|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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|
|
|
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(Address of principal executive offices)
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(Zip Code)
|
|
Registrant’s telephone number, including area code
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(
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Title of Each Class
|
Trading Symbol(s)
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Name of Each Exchange on Which Registered
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None
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None
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None
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Page
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|||
2
|
|||
ITEM 1
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7
|
||
ITEM 1A
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20 |
||
ITEM 1B
|
20
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||
ITEM 2
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20
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||
ITEM 3
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20 |
||
ITEM 4
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20 |
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21
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|||
ITEM 5
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21
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||
ITEM 6
|
21 |
||
ITEM 7
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22 |
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ITEM 7A
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33
|
||
ITEM 8
|
33
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||
ITEM 9
|
33
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||
ITEM 9A
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33
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||
ITEM 9B
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34 |
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ITEM 9C
|
34
|
||
35
|
|||
ITEM 10
|
35
|
||
ITEM 11
|
40
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||
ITEM 12
|
41 |
||
ITEM 13
|
43 |
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ITEM 14
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43 |
||
44
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|||
ITEM 15
|
44
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ITEM 16
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45 |
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46 |
ITEM 1. |
BUSINESS
|
• |
Product innovation: By working with key researchers and scientific organizations, we seek to develop new products to enhance the range of tools available and thereby
expand the capabilities of life science researchers.
|
• |
Operational improvement: We continue to enhance our operational designs and processes to be more efficient, which supports higher profitability and enables us to devote
more resources to investments in growth and innovation.
|
• |
Attract and retain exceptional talent: High-quality scientists enable our top-quality products and services to be offered, which are key to our reputation in the
marketplace.
|
• |
Acquisitions and investments: We intend to grow by acquiring new businesses with high-quality reputations that will benefit from our combined innovation and operational
strength.
|
• |
Customers and distribution methods: We sell our biotechnology products directly to customers, principally direct through our website or distributors. Some of our
customers utilize our scientific expertise and production capabilities and purchase our products and re-label them. Our reputation for quality products is critical to our ability to attract new customers for both our products and
services.
|
• |
Broad product offering: A number of companies supply protein-related research and diagnostic reagents. Customers choose their products based upon product quality,
reputation and price. We believe a number of our products have long-standing reputations and that our portfolio overall is well-regarded, especially amongst the academic, diagnostic and pharmaceutical research community.
|
• |
Manufacturing: Our antibodies are produced using a variety of technologies including traditional animal immunization and hybridoma technology as well as recombinant
antibody techniques. We are not dependent on key or sole source suppliers for most of our products, as we typically have several outside sources for all critical raw materials necessary for the manufacture of our products.
|
ITEM 1A. |
RISK FACTORS
|
• |
Janel's financial condition may not be sufficient to support the funding needs of an expansion program;
|
• |
Janel may not be able to successfully identify suitable investment opportunities;
|
• |
acquisitions that Janel undertakes may not be successfully consummated or enhance profitability; or
|
• |
expansion opportunities may not be available to Janel upon reasonable terms.
|
• |
difficulty in assimilating/integrating the operations and personnel of the acquired businesses;
|
• |
potential disruption of Janel’s or the target’s ongoing business;
|
• |
inability to realize the projected operational and financial benefits from the acquisition or to maximize financial and strategic benefits through the incorporation of acquired personnel and clients;
|
• |
difficulty maintaining uniform standards, controls, procedures and policies;
|
• |
impairment of relationships with employees and clients resulting from integration of the newly acquired company;
|
• |
strain on managerial and operational resources as management tries to oversee larger operations and newly acquired businesses;
|
• |
significantly increased need for working capital to operate the acquired companies;
|
• |
exposure to unforeseen liabilities of acquired companies.
|
• |
a change in control of our subsidiaries that would trigger limitations on the amount of taxable income in future years that may be offset by NOLs and other carryforwards that existed prior to the change in control; and
|
• |
examinations and audits by the IRS and other taxing authorities could reduce the amount of NOLs and other credit carryforwards that are available for future years.
|
• |
making it more difficult for us to satisfy our financial obligations;
|
• |
increasing our vulnerability to adverse economic, regulatory and industry conditions, and placing us at a disadvantage compared to our competitors that are less leveraged;
|
• |
limiting our ability to compete and our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate;
|
• |
limiting our ability to borrow additional funds for working capital, capital expenditures, acquisitions and general corporate or other purposes; and
|
• |
exposing us to greater interest rate risk, including the risk to variable borrowings of a rate increase and the risk to fixed borrowings of a rate decrease.
|
• |
a reduction in overall freight volumes in the marketplace, reducing our Logistics business’s opportunities for growth;
|
• |
economic difficulties encountered by some of our Logistics business customers, who may, therefore, not be able to pay our Logistics business in a timely manner or at all, or may go out of business;
|
• |
economic difficulties encountered by a significant number of our Logistics business’s transportation providers, who may go out of business and, therefore, leave our Logistics business unable to secure sufficient equipment or other
transportation services to meet commitments to its customers; and
|
• |
the inability of our Logistics business to appropriately adjust its expenses to changing market demands.
|
• |
economic and political conditions in the United States and abroad;
|
• |
major work stoppages;
|
• |
exchange controls, currency conversion and fluctuations;
|
• |
war, other armed conflicts and terrorism, such as the Russia-Ukraine conflict; and
|
• |
U.S. and foreign laws relating to tariffs, trade restrictions, foreign investment and taxation.
