What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-04 compared with 2023-05-05 · 213 added, 204 removed, 172 unchanged (71% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes thereto as of and for

the three and six months ended March 31, 2023, which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S.

Amounts presented in this section are in thousands, except share and per share

The following discussion and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes thereto as of and

for the three and nine months ended June 30, 2023, which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S.

Amounts presented in this section are in thousands, except share and per

As used throughout this Report, “we,” “us”, “our,” “Janel,” “the Company,” “Registrant” and similar words refer to Janel Corporation and its Subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Report”) contains certain statements that are, or may deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of

1933 and Section 21E of the Securities Exchange Act of 1934 and that reflect management’s current expectations with respect to our operations, performance, financial condition, and other developments.

of 1933 and Section 21E of the Securities Exchange Act of 1934 and that reflect management’s current expectations with respect to our operations, performance, financial condition, and other developments.

These forward – looking statements may

28 unchanged sentences

other events affecting the volume of international trade and international

operations; risks arising from our ability to comply with governmental permit and licensing requirements or statutory and regulatory requirements; the impact of seasonal trends and other factors beyond our control on our Logistics business; changes

in governmental regulations applicable to our Life Sciences business; the ability of our Life Sciences business to continually produce products that meet high-quality standards such as purity, reproducibility and/or absence of cross-reactivity; the

ability of our Life Sciences business to maintain, determine the scope of and defend its and its competitors’ intellectual property rights;

the impact of pressures in the life sciences industry to increase the predictability of or reduce healthcare

any decrease in the availability, or increase in the cost or supply shortages, of raw materials used by Indco; risks arising from the environmental, health and safety regulations applicable to Indco;

the reliance of our Indco business on a

single location to manufacture their products; the controlling influence exerted by our officers and directors and one of our stockholders; the unlikelihood that we will issue dividends in the foreseeable future; and risks related to ownership of

our common stock, including share price volatility, the lack of a guaranteed continued public trading market for our common stock, our ability to issue shares of preferred stock with greater rights than our common stock and costs related to

maintaining our status as a public company;

operations; risks arising from our ability to comply with governmental permit and licensing requirements or statutory and regulatory requirements; the impact of seasonal trends, impact of lower global volumes due to weak economic conditions and

other factors beyond our control on our Logistics business; changes in governmental regulations applicable to our Life Sciences business; the ability of our Life Sciences business to continually produce products that meet high-quality standards

such as purity, reproducibility and/or absence of cross-reactivity; the ability of our Life Sciences business to maintain, determine the scope of and defend its and its competitors’ intellectual property rights;

the impact of pressures in the life

sciences industry to increase the predictability of or reduce healthcare costs;

any decrease in the availability, or increase in the cost or supply shortages, of raw materials used by Indco; risks arising from the environmental, health and safety

regulations applicable to Indco;

the reliance of our Indco business on a single location to manufacture their products; the controlling influence exerted by our officers and directors and one of our stockholders; the unlikelihood that we will issue

dividends in the foreseeable future; and risks related to ownership of our common stock, including share price volatility, the lack of a guaranteed continued public trading market for our common stock, our ability to issue shares of preferred stock

with greater rights than our common stock and costs related to maintaining our status as a public company;

and such other factors that may be identified from time to time in our Securities and Exchange Commission (“SEC”) filings.

Should one or more of these risks or uncertainties materialize, or should

underlying assumptions prove incorrect, actual outcomes may vary materially from those projected.

You should not place undue reliance on any of our forward-looking statements which speak only as of the date they are made.

We undertake no obligation

to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

For a more detailed discussion of these factors, see our periodic reports filed with the SEC, including our most recent

Annual Report on Form 10-K for the fiscal year ended September 30, 2022.

Should one or more

of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those projected.

You should not place undue reliance on any of our forward-looking statements which speak only

as of the date they are made.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

For a more detailed discussion of these factors, see our

periodic reports filed with the SEC, including our most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2022.

Janel Corporation ("Janel," the "Company," or the "Registrant") is a holding company with subsidiaries in three business segments:

Logistics, Life Sciences and Manufacturing.

The Company strives to

create shareholder value primarily through three strategic priorities:

The Company strives

to create shareholder value primarily through three strategic priorities:

supporting its businesses’ efforts to make investments and to build long-term profits; allocating Janel's capital at high risk-adjusted rates of return; and attracting and

1 unchanged sentence

Management at the Janel holding company focuses on significant capital allocation decisions, corporate governance and supporting Janel’s subsidiaries where appropriate.

Janel expects to grow through

its subsidiaries’ organic growth and by completing acquisitions.

Janel expects to grow

through its subsidiaries’ organic growth and by completing acquisitions.

We plan to either acquire businesses within our existing segments or expand our portfolio into new strategic segments.

Our acquisition strategy focuses on reasonably priced companies

with strong and capable management teams, attractive existing business economics and stable and predictable earnings power.

Our acquisition strategy focuses on reasonably priced

companies with strong and capable management teams, attractive existing business economics and stable and predictable earnings power.

The Company’s Logistics segment is comprised of several wholly-owned subsidiaries.

13 unchanged sentences

an original equipment manufacturer (OEM) basis.

On May 22, 2023, the Company acquired all the rights, title and interests to a royalty agreement for certain antibody products, which we include in our Life Sciences segment.

