before income taxes for the three months ended June 30, 2017 was $587,940, as compared to $443,184 for the three months ended June 30, 2016. This is an increase of $144,756, or 32.7%.
Corporate – Three months ended June 30, 2017 and 2016
Corporate Selling, General and Administrative Expenses. Total corporate selling, general and administrative expenses from continuing operations for the three months ended June 30, 2017 were $496,396, as compared to $253,053 for the three months ended June 30, 2016. This is an increase of $243,343, or 96.2%. The increase is due to the recategorization of certain costs, previously included in the Global Logistics Services segment, as “corporate” costs. These include primarily the salaries of executives whose responsibilities have shifted from the Global Logistics Service segment to Janel Corporation corporate development.
Amortization of Intangible Assets.Total amortization of intangible assets for the three months ended June 30, 2017 was $193,166 as compared to $200,737 for the three months ended June 30, 2016. This is a decrease of ($7,571), or (3.8%). The decrease is due to an amortization adjustment related to INDCO in the first quarter following the INDCO acquisition.
Net Loss. As a result of the above, net loss for the three months ended June 30, 2017 was ($689,562), as compared to ($453,790) for the three months ended June 30, 2016. This is a decrease of ($235,772) or (52.0%).
Consolidated income taxes – Three months ended June 30, 2017 and 2016
The company recorded a net income tax provision for the three months ended June 30, 2017 of $129,419, as compared to $36,604 for the three months ended June 30, 2016.
Global Logistics Services – Nine months ended June 30, 2017 and 2016
Revenues. Total revenues from continuing operations for the nine months ended June 30, 2017 were $49,499,193, as compared to $53,935,789 for the nine months ended June 30, 2016. This is a decrease of ($4,436,596), or (8.2%). The decrease primarily is due to the loss of a low-margin, high-revenue customer, offset by revenues from new customers, including those derived from the Byrnes acquisition.
Forwarding Expenses. Total forwarding expenses from continuing operations for the nine months ended June 30, 2017 were $39,810,183 as compared to $44,171,758 for the nine months ended June 30, 2016. This is a decrease of ($4,361,575), or (9.9%). The decrease primarily is due to reduction in expenses associated with the loss of the low-margin, high-revenue customer referenced above, offset by additional expenses associated with new customer revenues, including those derived from the Byrnes acquisition.
For the current fiscal year, certain items have been categorized as “corporate” expenses attributable to overall management of Janel and other non-segment specific activities. These expenses are discussed below under “Corporate Selling, General and Administrative Expenses.” The following discussion of selling, general and administrative expenses in the Global Logistics Service segment excludes these “corporate” items.
Selling, General and Administrative Expenses. Total selling, general and administrative expenses from continuing operations for the nine months ended June 30, 2017 were $8,001,437 as compared to $8,086,749 for the nine months ended June 30, 2016. This is a decrease of ($85,312), or (1.1%). The decrease is due to certain cost reduction initiatives enacted in prior periods. As a percentage of revenue, selling, general and administrative expenses for the nine months ended June 30, 2017 were 16.2%, as compared to 15.0% for the nine months ended June 30, 2016. This is an increase of 1.2%. The increase primarily is due to the reduction in revenues associated with the loss of the low-margin, high-revenue customer referenced above.
Interest Expense. Total interest expense for the nine months ended June 30, 2017 was $356,362, as compared to $382,804 for the nine months ended June 30, 2016. This is a decrease of ($26,442), or (6.9%). The decrease was due to an improvement in working capital for the period, which lowered average borrowings against the Presidential Borrowing Facility referenced below.
Income from Continuing Operations before Income Taxes. As a result of the above, income from continuing operations before income taxes for the nine months ended June 30, 2017 was $1,331,211, as compared to $1,294,478 for the nine months ended June 30, 2016. This is an increase of $36,733, or 2.8%.
Manufacturing – Nine months ended June 30, 2017 and 2016
INDCO, which comprises the Company’s Manufacturing segment, was purchased as of March 1, 2016. Therefore, prior period data includes only the results of the four months in that period that the Company owned INDCO.
