Nevada
|
86-1005291
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
80 Eighth Avenue | ||
New York, New York
|
10011
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading symbols(s)
|
Name of each exchange
on which registered
|
||
None
|
None
|
None
|
Large accelerated filer ☐
|
Accelerated filer
|
☐ |
Non-accelerated filer ☐
|
Smaller reporting company
|
☒ |
Emerging growth company
|
☐ |
Page
|
|||
3
|
|||
Item 1.
|
3
|
||
3
|
|||
4
|
|||
5
|
|||
6
|
|||
7
|
|||
Item 2.
|
19 | ||
Item 4.
|
26 | ||
28 | |||
Item 1.
|
28 | ||
Item 1A.
|
28 | ||
Item 2.
|
28 | ||
Item 5.
|
Other Information | 28 | |
Item 6.
|
28 | ||
29 |
ITEM 1. |
FINANCIAL STATEMENTS
|
December 31,
2022 |
September 30,
2022
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash
|
$
|
4,155
|
$
|
6,591
|
||||
Accounts receivable, net of allowance for doubtful accounts
|
42,598
|
57,077
|
||||||
Inventory, net
|
4,979
|
4,802
|
||||||
Prepaid expenses and other current assets
|
2,800
|
3,423
|
||||||
Total current assets
|
54,532
|
71,893
|
||||||
Property and Equipment, net
|
5,004
|
5,044
|
||||||
Other Assets:
|
||||||||
Intangible assets, net
|
24,389
|
22,420
|
||||||
Goodwill
|
19,576
|
18,622
|
||||||
Investment in marketable securities at fair value | 1,972 | 2,371 | ||||||
Operating lease right of use asset
|
5,600
|
5,660
|
||||||
Security deposits and other long-term assets
|
491
|
522
|
||||||
Total other assets
|
52,028
|
49,595
|
||||||
Total assets
|
$
|
111,564
|
$
|
126,532
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Lines of credit
|
$
|
21,320
|
$
|
26,396
|
||||
Accounts payable - trade
|
35,323
|
44,960
|
||||||
Accrued expenses and other current liabilities
|
6,186
|
7,194
|
||||||
Dividends payable
|
1,816
|
1,745
|
||||||
Current portion of earnout
|
1,892
|
1,664
|
||||||
Current portion of long-term debt
|
640
|
639
|
||||||
Current portion of deferred acquisition payments
|
440
|
188
|
||||||
Current portion of subordinated promissory note-related party
|
825
|
425
|
||||||
Current portion of operating lease liabilities
|
1,729
|
1,825
|
||||||
Total current liabilities
|
70,171
|
85,036
|
||||||
Other Liabilities:
|
||||||||
Long-term debt
|
7,176
|
7,519
|
||||||
Long-term portion of earnout
|
3,288
|
2,916
|
||||||
Subordinated promissory notes-related party
|
4,864
|
5,382
|
||||||
Mandatorily redeemable non-controlling interest
|
430
|
430
|
||||||
Deferred income taxes
|
2,526
|
2,541
|
||||||
Long-term operating lease liabilities
|
4,053
|
4,001
|
||||||
Other liabilities
|
390
|
380
|
||||||
Total other liabilities
|
22,727
|
23,169
|
||||||
Total liabilities
|
92,898
|
108,205
|
||||||
Stockholders’ Equity:
|
||||||||
Preferred Stock, $0.001 par value; 100,000 shares authorized
|
||||||||
Series C 30,000 shares authorized and 11,368 shares issued and outstanding at December 31, 2022 and September 30, 2022, liquidation value of $7,500 and $7,429 at December
31, 2022 and September 30, 2022, respectively
|
—
|
—
|
||||||
Common stock, $0.001 par value; 4,500,000 shares authorized, 1,206,354
issued and 1,186,354 outstanding as of December 31, 2022 and September 30, 2022, respectively
|
1
|
1
|
||||||
Paid-in capital
|
17,163
|
17,184
|
||||||
Common treasury stock, at cost, 20,000 shares
|
(240
|
)
|
(240
|
)
|
||||
Accumulated earnings
|
1,742
|
1,382
|
||||||
Total stockholders’ equity
|
18,666
|
18,327
|
||||||
Total liabilities and stockholders’ equity
|
$
|
111,564
|
$
|
126,532
|
Three Months Ended
December 31,
|
||||||||
2022
|
2021
|
|||||||
Revenue
|
$
|
57,044
|
$
|
83,314
|
||||
Forwarding expenses and cost of revenue
|
42,127
|
67,825
|
||||||
Gross profit
|
14,917
|
15,489
|
||||||
Cost and Expenses:
|
||||||||
