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Item 2. Management’s Discussion and Analysis

2024-08-02 compared with 2024-05-03 · 279 added, 266 removed, 123 unchanged (82% 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, 2024, 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, 2024, 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 data.

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

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

These forward – looking statements may

generally be identified using the words “may,” “will,” “intends,” “plans,” projects,” “believes,” “should,” “expects,” “predicts,” “anticipates,” “estimates,” and similar expressions or the negative of these terms or other comparable terminology.

These statements are necessarily estimates reflecting management’s best judgment based upon current information and involve several risks, uncertainties and assumptions.

We caution readers not to place undue reliance on any such forward-looking

statements, which speak only as of the date made, and readers are advised that various factors, including, but not limited to, those set forth elsewhere in this Report, could affect our financial performance and could cause our actual results for

future periods to differ materially from those anticipated or projected.

While it is impossible to identify all such factors, such factors include, but are not limited to, our strategy of expanding our business through acquisitions of other

businesses; we may be required to record a significant charge to earnings related to the impairment of acquired assets;

we may fail to realize the expected benefits or strategic objectives of any acquisition, or that we spend resources exploring

acquisitions that are not consummated; risks associated with litigation, including contingent auto liability and insurance coverage, and indemnification claims and other unforeseen claims and liabilities that may arise from an acquisition;

changes in tax rates, laws or regulations and our acquired companies and subsidiaries’ ability to utilize anticipated tax benefits;

These forward – looking statements may generally be

identified using the words “may,” “will,” “intends,” “plans,” projects,” “believes,” “should,” “expects,” “predicts,” “anticipates,” “estimates,” and similar expressions or the negative of these terms or other comparable terminology.

These statements

are necessarily estimates reflecting management’s best judgment based upon current information and involve several risks, uncertainties and assumptions.

We caution readers not to place undue reliance on any such forward-looking statements, which speak

only as of the date made, and readers are advised that various factors, including, but not limited to, those set forth elsewhere in this Report, could affect our financial performance and could cause our actual results for future periods to differ

materially from those anticipated or projected.

While it is impossible to identify all such factors, such factors include, but are not limited to, our strategy of expanding our business through acquisitions of other businesses; we may be required to

record a significant charge to earnings related to the impairment of acquired assets;

we may fail to realize the expected benefits or strategic objectives of any acquisition, or that we spend resources exploring acquisitions that are not consummated;

risks associated with litigation, including contingent auto liability and insurance coverage, and indemnification claims and other unforeseen claims and liabilities that may arise from an acquisition; changes in tax rates, laws or regulations and our

acquired companies and subsidiaries’ ability to utilize anticipated tax benefits;

the impact of inflation and rising interest rates on our investments, business and operations;

interest with the minority shareholders of our business;

economic and other conditions in the markets in which we operate; we may not have sufficient working capital to continue operations; we may lose customers who are not obligated to long-term

contracts to transact with us;

instability in the financial markets; changes or developments in U.S.

conflicts of interest with the minority shareholders of our business;

economic and other conditions in the markets in which we operate; we may not have sufficient working capital to continue operations; we may lose customers who are not obligated to long-term contracts to transact with us;

instability in the financial

markets; changes or developments in U.S.

laws or policies;

competition from companies with greater financial resources and from companies that operate in areas in which we plan to

expand; our dependence on technically skilled employees; impacts from climate change, including the increased focus by third-parties on sustainability issues and our ability to comply therewith;

the impact of increases in shipping costs, long

lead times, supply shortages and supply changes;

competition from parties who sell their businesses to us and from professionals who cease working for us; terrorist attacks and other acts of violence or war; security breaches or cybersecurity

the level of our insurance coverage, including related to product and other liability risks;

our compliance with applicable privacy, security and data laws; risks related to the diverse platforms and geographies which host our management

information and financial reporting systems;

our dependence on the availability of cargo space from third parties; the impact of claims arising from transportation of freight by the carriers with which we contract, including an increase in

premium costs;

competition from companies with greater financial resources and from companies that operate in areas in which we plan to expand; our dependence on technically skilled employees; impacts from

climate change, including the increased focus by third-parties on sustainability issues and our ability to comply therewith;

the impact of increases in shipping costs, long lead times, supply shortages and supply changes;

competition from parties who

sell their businesses to us and from professionals who cease working for us; terrorist attacks and other acts of violence or war; security breaches or cybersecurity attacks;

the level of our insurance coverage, including related to product and other

liability risks;

our compliance with applicable privacy, security and data laws; risks related to the diverse platforms and geographies which host our management information and financial reporting systems;

our dependence on the availability of cargo

space from third parties; the impact of claims arising from transportation of freight by the carriers with which we contract, including an increase in premium costs;

risks related to the classification of owner-operators in the transportation industry;

recessions and other economic developments that reduce freight volumes;

other events affecting the volume of international trade and

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

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

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

the impact of pressures in the life sciences industry to increase the predictability

of or reduce healthcare costs;