Revenues. Total revenues for the nine months ended June 30, 2017 were $6,444,205 and $2,792,667 for the four months ended June 30, 2016.
Cost of Revenues. Total cost of revenues for the nine months ended June 30, 2017 was $2,888,458 and $1,266,878 for the four months ended June 30, 2016.
Gross Margin. Total gross margin for the nine months ended June 30, 2017 was $3,555,748 and $1,525,789 for the four months ended June 30, 2016.
Selling, General and Administrative Expenses. Total selling, general and administrative expenses for the nine months ended June 30, 2017 were $1,911,848 and $805,985 for the four months ended June 30, 2016.
Interest Expense. Total interest expense for the nine months ended June 30, 2017 was $210,445 and $93,861 for the four months ended June 30, 2016.
Income from Continuing Operations before Income Taxes. Income from continuing operations before income taxes for the nine months ended June 30, 2017 was $1,425,954 and $622,610 for the four months ended June 30, 2016.
Corporate – Nine months ended June 30, 2017 and 2016
Corporate Selling, General and Administrative Expenses. Total corporate selling, general and administrative expenses from continuing operations for the nine months ended June 30, 2017 were $1,293,174 as compared to $906,174 for the nine months ended June 30, 2016. This is an increase of $387,000, or 42.7%. The increase is due to the recategorization of certain costs, previously included in the Global Logistics Services segment, as “corporate” costs. These include primarily the salaries of executives whose responsibilities have shifted from the Global Logistics Service segment to Janel Corporation corporate development.
Amortization of Intangible Assets.Total amortization of intangible assets for the nine months ended June 30, 2017 was $571,497, as compared to $399,582 for the nine months ended June 30, 2016. This is an increase of $171,915, or 43.0%. The increase is due to the full-year impact of goodwill amortization associated with the March 2016 purchase of INDCO and additional goodwill amortization associated with the April 2017 purchase of Byrnes. These amounts do not include amortization associated with the INDCO term loan origination fee.
Net Loss. As a result of the above, net loss for the nine months ended June 30, 2017 was ($1,864,671) as compared to ($1,305,756) for the nine months ended June 30, 2016. This is a decrease of ($558,915) or (42.8%).
Consolidated income taxes – Nine months ended June 30, 2017 and 2016
The company recorded a net income tax provision for the nine months ended June 30, 2017 of $356,257, as compared to $75,181 for the nine months ended June 30, 2016.
Liquidity and Capital Resources
General. Our ability to satisfy our liquidity requirements, which derive from debt obligations, working capital needs, day-to-day operating expenses and capital expenditures, depends upon our future performance, which is subject to general economic conditions, competition and other factors, some of which are beyond our control. We depend on our commercial credit facilities to fund our day-to-day operations, as there is a timing difference between our collection cycles and the timing of our payments to vendors.
Janel’s cash flow performance for the nine months ending June 30, 2017 is not necessarily indicative of future cash flow performance.
Cash Flows from Operating Activities. Net cash provided by operating activities for the nine months ended June 30, 2017 was $2,828,686, as compared to $1,039,570 for the nine months ended June 30, 2016. This is an increase of $1,789,116, or 172.1%. The increase primarily is due to changes in accounts payable and accrued liabilities, offset by changes in accounts receivable.
Cash Flows from Discontinued Operating Activities. Net cash used in discontinued operating activities for the nine months ended June 30, 2017 was $46,878, which amount was reported within continuing operations in 2017, as compared to $184,845 for the nine months ending June 30, 2016. This is a decrease of ($137,967), or (74.6%). The 2016 figure includes the settlement of a lawsuit involving the Company's discontinued food business.
Cash Flows from Investing Activities. Net cash used in investing activities for the nine months ended June 30, 2017 was $120,132, as compared to $11,042,213 for the nine months ended June 30, 2016. The decrease reflects the INDCO acquisition in the prior period.