Selling, general and administrative
|
13,011
|
12,338
|
||||||
Amortization of intangible assets
|
526
|
509
|
||||||
Total Costs and Expenses
|
13,537
|
12,847
|
||||||
Income from Operations
|
1,380
|
2,642
|
||||||
Other Items:
|
||||||||
Interest expense
|
(474
|
)
|
(279
|
)
|
||||
Unrealized loss on marketable securities
|
(399 | ) | — | |||||
Income Before Income Taxes
|
507
|
2,363
|
||||||
Income tax expense
|
(147
|
)
|
(675
|
)
|
||||
Net Income
|
360
|
1,688
|
||||||
Preferred stock dividends
|
(72
|
)
|
(211
|
)
|
||||
Net Income Available to Common Stockholders
|
$
|
288
|
$
|
1,477
|
||||
Net Income per share
|
||||||||
Basic
|
$
|
0.30
|
$
|
1.76
|
||||
Diluted
|
$
|
0.30
|
$
|
1.66
|
||||
Net income per share attributable to common stockholders:
|
||||||||
Basic
|
$
|
0.24
|
$
|
1.54
|
||||
Diluted
|
$
|
0.24
|
$
|
1.45
|
||||
Weighted average number of shares outstanding:
|
||||||||
Basic
|
1,186.3
|
959.1
|
||||||
Diluted
|
1,208.2
|
1,018.1
|
PREFERRED STOCK
|
COMMON STOCK
|
PAID-IN CAPITAL
|
COMMON TREASURY
STOCK
|
ACCUMULATED
EARNINGS
|
TOTAL EQUITY
|
|||||||||||||||||||||||||||||||
SHARES
|
$ |
SHARES
|
$ |
$ |
SHARES
|
$ |
$ |
$ |
||||||||||||||||||||||||||||
Balance - September 30, 2022
|
11,368
|
$
|
—
|
1,206,354
|
$
|
1
|
$
|
17,184
|
20,000
|
$
|
(240
|
)
|
$
|
1,382
|
$
|
18,327
|
||||||||||||||||||||
Net Income
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
360
|
360
|
|||||||||||||||||||||||||||
Dividends to preferred stockholders
|
—
|
—
|
—
|
—
|
(72
|
)
|
—
|
—
|
—
|
(72
|
)
|
|||||||||||||||||||||||||
Stock-based compensation
|
—
|
—
|
—
|
—
|
51
|
—
|
—
|
—
|
51
|
|||||||||||||||||||||||||||
Balance - December 31, 2022
|
11,368
|
$
|
—
|
1,206,354
|
$
|
1
|
$
|
17,163
|
20,000
|
$
|
(240
|
)
|
$
|
1,742
|
$
|
18,666
|
PREFERRED STOCK
|
COMMON STOCK
|
PAID-IN CAPITAL
|
COMMON TREASURY
STOCK
|
ACCUMULATED
EARNINGS
(DEFICIT)
|
TOTAL EQUITY
|
|||||||||||||||||||||||||||||||
SHARES
|
$ |
SHARES
|
$ |
$ |
SHARES
|
$ |
$ |
$ |
||||||||||||||||||||||||||||
Balance - September 30, 2021
|
20,991
|
$
|
—
|
962,207
|
$
|
1
|
$
|
14,838
|
20,000
|
$
|
(240
|
)
|
$
|
3,520
|
$
|
18,119
|
||||||||||||||||||||
Net Income
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
1,688
|
1,688
|
|||||||||||||||||||||||||||
Dividends to preferred stockholders
|
—
|
—
|
—
|
—
|
(211
|
)
|
—
|
—
|
—
|
(211
|
)
|
|||||||||||||||||||||||||
Stock-based compensation
|
—
|
—
|
—
|
—
|
29
|
—
|
—
|
—
|
29
|
|||||||||||||||||||||||||||
Stock option exercise |
— | — | 17,500 | — | 85 | — | — | — | 85 | |||||||||||||||||||||||||||
Balance - December 31, 2021
|
20,991
|
$
|
—
|
979,707
|
$
|
1
|
$
|
14,741
|
20,000
|
$
|
(240
|
)
|
$
|
5,208
|
$
|
19,710
|
Three Months Ended
December 31,
|
||||||||
2022
|
2021
|
|||||||
Cash Flows From Operating Activities:
|
||||||||
Net income
|
$
|
360
|
$
|
1,688
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
(Recovery of) Provision for uncollectible accounts
|
(71
|
)
|
102
|
|||||
Depreciation
|
121
|
107
|
||||||
Deferred income provision
|
(15
|
)
|
133
|
|||||
Amortization of intangible assets
|
526
|
509
|
||||||
Amortization of acquired inventory valuation
|
90
|
171
|
||||||
Amortization of loan costs
|
4
|
2
|
||||||
Stock-based compensation
|
61
|
40
|
||||||
Unrealized loss on marketable securities |
399 | — |
||||||
Change in fair value of mandatorily redeemable noncontrolling interest
|
—
|
58
|
||||||
Changes in operating assets and liabilities, net of effects of acquisitions:
|
||||||||
Accounts receivable
|
14,656
|
(4,952
|
)
|
|||||
Inventory
|
84
|
(464
|
)
|
|||||
Prepaid expenses and other current assets
|
623
|
684
|
||||||
Security deposits and other long term assets