|
ITEM 1B. |
UNRESOLVED STAFF COMMENTS
|
ITEM 2. |
PROPERTIES
|
ITEM 3. |
LEGAL PROCEEDINGS
|
ITEM 4. |
MINE SAFETY DISCLOSURES
|
ITEM 5. |
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Fiscal Year 2022
|
Fiscal Year 2021
|
|||||||||||||||
Fiscal Quarter
|
High
|
Low
|
High
|
Low
|
||||||||||||
First Quarter ended December 31
|
$
|
29.00
|
$
|
15.52
|
$
|
8.00
|
$
|
3.00
|
||||||||
Second Quarter ended March 31
|
$
|
52.00
|
$
|
16.75
|
$
|
17.50
|
$
|
4.51
|
||||||||
Third Quarter ended June 30
|
$
|
47.00
|
$
|
25.00
|
$
|
18.00
|
$
|
11.00
|
||||||||
Fourth Quarter ended September 30
|
$
|
57.11
|
$
|
28.00
|
$
|
19.00
|
$
|
14.00
|
ITEM 6. |
RESERVED
|
ITEM 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
2022
|
2021
|
|||||||
Revenue
|
$
|
316,863
|
$
|
146,419
|
||||
Forwarding expenses and cost of revenue
|
250,666
|
113,986
|
||||||
Gross profit
|
66,197
|
32,433
|
||||||
Operating expenses
|
56,699
|
28,482
|
||||||
Income from operations
|
$
|
9,498
|
$
|
3,951
|
||||
Net (loss) income
|
$
|
(2,138
|
)
|
$
|
5,203
|
|||
Adjusted operating income
|
$
|
12,797
|
$
|
5,894
|
2022
|
2021
|
|||||||
Income from operations
|
$
|
9,498
|
$
|
3,951
|
||||
Amortization of intangible assets
|
1,975
|
1,120
|
||||||
Stock-based compensation
|
832
|
115
|
||||||
Cost recognized on sale of acquired inventory
|
492
|
708
|
||||||
Adjusted operating income
|
$
|
12,797
|
$
|
5,894
|
2022
|
2021
|
|||||||
Revenue
|
$
|
295,343
|
$
|
125,863
|
||||
Forwarding expense
|
242,946
|
106,139
|
||||||
Gross profit
|
$
|
52,397
|
$
|
19,724
|
||||
Gross profit margin
|
17.7
|
%
|
15.7
|
%
|
||||
Selling, general and administrative expenses
|
$
|
40,075
|
$
|
16,656
|
||||
Income from operations
|
$
|
12,322
|
$
|
3,068
|
2022
|
2021
|
|||||||
Revenue
|
$
|
11,625
|
$
|
11,992
|
||||
Cost of sales
|
2,441
|
3,156
|
||||||
Cost recognized upon sale of acquired inventory
|
492
|
708
|
||||||
Gross profit
|
$
|
8,692
|
$
|
8,128
|
||||
Gross profit margin
|
74.8
|
%
|
67.8
|
%
|
||||
Selling, general and administrative expenses
|
$
|
5,421
|
$
|
4,469
|
||||
Income from operations
|
$
|
3,271
|
$
|
3,659
|
2022
|
2021
|
|||||||
Revenue
|
$
|
9,895
|
$
|
8,564
|
||||
Cost of sales
|
$
|
4,787
|
$
|
3,983
|
||||
Gross profit
|
$
|
5,108
|
$
|
4,581
|
||||
Gross profit margin
|
51.6
|
%
|
53.5
|
%
|
||||
Selling, general and administrative expenses
|
$
|
3,095
|
$
|
2,696
|
||||
Income from operations
|
$
|
2,013
|
$
|
1,885
|
Years Ended
September 30,
|
||||||||
2022
|
2021
|
|||||||
(In thousands)
|
||||||||
Total income from operating segments
|
$
|
17,606
|
$
|
8,612
|
||||
Corporate expenses
|
(5,342
|
)
|
(3,493
|
)
|
||||
Amortization expense
|
(1,976
|
)
|
(1,120
|
)
|
||||
Stock-based compensation
|
(790
|
)
|
(48
|
)
|
||||
Total Corporate expenses
|
(8,108
|
)
|
(4,661
|
)
|
||||
Interest expense
|
(1,276
|
)
|
(589
|
)
|
||||
Change in fair value of mandatorily redeemable non-controlling interest
|
411
|
(93
|
)
|
|||||
Fair value adjustments to Rubicon investment (net of dividends)
|
(7,601
|
)
|
—
|
|||||
Change in fair value of earnout
|
(980
|
)
|
—
|
|||||
Gain on Paycheck Protection Program loan forgiveness
|
—
|
2,895
|
||||||
Net income before taxes
|
52
|
6,164
|
||||||
Income tax expense
|
(2,190
|
)
|
(961
|
)
|
||||
Net (loss) Income
|
(2,138
|
)
|
5,203
|
|||||
Preferred stock dividends
|
(586
|
)
|
(766
|
)
|
||||
Non-controlling interest dividends
|
(404
|
)
|
—
|
|||||
Net (loss) Income Available to Common Stockholders
|
$
|
(3,128
|
)
|
$
|
4,437
|
ITEM 7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
|
ITEM 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
|
ITEM 9A. |
CONTROLS AND PROCEDURES
|
ITEM 9B. |
OTHER INFORMATION
|
ITEM 9C. |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
|
ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Name
|
Age
|
Position
|
||
Dominique Schulte
|
49
|
Board Chair, President and Chief Executive Officer
|
||
Brendan J. Killackey
|
48
|
Director, Chief Information Officer
|
||
Gerard van Kesteren
|
73
|
Director, Chair of Audit Committee
|
||
John J. Gonzalez, II
|
72
|
Director, Senior Advisor for Mergers and Acquisitions
|
||
Gregory J. Melsen
|
70
|
Director, Chair of Nominating and Corporate Governance Committee
|
||
Karen Miller Ryan
|
58
|
Director, Chair of Compensation Committee
|
||
Vincent A. Verde
|
60
|
Principal Financial Officer, Treasurer and Secretary
|
• |
reviewing and assessing the effectiveness of external auditors, their independence from Janel and any additional assignments they may be given, as well as reviewing their appointment, termination and
remuneration;
|
• |
reviewing and assessing the scope and plan of the audit, the examination process, audit results and reports, as well as whether auditor recommendations have been implemented by management;
|
• |
recommending the approval of the annual internal audit report, including the responses of management thereto;
|
• |
assessing management’s established risk assessment and any proposed measures to reduce risk;
|
• |
assessing the Company’s efforts and policies of compliance with relevant laws and regulations;
|
• |
reviewing, in tandem with external auditors, as well as the Chief Executive Officer and the Principal Financial Officer, whether accounting principles and the financial control mechanisms of Janel and its
subsidiaries are appropriate in view of Janel’s size and complexity; and
|
• |
reviewing annual and interim statutory and consolidated financial statements intended for publication and recommending such financial statements to the board of directors.
|
• |
reviewing and approving the Company’s general compensation philosophy and objectives;
|
• |
reviewing and approving the corporate goals and individual objectives relevant to the compensation of the Company’s Chief Executive Officer and evaluating the performance of the Chief Executive Officer
considering these objectives;
|
• |
approving base salary amounts, incentive and bonus compensation amounts and individual stock and/or option grants and awards for the Chief Executive Officer and, based on the recommendation of the Chief
Executive Officer, all corporate officers at or above the Vice President level;
|
• |
reviewing all forms of compensation for the Company’s senior management, including the form and amount of current salary, deferred salary, cash and non-cash benefits, and all compensation plans;
|
• |
reviewing the Company’s severance or similar termination payments and administering the Company’s stock option and other incentive compensation plans and programs;
|
• |
amending or modifying, where appropriate, the provisions of any compensation or benefit plan that does not require stockholder approval;
|
• |
preparing and approving reports to stockholders on compensation matters which are required by the SEC and other government bodies;
|
• |
performing an annual performance appraisal for members of the Company’s senior management designated by the board of directors;
|
• |
establishing levels of director compensation to include marketplace reviews of retainers, meeting fees, stock plans and other similar components of compensation; and
|
• |
annually reviewing succession plans for key positions within the Company.
|
• |
making recommendations to Janel’s board of directors regarding matters and practices concerning the board, its committees and individual directors, as well as matters and practices of the boards, committees
and individual directors of each of Janel’s subsidiaries;
|
• |
periodically evaluating the size, composition and governance structure of Janel’s board of directors and its committees and the boards and committees of Janel’s subsidiaries and determining the future
requirements of each such body;
|
• |
periodically making recommendations concerning the qualifications, criteria, compensation and retirement age of members of Janel’s board of directors and the boards of its subsidiaries, which
recommendations, upon approval by Janel’s board of directors, shall be incorporated in Janel’s Corporate Governance Guidelines;
|
• |
recommending nominees for election to Janel’s board of directors and the boards of its subsidiaries and establishing and administering a board evaluation process; and
|
• |
reviewing timely nominations by stockholders for the election of individuals to Janel’s board of directors and ensure that such stockholders are advised of any action taken by the board of directors with
respect thereto.