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

the reliance of

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

related to ownership of our common stock, including share price volatility, 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, 2023.

other events affecting the volume of international trade and international operations; risks arising from our ability to comply with governmental permit and licensing requirements

or statutory and regulatory requirements; the impact of seasonal trends and other factors beyond our control on our Logistics business; changes in governmental regulations applicable to our Life Sciences business; the ability of our Life Sciences

business to continually produce products that meet high-quality standards such as purity, reproducibility and/or absence of cross-reactivity; the ability of our Life Sciences business to maintain, determine the scope of and defend its and its

competitors’ intellectual property rights;

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

any decrease in the availability, or increase in the cost or supply shortages, of raw

materials used by Indco; risks arising from the environmental, health and safety regulations applicable to Indco;

the reliance of our Indco business on a single location to manufacture their products; the controlling influence exerted by our officers

and directors and one of our stockholders; the unlikelihood that we will issue dividends in the foreseeable future; and risks related to ownership of our common stock, including share price volatility, 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

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, 2023.

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

Logistics, Life Sciences and Manufacturing.

The Company strives to

create shareholder value primarily through three strategic priorities:

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

retaining exceptional talent.

The Company strives to create

shareholder value primarily through three strategic priorities:

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

exceptional talent.

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

Janel expects to grow through

its subsidiaries’ organic growth and by completing acquisitions.

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.

The Logistics segment is a non-asset based, full-service provider of cargo transportation logistics management

services, including freight forwarding via air, ocean and land-based carriers;

The Logistics segment is a non-asset based, full-service provider of cargo transportation logistics management services,

including freight forwarding via air, ocean and land-based carriers;

customs brokerage services;

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trucking and other value-added logistics services.

In addition to these revenue streams, the Company

earns accessorial revenues in connection with its core services.

Accessorial revenues include, but are not limited to, fuel service charges, wait time fees, hazardous cargo fees, labor charges, handling, cartage, bonding and additional labor

In addition to these revenue streams, the Company earns

accessorial revenues in connection with its core services.

Accessorial revenues include, but are not limited to, fuel service charges, wait time fees, hazardous cargo fees, labor charges, handling, cartage, bonding and additional labor charges.

On June 5, 2024, the Company completed a business combination whereby it acquired a majority ownership position in Airschott , a non-asset-based freight

forwarder and customs broker.

At closing, the Company purchased 80% of the outstanding stock of Airschott.

The Company also agreed to purchase the remaining 20% of Airschott stock in three years.

Life Sciences

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

The Company’s Life Sciences segment manufactures and distributes high-quality monoclonal and polyclonal

antibodies, diagnostic reagents and other immunoreagents for biomedical research and provides antibody manufacturing for academic and industry research scientists.

Our Life Sciences segment also produces products for other life science companies

on an original equipment manufacturer (OEM) basis.

On February 1, 2024, the Company completed a business combination whereby it acquired all of the outstanding stock of ViraQuest Inc., which we include in our Life Sciences segment.

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.

The Company’s Life Sciences segment manufactures and distributes antibodies, research and diagnostic reagents, and

provides custom services, for academic, non-profit and commercial customers.

On November 1, 2022, the Company completed a business combination whereby it acquired all of the outstanding stock of ImmunoBioScience Corporation, 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.

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 February 1, 2024, the Company completed a business combination whereby it acquired all of the outstanding stock of ViraQuest Inc., which we include in our Life Sciences segment.

Manufacturing

The Company’s Manufacturing segment is comprised of Indco, Inc.

Indco is a majority-owned subsidiary of the Company that manufactures and distributes mixing equipment and apparatus for

specific applications within various industries.

Indco is a majority-owned subsidiary of the Company that manufactures and distributes mixing equipment and apparatus for specific

applications within various industries.

Indco’s customer base is comprised of small- to mid-sized businesses as well as other larger customers for which Indco fulfills repetitive production orders.

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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 represent 45.0% of

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

The Company owned

approximately 46.6% of Rubicon’s issued and outstanding shares of common stock as of March 31, 2024 and September 30, 2023.

(“Rubicon”), at a price per share of $20.00, in a cash tender offer

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

Pursuant to the terms of the Rubicon Purchase Agreement, the acquired shares represented 45.0% of Rubicon’s

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

The Company owned approximately 46.6% of

Rubicon’s total issued and outstanding shares of common stock as of June 30, 2024 and September 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 assets.

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

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.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States.

These generally accepted accounting principles

require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses during the reporting period.

These generally accepted accounting principles require

management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses during the reporting period.

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

For a description of the Company’s critical accounting policies

and estimates, refer to “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our Annual Report on Form 10-K filed with the SEC on December 8, 2023.