|
31
|
67
|
||||||
Accounts payable and accrued expenses
|
(11,115
|
)
|
7,172
|
|||||
Other liabilities
|
26
|
(26
|
)
|
|||||
Net cash provided by operating activities
|
5,780
|
5,291
|
||||||
Cash Flows From Investing Activities:
|
||||||||
Acquisition of property and equipment, net of disposals
|
(80
|
)
|
(169
|
)
|
||||
Acquisition
|
(2,847
|
)
|
—
|
|||||
Net cash used in investing activities
|
(2,927
|
)
|
(169
|
)
|
||||
Cash Flows From Financing Activities:
|
||||||||
Rrepayments of term loan
|
(347
|
)
|
(292
|
)
|
||||
Proceeds from stock option exercise
|
—
|
85
|
||||||
Lines of credit payments, net
|
(5,076
|
)
|
(5,795
|
)
|
||||
Issuance (repayment) of subordinated promissory notes
|
134
|
(168
|
)
|
|||||
Net cash used in financing activities
|
(5,289
|
)
|
(6,170
|
)
|
||||
Net decrease in cash
|
(2,436
|
)
|
(1,048
|
)
|
||||
Cash at beginning of the period
|
6,591
|
6,234
|
||||||
Cash at end of period
|
$
|
4,155
|
$
|
5,186
|
||||
Supplemental Disclosure of Cash Flow Information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
380
|
$
|
194
|
||||
Income taxes
|
$
|
9
|
$
|
10
|
||||
Non-cash investing activities:
|
||||||||
Contingent earn-out acquisition
|
$ | 600 | $ | — |
||||
Due to former IBS owner
|
$ |
455 | $ | — |
||||
Non-cash financing activities:
|
||||||||
Dividends declared to preferred stockholders
|
$
|
72
|
$
|
211
|
1.
|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
|
Three Months Ended
December 31,
|
||||||||
2022 |
2021
|
|||||||
Service Type | ||||||||
Trucking |
$ | 22,761 | $ | 21,810 | ||||
Ocean
|
18,166
|
33,895
|
||||||
Air
|
6,239
|
14,284
|
||||||
Customs brokerage
|
2,434
|
3,755
|
||||||
Other |
2,200 |
3,812 |
||||||
Total
|
$
|
51,800
|
$
|
77,556
|
2. |
ACQUISITIONS
|
3. |
INVENTORY
|
December 31,
2022
|
September 30,
2022
|
|||||||
Finished goods
|
$
|
1,704
|
$
|
1,823
|
||||
Work-in-process
|
958
|
763
|
||||||
Raw materials
|
2,364
|
2,260
|
||||||
Gross inventory
|
5,026
|
4,846
|
||||||
Less – reserve for inventory valuation
|
(47
|
)
|
(44
|
)
|
||||
Inventory net
|
$
|
4,979
|
$
|
4,802
|
4. |
INTANGIBLE ASSETS
|
December 31,
2022
|
September 30,
2022
|
Life
|
|||||||
Customer relationships
|
$
|
25,653
|
$
|
23,625
|
12-24 Years
|
||||
Trademarks/names
|
4,641
|
4,539
|
1-20 Years
|
||||||
Trademarks/names
|
521
|
521
|
Indefinite
|
||||||
Other
|
1,545
|
1,180
|
2-22 Years
|
||||||
32,360
|
29,865
|
||||||||
Less: Accumulated Amortization
|
(7,971
|
)
|
(7,445
|
)
|
|||||
Intangible assets, net
|
$
|
24,389
|
$
|
22,420
|
December 31,
2022
|
September 30,
2022
|
|||||||
Logistics
|
$
|
18,174
|
$
|
18,174
|
||||
Life Sciences | 6,486 | 3,991 | ||||||
Manufacturing
|
7,700
|
7,700
|
||||||
32,360
|
29,865
|
|||||||
Less: Accumulated Amortization
|
(7,971
|
)
|
(7,445
|
)
|
||||
Intangible assets, net
|
$
|
24,389
|
$
|
22,420
|
5. |
GOODWILL
|
December 31,
2022
|
September 30,
2022
|
|||||||
Logistics
|
$
|
9,175
|
$
|
9,175
|
||||
Life Sciences | 5,355 | 4,401 | ||||||
Manufacturing
|
5,046
|
5,046
|
||||||
Total |
$
|
19,576
|
$
|
18,622
|
6. |
NOTES PAYABLE – BANKS
|
(A) |
Santander Bank Facility
|
(B) |
First Merchants Bank Credit Facility
|
(in thousands) |
December 31,
2022
|
September 30,
2022
|
||||||
Total Debt*
|
$
|
5,725
|
$
|
6,051
|
||||
Less Current Portion
|
(574
|
)
|
(574
|
)
|
||||
Long-term Portion |
$
|
5,151
|
$
|
5,477
|
* |
Note:
Term Loan principal payments are due in monthly installments of $46 plus monthly interest, at SOFR plus 2.75%
to 3.5% per annum, and the mortgage loan is due in monthly installments of $4, including
interest at 4.19%. The credit facilities are collateralized by all of Indco’s assets and guaranteed by Janel.