|
Name
|
Fees Earned or
Paid in Cash(1)
|
Option
Awards(2)
|
All Other
Compensation
|
Total
|
||||||||||||
Gerard van Kesteren
|
$
|
50,000
|
$
|
47,675
|
$
|
40,000
|
(3)
|
$
|
137,675
|
|||||||
John J. Gonzalez
|
$
|
50,000
|
$
|
47,675
|
$
|
109,000
|
(4)
|
$
|
206,675
|
|||||||
Gregory J. Melsen
|
$
|
50,000
|
$
|
47,675
|
$
|
—
|
$
|
97,675
|
||||||||
Karen Miller Ryan
|
$
|
40,000
|
$
|
47,675
|
$
|
—
|
$
|
87,675
|
(1) |
Compensation is paid on a monthly basis.
|
(2) |
The aggregate number of options outstanding as of September 30, 2022, for each director was as follows: Gerard van Kesteren – 4,999, John J. Gonzalez II – 4,999, Gregory J. Melsen – 11,875, and Karen Miller
Ryan – 2,500.
|
(3) |
Represents compensation paid to Mr. van Kesteren in connection with his consulting agreement.
|
(4) |
Represents compensation paid to Mr. Gonzalez in connection with his consulting arrangement and payment of medical insurance premiums.
|
ITEM 11. |
EXECUTIVE COMPENSATION
|
Name and Principal Position
|
Year
|
Base
Salary ($)
|
Bonus ($)
|
All Other
Comp. ($)
|
Total ($)
|
||||||||||
Dominique Schulte, Chief Executive Officer and President
|
2022
|
50,000
|
—
|
19,299
|
(1)
|
69,299
|
|||||||||
2021
|
50,000
|
—
|
16,478
|
66,478
|
|||||||||||
Brendan J. Killackey, Chief Information Officer
|
2022
|
160,000
|
106,836
|
11,772
|
(2)
|
278,608
|
|||||||||
2021
|
160,000
|
44,000
|
11,659
|
215,659
|
|||||||||||
Vincent A. Verde, Principal Financial Officer,
|
|||||||||||||||
Treasurer and Secretary
|
2022
|
215,000
|
80,936
|
27,606
|
(3)
|
323,542
|
|||||||||
2021
|
215,000
|
25,000
|
27,438
|
267,438
|
(1) |
Amounts reported under all other compensation for the fiscal year ended September 30, 2022, include $18,360 of medical insurance premiums and $939 of 401K contributions paid for the fiscal year ended 2022.
|
(2) |
Includes $6,763 of medical insurance premiums and $5,009 of 401(k) contributions paid on behalf of Mr. Killackey for the fiscal year ended 2022.
|
(3) |
Amounts reported under all other compensation for the fiscal year ended September 30, 2022 include $20,864 of medical insurance premiums and $6,742 of 401(k) contributions paid on behalf of Mr. Verde for
the fiscal year ended 2022.
|
ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
Name and address of Beneficial Owner (1)
|
Shares
Beneficially
Owned
|
Percent
of Class
|
||||||
Oaxaca Group L.L.C.(2)
|
485,302
|
40.9
|
%
|
|||||
John Eidinger
|
186,704
|
15.7
|
%
|
|||||
John J. Gonzalez, II (3)
|
106,570
|
9.0
|
%
|
|||||
Gerard van Kesteren(3)
|
81,887
|
6.8
|
%
|
|||||
Brendan Killackey
|
59,333
|
5.0
|
%
|
(1) |
The address of each person and entity included in this table is 80 Eighth Avenue, New York, NY 10011
|
(2) |
These shares are held by Oaxaca Group L.L.C. Ms. Schulte is the sole member of Oaxaca Group L.L.C. and, therefore, shares beneficial ownership of the shares.
|
(3) |
Includes 2,500 shares of common stock issuable upon the exercise of stock options that may be exercised within 60 days of September 30, 2022.
|
Name of Beneficial Owner
|
Shares
Beneficially
Owned
|
Percent
of Class
|
||||||
Dominique Schulte (1)
|
485,302
|
40.9
|
%
|
|||||
John J. Gonzalez, II (2)
|
106,570
|
9.0
|
%
|
|||||
Gerard van Kesteren (2)
|
81,887
|
6.8
|
%
|
|||||
Brendan Killackey
|
59,333
|
5.0
|
%
|
|||||
Gregory J. Melsen (2)
|
9,376
|
*
|
||||||
Karen Miller Ryan (3)
|
5,278
|
*
|
||||||
Vincent A. Verde
|
665
|
*
|
||||||
Total
|
748,411
|
61.7
|
%
|
(1) |
These shares are held by Oaxaca Group L.L.C. Ms. Schulte is the sole member of Oaxaca Group L.L.C. and, therefore, shares beneficial ownership of the shares.
|
(2) |
Includes 2,500 shares of common stock issuable upon the exercise of stock options that may be exercised within 60 days of September
30, 2022.
|
(3) |
Includes 834 shares of common stock issuable upon the exercise of stock options that may be exercised within 60 days of September 30, 2022.
|
Column A
|
Column B
|
Column C
|
||||||||||
Plan Category: Equity Compensation plans not approved by security holders:
|
Number of securities
to be issued,
upon exercise of
outstanding options,
warrants and rights
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
Number of securities
remaining available
for future issuance
under equity
compensation plans
|
|||||||||
2013 Stock Option Plan (1)
|
6,621
|
$
|
5.49
|
35,701
|
||||||||
Amended and Restated 2017 Equity Incentive Plan (2)
|
24,373
|
$
|
14.64
|
79,753
|
||||||||
Total
|
30,994
|
$
|
20.13
|
115,454
|
(1) |
On October 30, 2013, the Board of Directors of the Company adopted the Company’s 2013 Non-Qualified Stock 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. The exercise price and other terms of any nonqualified option granted under the 2013 Option Plan is determined by the Compensation Committee of the
board of directors.
|
(2) |
On September 21, 2021, the Board of Directors of the Company adopted the Amended and Restated 2017 Janel Corporation Equity Incentive Plan pursuant to which non-statutory stock options, restricted stock
awards and stock appreciation rights with respect to up to 200,000 shares of the Company’s common stock may be granted to employees, directors and consultants to the Company and its subsidiaries. Participants and all terms of any grant
under the Amended and Restated Plan are in the discretion of the Compensation Committee.
|
ITEM 13. |
CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
ITEM 14. |
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
Year End September 30,
|
||||||||
Fee Category
|
2022
|
2021
|
||||||
Audit Fees
|
$
|
377,050
|
$
|
292,500
|
||||
Audit-Related Fees
|
92,000
|
41,500
|
||||||
Tax Fees
|
71,768
|
48,741
|
||||||
Total Fees
|
$
|
540,818
|
$
|
382,741
|
ITEM 15. |
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
(a) |
Documents filed as part of this report
|
(1) |
Financial Statements.