Cash Flows from Financing Activities. Net cash (used in) provided by financing activities for the nine months ended June 30, 2017 was ($1,784,201) as compared to $9,820,642 for the nine months ended June 30, 2016. The cash used in financing activities for the nine months ending June 30, 2017 primarily went toward the second of three annual earnout payments associated with the 2014 acquisition of Alpha/PCL and toward repayment of the First Merchants Bank Borrowing Facility associated with the INDCO acquisition. The cash provided by financing activities for the nine months ended June 30, 2016 primarily came from the First Merchants Bank Borrowing Facility and the sale of additional Preferred Series C shares, both associated with the INDCO acquisition.
Global Logistics Services
Presidential Financial Corporation Borrowing Facility. On March 27, 2014, Janel Corporation and several of its subsidiaries within its Global Logistics Services segment (collectively, the “Janel Borrowers”), entered into a Loan and Security Agreement with Presidential Financial Corporation (“Presidential”) with respect to a revolving line of credit facility (the “Presidential Facility”). As currently amended, the Presidential Facility provides that the Janel Borrowers can borrow up to $10,000,000, limited to 85% of the Janel Borrowers’ aggregate outstanding eligible accounts receivable, subject to adjustment as set forth in the Loan and Security Agreement. Interest will accrue at an annual rate equal to five percent above the greater of (a) the prime rate of interest quoted in The Wall Street Journal from time to time, or (b) 3.25%. The Janel Borrowers’ obligations under the Presidential Facility are secured by the assets of the Janel Borrowers. The Loan Security Agreement requires, among other things, that the Company, on a monthly basis, maintain a “minimum fixed charge covenant ratio” and “tangible net worth,” both as defined. The Presidential Facility will expire on March 27, 2018, subject to earlier termination as provided in the Loan and Security Agreement, unless renewed.
Working Capital Requirements.Janel Group’s cash needs are currently met by cash flow from operations, the Presidential Facility and cash on hand. As of June 30, 2017, the Company had $662,442 available under its Presidential Facility and $1,232,102 in cash. The Company believes that current financial resources will be sufficient to finance Janel Group operations and obligations (current and long-term liabilities) for the long- and short-terms. However, Janel Group’s actual working capital needs for the long- and short-terms will depend upon numerous factors, including operating results, the cost associated with growing Janel Group either internally or through acquisition, competition, and the availability under the Presidential Facility. None of these factors can be predicted with certainty. If cash flow and available credit are not sufficient to fund working capital, Janel Group’s operations will be materially negatively impacted.
Manufacturing
First Merchants Bank Borrowing Facility.On March 21, 2016, INDCO executed a Credit Agreement with First Merchants Bank (“First Merchants”) with respect to a $6,000,000 term loan and $1,500,000 (limited to the borrowing base and reserves) revolving loan(together, the “First Merchants Facility”). Interest will accrue on the term loan at an annual rate equal to the one-month LIBOR plus either 3.75% (if INDCO’s cash flow leverage ratio is less than or equal to 2:1) or 4.75% (if INDCO’s cash flow leverage ratio is greater than 2:1). Interest accrues on the revolving loan at an annual rate equal to the one-month LIBOR plus 2.75%. INDCO’s obligations under theFirst Merchants Facilityare secured by all of INDCO’s assets, and are guaranteed by the Company. The Credit Agreement requires, among other things, that INDCO, on a monthly basis, not exceed a “maximum total funded debt to EBITDA ratio” and maintain a “minimum fixed charge covenant ratio,” both as defined. TheFirst Merchants Facilityrequires monthly payments until the expiration date on the fifth anniversary of the loan. The loan is subject to earlier termination as provided in the Credit Agreement, unless renewed.
Working Capital Requirements.INDCO’s cash needs are currently met bycash flow from operations, the First Merchants Facility, and cash on hand. As of June 30, 2017, INDCO had $1,500,000 available under its $1,500,000 revolving facility, subject to collateral availability, and $657,366 in cash. The Company believes that the current financial resources will be sufficient to finance INDCO operations and obligations (current and long-term liabilities) for the long- and short-terms. However, actual working capital needs for the long- and short-terms will depend upon numerous factors, including operating results, the cost associated with growing INDCO either internally or through acquisition, competition, and available credit under the revolving credit facility. None of these factors can be predicted with certainty. If cash flow and available credit are not sufficient to fund working capital, INDCO’s operations will be materially negatively impacted.