|
(C) |
First Northern Bank of Dixon
|
(in thousands) |
December 31,
2022
|
September 30,
2022
|
||||||
Total Debt*
|
$
|
2,091
|
$
|
2,107
|
||||
Less Current Portion
|
(66
|
)
|
(65
|
)
|
||||
Long-term Portion |
$
|
2,025
|
$
|
2,042
|
* |
Long-term debt under the First Northern Loan Agreement is due in monthly installments of $12 plus monthly interest, at 4.18% per annum for five years.
|
7. |
SUBORDINATED PROMISSORY NOTES - RELATED PARTY
|
(in thousands) |
December 31,
2022
|
September 30,
2022
|
||||||
Total subordinated promissory notes
|
$
|
5,689
|
$
|
5,807
|
||||
Less current portion of subordinated promissory notes
|
(825
|
)
|
(425
|
)
|
||||
Long term portion of subordinated promissory notes
|
$
|
4,864
|
$
|
5,382
|
8. |
STOCKHOLDERS’ EQUITY
|
|
(in thousands, except share and per share data)
|
(A) |
Common Stock
|
(B) |
Preferred Stock
|
9. |
STOCK-BASED COMPENSATION
|
|
(in thousands, except share and per share data)
|
(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.
|
Three
Months Ended
December 31, 2022 |
||||
Risk-free interest rate
|
3.98
|
%
|
||
Expected option term in years
|
5.5-6.5
|
|||
Expected volatility
|
93.6
|
%
|
||
Dividend yield |
— | % | ||
Weighted average grant date fair value
|
$
|
30.06 - $41.24
|
Number
of Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term (in years)
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||||||||||||
Outstanding balance at September 30, 2022
|
30,993
|
$
|
12.68
|
6.8
|
$
|
1,251.45
|
||||||||||
Granted
|
10,000
|
$
|
53.06
|
9.6
|
$
|
—
|
||||||||||
Outstanding balance at December 31, 2022
|
40,993
|
$
|
22.53
|
7.3
|
$
|
812.57
|
||||||||||
Exercisable at December 31, 2022
|
21,831
|
$
|
9.96
|
5.7
|
$
|
631.90
|
Three
Months Ended
December 31, 2022 |
||||
Risk-free interest rate
|
3.98
|
%
|
||
Expected option term in years
|
4.5-5.5
|
|||
Expected volatility
|
44
|
%
|
||
Dividend yield |
— | % | ||
Weighted average grant date fair value
|
$
|
3.96 - $6.68
|
Number
of Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term (in years)
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||||||||||||
Outstanding balance at September 30, 2022
|
35,607
|
$
|
12.22
|
6.67
|
$
|
175.98
|
||||||||||
Granted
|
7,018
|
$
|
15.20
|
9.75
|
$
|
—
|
||||||||||
Outstanding balance at December 31, 2022
|
42,625
|
$
|
12.71
|
7.10
|
$
|
119.94
|
||||||||||
Exercisable at December 31, 2022
|
28,613
|
$
|
11.40
|
6.00
|
$
|
113.20
|
10. |
INCOME PER COMMON SHARE
|
Three Months Ended
December 31,
|
||||||||
(in thousands, except per share data)
|
2022
|
2021
|
||||||
Income:
|
||||||||
Net income
|
$
|
360
|
$
|
1,688
|
||||
Preferred stock dividends
|
(72
|
)
|
(211
|
)
|
||||
Net income available to common stockholders
|
$
|
288
|
$
|
1,477
|
||||
Common Shares:
|
||||||||
Basic - weighted average common shares