|
(b) |
Exhibits
|
Exhibit
No.
|
Description
|
|||
* 2.1
|
Stock Purchase and Sale Agreement, dated July 1, 2022, between Janel Corporation and Rubicon Technology, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report
on Form 8-K filed July 5, 2022)
|
|||
Articles of Incorporation of Wine Systems Design, Inc. (predecessor name) (incorporated by reference to Exhibit 3A to Wine Systems Design, Inc. (predecessor name) Registration Statement
on Form SB-2 filed May 10, 2001)
|
||||
Amended and Restated By-Laws of Janel Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed November 1, 2013)
|
||||
Certificate of Designations of Series C Cumulative Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed August 29, 2014)
|
||||
Certificate of Change filed Pursuant to NRS 78.209 for Registrant (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed April 21, 2015)
|
||||
Certificate of Amendment to Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed April 21, 2015)
|
||||
Amendment to Certificate of Designation After Issuance of Class or Series pursuant to NRS 78.1955 for Series C Cumulative Preferred Stock (incorporated by reference to Exhibit 3.1 to
the Company’s Current Report on Form 8-K filed March 25, 2016)
|
||||
Amendment to Certificate of Designation After Issuance of Class or Series pursuant to NRS 78.1955 for Series C Cumulative Preferred Stock (incorporated by reference to Exhibit 3.7 to
the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017)
|
||||
|
Amendment to Certificate of Designation After Issuance of Class or Series pursuant to NRS 78.1955 for Series C Cumulative Preferred Stock (incorporated by reference to Exhibit 3.1 to
the Company’s Current Report on Form 8-K/A filed October 17, 2017)
|
|||
Amendment to Certificate of Designation After Issuance of Class or Series pursuant to NRS 78.1955 for Series C Cumulative Preferred Stock (incorporated by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K filed on October 5, 2021)
|
||||
3.10 | Certificate, Amendment or Withdrawal of Designation pursuant to NRS 78.1955 with respect to Series C Cumulative Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 5, 2022) | |||
Description of Registrant’s Securities (filed herewith)
|
||||
† 10.1
|
Janel World Trade, Ltd. 2013 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 1, 2013)
|
|||
Credit Agreement, effective as of February 29, 2016, by and between Indco, Inc. and First Merchants Bank (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on
Form 8-K filed March 25, 2016)
|
||||
Security Agreement, effective as of February 29, 2016, made by Indco and the Company, Inc. for the benefit of First Merchants Bank (incorporated by reference to Exhibit 10.7 to the
Company’s Current Report on Form 8-K filed March 25, 2016)
|
||||
Continuing Guaranty Agreement, effective as of February 29, 2016, made by Janel Corporation for the benefit of First Merchants Bank (incorporated by reference to Exhibit 10.9 to the
Company’s Current Report on Form 8-K filed March 25, 2016)
|
||||
† 10.5
|
Restricted Stock Award Agreement between Janel Corporation and Gerard van Kesteren dated May 12, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form
8-K filed September 5, 2017)
|
|||
Business Loan Agreement, dated June 14, 2018, by and between AB Merger Sub, Inc. and First Northern Bank of Dixon (incorporated by reference to Exhibit 10.1 of the Company’s Current
Report on Form 8-K filed June 27, 2018)
|
Promissory Note, dated June 14, 2018, made by AB Merger Sub, Inc. payable to First Northern Bank of Dixon (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on
Form 8-K filed June 27, 2018)
|
|||
Deed of Trust, dated June 14, 2018, by Antibodies Incorporated, as Trustor (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed June 27, 2018)
|
|||
Commercial Guaranty, dated June 14, 2018, from Janel Corporation (as Guarantor) to First Northern Bank of Dixon (incorporated by reference to Exhibit 10.4 of the Company’s Current
Report on Form 8-K filed June 27, 2018)
|
|||
Amendment No. 1 to Credit Agreement, effective as of August 30, 2019, by and between Indco, Inc. and First Merchants Bank (incorporated by reference to Exhibit 10.1 of the Company’s
Current Report on Form 8-K filed on September 6, 2019)
|
|||
Term Loan Promissory Note, effective as of August 30, 2019, made by Indco, Inc. payable to First Merchants Bank (incorporated by reference to Exhibit 10.2 to the Company’s Current
Report on Form 8-K filed on September 6, 2019)
|
|||
Revolving Loan Promissory Note, effective as of August 30, 2019, made by Indco, Inc. payable to First Merchant Bank (incorporated by reference to Exhibit 10.3 to the Company’s Current
Report on Form 8-K filed on September 6, 2019)
|
|||
Pledge Agreement, effective as of August 30, 2019, by Janel Corporation to First Merchant Bank (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K
filed on September 6, 2019)
|
|||
† 10.14
|
Consulting Agreement, dated February 26, 2017, between Janel Corporation and John J. Gonzalez, II (incorporated by reference to Exhibit 10.30 of the Company’s Form 10-K for the year
ended September 30, 2018, filed on July 26, 2019)
|
||
† 10.15
|
Consulting Agreement, dated September 28, 2016, between Janel Corporation and Gerard van Kesteren (incorporated by reference to Exhibit 10.31 of the Company’s Form 10-K for the year
ended September 30, 2018, filed on July 26, 2019)
|
||
Amendment No. 2 to Credit Agreement effective as of July 1, 2020, by and between Indco Inc. and First Merchants Bank (incorporated by reference to Exhibit 10.39 of the Company’s Annual
Report on Form 10-K for the fiscal year ended September 30, 2020)
|
|||
Amended and Restated Loan and Security Agreement, by and among Santander Bank, N.A., as lender, and Janel Group, Inc., Expedited Logistics and Freight Services, LLC, a Texas limited
liability company, and ELFS Brokerage, LLC (collectively as borrowers) and Janel Corporation and Expedited Logistics and Freight Services, LLC, an Oklahoma limited liability company, as loan party obligors dated September 21, 2021
(incorporated by reference to Exhibit 10.44 of the Company’s Annual Report on Form 10-K for the year ended September 30, 2021)
|
|||
10.18 | First Amendment to Amended and Restated Loan and Security Agreement between (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022) | ||
10.19 | Consent, Waiver and Second Amendment to Amended and Restated Loan Agreement, dated as of July 13, 2022, by and among Santander Bank, N.A., Janel Group, Inc., Expedited Logistics and Freight Services, LLC, ELFS Brokerage LLC, Janel Corporation and Expedited Logistics and Freight Services, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on July 13, 2022) | ||
10.20 | Form letter purchase agreement, dated March 31, 2022, between the Company and holders of Series C Stock (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022) | ||
10.21 |
Amended and Restated 2017 Janel Corporation Equity Incentive Plan dated September 21, 2021 (incorporated by reference to Exhibit 10.45 of the Company’s Annual Report on Form 10-K for the
fiscal year ended September 30, 2021)
|
||
10.22 | Subscription Agreement for sale of Series C Preferred Stock dated as of September 30, 2021 between Janel Corporation and Oaxaca Group LLC (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on October 5, 2021) | ||
10.23 | Amendment No. 3 to Credit Agreement effective as of August 1, 2022 entered into by and among Indco, Inc., and First Merchants Bank (filed herewith) | ||
Subsidiaries of the Registrant (filed herewith)
|
|||
Consent of Prager Metis CPAs, LLC (filed herewith)
|
|||
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer (filed herewith)
|
|||
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer (filed herewith)
|
|||
Section 1350 Certification of Principal Executive Officer (furnished herewith)
|
|||
Section 1350 Certification of Principal Financial Officer (furnished herewith)
|
|||
101
|
Interactive data files providing financial information from the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2022 in Inline XBRL (eXtensible Business
Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of September 30, 2022 and September 30, 2021, (ii) Consolidated Statements of Operations for the years ended September 30, 2022 and 2021, (iii)
Consolidated Statements of Stockholders’ Equity for the years ended September 30, 2022 and 2021, (iv) Consolidated Statements of Cash Flows for the years ended September 30, 2022 and 2021, and (v) Notes to Consolidated Financial
Statements (filed herewith)
|
||
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Interactive Data Files submitted as Exhibit 101) (filed herewith)
|
† |
Represents management contract, compensatory plan or arrangement in which directors and/or executive officers are entitled to participate.