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

make estimates about the effect of matters that are inherently uncertain.

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 8, 2023.

Critical accounting

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

about the effect of matters that are inherently uncertain.

If actual results were to differ significantly from estimates made, the reported results could be materially affected.

There were no significant changes to our critical

accounting policies during the six months ended March 31, 2024.

There were no significant changes to our critical accounting policies

during the nine months ended June 30, 2024.

NON-GAAP FINANCIAL MEASURES

While we prepare our financial statements in accordance with U.S.

GAAP, we also utilize and present certain financial measures, in particular adjusted operating income, which is not based on or

included in U.S.

GAAP, we also utilize and present certain financial measures, in particular adjusted operating income, which is not based on or included

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

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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 revenues, operating income or any other operating performance measures calculated in

accordance with U.S.

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 revenues, 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, 2024 and 2023

However, organic growth and

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

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

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 revenues, 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, 2024 and 2023

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

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Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

Forwarding expenses and cost of revenues

Operating expenses

Total costs and expenses

Income from operations

Net income (loss)

Adjusted operating income

Consolidated revenues for the three months ended March 31, 2024 were $42,122, which was $3,256 or 7.1% lower than the prior year period.

Consolidated revenues for the six months ended March 31, 2024

were $83,157, which was $19,265 or 18.8% lower than the prior year period.

Revenues for both the three and six months ended March 31, 2024 decreased primarily due to lower freight prices in our Logistics segment as a result of lower freight

demand aligned more closely with global transportation capacity.

Income from operations for the three months ended March 31, 2024 was $580 compared with $904 in the prior year period.

Income from operations for the six months ended March 31, 2024 was $1,582

compared with $2,284 in the prior year period.

The decrease for both the three and six months ended March 31, 2024 resulted from lower profits primarily in our Logistics segment.

Net income for the three months ended March 31, 2024 totaled $219 or $0.18 per diluted share, compared to net income of $218 or $0.18 per diluted share for the three months ended March 31, 2023.

income for the six months ended March 31, 2024 totaled $495 or $0.41 per diluted share, compared to net income of $578 or $0.48 per diluted share for the six months ended March 31, 2023.

The decline in net income for the six months ended March

31, 2024 was largely due to lower profits (primarily in our Logistics segment) and higher interest expense.

Adjusted operating income for the three months ended March 31, 2024 decreased to $1,282 versus $1,636 in the prior year period.

Adjusted operating income for the six months ended March 31, 2024

decreased to $2,976 versus $3,693 in the prior year period.

The decrease for both the three and six months ended March 31, 2024 resulted primarily from a decline in profits in our Logistics segment partially offset by an increase in profits at

our other businesses.

Consolidated revenues for the three months ended June 30, 2024 were $46,724, which was $4,167 or 9.8% higher than the prior year period.

Consolidate d revenues for the nine months ended June 30, 2024 were $129,881, which was $15,098 or 10.4% lower than the prior year period.

Revenues increased for the three months ended June 30, 2024 primarily due to a recent increase in freight rates and increased project business in the quarter.

Revenues decreased for the nine months ended June 30, 2024 primarily due to a reduction in transportation rates over prior year as lower freight demand aligned

more closely with global transportation capacity.

Income from operations for the three months ended June 30, 2024 was $1,178 compared with $187 in the prior year period.

Income from operations for the

nine months ended June 30, 2024 was $2,760 compared with $2,471 in the prior year period.

The increase for both the three and nine months

ended June 30, 2024 resulted from greater revenues in the applicable recently completed period from product demand at Manufacturing as well as product mix improvements at Life Sciences.

Net loss for the three months ended June 30, 2024 totaled $191 or ($0.16) per diluted share, compared to net loss of $430 or ($0.36) per diluted share

for the three months ended June 30, 2023.

Net income for the nine months ended June 30, 2024 totaled $304 or $0.25 per diluted share, compared to net income of $148 or $0.12 per diluted share for the nine months ended June 30, 2023.

The change in net income (loss) for the three and nine months ended June 30,

2024 was largely due to greater revenues in the applicable recently completed period from product demand at Manufacturing, and product mix improvements at Life Sciences, which was partially offset by a fair

value adjustment to the mandatorily redeemable non-controlling interest .

Adjusted operating income for the three months ended June 30, 2024 increased to $1,897 versus $876 in the prior year period.

Adjusted operating

income for the nine months ended June 30, 2024 increased to $4,873 versus $4,569 in the prior year period.

The increase for the three months ended June 30, 2024 was primarily the result of higher revenues and profits

across all segments.