|
1,186.3
|
959.1
|
||||||
Effect of dilutive securities:
|
||||||||
Stock options
|
21.9
|
58.7
|
||||||
Convertible preferred stock
|
—
|
0.3
|
||||||
Diluted - weighted average common stock
|
1,208.2
|
1,018.1
|
||||||
Income per Common Share:
|
||||||||
Basic -
|
||||||||
Net income
|
$
|
0.30
|
$
|
1.76
|
||||
Preferred stock dividends
|
(0.06
|
)
|
(0.22
|
)
|
||||
Net income attributable to common stockholders
|
$
|
0.24
|
$
|
1.54
|
||||
Diluted -
|
||||||||
Net income
|
$
|
0.30
|
$
|
1.66
|
||||
Preferred stock dividends
|
(0.06
|
)
|
(0.21
|
)
|
||||
Net income available to common stockholders
|
$
|
0.24
|
$
|
1.45
|
Three Months Ended
December 31,
|
||||||||
2022
|
2021
|
|||||||
Employee stock options (Note 9)
|
22
|
92
|
||||||
22
|
92
|
11. |
INCOME TAXES
|
Three Months Ended
December 31,
|
||||||||
2022 |
2021 |
|||||||
Federal taxes at statutory rates
|
$
|
107
|
$
|
496
|
||||
Permanent differences
|
1
|
10
|
||||||
State and local taxes, net of Federal benefit
|
39
|
169
|
||||||
Total
|
$
|
147
|
$
|
675
|
12. |
BUSINESS SEGMENT INFORMATION
|
For the three months ended December 31, 2022
(in thousands)
|
Consolidated
|
Logistics
|
Life Sciences
|
Manufacturing
|
Corporate
|
|||||||||||||||
Revenue
|
$
|
57,044
|
$
|
51,800
|
$
|
2,838
|
$
|
2,406
|
$
|
—
|
||||||||||
Forwarding expenses and cost of revenue
|
42,127
|
40,267
|
728
|
1,132
|
—
|
|||||||||||||||
Gross profit
|
14,917
|
11,533
|
2,110
|
1,274
|
—
|
|||||||||||||||
Selling, general and administrative
|
13,011
|
9,528
|
1,510
|
774
|
1,199
|
|||||||||||||||
Amortization of intangible assets
|
526
|
—
|
—
|
—
|
526
|
|||||||||||||||
Income (loss) from operations
|
1,380
|
2,005
|
600
|
500
|
(1,725
|
)
|
||||||||||||||
Interest expense
|
474
|
334
|
37
|
103
|
—
|
|||||||||||||||
Identifiable assets
|
111,564
|
49,220
|
11,317
|
4,085
|
46,942
|
|||||||||||||||
Capital expenditures, net of disposals
|
80
|
68
|
10
|
2
|
—
|
For the three months ended December 31, 2021
(in thousands)
|
Consolidated
|
Logistics
|
Life Sciences
|
Manufacturing
|
Corporate
|
|||||||||||||||
Revenue
|
$
|
83,314
|
$
|
77,556
|
$
|
3,244
|
$
|
2,514
|
$
|
—
|
||||||||||
Forwarding expenses and cost of revenue
|
67,825
|
65,610
|
1,001
|
1,214
|
—
|
|||||||||||||||
Gross profit
|
15,489
|
11,946
|
2,243
|
1,300
|
—
|
|||||||||||||||
Selling, general and administrative
|
12,338
|
9,349
|
1,250
|
729
|
1,010
|
|||||||||||||||
Amortization of intangible assets
|
509
|
—
|
—
|
—
|
509
|
|||||||||||||||
Income (loss) from operations
|
2,642
|
2,597
|
993
|
571
|
(1,519
|
)
|
||||||||||||||
Interest expense
|
279
|
224
|
29
|
26
|
—
|
|||||||||||||||
Identifiable assets
|
122,237
|
64,899
|
10,083
|
4,017
|
43,238
|
|||||||||||||||
Capital expenditures, net of disposals
|
169
|
|
65
|
102
|
2
|
—
|
13.