|
* |
Schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Registration S-K. The Registrant hereby agrees to furnish a copy of any omitted schedules to the SEC upon request
|
ITEM 16. |
FORM 10-K SUMMARY
|
JANEL CORPORATION
(Registrant)
|
||
Date: December 9, 2022
|
By:
|
/s/ Dominique Schulte
|
Dominique Schulte
|
||
Director, Board Chair, President and Chief Executive Officer
(Principal Executive Officer)
|
||
Date: December 9, 2022
|
By:
|
/s/ Vincent A. Verde
|
Vincent A. Verde
|
||
Principal Financial Officer, Treasurer and Secretary
|
Signature
|
Title
|
Date
|
||
/s/ Dominique Schulte
|
Director, Board Chair, President and Chief Executive Officer
|
December 9, 2022
|
||
Dominique Schulte
|
||||
/s/ Vincent A. Verde
|
Principal Financial Officer, Treasurer and Secretary
|
December 9, 2022
|
||
Vincent A. Verde
|
||||
/s/John J. Gonzalez, II
|
Director
|
December 9, 2022
|
||
John J. Gonzalez, II
|
||||
/s/Brendan J. Killackey
|
Director
|
December 9, 2022
|
||
Brendan J. Killackey
|
||||
/s/Gregory J. Melsen
|
Director
|
December 9, 2022
|
||
Gregory J. Melsen
|
||||
/s/Karen Miller Ryan
|
Director
|
December 9, 2022
|
||
Karen Miller Ryan
|
||||
/s/Gerard van Kesteren
|
Director
|
December 9, 2022
|
||
Gerard van Kesteren
|
Report of Registered Independent Public Accounting Firm – Prager Metis CPAs, LLC (PCAOB ID number
|
F-2
|
|
|
F-3
|
|
|
|
F-4
|
|
|
|
F-5
|
|
|
|
F-6
|
|
|
|
F-7
|
September 30,
|
||||||||
2022
|
2021
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash
|
$
|
|
$
|
|
||||
Accounts receivable, net of allowance for doubtful accounts
|
|
|
||||||
Inventory, net
|
|
|
||||||
Prepaid expenses and other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Property and Equipment, net
|
|
|
||||||
Other Assets:
|
||||||||
Intangible assets, net
|
|
|
||||||
Goodwill
|
|
|
||||||
Investment in Rubicon at fair value
|
||||||||
Operating lease right of use asset
|
|
|
||||||
Security deposits and other long-term assets
|
|
|
||||||
Total other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Line of credit
|
$
|
|
$
|
|
||||
Accounts payable - trade
|
|
|
||||||
Accrued expenses and other current liabilities
|
|
|
||||||
Dividends payable
|
|
|
||||||
Current portion of earnout |
||||||||
Current portion of long-term debt
|
|
|
||||||
Current portion of deferred acquisition payments |
|
|
||||||
Current portion of subordinated promissory note-related party |
|
|
||||||
Current portion of operating lease liabilities
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Other Liabilities:
|
||||||||
Long-term debt
|
|
|
||||||
Long-term portion of earnout |
||||||||
Subordinated promissory notes-related party
|
|
|
||||||
Long-term portion of deferred acquisition payments
|
|
|
||||||
Mandatorily redeemable non-controlling interest
|
|
|
||||||
Deferred income taxes
|
|
|
||||||
Long-term operating lease liabilities
|
|
|
||||||
Other liabilities
|
|
|
||||||
Total other liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Stockholders’ Equity:
|
||||||||
Preferred Stock, $
|
||||||||
Series B
|
|
|||||||
Series C
|
|
|||||||
Common stock, $
|
|
|
||||||
Paid-in capital
|
|
|
||||||
Common treasury stock, at cost,
|
(
|
)
|
(
|
)
|
||||
Accumulated earnings
|
|
|
||||||
Total stockholders’ equity
|
|
|
||||||
Total liabilities and stockholders’ equity
|
$
|
|
$
|
|
Year Ended September 30,
|
||||||||
2022
|
2021
|
|||||||
Revenue
|
$
|
|
$
|
|
||||
Forwarding expenses and cost of revenue
|
|
|
||||||
Gross profit
|
|
|
||||||
Cost and Expenses:
|
||||||||
Selling, general and administrative
|
|
|
||||||
Amortization of intangible assets
|
|
|
||||||
Total Costs and Expenses
|
|
|
||||||
Income from Operations
|
|
|
||||||
Other Items:
|
||||||||
Interest expense
|
(
|
)
|
(
|
)
|
||||
Gain on Paycheck Protection Program loan forgiveness |
||||||||
Fair value adjustments to Rubicon investment (net of dividends)
|
( |
) | ||||||
Change in fair value of earnout
|
( |
) | ||||||
Change in fair value of mandatorily redeemable non-controlling interest
|
|
(
|
)
|
|||||
Income Before Income Taxes
|
|
|
||||||
Income tax expense
|
(
|
)
|
(
|
)
|
||||
Net (Loss) Income
|
(
|
)
|
|
|||||
Preferred stock dividends
|
(
|
)
|
(
|
)
|
||||
Non-controlling interest dividends |
( |
) | ||||||
Net (Loss) Income Available to Common Stockholders
|
$
|
(
|
)
|
$
|
|
|||
Net (loss) Income per share
|
||||||||
Basic
|
$
|
(
|
)
|
$
|
|
|||
Diluted
|
$
|
(
|
)
|
$
|
|
|||
Net income (loss) per share attributable to common stockholders:
|
||||||||
Basic
|
$
|
(
|
)
|
$
|
|
|||
Diluted
|
$
|
(
|
)
|
$
|
|
|||
Weighted average number of shares outstanding:
|
||||||||
Basic
|
|
|
||||||
Diluted
|
|
|
PREFERRED
STOCK
|
COMMON
STOCK
|
PAID-IN CAPITAL
|
COMMON
TREASURY
STOCK
|
ACCUMULATED
EARNING
(DEFICIT)
|
TOTAL
EQUITY
|
|||||||||||||||||||||||||||||||
Shares
|
$ |
Shares
|
$ |
$ |
Shares
|
$ |
$ |
$ |
||||||||||||||||||||||||||||
Balance - September 30, 2020
|
|
$
|
|
|
$
|
|
$
|
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|||||||||||||||||||
Net Income
|
—
|
|
—
|
|
|
—
|
|
|
|
|||||||||||||||||||||||||||
Dividends to preferred stockholders
|
—
|
|
—
|
|
(
|
)
|
—
|
—
|
|
(
|
)
|
|||||||||||||||||||||||||
Preferred C shares purchased |
— |
— |
||||||||||||||||||||||||||||||||||
Preferred C shares sold |
— | — | — |
— |
||||||||||||||||||||||||||||||||