On March 2, 2023, the Company completed a business combination whereby it acquired all of the outstanding stock of Stephen Hall, PhD Ltd., which we include in our Life Sciences segment.

8 unchanged sentences

On August 19, 2022, the Company acquired 1,108,000 shares of the common stock, par value $0.001 per share, of Rubicon Technology, Inc.

("Rubicon"), at a price per share of $20.00, in a cash tender

offer made pursuant to the Stock Purchase and Sale Agreement, dated July 1, 2022, between the Company and Rubicon (the "Rubicon Purchase Agreement").

Pursuant to the terms of the Rubicon Purchase Agreement, the acquired shares represented 44.99% of

Rubicon's issued and outstanding shares of common stock as of August 3, 2022, as reported in Rubicon's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022, filed with the SEC on August 12, 2022.

("Rubicon"), at a price per share of $20.00, in a cash

tender offer made pursuant to the Stock Purchase and Sale Agreement, dated July 1, 2022, between the Company and Rubicon (the "Rubicon Purchase Agreement").

Pursuant to the terms of the Rubicon Purchase Agreement, the acquired shares represented

44.99% of Rubicon's issued and outstanding shares of common stock as of August 3, 2022, as reported in Rubicon's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022, filed with the SEC on August 12, 2022.

The Company owned

approximately 46.6% of Rubicon's issued and outstanding shares of common stock as of June 30, 2023.

Rubicon is an advanced materials provider specializing in monocrystalline sapphire for applications in optical and industrial systems.

The purpose of our investment in Rubicon is for Janel to acquire

a significant ownership interest in Rubicon, together with representation on Rubicon's Board, in an attempt to (i) restructure the Rubicon business to achieve profitability and (ii) assist Rubicon in utilizing its net operating loss carry-forward

The purpose of our investment in Rubicon is for Janel to

acquire a significant ownership interest in Rubicon, together with representation on Rubicon's Board, in an attempt to (i) restructure the Rubicon business to achieve profitability and (ii) assist Rubicon in utilizing its net operating loss

carry-forward assets.

Although we are optimistic about our investment in Rubicon, our investment involves risks and uncertainties that are beyond our control.

4 unchanged sentences

Our senior management has reviewed the critical accounting policies and estimates with the Audit Committee of our Board of Directors.

For a description of the Company’s critical accounting policies

and estimates, refer to “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our Annual Report on Form 10-K filed with the SEC on December 9, 2022.

For a description of the Company’s critical accounting

policies and estimates, refer to “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our Annual Report on Form 10-K filed with the SEC on December 9, 2022.

accounting policies are those that are most important to the portrayal of our financial condition, results of operations and cash flows and require management’s most difficult, subjective and complex judgments, often as a result of the need to make

2 unchanged sentences

There were no significant changes to our critical accounting

policies during the six months ended March 31, 2023.

policies during the nine months ended June 30, 2023.

NON-GAAP FINANCIAL MEASURES

3 unchanged sentences

GAAP (we refer to these as “non-GAAP financial measures”).

Organic Growth

Our non-GAAP financial measure of organic growth represents revenue growth excluding revenue from acquisitions within the preceding 12 months.

The organic growth presentation provides useful period-to-period comparison of revenue results as it excludes revenue from acquisitions that would not be included in the comparable prior period.

Organic Revenue

Our non-GAAP financial measure of organic revenue represents revenue growth excluding revenue from acquisitions within the preceding 12 months.

The organic revenue presentation provides useful period-to-period comparison of revenue results as it excludes revenue from acquisitions that would not be included in the comparable prior period.

Adjusted Operating Income

As a result of our acquisition strategy, our net income includes material non-cash charges relating to the amortization of customer-related intangible assets in the ordinary course of business as well

as other intangible assets acquired in our acquisitions.

As a result of our acquisition strategy, our net income includes material non-cash charges relating to the amortization of customer-related intangible assets in the ordinary course of business as

well as other intangible assets acquired in our acquisitions.

Although these charges may increase as we complete more acquisitions, we believe we will be growing the value of our intangible assets such as customer relationships.

Because these charges

are not indicative of our operations, we believe that adjusted operating income is a useful financial measure for investors because it eliminates the effect of these non-cash costs and provides an important metric for our business that is more

representative of the actual results of our operations.

Adjusted operating income (which excludes the non-cash impact of amortization of intangible assets, stock-based compensation and cost recognized on the sale of acquired inventory valuation) is used by

management as a supplemental performance measure to assess our business’s ability to generate cash and economic returns.

Because these

charges are not indicative of our operations, we believe that adjusted operating income is a useful financial measure for investors because it eliminates the effect of these non-cash costs and provides an important metric for our business that is

more representative of the actual results of our operations.

Adjusted operating income (which excludes the non-cash impact of amortization of intangible assets, stock-based compensation and cost recognized on the sale of acquired inventory valuation) is

used by management as a supplemental performance measure to assess our business’s ability to generate cash and economic returns.

Adjusted operating income is a non-GAAP measure of income and does not include the effects of preferred stock dividends, interest and taxes.

We believe that organic growth and adjusted operating income provide useful information in understanding and evaluating our operating results in the same manner as management.