|
FAIR VALUE MEASUREMENTS
|
Level 1
|
December 31,
2022 |
September 30,
2022
|
||||||
Investment in Rubicon at fair value
|
$
|
1,972
|
$
|
2,371
|
||||
Level 1 Assets
|
$
|
1,972
|
$
|
2,371
|
December 31,
2022
|
September 30,
2022
|
|||||||
Balance beginning of period
|
$
|
2,371
|
$
|
—
|
||||
Purchase of Rubicon Investment
|
—
|
22,160
|
||||||
Unrealized loss on Rubicon investment
|
(399
|
)
|
(19,789
|
)
|
||||
Balance end of period
|
$
|
1,972
|
$
|
2,371
|
Level 3
|
December 31,
2022
|
September 30,
2022
|
||||||
Contingent earnout liabilities
|
$
|
5,180
|
$
|
4,580
|
||||
Level 3 Liabilities
|
$
|
5,180
|
$
|
4,580
|
December 31,
2022
|
September 30,
2022
|
|||||||
Balance beginning of period
|
$
|
4,580
|
$
|
3,600
|
||||
Fair value of contingent consideration recorded in connection with business combinations
|
600
|
980
|
||||||
Balance end of period
|
$
|
5,180
|
$
|
4,580
|
14. |
LEASES
|
Three Months Ended
December 31,
|
||||||||
2022 | 2021 | |||||||
Operating lease cost
|
$
|
551
|
$
|
480
|
||||
Short-term lease cost
|
20
|
152
|
||||||
Total lease cost
|
$
|
571
|
$
|
632
|
2023
|
$
|
1,759
|
||
2024
|
1,409
|
|||
2025
|
1,005
|
|||
2026 |
709
|
|||
2027
|
723
|
|||
Thereafter |
566 | |||
Total undiscounted loan payments
|
6,171
|
|||
Less: imputed interest
|
(389
|
)
|
||
Total lease obligation
|
$
|
5,782
|
15. | SUBSEQUENT EVENT |
ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Three Months Ended
December 31,
|
||||||||
(in thousands)
|
2022
|
2021
|
||||||
Revenue
|
$
|
57,044
|
$
|
83,314
|
||||
Forwarding expenses and cost of revenue
|
42,127
|
67,825
|
||||||
Gross profit
|
14,917
|
15,489
|
||||||
Operating expenses
|
13,537
|
12,847
|
||||||
Income from operations
|
1,380
|
2,642
|
||||||
Net income
|
360
|
1,688
|
||||||
Adjusted operating income
|
$
|
2,057
|
$
|
3,362
|
Three Months Ended
December 31,
|
||||||||
(in thousands)
|
2022
|
2021
|
||||||
Income from operations
|
$
|
1,380
|
$
|
2,642
|
||||
Amortization of intangible assets
|
526
|
509
|
||||||
Stock-based compensation
|
61
|
40
|
||||||
Cost recognized on sale of acquired inventory
|
90
|
171
|
||||||
Adjusted operating income
|
$
|
2,057
|
$
|
3,362
|
Three Months Ended
December 31,
|
||||||||
2022
|
2021
|
|||||||
(in thousands)
|
||||||||
Revenue
|
$
|
51,800
|
$
|
77,556
|
||||
Forwarding expense
|
40,267
|
65,610
|
||||||
Gross profit
|
11,533
|
11,946
|
||||||
Gross profit margin
|
22.3
|
%
|
15.4
|
%
|
||||
Selling, general and administrative expenses
|
9,528
|
9,349
|
||||||
Income from operations
|
$
|
2,005
|
$
|
2,597
|
Three Months Ended
December 31,
|
||||||||
2022
|
2021
|
|||||||
(in thousands)
|
||||||||
Revenue
|
$
|
2,838
|
$
|
3,244
|
||||
Cost of sales
|
638
|
830
|
||||||
Cost recognized upon sale of acquired inventory
|
90
|
171
|
||||||
Gross profit
|
2,110
|
2,243
|
||||||
Gross profit margin
|
74.3
|
%
|
69.1
|
%
|
||||
Selling, general and administrative
|
1,510
|
1,250
|
||||||
Income from operations
|
$
|
600
|
$
|
993
|
Three Months Ended
December 31,
|
||||||||
2022
|
2021
|
|||||||
(in thousands)
|
||||||||
Revenue
|
$
|
2,406
|
$
|
2,514
|
||||
Cost of sales
|
1,132
|
1,214
|
||||||
Gross profit
|
1,274
|
1,300
|
||||||
Gross profit margin
|
53.0
|
%
|
51.7
|
%
|
||||
Selling, general and administrative expenses
|
774
|
729
|
||||||
Income from operations
|
$
|
500
|
$
|
571
|
Three Months Ended
December 31,
|
||||||||
(in thousands)
|
2022
|
2021
|
||||||
Total income from operations by segment
|
$
|
3,105
|
$
|
4,161
|
||||
Corporate expenses
|
(1,138
|
)
|
(1,000
|
)
|
||||
Amortization of intangible assets
|
(526
|
)
|
(509
|
)
|
||||
Stock-based compensation
|
(61
|
)
|
(10
|
)
|
||||
Total corporate expenses
|
(1,725
|
)
|
(1,519
|
)
|
||||
Interest expense
|
(474
|
)
|
(279
|
)
|
||||
Unrealized loss on Rubicon investment
|
(399
|
)
|
—
|
|||||
Net income before taxes
|
507
|
2,363
|
||||||
Income taxes expense
|
(147
|
)
|
(675
|
)
|
||||
Net Income
|
360
|
1,688
|
||||||
Preferred stock dividends
|
(72
|
)
|
(211
|
)
|
||||
Net Income Available to Common Stockholders
|
$
|
288
|
$
|
1,477
|
ITEM 4. |
CONTROLS AND PROCEDURES
|
ITEM 1. |
LEGAL PROCEEDINGS
|
ITEM 1A. |
RISK FACTORS
|
ITEM 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 6. |
EXHIBIT INDEX
|