The increase for the nine months ended June 30, 2024 related to higher revenues and profits in the Life Sciences and Manufacturing 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)

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Adjusted operating income

Results of Operations – Logistics – Three and Six Months Ended March 31, 2024 and 2023

Results of Operations – Logistics – Three and Nine Months Ended June 30, 2024 and 2023

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

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Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

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Income from operations

Total revenues for the three months ended March 31, 2024 was $36,099 as compared to $39,878 for the three months ended March 31, 2023, a decrease of $3,779, or 9.5%.

Total revenues for the six

months ended March 31, 2024 was $71,314 as compared to $91,678 for the six months ended March 31, 2023, a decrease of $20,364 or 22.2%.

Revenues decreased for both the three and six months ended March 31, 2024 primarily due to a reduction in

transportation rates as lower freight demand aligned more closely with global transportation capacity.

Gross profit for the three months ended March 31, 2024 was $9,806, a decrease of $241, or 2.4%, as compared to $10,047 for the three months ended March 31, 2023.

Gross profit margin as a percentage

of revenues increased to 27.2% for the three months ended March 31, 2024, compared to 25.2% for the prior year period.

While revenues were down primarily due to a reduction in transportation rates, our gross profit margin was not negatively

impacted given our pricing model.

Gross profit for the six months ended March 31, 2024 was $19,807, a decrease of $1,773, or 8.2%, as compared to $21,580 for the six months ended March 31, 2023.

Gross profit margin as a percentage

of revenue increased to 27.8% compared to 23.5% for the prior year period.

While revenues were down primarily due to a reduction in transportation rates, our gross profit margin was not negatively impacted given our pricing model.

Total revenues for the three months ended June 30, 2024 was $40,677 as compared to $37,484 for the three months ended June 30, 2023, an increase of $3,193, or 8.5%.

Total revenues for the nine months ended June 30, 2024 was $111,991 as compared to $129,162 for the nine months ended June 30, 2023, a decrease of $17,171 or 13.3%.

Revenues increased for the three months ended June 30, 2024 primarily due to a recent increase in freight rates and increased project business during the quarter.

Revenues decreased for the nine months ended June 30, 2024 primarily due to a reduction in transportation rates over the prior year period as lower freight demand aligned

more closely with global transportation capacity.

Organic growth for the three months ended June 30, 2024 was similar to the overall growth in the prior year period as the acquisition of Airschott on June 5, 2024

did not contribute a material amount to the quarter.

Gross profit for the three months ended June 30, 2024 was $10,952, an increase of $709, or 6.9%, as compared to $10,243 for the three months ended June

Gross profit margin as a percentage of revenues decreased to 26.9% for the three months ended June 30, 2024, compared to 27.3% for the prior year period , primarily due to the impact of increased rate

prices on forwarding expenses.

Gross profit for the nine months ended June 30, 2024 was $30,759, a decrease of $1,064, or 3.3%, as compared to

$31,823 for the nine months ended June 30, 2023.

Gross profit margin as a percentage of revenue increased to 27.5% compared to 24.6% for the prior year period, primarily due to the impact of lower freight prices

on forwarding expenses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended March 31, 2024 were $8,877, as compared to $8,734 for the three months ended March 31, 2023.

This increase of $143, or 1.6%,

was mainly due to higher insurance expenses and bad debt expense.

Selling, general and administrative expenses as a percentage of revenue were 24.6% and 21.9% for the three months ended March 31, 2024 and 2023, 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, 2024 were $17,742, as compared to $18,262 for the six months ended March 31, 2023.

This decrease of $520, or 2.8%, was

mainly due to lower professional service fees during the period.

Selling, general and administrative expenses as a percentage of revenue were 24.9% and 19.9% of revenue for the six months ended March 31, 2024 and 2023, respectively.

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

Selling, general and administrative expenses for the three months ended June 30, 2024 were $9,444, as compared to $9,629 for the three months ended June 30, 2023.

This decrease of $185, or 1.9%, was mainly due to decreases across several selling, general

and administrative categories, largely offset by an increase in bad debt expense .

Selling, general and administrative expenses as a percentage of revenue were 23.2 % and 25.7% for the

three months ended June 30, 2024 and 2023, respectively.

The decrease in selling, general and administrative expenses as a percentage of revenue was due to the reduction in

costs combined with the increase in revenues.

Selling, general and administrative expenses for the nine months ended June 30, 2024 were $27,186, as compared to $27,891 for the nine months ended June

This decrease of $705, or 2.5%, was mainly due to a reduction in various costs including insurance claims and premiums.

Selling, general and administrative expenses

as a percentage of revenues were 24.3% and 21.6% of revenues for the nine months ended June 30, 2024 and 2023, respectively.

The increase in selling, general and administrative expenses as a percentage of

revenues for the nine-month period was due to the decrease in revenues for the period.

Income from Operations

Income from operations decreased to $929 for the three months ended March 31, 2024, as compared to income from operations of $1,313 for the three months ended March 31, 2023, a decrease of $384, or

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, 2024 was 9.5% compared to 13.1% in the prior year period due to lower income

from operations.