However, organic growth

and adjusted operating income are not financial measures calculated in accordance with U.S.

GAAP and should not be considered as a substitute for total revenue, operating income or any other operating performance measures calculated in accordance

Using these non-GAAP financial measures to analyze our business has material limitations because the calculations are based on the subjective determination of management regarding the nature and classification of events and

circumstances that users of the financial statements may find significant.

In addition, although other companies may report measures titled organic growth, adjusted operating income or similar measures, such non-GAAP financial measures may be calculated differently from how

we calculate our non-GAAP financial measures, which reduces their overall usefulness as comparative measures.

Because of these limitations, you should consider organic growth and adjusted operating income alongside other financial performance

measures, including total revenue, operating income and our other financial results presented in accordance with U.S.

Results of Operations – Janel Corporation - Three and Six Months Ended March 31, 2023 and 2022

We believe that organic revenue and adjusted operating income provide useful information in understanding and evaluating our operating results in the same manner as management.

However, organic

revenue and adjusted operating income are not financial measures calculated in accordance with U.S.

GAAP and should not be considered as a substitute for total revenue, operating income or any other operating performance measures calculated in

accordance with U.S.

and circumstances that users of the financial statements may find significant.

In addition, although other companies may report measures titled organic revenue, adjusted operating income or similar measures, such non-GAAP financial measures may be calculated differently

from how we calculate our non-GAAP financial measures, which reduces their overall usefulness as comparative measures.

Because of these limitations, you should consider organic revenue and adjusted operating income alongside other financial

performance measures, including total revenue, operating income and our other financial results presented in accordance with U.S.

Results of Operations – Janel Corporation - Three and Nine Months Ended June 30, 2023 and 2022

Our results of operations and period-over-period changes are discussed in the following section.

The tables and discussion should be read in conjunction with the accompanying Condensed Consolidated

Financial Statements and the notes thereto.

The tables and discussion should be read in conjunction with the accompanying Condensed

Consolidated Financial Statements and the notes thereto.

Our consolidated results of operations are as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

2 unchanged sentences

Income from operations

Net (loss) income

Adjusted operating income

Consolidated revenue for the three months ended March 31, 2023 was $45,378, which was $35,473 or 43.9% lower than the prior year period.

Consolidated revenue for the six months ended March 31, 2023

were $102,422, which was $61,743 or 37.6% lower than the prior year period.

Revenue for both the three and six months ended March 31, 2023 decreased primarily due to lower freight prices in our Logistics segment as a result of lower freight demand

relative to improved global transportation capacity.

Income from operations for the three months ended March 31, 2023 was $904 compared with $2,147 in the prior year period.

Income from operations for the six months ended March 31, 2023 was $2,284

compared with $4,789 in the prior year period.

The decrease for both the three and six months ended March 31, 2023 resulted from lower profits across our business segments, especially at our Logistics segment, which benefited from unusually high

demand in the prior year periods.

Net income for the three months ended March 31, 2023 totaled $218 or $0.18 per diluted share, compared to net income of $1,273 or $1.23 per diluted share for the three months ended March 31, 2022.

income for the six months ended March 31, 2023 totaled $578 or $0.48 per diluted share, compared to net income of $2,961 or $2.89 per diluted share for the six months ended March 31, 2022.

The decline in net income was largely due to lower profits

in our business segments, higher interest expense and a non-cash mark-to-market write-down of an equity investment.

Adjusted operating income for the three months ended March 31, 2023 decreased to $1,636 versus $3,454 in the prior year period.

Adjusted operating income for the six months ended March 31, 2023

Consolidated revenue for the three months ended June 30, 2023 was $42,557, which was $36,427 or 46.1% lower than the prior year period.

Consolidated revenue for the nine months

ended June 30, 2023 was $144,979, which was $98,170 or 40.4% lower than the prior year period.

Revenue for both the three and nine months ended June 30, 2023 decreased primarily due to lower freight prices in our Logistics segment as a result of lower freight demand relative to improved global transportation capacity.

Income from operations for the three months ended June 30, 2023 was $187 compared with $3,171 in the prior year period.

Income from operations for the nine months ended June 30,

2023 was $2,471 compared with $7,960 in the prior year period.

The decrease for both the three and nine months ended June 30, 2023 resulted from lower profits

across our business segments, especially at our Logistics segment, which benefited from unusually high demand in the prior year periods.

Net loss for the three months ended June 30, 2023 totaled ($430) or ($0.36) per diluted share, compared to net income of $2,158 or $1.93 per diluted share for the three months ended June 30,

Net income for the nine months ended June 30, 2023 totaled $148 or $0.12 per diluted share, compared to net income of $5,119 or $4.85 per diluted share for the nine months ended June 30, 2022.

The decline in net income was largely due to

lower profits in our business segments, higher interest expense and a non-cash mark-to-market write-down of an equity investment.

Adjusted operating income for the three months ended June 30, 2023 decreased to $876 versus $3,822 in the prior year period.

Adjusted operating income for the nine months ended June 30, 2023

decreased to $4,569 versus $10,638 in the prior year period.

The decrease for both the three and six months ended March 31, 2023 resulted from an overall decrease in profits at our business segments.

The decrease for both the three and nine months ended June 30, 2023 resulted from an overall decrease in profits at our business segments.