Current Outlook
The results of operations for both Janel Group and INDCO are affected by the general economic cycle. Janel Group is particularly influenced by global trade levels, specifically the import and export activities of its current and prospective customers. Historically, Janel Group’s quarterly results of operations have been subject to seasonal trends which have been the result of, or influenced by, numerous factors, including climate, national holidays, consumer demand, economic conditions, the growth and diversification of Janel Group’s international network and service offerings, and other similar and subtle forces.
The Company cannot accurately forecast many of these factors, nor can it estimate accurately the relative influence of any factor and, as a result, there can be no assurance that historical patterns, if any, will continue in future periods.
Both Janel Group and INDCO are implementing business strategies to grow revenue and profitability for the current fiscal year and beyond. Janel Group’s strategy calls for additional branch offices, introduction of new revenue streams for existing locations, sales force expansion, additional acquisitions, and a continued focus on implementing lean methodologies to contain operating expenses. INDCO’s strategy calls for introductions of new product lines and wider distribution and promotion of its print- and web-based catalog.
In addition to supporting its subsidiaries’ growth plans, the Company may seek to grow by entering new business segments through acquisition.
Certain elements of our profitability and growth strategy, principally proposals for acquisition and accelerating our revenue growth, are contingent upon the availability of adequate financing on terms acceptable to the Company. Without adequate equity and/or debt financing, the implementation of significant aspects of the Company’s strategic growth plan may be deferred beyond the originally anticipated timing, and the Company’s operations will be materially negatively impacted.
Critical Accounting Policies and Estimates
Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America.U.S. GAAP. The preparation of these financial statements requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Since future events and their effects cannot be determined with absolute certainty, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and such differencedifferences may be material to the financial statements. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to revenue recognition, the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources, primarily allowance for doubtful accounts, accruals for transportation and other direct costs, accruals for cargo insurance, and deferred income taxes. Management bases its estimates on historical experience and on various assumptions which are believed to be reasonable under the circumstances. We reevaluate these significant factors as facts and circumstances change. Historically, actual results have not differed significantly from management’sour estimates.
Note 1 of the notes to consolidated financial statements in our Annual Report on Form 10-K/A for the year ended September 30, 2017 includes a summary of the significant accounting policies and methods used in the preparation of our consolidated financial statements. The following is a brief discussion of certain accounting policies and estimates.
Revenue Recognition
Global Logistics Services
policy due to the complexity of arranging and managing global logistics and supply-chain management transactions.
In its capacity as an air freightliabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and ocean freight service provider, Janel Group acts as an indirect carrier: it does not own any transportation assets. Rather, it purchases transportation servicesliabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date.
Air freight revenues include charges for carrying shipments when Janel Group acts as an air freight consolidator. Ocean freight revenues include charges for carrying shipments when Janel Group acts as a Non-Vessel Operating Common Carrier (“NVOCC”). Janel Group issues a House Airway Bill (“HAWB”) or a House Ocean Bill of Lading (“HOBL”) to customers as the contract of carriage. In turn, when the freight is physically tenderedworldwide tax system to a direct carrier, Janel Group receivesterritorial system, as well as other changes. As a contractresult of carriage known as a Master Airway Bill for air freight shipments and a Master Ocean Bill of Lading for ocean freight shipments. At this point, the risk of loss passes to the carrier; however, in order to claim for any such loss, the customer is obligated to pay the freight charges.
Based upon the termsenactment of the contractlegislation, the Company has made a reasonable estimate and recorded an additional one-time income tax benefit of carriage, Janel Group recognizes air freight and ocean freight revenues when$49,284 during the freight is tendered to the direct carrier. Costsfirst quarter of fiscal 2018, related to the shipments are recognized atestimated re-measurement of certain deferred tax assets, primarily net operating losses and deferred tax liabilities attributable to intangible assets. The Company continues to evaluate the same time.