Preferred B shares converted
|
|
|
|
|
|
—
|
—
|
|
|
|||||||||||||||||||||||||||
Restricted stock issued
|
|
|
|
|
|
—
|
—
|
|
|
|||||||||||||||||||||||||||
Stock based compensation
|
|
|
|
|
|
—
|
—
|
|
|
|||||||||||||||||||||||||||
Stock option exercise
|
|
|
|
|
|
—
|
—
|
|
|
|||||||||||||||||||||||||||
Balance - September 30, 2021
|
|
$
|
|
|
$
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
$
|
|
||||||||||||||||||||
Net (Loss)
|
—
|
|
—
|
|
|
—
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||
Dividends to preferred stockholders
|
—
|
|
—
|
|
(
|
)
|
—
|
—
|
|
(
|
)
|
|||||||||||||||||||||||||
Dividends to non-controlling interest
|
— | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||||||||
Preferred C shares purchases
|
(
|
)
|
|
|
|
(
|
)
|
—
|
—
|
—
|
(
|
)
|
||||||||||||||||||||||||
Preferred C shares converted |
( |
) | — | — | ||||||||||||||||||||||||||||||||
Preferred B shares converted | ( |
) | — | — | ||||||||||||||||||||||||||||||||
Common Stock issued in private placement
|
—
|
—
|
|
|
|
—
|
—
|
|
|
|||||||||||||||||||||||||||
Stock based compensation
|
|
|
|
|
|
—
|
—
|
|
|
|||||||||||||||||||||||||||
Stock option exercise
|
|
|
|
|
|
—
|
—
|
|
|
|||||||||||||||||||||||||||
Balance - September 30, 2022
|
|
$
|
|
|
$
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
$
|
|
Year Ended
September 30,
|
||||||||
2022
|
2021
|
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
|||
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
||||||||
Provision for (recovery of) uncollectible accounts
|
|
|
||||||
Depreciation
|
|
|
||||||
Deferred income provision
|
|
|
||||||
Amortization of intangible assets
|
|
|
||||||
Amortization of acquired inventory valuation
|
|
|
||||||
Amortization of loan costs
|
|
|
||||||
Stock based compensation
|
|
|
||||||
Unrealized loss on fair value adjustment to Rubicon investment (net of dividend)
|
|
|
||||||
Change in fair value of earnout
|
|
|
||||||
Change in fair value of mandatorily redeemable non-controlling interest
|
(
|
)
|
|
|||||
Gain on Paycheck Protection Program loan forgiveness
|
|
(
|
)
|
|||||
Changes in operating assets and liabilities, net of effects of acquisitions:
|
||||||||
Accounts receivable
|
(
|
)
|
(
|
)
|
||||
Inventory
|
(
|
)
|
(
|
)
|
||||
Prepaid expenses and other current assets
|
(
|
)
|
(
|
)
|
||||
Security deposits and other long-term assets
|
|
|
||||||
Accounts payable and accrued expenses
|
|
|
||||||
Other liabilities
|
|
|
||||||
Net cash provided by (used in) operating activities
|
|
(
|
)
|
|||||
Cash Flows from Investing Activities:
|
||||||||
Acquisition of property and equipment, net of disposals
|
(
|
)
|
(
|
)
|
||||
Investment in Rubicon (net of dividend)
|
(
|
)
|
|
|||||
Acquisitions
|
(
|
)
|
(
|
)
|
||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
Cash Flows from Financing Activities:
|
||||||||
Dividends paid to preferred stockholders
|
(
|
)
|
|
|||||
Dividends paid to minority shareholders
|
(
|
)
|
|
|||||
Borrowings (repayments) of term loan
|
|
(
|
)
|
|||||
Proceeds from stock option exercise
|
|
|
||||||
Line of credit, (payments) proceeds, net
|
(
|
)
|
|
|||||
Repurchase of Series C Preferred Stock
|
(
|
)
|
|
|||||
Restricted Stock Issued
|
|
|
||||||
Proceeds from sale of Series C Preferred Stock
|
|
|
||||||
Proceeds from Private Placement
|
|
|
||||||
Repayment of subordinated promissory note-related party
|
(
|
)
|
(
|
)
|
||||
Net cash (used in) provided by financing activities
|
(
|
)
|
|
|||||
Net increase in cash
|
|
|
||||||
Cash at beginning of the period
|
|
|
||||||
Cash at end of period
|
$
|
|
$
|
|
||||
Supplemental Disclosure of Cash Flow Information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
|
$
|
|
||||
Income taxes
|
$
|
|
$
|
|
||||
Non-cash investing activities:
|
||||||||
Contingent earn-out acquisition
|
$
|
|
$
|
|
||||
Subordinated Promissory notes of ELFS
|
$
|
|
$
|
|
||||
Subordinated Promissory notes of ICT
|
$
|
|
$
|
|
||||
Due to former ECM owner
|
$
|
|
$
|
|
||||
Non-cash financing activities:
|
||||||||
Dividends declared to preferred stockholders
|
$
|
|
$
|
|
1.
|
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
|
Year Ended September 30, |
||||||||
Service Type
|
2022
|
2021
|
||||||
Ocean freight
|
$
|
|
$
|
|
||||
Trucking |
||||||||
Air freight |
||||||||
Custom brokerage
|
|
|
||||||
Other
|
|
|
||||||
Total
|
$
|
|
$
|
|
2.
|
ACQUISITIONS
|
Fair Value
|
||||
Accounts Receivable
|
$
|
|
||
Prepaid expenses and other current assets
|
|
|||
Property & equipment, net
|
|
|||
Security deposits and other long-term assets
|
|
|||
Operating lease right of use asset
|
|
|||
Goodwill
|
|
|||
Intangible assets
|
|
|||
Accounts payable
|
(
|
)
|
||
Current portion of operating lease liabilities
|
(
|
)
|
||
Accrued expenses and other current liabilities
|
(
|
)
|
||
Long-term operating lease liabilities
|
(
|
)
|
||
Total Consideration Paid
|
$
|
|
2021
|
||||
Revenues
|
$
|
|
||
Forwarding expense
|
|
|||
Gross profit
|
|
|||
Selling, general and administrative expenses
|
|
|||
Income from operations
|
$
|
|
•
|
Amortization expense of acquired intangibles
|
•
|
Adjustments to interest expense to remove historical ELFS interest costs and reflect Janel’s current debt profile
|
•
|
The related tax impact of the above referenced adjustments
|
3.