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

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

4 unchanged sentences

Adjusted operating income

Results of Operations – Logistics – Three and Six Months Ended March 31, 2023 and 2022

Results of Operations – Logistics – Three and Nine Months Ended June 30, 2023 and 2022

Our Logistics business helps its clients move and manage freight efficiently to reduce inventories and to increase supply chain speed and reliability.

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

Forwarding expenses

Forwarding expense

Gross profit margin

Selling, general & administrative

Selling, general and administrative expenses

Income from operations

Total revenue for the three months ended March 31, 2023 was $39,878 as compared to $75,073 for the three months ended March 31, 2022, a decrease of $35,195, or 46.9%.

Total revenue for the six months

ended March 31, 2023 was $91,678 as compared to $152,629 for the six months ended March 31, 2022, a decrease of $60,951 or 39.9%.

Revenue decreased for both the three and six months ended March 31, 2023 primarily due to lower freight prices as a

result of lower freight demand relative to improved global transportation capacity.

Gross profit for the three months ended March 31, 2023 was $10,047, a decrease of $2,745, or 21.5%, as compared to $12,792 for the three months ended March 31, 2022.

Total revenue for the three months ended June 30, 2023 was $37,484 as compared to $73,684 for the three months ended June 30, 2022, a decrease of $36,200, or 49.1%.

Total revenue for the nine

months ended June 30, 2023 was $129,162 as compared to $226,313 for the nine months ended June 30, 2022, a decrease of $97,151 or 42.9%.

Revenue decreased for both the three and nine months ended June 30, 2023 primarily due to lower freight prices

as a result of lower freight demand relative to improved global transportation capacity.

Gross profit for the three months ended June 30, 2023 was $10,243, a decrease of $3,552, or 25.7%, as compared to $13,795 for the three months ended June 30, 2022.

Gross profit margin as a

percentage of revenue increased to 25.2% for the three months ended March 31, 2023, compared to 17.0% for the prior year period, primarily because gross profit declined at a slower rate as compared to gross revenue, which declined more

significantly due to lower freight prices.

Gross profit for the six months ended March 31, 2023 was $21,580, a decrease of $3,158, or 12.8%, as compared to $24,738 for the six months ended March 31, 2022.

Gross profit margin as a percentage of

revenue increased to 23.5% compared to 16.2% for the prior year period, primarily because gross profit declined at a slower rate compared with gross revenue, which declined more significantly due to lower freight prices.

percentage of revenue increased to 27.3% for the three months ended June 30, 2023, compared to 18.7% for the prior year period, primarily because gross profit declined at a slower rate as compared to gross revenue, which declined more significantly

due to lower freight prices.

Gross profit for the nine months ended June 30, 2023 was $31,823, a decrease of $6,710, or 17.4%, as compared to $38,533 for the nine months ended June 30, 2022.

Gross profit margin as a

percentage of revenue increased to 25.7% compared to 17.0% for the prior year period, primarily because gross profit declined at a slower rate compared with gross revenue, which declined more significantly due to lower freight prices.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended March 31, 2023 were $8,734, as compared to $10,066 for the three months ended March 31, 2022.

Selling, general and administrative expenses for the three months ended June 30, 2023 were $9,629, as compared to $10,387 for the three months ended June 30, 2022.

This decrease of $758, or 7.3%,

was mainly due to lower personnel expenses and bad debt expense.

Selling, general and administrative expenses as a percentage of revenue were 21.9% and 13.4% for the three months ended March 31, 2023 and 2022, respectively.

Selling, general and administrative expenses as a percentage of revenue were 25.7% and 14.1% for the three months ended June 30, 2023 and 2022, respectively.

The increase in selling,

general and administrative expenses as a percentage of revenue largely reflected the reduction in transportation rates.

Selling, general and administrative expenses for the six months ended March 31, 2023 were $18,262, as compared to $19,415 for the six months ended March 31, 2022.

This decrease of $1,153, or 5.9%, was

mainly due to lower personnel expenses and recovery of bad debt expense.

Selling, general and administrative expenses as a percentage of revenue were 19.9% and 12.7% of revenue for the six months ended March 31, 2023 and 2022, respectively.

increase in selling, general and administrative expenses as a percentage of revenue largely reflected the decrease in transportation rates.

Selling, general and administrative expenses for the nine months ended June 30, 2023 were $27,891, as compared to $29,802 for the nine months ended June 30, 2022.

This decrease of $1,911, or

6.4%, was mainly due to lower personnel expenses and recovery of bad debt expense.

Selling, general and administrative expenses as a percentage of revenue were 21.6% and 13.2% of revenue for the nine months ended June 30, 2023 and 2022,

respectively.

The increase in selling, general and administrative expenses as a percentage of revenue largely reflected the decrease in transportation rates.

Income from Operations

Income from operations decreased to $1,313 for the three months ended March 31, 2023, as compared to income from operations of $2,726 for the three months ended March 31, 2022, a decrease of $1,413,

Income from operations decreased to $614 for the three months ended June 30, 2023, as compared to income from operations of $3,408 for the three months ended June 30, 2022, a decrease of $2,794,

Income from operations decreased as a result of lower transportation demand.