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 (filed herewith)
|
|
Section 1350 Certification of Principal Financial Officer (filed herewith)
|
|
10.1 | Third Amendment to 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 January 30, 2023 (filed herewith) |
101
|
Interactive data files providing financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2022 for the three months ended
December 31, 2022 and 2021 in Inline XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Balance Sheets as of December 31, 2022 and September 30, 2022, (ii) Condensed Consolidated
Statements of Operations for the three months ended December 31, 2022 and 2021, (iii) Condensed Consolidated Statement of Changes in Stockholders’ Equity for the three months December 31, 2022 and 2021, (iv) Condensed Consolidated
Statements of Cash Flows for the three months ended December 31, 2022 and 2021, and (v) Notes to Condensed Consolidated Financial Statements.
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Interactive Data Files submitted as Exhibit 101) (filed herewith)
|
Dated: February 3, 2023
|
JANEL CORPORATION
|
Registrant
|
|
/s/ Darren Seirer
|
|
Darren Seirer
|
|
Chairman, President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
Dated: February 3, 2023
|
JANEL CORPORATION
|
Registrant
|
|
/s/ Vincent A. Verde
|
|
Vincent A. Verde
|
|
Principal Financial Officer, Treasurer and Secretary
|
1. |
Capitalized Terms. All capitalized terms used herein and not otherwise defined
shall have the same meaning herein as in the Agreement.
|
2. |
Amendments to Agreement.
|
a. |
Section 5.14 (Insurance). The first sentence of subparagraph (a) of
Section 5.14 is hereby restated in its entirety as follows:
|
b. |
Schedule A of the Agreement (Description of Certain Terms) is hereby deleted in its entirety and replaced with Schedule A attached hereto.
|
c. |
Schedule B of the Agreement (Definitions) is hereby amended as follows:
|
i. |
The definition of “Accounts Advance Rate” is hereby
restated in its entirety as follows:
|
ii. |
The definition of “Borrowing Base” is hereby
restated in its entirety as follows:
|
iii. |
The definition of “Eligible Account” is hereby
restated in its entirety as follows:
|
3. |
Conditions to Effectiveness. This Third Amendment shall not be effective until each
of the following conditions precedent have been fulfilled to the satisfaction of the Lender:
|
a. |
This Third Amendment shall have been duly executed and delivered by the respective parties hereto and, shall be in full force and effect and shall be in form and
substance satisfactory to the Lender.
|
b. |
The Borrower shall have paid to the Lender all fees and expenses then due and owing pursuant to the Agreement and this Third Amendment.
|
c. |
The Lender shall have received customary officers’ certifications; customary evidence of authorization to enter into this Third Amendment; and good standing
certificates in jurisdictions of formation/organization (to the extent such a certificate exists in the applicable jurisdiction) of the Loan Party Obligors.
|
d. |
The Loan Party Obligor’s credit insurance policy covering Domestic Insured Accounts shall be in form and substance satisfactory to the Lender and in full force
and effect, and the Lender shall have received a policy beneficiary endorsement with respect thereto.
|
4. |
Miscellaneous.
|
a. |
This Third Amendment may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be
an original, and all of which together shall constitute one instrument.
|
b. |
The provisions of Section 10.15 (Governing Law) and 10.16 (Consent to Jurisdiction; Waiver of Jury Trial) are specifically incorporated herein by reference.
|
c. |
This Third Amendment expresses the entire understanding of the parties with respect to the transactions contemplated hereby. No prior negotiations or
discussions shall limit, modify, or otherwise affect the provisions hereof.
|
d. |
Any determination that any provision of this Third Amendment or any application hereof is invalid, illegal or unenforceable in any respect and in any instance
shall not affect the validity, legality, or enforceability of such provision in any other instance, or the validity, legality or enforceability of any other provisions of this Third Amendment.