|
PROPERTY AND EQUIPMENT
|
September 30, |
||||||||
2022
|
2021
|
Life
|
||||||
Building and improvements
|
$
|
|
$
|
|
|
|||
Land and improvements
|
|
|
Indefinite
|
|||||
Furniture and Fixture
|
|
|
|
|||||
Computer Equipment
|
|
|
|
|||||
Machinery & Equipment
|
|
|
|
|||||
Leasehold Improvements
|
|
|
|
|||||
|
|
|||||||
Less Accumulated Depreciation
|
(
|
)
|
(
|
)
|
||||
$
|
|
$ |
|
4.
|
INVENTORY
|
Year End September 30,
|
||||||||
2022
|
2021
|
|||||||
Finished goods
|
$
|
|
$
|
|
||||
Work-in-process
|
|
|
||||||
Raw materials
|
|
|
||||||
Gross inventory
|
|
|
||||||
Less – reserve for inventory valuation
|
(
|
)
|
(
|
)
|
||||
Inventory net
|
$
|
|
$
|
|
5.
|
INTANGIBLE ASSETS
|
September 30, |
|||||||||
2022
|
2021
|
Life
|
|||||||
Customer relationships
|
$
|
|
$
|
|
|
||||
Trademarks/names
|
|
|
|
||||||
Trademarks/names
|
|
|
Indefinite
|
||||||
Other
|
|
|
|
||||||
|
|
||||||||
Less: Accumulated Depreciation
|
(
|
)
|
(
|
)
|
|||||
$
|
|
$
|
|
September 30, |
||||||||
2022
|
2021
|
|||||||
Logistics
|
$
|
|
$
|
|
||||
Life Sciences |
|
|
||||||
Manufacturing
|
|
|
||||||
|
|
|||||||
Less: Accumulated Depreciation
|
(
|
)
|
(
|
)
|
||||
$
|
|
$
|
|
Fiscal Year 2023
|
$
|
|
||
Fiscal Year 2024
|
|
|||
Fiscal Year 2025
|
|
|||
Fiscal Year 2026
|
|
|||
Fiscal Year 2027
|
|
|||
Thereafter
|
|
|||
$
|
|
6.
|
GOODWILL
|
September 30, |
||||||||
2022
|
2021
|
|||||||
Logistics
|
$
|
|
$
|
|
||||
Life Sciences
|
|
|
||||||
Manufacturing
|
|
|
||||||
Total
|
$
|
|
$
|
|
7.
|
NOTES PAYABLE - BANKS
|
(A)
|
Santander Bank Facility
|
(B)
|
First Merchants Bank Credit Facility
|
September 30, |
||||||||
2022
|
2021
|
|||||||
Total Debt*
|
$
|
|
$
|
|
||||
Less Current Portion
|
(
|
)
|
(
|
)
|
||||
Long-term Portion
|
$
|
|
$
|
|
*
|
|
Fiscal Year 2023
|
$
|
|
||
Fiscal Year 2024
|
|
|||
Fiscal Year 2025
|
|
|||
Fiscal Year 2026
|
|
|||
Fiscal Year 2027
|
|
|||
$
|
|
(C)
|
First Northern Bank of Dixon
|
September 30, |
||||||||
2022
|
2021
|
|||||||
(in thousands) |
||||||||
Total Debt*
|
$
|
|
$
|
|
||||
Less Current Portion
|
(
|
)
|
(
|
)
|
||||
Long-term Portion
|
$
|
|
$
|
|
* |
|
Fiscal Year 2023
|
$
|
|
||
Fiscal Year 2024
|
|
|||
Fiscal Year 2025
|
|
|||
Fiscal Year 2026
|
|
|||
Fiscal Year 2027
|
|
|||
Thereafter
|
|
|||
$
|
|
8. |
SUBORDINATED PROMISSORY NOTES – RELATED PARTY
|
September 30,
|
||||||||
2022 |
2021 |
|||||||
(in thousands)
|
||||||||
Total subordinated promissory notes
|
$
|
|
$
|
|
||||
Less current portion of subordinated promissory notes
|
(
|
)
|
(
|
)
|
||||
Long term portion of subordinated promissory notes
|
$
|
|
$
|
|
Total |
||||
Fiscal Year 2023
|
$
|
|
||
Fiscal Year 2024
|
|
|||
Fiscal Year 2025
|
|
|||
Fiscal Year 2026
|
|
|||
Total |
$
|
|
9. |
SBA PAYCHECK PROTECTION PROGRAM LOANS
|
10. |
STOCKHOLDERS’ EQUITY
|
(A)
|
Common Stock
|
(B)
|
Preferred Stock
|
(C)
|
Equity Incentive Plan
|
11. |
STOCK-BASED COMPENSATION
|
(A)
|
Stock Options
|
• |
Risk-free interest rate - We determine the risk-free interest rate by using a weighted average assumption equivalent to the expected term based on the U.S. Treasury constant maturity rate.
|
• |
Expected term - We estimate the expected term of our options on the average of the vesting date and term of the option.
|
• |
Expected volatility - We estimate expected volatility using daily historical trading data of a peer group.
|
• |
Dividend yield - We have never paid dividends on our common stock and currently have no plans to do so; therefore, no dividend yield is applied.