Income from operations decreased to $2,065 for the six months ended March 31, 2024, as compared to $3,318 for the six months ended March 31, 2023, a decrease of $1,253, or 37.8%.

operations decreased during the six months ended March 31, 2024 as a result of lower transportation demand.

Our operating margin as a percentage of gross profit for the six months ended March 31, 2024 was 10.4% compared to 15.4% in the prior year

period largely due to lower income from operations.

Results of Operations – Life Sciences – Three and Six Months Ended March 31, 2024 and 2023

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.

Income from operations increased to $1,508 for the three months ended June 30, 2024, as compared to income from

operations of $614 for the three months ended June 30, 2023, an increase of $894, or 145.6%.

Operating margin as a percentage of gross profit for the three months ended June

30, 2024 was 13.8% compared to 6.0% in the prior year period.

These increases were the result of an increase in revenues and a decrease in selling, general and

administrative expenses.

Income from operations decreased to $3,573 for the nine months ended June 30, 2024, as compared to $3,932 for the nine months ended June 30, 2023, a decrease of $359, or 9.1%.

Operating margin as a percentage of gross profit for the nine months ended June 30, 2024 was 11.6% compared to 12.4% in the prior year.

These decreases were a result of lower

transportation demand s.

Results of Operations – Life Sciences – Three and Nine Months Ended June 30, 2024 and 2023

The Company’s Life Sciences segment manufactures and distributes antibodies, research and diagnostic reagents, and provides custom services, for academic, non-profit and commercial customers.

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

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Income from operations

Total revenues were $3,524 and $3,068 for the three months ended March 31, 2024 and 2023, respectively, reflecting an increase of $456, or 14.9%, compared to the prior year period due to increased

Organic revenues excluding acquisition revenue increased $328, or 10.7%.

Total revenues were $7,005 and $5,906 for the six months ended March 31, 2024 and 2023, respectively, reflecting an increase of $1,099, or 18.6%, compared to the prior year period due to increased

Organic revenues excluding acquisition revenue increased $884, or 15.0%.

Gross profit was $2,674 and $2,441 for the three months ended March 31, 2024 and 2023, respectively, an increase of $233, or 9.5%.

During the three months ended March 31, 2024 and 2023, gross profit

margin was 75.9% and 79.6%, respectively, as cost of sales increased.

Gross profit was $5,549 and $4,551 for the six months ended March 31, 2024 and 2023, respectively, an increase of $998 or 21.9%.

In the six months ended March 31, 2024 and 2023, gross profit margin

was 79.2% and 77.1%, respectively.

Gross profit margin increased as product mix improvements yielded higher margins.

Total revenues were $3,208 and $2,811 for the three months ended June 30, 2024 and 2023, respectively, reflecting an increase of $397, or 14.1%, com pared to the prior year period, primarily due to increased sales of research and diagnostic reagents to

commercial customers.

Organic growth excluding acquisition revenue increased $324, or 11.5%.

Total revenues were $10,213 and $8,717 for the nine months ended June 30, 2024 and 2023, respectively, reflecting an increase of $1,496, or 17.2%, compared to the prior year period,

primarily due to increased sales of research and diagnostic reagents to commercial customers.

Organic growth excluding acquisition revenue increased $1,209, or 13.9%.

Gross profit was $2,599 and $2,236 for the three months ended June 30, 2024 and 2023, respectively , an increase of $363, or 16.2%.

During the three months ended June 30, 2024 and 2023, gross profit margin was 81.0% and 79.5%, respectivel y, with higher margins primarily due to product mix improvement.

Gross profit was $8,148 and $6,787 for the nine months ended June 30, 2024 and 2023, respectively, an increase of $1,361 or 20.1%.

In the nine months

ended June 30, 2024 and 2023, gross profit margin was 79.8% and 77.9%, respectively .

Gross profit margin increased primarily due to product mix improvement.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the Life Sciences segment were $1,745 and $1,570 for the three months ended March 31, 2024 and 2023, respectively.

Selling, general and

administrative expenses were $3,495 and $3,080 for the six months ended March 31, 2024 and 2023, respectively.

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

Selling, general and administrative expenses for the Life Sciences segment were $1,812 and $1,512 for the three months ended June 30, 2024 and 2023,

respectively.

Selling, general and administrative expenses were $5,307 and $4,592 for the nine months ended June 30, 2024 and 2023, respectively.

The year-over-year increases for both periods were largely due to additional expenses from acquired businesses and increased expenses supporting organic growth .

Income from Operations

Income from operations for the three months ended March 31, 2024 and 2023 was $929 and $871, respectively, an increase of $58, or 6.7%.