Operating margin as a percentage of gross profit for the three months ended March 31, 2023 was 13.1% compared to 21.3% in the prior year period due to lower

gross profits.

Income from operations increased to $3,318 for the six months ended March 31, 2023, as compared to $5,323 for the six months ended March 31, 2022, a decrease of $2,005, or 37.7%.

operations decreased during the six months ended March 31, 2023 as a result of lower transportation demand.

Our operating margin as a percentage of gross profit for the six months ended March 31, 2023 was 15.4% compared to 21.5% in the prior year

Operating margin as a percentage of gross profit for the three months ended June 30, 2023 was 6.0% compared to 24.7% in the prior year period due to lower gross

Income from operations decreased to $3,932 for the nine months ended June 30, 2023, as compared to $8,731 for the nine months ended June 30, 2022, a decrease of $4,799, or 55.0%.

operations decreased during the nine months ended June 30, 2023 as a result of lower transportation demand.

Our operating margin as a percentage of gross profit for the nine months ended June 30, 2023 was 12.4% compared to 22.7% in the prior year

period largely due to lower gross profits.

Results of Operations – Life Sciences – Three and Six Months Ended March 31, 2023 and 2022

The Company’s Life Sciences segment manufactures and distributes high-quality monoclonal and polyclonal antibodies, diagnostic reagents and other immunoreagents for biomedical research and provides

antibody manufacturing for academic and industry research scientists.

Results of Operations – Life Sciences – Three and Nine Months Ended June 30, 2023 and 2022

The Company’s Life Sciences segment manufactures and distributes high-quality monoclonal and polyclonal antibodies, diagnostic reagents and other immunoreagents for biomedical research and

provides antibody manufacturing for academic and industry research scientists.

Our Life Sciences business also produces products for other life science companies on an OEM basis.

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

Cost of sales

Cost recognized upon sales of acquired inventory

Cost recognized upon sale of acquired inventory

Gross profit margin

1 unchanged sentence

Income from operations

Total revenue was $3,068 and $3,275 for the three months ended March 31, 2023 and 2022, respectively, reflecting a decrease of $207, or 6.3%, compared to the prior year period due to

lower demand for diagnostic reagents, partially offset by current year acquisitions .

Total revenue was $2,811 and $2,738 for the three months ended June 30, 2023 and 2022, respectively, reflecting a slight increase of $73, or 2.7%, compared to the prior year period

primarily due to current year acquistions, partially offset by lower demand for diagnostic reagents.

Organic revenue excluding acquisition revenue declined $251, or 9.2%.

Total revenue was $5,906 and $6,519 for the six months ended March 31, 2023 and 2022, respectively, reflecting a decrease of $613, or 9.4%, compared to the prior year period due

to lower demand for diagnostic reagents , partially offset by current year acquisitions .

Total revenue was $8,717 and $9,257 for the nine months ended June 30, 2023 and 2022, respectively, reflecting a decrease of $540, or 5.8%, compared to the prior year period due to

lower demand for diagnostic reagents, partially offset by current year acquisitions.

Organic revenue excluding acquisition revenue declined $1,239, or 13.8%.

Gross profit was $2,441 and $2,408 for the three months ended March 31, 2023 and 2022, respectively, an increase of $33, or 1.4%.

During the three months ended March 31, 2023 and 2022, gross profit

margin was 79.6% and 73.5%, respectively, as product mix improved.

Gross profit was $4,551 and $4,651 for the six months ended March 31, 2023 and 2022, respectively, a decrease of $100 or 2.2%.

In the six months ended March 31, 2023 and 2022, the Life Sciences

segment had a gross profit margin of 77.1% and 71.3%, respectively.

Gross profit margin increased as product mix improved.

Gross profit was $2,236 and $2,090 for the three months ended June 30, 2023 and 2022, respectively, an increase of $146, or 7.0%.

During the three months ended June 30, 2023 and 2022, gross

profit margin was 79.5% and 76.3%, respectively, as product mix improved.

Gross profit was $6,787 and $6,741 for the nine months ended June 30, 2023 and 2022, respectively, an increase of $46 or 0.7%.

During the nine months ended June 30, 2023 and 2022, the Life

Sciences segment had gross profit margin of 77.9% and 72.8%, respectively.

The increase in gross profit margin resulted from an improvement in product mix.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the Life Sciences segment were $1,570 and $1,283 for the three months ended March 31, 2023 and 2022, respectively.

Selling, general and administrative

expenses were $3,080 and $2,533 for the six months ended March 31, 2023 and 2022, respectively.

Selling, general and administrative expenses for the Life Sciences segment were $1,512 and $1,225 for the three months ended June 30, 2023 and 2022, respectively.

Selling, general and

administrative expenses were $4,592 and $3,758 for the nine months ended June 30, 2023 and 2022, respectively.

The year-over-year increases for both periods were largely due to additional expenses from acquired businesses.

Income from Operations

Income from operations for the three months ended March 31, 2023 and 2022 was $871 and $1,125, respectively, a decrease of $254, or 22.6%.

Income from operations for the six months ended March 31,

Income from operations for the three months ended June 30, 2023 and 2022 was $724 and $865, respectively, a decrease of $141, or 16.3%.

Income from operations for the nine months ended June 30,

2023 and 2022 was $2,195 and $2,983, respectively, a decrease of $788, or 26.4%.