|
2022
|
2021
|
|||||||
Risk-free interest rate
|
|
%
|
|
%
|
||||
Expected option term in years
|
|
|
||||||
Expected volatility
|
|
%
|
|
%
|
||||
Dividend yield
|
% |
|
%
|
|||||
Weighted average grant date fair value
|
$
|
|
$
|
|
Number of
Options
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contractual
Term (in years)
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||||||||||||
Outstanding balance September 30, 2021
|
|
$
|
|
|
$
|
|
||||||||||
Granted
|
|
$
|
|
|
$
|
|
||||||||||
Exercised
|
(
|
)
|
$
|
|
—
|
$
|
—
|
|||||||||
Outstanding balance at September 30, 2022
|
|
$
|
|
|
$
|
|
||||||||||
Exercisable at September 30, 2022
|
|
$
|
|
|
$
|
|
2022
|
2021
|
|||||||
Risk-free interest rate
|
|
%
|
|
%
|
||||
Expected option term in years
|
|
|
||||||
Expected volatility
|
|
%
|
|
%
|
||||
Dividend yield
|
|
%
|
|
%
|
||||
Grant date fair value
|
$
|
|
$
|
|
Number of
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term
(in years)
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||||||||||||
Outstanding balance at September 30, 2021
|
|
$
|
|
|
$
|
|
||||||||||
Granted
|
|
$
|
|
|
$
|
|
||||||||||
Exercised | ( |
) | $ |
— | $ |
— | ||||||||||
Outstanding balance at September 30, 2022
|
|
$
|
|
|
$
|
|
||||||||||
Exercisable at September 30, 2022
|
|
$
|
|
|
$
|
|
(B)
|
Restricted Stock
|
12. |
INCOME PER COMMON SHARE
|
Year Ended September 30,
|
||||||||
2022
|
2021
|
|||||||
(Loss) Income:
|
||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
|||
Preferred stock dividends
|
(
|
)
|
(
|
)
|
||||
Non-controlling interest dividends
|
( |
) | ||||||
Net (loss) income available to common stockholders
|
$
|
(
|
)
|
$
|
|
|||
Common Shares:
|
||||||||
Basic - weighted average common shares
|
|
|
||||||
Effect of dilutive stock options
|
||||||||
Diluted - weighted average common stock
|
|
|
||||||
(Loss) Income per Common Share:
|
||||||||
Basic -
|
||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
|||
Preferred stock dividends
|
(
|
)
|
(
|
)
|
||||
Non-controlling interest dividends
|
(
|
)
|
|
|||||
Net (loss) income attributable to common stockholders
|
$
|
(
|
)
|
$
|
|
|||
Diluted -
|
||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
|||
Preferred stock dividends
|
(
|
)
|
(
|
)
|
||||
Non-controlling interest dividends
|
( |
) | ||||||
Net (loss) income available to common stockholders
|
$
|
(
|
)
|
$
|
|
September 30,
|
||||||||
2022
|
2021
|
|||||||
Employee stock options (Note 11)
|
|
|
||||||
Convertible preferred stock
|
|
|
||||||
|
|
13. |
INCOME TAXES
|
Year Ended September 30,
|
||||||||
2022
|
2021
|
|||||||
Federal taxes at statutory rates
|
$
|
|
$
|
|
||||
Permanent differences
|
|
(
|
)
|
|||||
State and local taxes, net of Federal benefit
|
|
|
||||||
Other
|
|
|
||||||
Total |
$
|
|
$
|
|
Year Ended September 30,
|
||||||||
2022
|
2021
|
|||||||
Current
|
$
|
|
$
|
|
||||
Deferred
|
|
|
|
|||||
Total
|
$
|
|
$
|
|
|
2022
|
2021
|
|||||||
Deferred tax assets - net operating loss carryforwards
|
$
|
|
$
|
|
||||
Lease liability
|
|
|
||||||
Other
|
|
(
|
)
|
|||||
Stock based compensation
|
|
|
||||||
Total deferred tax assets
|
|
|
||||||
Valuation allowance
|
|
|
||||||
Total deferred tax assets net of valuation allowance
|
|
|
||||||
Deferred tax liabilities - depreciation and amortization
|
|
|
||||||
Prepaid expenses
|
|
|
||||||
Right of use asset
|
|
|
||||||
Total deferred tax liabilities
|
|
|
||||||
Net deferred tax liability
|
$
|
(
|
)
|
$
|
(
|
)
|
14. |
PROFIT SHARING AND 401(K) PLANS
|
15. |
BUSINESS SEGMENT INFORMATION
|
For the year ended September 30, 2022
(in thousands)
|
Consolidated
|
Logistics
|
Life Sciences
|
Manufacturing
|
Corporate
|
|||||||||||||||
Revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Forwarding expenses and cost of revenues
|
|
|
|
|
|
|||||||||||||||
Gross profit
|
|
|
|
|
|
|||||||||||||||
Selling, general and administrative
|
|
|
|
|
|
|||||||||||||||
Amortization of intangible assets
|
|
|
|
|
|
|||||||||||||||
Income (loss) from operations
|
|
|
|
|
(
|
)
|
||||||||||||||
Interest expense
|
|
|
|
|
|
|||||||||||||||
Identifiable assets
|
|
|
|
|
|
|||||||||||||||
Capital expenditures, net of disposals
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
For the year ended September 30, 2021
(in thousands)
|
Consolidated
|
Logistics
|
Life Sciences
|
Manufacturing
|
Corporate
|
|||||||||||||||
Revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Forwarding expenses and cost of revenues
|
|
|
|
|
|
|||||||||||||||
Gross profit
|
|
|
|
|
|
|||||||||||||||
Selling, general and administrative
|
|
|
|
|
|
|||||||||||||||
Amortization of intangible assets
|
|
|
|
|
|
|||||||||||||||
Income (loss) from operations
|
|
|
|
|
(
|
)
|
||||||||||||||
Interest expense
|
|
|
|
|
|
|||||||||||||||
Identifiable assets
|
|
|
|
|
|
|||||||||||||||
Capital expenditures, net of disposals
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
16. |
LEASES
|
2022 |
2021
|
|||||||
Operating lease cost
|
$
|
|
$ | |||||
Short-term lease cost
|
|
|||||||
Total lease cost
|
$
|
|
$ |
Year End
September 30, 2022
|
||||
Fiscal Year 2023
|
$
|
|
||
Fiscal Year 2024 | ||||
Fiscal Year 2025
|
|
|||
Fiscal Year 2026
|
|
|||
Fiscal Year 2027
|
|
|||
Thereafter
|
|
|||
Total undiscounted loan payments
|
|
|||
Less imputed interest
|
(
|
)
|
||
Total lease obligation
|
$
|
|
17. |
RUBICON INVESTMENT
|
Balance as of September 30, 2021
|
$
|
|
||
Purchase of Rubicon investment
|
|
|||
Fair value adjustments to Rubicon investment
|
(
|
)
|
||
Total
|
$
|
|
18. |
FAIR VALUE MEASUREMENTS
|
Level 1:
|
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
|
Level 2:
|
Inputs to the valuation methodology are quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active,
and model-based valuation techniques for which all significant assumptions are observable in the market.
|
Level 3:
|
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
Total fair value at
September 30, 2022
|
Quoted prices in active
markets for identical
assets (Level 1)
|
Significant other
observable inputs
(Level 2)
|
Significant
unobservable inputs
(Level 3)
|
|||||||||||||
Assets:
|
||||||||||||||||
Investment in Rubicon at fair value
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Liabilities:
|
||||||||||||||||
Contingent earnout liabilities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
$
|
|
$
|
|
$
|
|
$
|
|
Total fair value at
September 30, 2021
|
Quoted prices in active
markets for identical
assets (Level 1)
|
Significant other
observable inputs
(Level 2)
|
Significant
unobservable inputs
(Level 3)
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Contingent
earnout liabilities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
$
|
|
$
|
|
$
|
|
$
|
|
|
September 30,
|
|||||||
2022
|
2021
|
|||||||
Balance at beginning of year
|
$
|
|
$ | |||||
Fair value of contingent consideration recorded in connection with business combinations
|
|
|
||||||
Total
|
$
|
|
$ |
19.
|
COMMITMENTS AND CONTINGENCIES
|
20. |
RISK AND UNCERTAINTIES
|
(A)
|
Currency Risks
|
(B)
|
Concentration of Credit Risk
|
(C)
|
Legal Proceedings
|
(D)
|
Concentration of Customers
|
(E)
|
Auto Insurance
|
21. |
SUBSEQUENT EVENTS
|