Income from operations for the six months ended March 31, 2024

and 2023 was $2,054 and $1,471, respectively, an increase of $583, or 39.6%.

Both the three-month and six-month periods were impacted by greater OEM demand and product mix improvements.

Results of Operations - Manufacturing – Three and Six Months Ended March 31, 2024 and 2023

Incom e from operations for the three months ended June 30, 2024 and 2023 was $787 and $724, respectively, an increase of $63, or 8.7%.

operations for the nine months ended June 30, 2024 and 2023 was $2,841 and $2,195, respectively , an increase of $646, or 29.4%.

Both the three-month and nine-month periods were impacted by higher sales of research and diagnostic reagents and product mix improvements.

Results of Operations - Manufacturing – Three and Nine Months Ended June 30, 2024 and 2023

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)

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Income from operations

Total revenues were $2,499 and $2,432 for the three months ended March 31, 2024 and 2023, respectively, an increase of $67, or 2.8%.

Total revenues were $4,838 for each of the six months ended March

31, 2024 and 2023.

The increase in revenues for the three months ended March 31, 2024 reflected a slight increase in volume across the business.

Gross profit was $1,343 and $1,261 for the three months ended March 31, 2024 and 2023, respectively, an increase of $82, or 6.5%.

Gross profit margin for the three months ended March 31, 2024 and

2023 was 53.7% and 51.9%, respectively.

Gross profit was $2,612 and $2,535 for the six months ended March 31, 2024 and 2023, respectively, an increase of $77, or 3.0%.

Gross profit margin for the six months ended March 31, 2024 and 2023 was 54.0%

and 52.4%, respectively.

The modest year-over-year increase in gross profit margin in both periods was generally due to the mix of business.

Total revenues were $2,839 and $2,262 for the three months ended June 30, 2024 and 2023, respectively, an increase of $577, or 25.5%.

revenues were $7,677 and $7,100 for the nine months ended June 30, 2024 and 2023, respectively, an increase of $577, or 8.1% .

The increase in

revenues for the three and nine months ended June 30, 2024 reflected an increase in certain sales categories within the business.

Gross profit was $1,540 and $1,180 for the three months ended June 30, 2024 and 2023, respectively, an increase of $360, or 30.5%.

Gross profit margin for the three months ended June 30, 2024 and 2023 was 54.2% and 52.2%, respectively.

Gross profit was $4,15 2 and $3,715 for the

nine months ended June 30, 2024 and 2023, respectively, an increase of $437, or 11.8%.

Gross profit margin for the nine months ended June 30, 2024 and 2023 was 54.1% and 52.3 %,

respectively.

The year-over-year increase in gross profit margin in both periods was generally due to the increase in both sales volume and sales mix of business.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were consistent for the three and six months ended March 31, 2024 when compared to March 31, 2023.

Selling, general and administrative expenses for the

three months ended March 31, 2024 and 2023 were $787 and $776, respectively.

Selling, general and administrative expenses for the six months ended March 31, 2024 and 2023 were $1,571 and $1,550, respectively.

Selling, general and administrative expenses were $793 and $717 for the three months ended June 30, 2024 and 2023, respectively, an increase of $76, or 10.6%.

Sell ing, general and administrative expenses were $2,364 and $2,267 for the nine months ended June 30, 2024 and 2023, respectively, an increase of $97, or 4.3%.

The modest increase in expenses in both periods was reflective of the overall increase in sales volume, the mix of sales and general economic cost increases.

Income from Operations

Income from operations was $556 for the three months ended March 31, 2024 compared to $485 for the three months ended March 31, 2023, representing a 14.6% increase from the prior year period due to

increases in sales of certain product lines versus the prior year period.

Income from operations was $1,041 for the six months ended March 31, 2024 compared to $985 for the six months ended March 31, 2023, representing a 5.7% increase from the

prior year period as a result of a decrease in cost of sales.

Results of Operations – Corporate and Other – Three and Six Months Ended March 31, 2024 and 2023

Income from operations was $747 for the three months ended June 30, 2024 compared to $463 for the three months ended June 30, 2023, representing a 61.3%

increase from the prior year period due to increases in sales of certain product categories versus the prior year period combined with effective

selling, general and administrative cost management.

Income from operations was $1,788 for the nine months ended June 30, 2024 compared to $1,448 for the nine months ended June 30, 2023, representing a 23.5% increase from the prior year period as a result of increased revenues and effective selling, general and administrative cost management.

Results of Operations – Corporate and Other – Three and Nine Months Ended June 30, 2024 and 2023

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)

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Change in fair value of mandatorily redeemable non-controlling interest

Net income before taxes

Net income (loss) before taxes

Income tax benefit (expense)

Net income (loss)

Preferred stock dividends

Net Income Available to Common Stockholders

Net income (loss) Available to Common Stockholders

Total Corporate Expenses

Total Corporate expenses, which include amortization of intangible assets, stock-based compensation and merger and acquisition expenses, increased by $69, or 3.9%, to $1,834 in the three months

ended March 31, 2024 as compared to $1,765 for the three months ended March 31, 2023.