Both the three-month and six-month periods were impacted by lower demand for diagnostic reagents and additional expenses from acquired businesses.

Results of Operations - Manufacturing – Three and Six Months Ended March 31, 2023 and 2022

Both the three-month and nine-month periods were impacted by lower demand for diagnostic reagents and additional expenses from acquired businesses.

Results of Operations - Manufacturing – Three and Nine Months Ended June 30, 2023 and 2022

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

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

1 unchanged sentence

Gross profit margin

Selling, general and administrative

Selling, general and administrative expenses

Income from operations

Total revenue was $2,432 and $2,503 for the three months ended March 31, 2023 and 2022, respectively, a decrease of $71, or 2.8%.

Total revenue was $4,838 and $5,017 for the six months ended March 31,

2023 and 2022, respectively, a decrease of $179, or 3.6%.

The decrease in revenue for both the three and six months ended March 31, 2023 reflected a decrease in volume across the business offset in part by higher product pricing.

Gross profit was $1,261 and $1,309 for the three months ended March 31, 2023 and 2022, respectively, a decrease of $48, or 3.7%.

Gross profit margin for the three months ended March 31, 2023 and 2022

Total revenue was $2,262 and $2,562 for the three months ended June 30, 2023 and 2022, respectively, a decrease of $300, or 11.7%.

Total revenue was $7,100 and $7,579 for the nine months ended

June 30, 2023 and 2022, respectively, a decrease of $479, or 6.3%.

The decrease in revenue for both the three and nine months ended June 30, 2023 reflected a decrease in volume across the business, offset in part by higher product pricing.

Gross profit was $1,180 and $1,280 for the three months ended June 30, 2023 and 2022, respectively, a decrease of $100, or 7.8%.

Gross profit margin for the three months ended June 30, 2023 and

2022 was 52.2% and 50.0%, respectively.

Gross profit was $2,535 and $2,609 for the six months ended March 31, 2023 and 2022, respectively, a decrease of $74, or 2.8%.

Gross profit margin for the six months ended March 31, 2023 and 2022 was 52.4% and

52.0%, respectively.

The gross profit and gross profit margin for both the three- and six-month periods remained relatively unchanged.

Gross profit was $3,715 and $3,889 for the nine months ended June 30, 2023 and 2022, respectively, a decrease of $174, or 4.5%.

Gross profit margin for the nine months ended June 30, 2023 and 2022 was 52.3%

and 51.3%, respectively.

The gross profit and gross profit margin for both the three- and nine-month periods remained relatively unchanged.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $776 and $765 for the three months ended March 31, 2023 and 2022, respectively, an increase of $11, or 1.4%.

Selling, general and administrative expenses were $717 and $676 for the three months ended June 30, 2023 and 2022, respectively, an increase of $41, or 6.1%.

Selling, general and administrative

expenses were $1,550 and $1,494 for the six months ended March 31, 2023 and 2022, respectively, an increase of $56, or 3.7%.

The increase in expenses relative to revenue for the three- and six-month periods reflected the mix of business.

expenses were $2,267 and $2,170 for the nine months ended June 30, 2023 and 2022, respectively, an increase of $97, or 4.5%.

The increase in expenses relative to revenue for the three- and nine-month periods reflected the mix of business.

Income from Operations

Income from operations was $485 for the three months ended March 31, 2023 compared to $544 for the three months ended March 31, 2022, representing a 10.8% decrease from the prior year period due to

Income from operations was $463 for the three months ended June 30, 2023 compared to $604 for the three months ended June 30, 2022, representing a 23.3% decrease from the prior year period due to

unfavorable order timing versus the prior year period.

Income from operations was $985 for the six months ended March 31, 2023 compared to $1,115 for the six months ended March 31, 2022, representing a 11.7% decrease from the prior year period.

Results of Operations – Corporate and Other – Three and Six Months Ended March 31, 2023 and 2022

Income from operations was $1,448 for the nine months ended June 30, 2023 compared to $1,719 for the nine months ended June 30, 2022, representing a 15.8% decrease from the prior year period

due to unfavorable order timing versus the prior year period.

Results of Operations – Corporate and Other – Three and Nine Months Ended June 30, 2023 and 2022

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

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

Total income from operating segments

Total income from operations by segment

Corporate expenses

Amortization expense

Amortization of intangible assets

Stock-based compensation

1 unchanged sentence

Interest expense

Unrealized loss on marketable securities

Net income before taxes

Income tax expense

Fair value adjustments to Rubicon investment

Net (loss) income before taxes

Income tax benefit (expense)

Net (loss) Income

Preferred stock dividends

Non-controlling interest dividends

Net Income Available to Common Stockholders

Non-controlling interest dividend

Net (loss) Income Available to Common Stockholders

Total Corporate Expenses

Total Corporate expenses, which include amortization of intangible assets, stock-based compensation and merger and acquisition expenses, decreased by $92, or 5.4%, to $1,614 in the three months

ended March 31, 2023 as compared to $2,248 for the three months ended March 31, 2022.

Total Corporate expenses decreased by $277, or 7.4%, to $3,490 for the six months ended March 31, 2023 as compared to $3,767 for the six months ended March 31,

ended June 30, 2023 as compared to $1,706 for the three months ended June 30, 2022.