In some cases, Janel Group acts as an agent forimpact the shipper, in which case it does not issue a HAWB or a HOBL. Revenues from these activities include only commission and fees earned for services performed. They are recognized upon completion of services.
In its capacity as a customs broker, Janel Group provides multiple services, including preparing documentation necessary for clearing shipments through U.S. customs, calculating and providing for payment of duties and other charges on its customers’ behalves and arranging for required inspections. Revenues derived from these activities are recognized upon completion of the services.
The movement of freight may require multiple services. In most instances, Janel Group may perform multiple services including destination break bulk and value-added services such as local transportation, distribution services and logistics management. Each of these services has separate fee that is recognized as revenue upon completion of the service.
Customers frequently request an all-inclusive rate for a set of services known as “door-to-door services.” In these cases, the customer is billed a single rate for all services from pickup at origin to delivery. The allocation of revenue and expense among the components of services when provided under an all-inclusive rate are done in an objective manner on a fair value basis in accordance with Emerging Issues Task Force (EITF) 00-21, “Revenue Arrangements with Multiple Deliverables.”
Manufacturing
The Company’s Manufacturing segment comprises its majority-owned INDCO subsidiary, which manufactures and distributes industrial mixing equipment. INDCO derives its revenues from product sales and shipping and handling charges, net of actual product returns and discounts. Since INDCO’s standard shipping terms are FOB shipping point, revenue primarily is recognizednew legislation will have on the date products are shipped to the customer. INDCO recognizes revenues from both e-commerce and traditional channels in the same manner. Accounts receivable are stated at their estimated net realizable value. INDCO makes an allowance for doubtful accounts based on its analysis of customer accounts and its historical experience with accounts receivable write-offs.
Consolidated Financial Statements.
| a. | accounts receivable valuation; |
| b. | the useful lives of long-term assets; |
| c. | the accrual of costs related to ancillary services the Company provides; and |
| d. | accrual of tax expense on an interim |
Recent
Three Months Ended March 31, 2018 | Six Months Ended March 31, 2018 | Three Months Ended March 31, 2017 | Six Months Ended March 31, 2017 | |||||||||||||
| (Loss) income from operations | $ | (140 | ) | $ | 157 | $ | 596 | $ | 906 | |||||||
| Addback: amortization | $ | 201 | $ | 394 | $ | 192 | $ | 383 | ||||||||
| EBITA | $ | 61 | $ | 551 | $ | 788 | $ | 1,289 | ||||||||
From
CONTROLS AND PROCEDURES |
| the appointment of a new corporate controller; |
| · | engagement of external advisors to supplement the staff charged with compiling and filing our U.S. GAAP results; |
| · | implementation of organizational structure changes that better integrate the tax accounting and finance functions as well as a formalized review process; |
| · | enhancement of our processes and procedures for determining, documenting and calculating our income tax provision; |
| · | increasing the level of certain tax review activities throughout the year and during the financial statement close process; and |
| · | enhancing the procedures and documentation requirements, including related training, surrounding the evaluation and recording of complex and/or non-routine transactions, such as business combinations. |
EXHIBIT INDEX |
Exhibit No. | ||
| 2.1 | ||
| 10.1 | ||
| 10.2 | ||
| 31.1 | ||
| 31.2 | ||
| 32.1 | ||
| 101 | Interactive data files providing financial information from the | |
| * | ||
| * | Filed herewith |
| ** | In accordance with the temporary hardship exemption provided by Rule 201 of Regulation S-T, the date by which the interactive data file is required to be submitted has been extended by six business days. |
Dated: August 4, 2017May 21, 2018JANEL CORPORATION Registrant /s/ Brendan J. Killackey Brendan J. Killackey President and Chief Executive Officer Exhibit No. /s/ Carlos PlaDescription31.1 Carlos Pla31.2 Chief32.1 (- 21 -Officer