Total Corporate expenses increased by $88, or 2.5%, to $3,578 for the six months ended March 31, 2024 as compared to $3,490 for the six months ended March 31,

The increase in both periods was due primarily to higher stock-based compensation related to more issuances of stock options, higher legal-related professional expense, an increase in executive severance costs, and increased merger and

Total Corporate expenses, which include amortization of intangible assets, stock-based compensation and merger and acquisition expenses , increased by $210 ,

or 20.4%, to $1,238 in the three months ended June 30, 2024 as compared to $1,028 for the three months ended June 30, 2023.

Total Corporate expenses increased by $267, or 8.0%, to $3,593 for the nine months ended June 30, 2024 as compared to $3,326 for the nine months ended June 30, 2023.

The increase in both periods was due primarily to higher stock-based compensation related to more issuances of stock options, higher legal-related professional expense, and increased merger and

acquisition expenses.

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Interest Expense

Interest expense for the consolidated company increased $76, or 16.0%, to $550 for the three months ended March 31, 2024 from $474 for the three months ended March 31, 2023.

Interest expense for the

consolidated company increased by $126, or 13.3%, to $1,074 for the six months ended March 31, 2024 from $948 for the six months ended March 31, 2023.

The increase in both periods was primarily due to higher interest rates partially offset by

lower average debt balances.

Interest expense for the consolidated company increased $61, or 11.6%, to $589 for the three months ended June 30,

2024 from $528 for the three months ended June 30, 2023.

Interest expense for the consolidated company increased by $187 , or 12.7%, to

$1,663 for the nine months ended June 30, 2024 from $1,476 for the nine months ended June 30, 2023.

The increase in both periods was

primarily due to higher interest rates partially offset by lower average debt balances.

Income Tax Expense

On a consolidated basis, the Company recorded an income tax benefit of $123 for the three months ended March 31, 2024, as compared to an income tax expense of $101 for the three months ended March

On a consolidated basis, the Company recorded an income tax expense of $69 for the six months ended March 31, 2024, as compared to an income tax expense of $248 for the six months ended March 31, 2023.

On a consolidated basis, the Company recorded an income tax expense of $343 for the three months ended June 30, 2024, as compared to an income tax

benefit of $181 for the three months ended June 30, 2023.

On a consolidated basis, the Company recorded an income tax expense of $412 for the nine months ended June 30, 2024, as compared to an income tax expense

of $68 for the nine months ended June 30, 2023.

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, 2024

For the three months ended June

30, 2024 and 2023, preferred stock dividends were $85 and $70, respectively, representing an increase of $15, or 21.4%.

For the six months ended March 31, 2024 and 2023, preferred stock dividends were $157 and $142, respectively, representing an increase

of $15, or 10.6%.

The increase in preferred stock dividends in both periods was the result of the increase in the dividend rate of the Series C Stock by 1% on January 1, 2024.

Such rate is set to increase on each January 1 thereafter for four

years to a maximum rate of 9%.

The dividend rate of the Series C Stock as of each of March 31, 2024 and September 30, 2023 was 6% and 5%, respectively.

Net income was $219, or $0.18 per diluted share, for the three months ended March 31, 2024 compared to net income of $218 or $0.18 per diluted share, for the three months ended March 31, 2023.

flat net income for the three months ended March 31, 2024 compared to March 31, 2023 was largely due to an income tax benefit and an increase in the fair value of our Rubicon investment, offset by lower income from operations and increases in

interest expense.

Net income was $495, or $0.41 per diluted share, for the six months ended March 31, 2024 compared to net income of $578, or $0.48 per diluted share, for the six months ended March 31, 2023.

decline in net income for the six months ended March 31, 2024 was largely due to lower profits in our Logistics segment and higher interest expenses.

Income Available to Common Stockholders

Income available to holders of Common Stock was $134, or $0.11 per diluted share, for the three months ended March 31, 2024 compared to income available to holders of Common Stock of $148, or $0.12

per diluted share, for the three months ended March 31, 2023.

Income available to holders of Common Stock was $338, or $0.28 per diluted share, for the six months ended March 31, 2024 compared to income available to holders of Common Stock of

$436, or $0.36 per diluted share, for the six months ended March 31, 2023.

The decrease in net income available to common stockholders for the three months ended March 31, 2024 was the result of an increase in the dividend rate with respect to

the Series C Preferred Stock from 5% to 6%.

The decrease in net income available to common stockholders for the six months ended March 31, 2024 was the result of lower net income and an increase in the dividend rate with respect to the Series C

Preferred Stock from 5% to 6%.