Total Corporate expenses decreased by $369, or 6.7%, to $5,104 for the nine months ended June 30, 2023 as compared to $5,473 for the nine months ended June 30,

The decrease in both periods was due primarily to higher stock-based compensation related to restricted stock issuance with immediate vesting, higher accounting-related professional expense, and increased merger and acquisition expenses in

prior year periods partially offset by current year increases in amortization of intangible expenses.

the prior year periods partially offset by current year increases in amortization of intangible expenses.

We incur merger and acquisition deal-related expenses and intangible amortization at the Corporate level rather than at the segment level.

Interest Expense

Interest expense for the consolidated company increased $205, or 76.2%, to $474 for the three months ended March 31, 2023 from $269 for the three months ended March 31, 2022.

Interest expense for the

consolidated company increased by $400, or 73.0%, to $948 for the six months ended March 31, 2023 from $548 for the six months ended March 31, 2022.

The increase in both periods was primarily due to higher interest rates.

Interest expense for the consolidated company increased $229, or 76.6%, to $528 for the three months ended June 30, 2023 from $299 for the three months ended June 30, 2022.

Interest expense for

the consolidated company increased by $629, or 74.3%, to $1,476 for the nine months ended June 30, 2023 from $847 for the nine months ended June 30, 2022.

The increase in both periods was primarily due to higher interest rates, partially off-set by

lower average debt outstanding.

Income Tax Expense

On a consolidated basis, the Company recorded an income tax expense of $101, an effective tax rate of 31.7% for the three months ended March 31, 2023, as compared to an income tax expense of $605, an

effective tax rate of 32.2% for the three months ended March 31, 2022.

On a consolidated basis, the Company recorded an income tax expense of $248, an effective tax rate of 30.0% for the six months ended March 31, 2023, as compared to an income tax

expense of $1,280, an effective tax rate of 30.2% for the six months ended March 31, 2022.

On a consolidated basis, the Company recorded an income tax benefit of $180, an effective tax rate of 29.5% for the three months ended June 30, 2023, as compared to an income tax expense of $714,

an effective tax rate of 24.9% for the three months ended June 30, 2022.

On a consolidated basis, the Company recorded an income tax expense of $68, an effective tax rate of 31.5% for the nine months ended June 30, 2023, as compared to an income

tax expense of $1,994, an effective tax rate of 28.0% for the nine months ended June 30, 2022.

The rate was higher than the statutory rate of 21% in both periods due to non-deductible expenses and state income taxes.

The decrease in expense for both

periods was primarily due to a decrease in pretax income.

The decrease in expense for

both periods was primarily due to a decrease in pretax income.

Preferred Stock Dividends

Preferred stock dividends include any dividends accrued but not paid on the Company’s Series C Cumulative Preferred Stock (the “Series C Preferred Stock”).

For the three months ended March 31, 2023

For the three months ended June 30,

2023 and 2022, preferred stock dividends were $70 and $71, respectively, representing a decrease of $1, or 1.4%.

For the six months ended March 31, 2023 and 2022, preferred stock dividends were $142 and $444, respectively, representing a decrease of

$302, or 68.0%.

For the nine months ended June 30, 2023 and 2022, preferred stock dividends were $212 and $515, respectively, representing a decrease

of $303, or 58.8%.

The decrease in preferred stock dividends in both periods was the result of the Company retiring $6,000 of Series C Preferred Stock on March 31, 2022 and the change in the annual dividend rate from 9% to 5% at that time.

Net income was $218, or $0.18 per diluted share, for the three months ended March 31, 2023 compared to net income of $1,273 or $1.23 per diluted share, for the three months ended March 31, 2022.

Net income was $578, or $0.48 per diluted share, for the six months ended March 31, 2023 compared to net income of $2,961, or $2.89 per diluted share, for the six months ended March 31, 2022.

Net (Loss) Income

Net loss was ($430), or ($0.36) per diluted share, for the three months ended June 30, 2023 compared to net income of $2,158 or $1.93 per diluted share, for the three months ended June 30, 2022.

Net income was $148, or $0.12 per diluted share, for the nine months ended June 30, 2023 compared to net income of $5,119, or $4.85 per diluted share, for the nine months ended June 30, 2022.

decline in net income in both periods was largely due to lower profits in our business segments, higher interest expenses and a non-cash mark-to-market write-down of an equity investment.

Income Available to Common Stockholders

Income available to holders of Common Stock was $148, or $0.12 per diluted share, for the three months ended March 31, 2023 compared to income available to holders of Common Stock of $979, or $0.95

per diluted share, for the three months ended March 31, 2022.

Income available to holders of Common Stock was $436, or $0.36 per diluted share, for the six months ended March 31, 2023 compared to income available to holders of Common Stock of

$2,456, or $2.40 per diluted share, for the six months ended March 31, 2022.

The decrease in net income available to common stockholders for both periods reflected lower net income and a decrease in the dividend rate with respect to the Series C

Preferred Stock as of March 31, 2022 from 9% to 5%.

Net (Loss) Income Available to Common Stockholders

Net (loss) available to holders of Common Stock was ($500), or ($0.42) per diluted share, for the three months ended June 30, 2023 compared to net income available to holders of Common Stock of

$2,087, or $1.87 per diluted share, for the three months ended June 30, 2022.