|
e. |
The Borrower shall pay on demand all costs and expenses of the Lender, including, without limitation, reasonable attorneys’ fees in connection with the
preparation, negotiation, execution and delivery of this Third Amendment.
|
f. |
The Loan Party Obligors each warrants and represents that such Person has consulted with independent legal counsel of such Person’s selection in connection with
this Third Amendment and is not relying on any representations or warranties of the Lender or its counsel in entering into this Third Amendment.
|
LENDER
|
||
SANTANDER BANK, N.A.
|
||
By:
|
/s/ Jennifer Baydian | |
Name: Jennifer Baydian
|
||
Its: Senior Vice President
|
BORROWERS
|
|||
JANEL GROUP, INC., a New York corporation, as
Borrower
|
|||
By:
|
/s/ William J. Lally
|
||
Name:
|
William J. Lally
|
||
Its:
|
President
|
||
EXPEDITED LOGISTICS AND FREIGHT SERVICES LLC, a Texas
limited liability company, as Borrower
|
|||
By:
|
/s/ William J. Lally
|
||
Name:
|
William J. Lally
|
||
Its:
|
Vice President
|
||
ELFS BROKERAGE LLC, a Texas limited liability company,
as Borrower
|
|||
By: Janel Group, Inc., its Manager
|
|||
By:
|
/s/ William J. Lally
|
||
Name:
|
William J. Lally
|
||
Its:
|
President
|
LOAN PARTY OBLIGORS
|
|||
JANEL CORPORATION, a Nevada corporation, as a Loan
Party Obligor and Term Loan Borrower
|
|||
By:
|
/s/ Darren Seirer
|
||
Name:
|
Darren Seirer
|
||
Its:
|
President
|
||
EXPEDITED LOGISTICS AND FREIGHT SERVICES LLC, an
Oklahoma limited liability company, as a Loan Party Obligor
|
|||
By:
|
Expedited Logistics and Freight Services LLC, a Texas limited liability company, its manager
|
||
By:
|
/s/ William J. Lally
|
||
Name:
|
William J. Lally
|
||
Its:
|
Vice President
|
1. |
Loan Limits for Revolving Loans and Letters of Credit:
|
|||
(a) |
Maximum Revolving Facility Amount:
|
$35,000,000
|
||
(b) |
Accounts Advance Rates:
|
|||
(i) |
Domestic Uninsured Account
|
85%
|
||
(ii) |
Domestic Insured Account
|
90%
|
||
(iii) |
Foreign Account
|
85%
|
||
(c) |
Foreign Accounts Sublimit:
|
$4,500,000
|
||
(d) |
Letter of Credit Limit:
|
$3,000,000
|
||
2. |
Interest Rates:
|
|||
(a) |
Base Rate Loans:
|
Base Rate (for avoidance of doubt, the applicable margin is found in the definition of “Base Rate”).
|
||
(b) |
SOFR Rate Loans:
|
SOFR Rate plus SOFR Adjustment plus SOFR Rate Margin
|
||
3. |
Maximum Days re Eligible Accounts:
|
|||
(a) |
Maximum days:
|
With respect to Accounts with thirty (30) day terms, more than ninety (90) days from invoice date and sixty (60) days from due date
|
||
With respect to Accounts with forty-five (45) day terms, more than one hundred five (105) days from invoice date and sixty (60) days from
due date
|
||||
With respect to Accounts with sixty (60) day terms, more than one hundred twenty (120) days from invoice date and sixty (60) days from due
date
|
||||
4. |
Maturity Date:
|
September 21, 2026
|
1. |
I have reviewed this Quarterly Report on Form 10-Q of Janel Corporation (the “Registrant”);
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of
the Registrant as of, and for, the periods presented in this report;
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4. |
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c) |
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
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(d) |
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
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5. |
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the
Registrant’s board of directors (or persons performing the equivalent function):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record,
process, summarize and report financial information; and
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
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Date: February 3, 2023
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/s/ Darren Seirer
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Darren Seirer
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|
Chairman, President and Chief Executive Officer
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|
(Principal Executive Officer)
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1. |
I have reviewed this Quarterly Report on Form 10-Q of Janel Corporation (the “Registrant”);
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4. |
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter
(the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5. |
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent function):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial
reporting.
|
Date: February 3, 2023
|
/s/ Vincent A. Verde
|
Vincent A. Verde
|
|
Principal Financial Officer, Treasurer and Secretary
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1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: February 3, 2023
|
/s/ Darren Seirer
|
Darren Seirer
|
|
Chairman, President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: February 3, 2023
|
/s/ Vincent A. Verde
|
Vincent A. Verde
|
|
Principal Financial Officer, Treasurer and Secretary
|