For the nine mont hs

ended June 30, 2024 and 2023, preferred stock dividends were $242 and $212, respectively, representing an increase of $30, or 14.2%.

The increase in preferred stock dividends in both periods was the result of the increase in the dividend rate of the

Series C Stock by 1% on January 1, 2024.

Such rate is set to increase on each January 1 thereafter for four years to a maximum rate of 9%.

The dividend rate of the Series C Stock as of each of June 30, 2024 and September

30, 2023 was 6% and 5%, respectively.

Net Income (Loss)

Net loss was $191 , or ($0.16) per diluted share, for the three months ended June 30, 2024 compared to net loss of $430 or ($0.36) per diluted share, for

the three months ended June 30, 2023.

The change in net loss for the three months ended June 30, 2024 was largely due to stronger revenues and profits across all segments.

Net income was $304 , or 0.25 per diluted share, for the nine months ended June 30, 2024 compared to net income of

$148, or $0.12 per diluted share, for the nine months ended June 30, 2023.

The increase in net income for the nine months ended June 30, 2024 was largely due to stronger

revenues and profits in the Life Sciences and Manufacturing segments.

Net Income (Loss) Available to Common Stockholders

Net loss available to holders of Common Stock was $276, or ($0.23) per diluted share, for the three months ended June 30, 2024 compared to net loss

available to holders of Common Stock of $500, or ($0.42) per diluted share, for the three months ended June 30, 2023.

Net income available to holders of Common Stock was $62 , or $0.05 per diluted share, for the nine months ended June 30, 2024 compared to net loss available to holders of Common Stock of $64, or ($0.05) per diluted share, for the nine months ended June 30, 2023.

decrease in net loss available to common stockholders for the three months ended June 30, 2024 was the result of an increase in income across all segments.

The increase in net income available to common stockholders for the nine months ended June 30,

2024 was also the result of an increase in income across all segments.

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.

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 revenues and expenses.

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

and expenses.

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

through” billings can influence our traditional credit collection metrics.

These “pass through” billings

can influence our traditional credit collection metrics.

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

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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.

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

Generally, we do not make significant capital expenditures.

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Cash flows from operating activities

Net cash provided by operating activities was $4,294 for the six months ended March 31, 2024, versus $10,100 provided by operating activities for the six months ended March 31, 2023.

The decrease in

cash provided by operations for the six months ended March 31, 2024 compared to the prior year period was driven principally by a lower net working capital benefit at our Logistics segment.

Net cash provided by operating activities was $6,354 for the nine months ended June 30, 2024, versus $11,056 provided by operating activities for the nine months ended June 30, 2023.

The decrease in cash

provided by operations for the nine months ended June 30, 2024 compared to the prior year period was driven principally by a lower net working capital benefit at our Logistics segment.

Cash flows from investing activities

Net cash used in investing activities totaled $1,638 for the six months ended March 31, 2024, versus $5,782 for the six months ended March 31, 2023.

We used $327 for the acquisition of property

and equipment, $571 for the acquisition of one business, and $740 in earnout payments to the former owners of ELFS and IBS for the six months ended March 31, 2024, compared to $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 businesses for the six months ended March 31, 2023.

Net cash used in investing activities totaled $5,193 for the nine months ended June 30, 2024, versus $6,361 for the nine months ended June 30, 2023.

We used $3,795 for the acquisition of two businesses, $740 in earnout payments to the former owners of ELFS and IBS, and $658 for the acquisition of property and equipment for the nine months ended June

30, 202 4, compared to $4,401 for the acquisition of two businesses, $1,693 in earnout payment to the former owners of ELFS, and $267 for the acquisition of property and equipment for the nine months ended June 30, 2023 .

Cash flows from financing activities

Net cash used in financing activities was $3,086 for the six months ended March 31, 2024, versus net cash used in financing activities of $8,596 for the six months ended March 31, 2023.

used in financing activities for the six months ended March 31, 2024 included repayment of funds from our lines of credit, repayment of funds from our term loan and repayment of subordinated promissory notes.

Net cash provided financing

activities for the six months ended March 31, 2023 primarily included repayment of funds from our lines of credit and repayment of term loans.

Net cash provided by financing activities was $318 for the nine months ended June 30, 2024, versus net cash used in

financing activities of $8,513 for the nine months ended June 30, 2023.

Net cash provided in financing activities for the nine months ended June 30, 2024 included repayment of funds from our lines of credit, repayment of funds from our term loan and

repayment of subordinated promissory notes.

Net cash provided financing activities for the nine months ended June 30, 2023 primarily included repayment of funds from our lines of credit and repayment of term loans.

Off-Balance Sheet Arrangements

As of March 31, 2024, we had no off-balance sheet arrangements or obligations.

As of June 30, 2024, 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