Net (loss) available to holders of Common Stock was ($64), or ($0.05) per diluted share, for the nine months ended June 30, 2023 compared to income available to holders

of Common Stock of $4,543, or $4.31 per diluted share, for the nine months ended June 30, 2022.

The decrease in net income available to common stockholders for both periods reflected lower net income and a decrease in the dividend rate with respect

to the Series C Preferred Stock as of March 31, 2022 from 9% to 5%.

LIQUIDITY AND CAPITAL RESOURCES

Our ability to satisfy liquidity requirements—including meeting debt obligations and funding working capital, day-to-day operating expenses, and capital expenditures—depends upon future performance,

which is subject to general economic conditions, competition and other factors, some of which are beyond our control.

Our Logistics segment depends on commercial credit facilities to fund day-to-day operations as there is a difference between the

timing of collection cycles and the timing of payments to vendors.

Our ability to satisfy liquidity requirements—including meeting debt obligations and funding working capital, day-to-day operating expenses, and capital expenditures—depends upon future

performance, which is subject to general economic conditions, competition and other factors, some of which are beyond our control.

Our Logistics segment depends on commercial credit facilities to fund day-to-day operations as there is a difference

between the timing of collection cycles and the timing of payments to vendors.

As a customs broker, our Logistics segment makes significant cash advances for a select group of our credit-worthy customers.

These cash advances are for customer obligations such as the payment of

duties and taxes to customs authorities primarily in the United States.

These cash advances are for customer obligations such as the payment

of duties and taxes to customs authorities primarily in the United States.

Increases in duty rates could result in increases in the amounts we advance on behalf of our customers.

Cash advances are a “pass through” and are not recorded as a component

of revenue and expense.

Cash advances are a “pass through” and are not recorded as a

component of revenue and expense.

The billings of such advances to customers are accounted for as a direct increase in accounts receivable from the customer and a corresponding increase in accounts payable to governmental customs authorities.

through” billings can influence our traditional credit collection metrics.

“pass through” billings can influence our traditional credit collection metrics.

For customers that meet certain criteria, we have agreed to extend payment terms beyond our customary terms.

Management believes that it has established effective credit control procedures and has

historically experienced relatively insignificant collection problems.

Our subsidiaries depend on commercial credit facilities to fund day-to-day operations as there is a difference between the timing of collection cycles and the timing of payments

Management believes that it has established effective credit control procedures and

has historically experienced relatively insignificant collection problems.

Our subsidiaries depend on commercial credit facilities to fund day-to-day operations as there is a difference between the timing of collection cycles and the timing of

payments to vendors.

Generally, we do not make significant capital expenditures.

1 unchanged sentence

Cash flows from operating activities

Net cash provided by operating activities was $10,100 for the six months ended March 31, 2023, versus $5,991 provided by operating activities for the six months ended March 31, 2022.

The increase in

cash provided by operations for the six months ended March 31, 2023 compared to the prior year period was driven principally by lower net working capital at our Logistics segment, offset by a decline in net income.

Net cash provided by operating activities was $11,056 for the nine months ended June 30, 2023, versus $8,678 provided by operating activities for the nine months ended June 30, 2022.

in cash provided by operations for the nine months ended June 30, 2023 compared to the prior year period was driven principally by lower net working capital at our Logistics segment, partially offset by a decline in net income.

Cash flows from investing activities

Net cash used in investing activities totaled $5,782 for the six months ended March 31, 2023, versus $382 for the six months ended March 31, 2022.

We used $178 for the acquisition of property and equipment, $1,693 in earnout payment to the former owners of ELFS and $3,911 for the acquisition of two business for the six months ended March 31, 2023,

compared to $270 for the acquisition of property and equipment for the six months ended March 31, 2022.

Net cash used in investing activities totaled $6,361 for the nine months ended June 30, 2023, versus $589 for the nine months ended June 30, 2022.

We used $267 for the acquisition of property and

equipment, $1,693 in earnout payment to the former owners of ELFS and $4,401 for the acquisition of two business for the nine months ended June 30, 2023, compared to $477 for the acquisition of property and equipment for the nine months ended June

Cash flows from financing activities

Net cash used in financing activities was $8,596 for the six months ended March 31, 2023, versus net cash used in financing activities of $8,409 for the six months ended March 31, 2022.

Net cash used

in financing activities for the six months ended March 31, 2023 primarily included repayment of funds from our line of credit, and repayment of funds from our term loan.

Net cash provided financing activities for the six months ended March 31, 2022

primarily included funds from our line of credit partially offset by repayments of term loans.

Net cash used in financing activities was $8,513 for the nine months ended June 30, 2023, versus net cash used in financing activities of $10,487 for the nine months ended June 30, 2022.

used in financing activities for the nine months ended June 30, 2023 primarily included repayment of funds from our line of credit, and repayment of funds from our term loan.

Net cash used in financing activities for the nine months ended June 30,

2022 primarily included repayment of funds from our line of credit and repayments of term loans.

Off-Balance Sheet Arrangements

As of March 31, 2023, we had no off-balance sheet arrangements or obligations.

As of June 30, 2023, we had no off-balance sheet arrangements or obligations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis