JANEL CORP 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Janel maintains a system of disclosure controls and procedures that is designed to provide reasonable assurance that information, which is required to be disclosed in the reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and is accumulated and communicated to management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of September 30, 2024, the end of the period covered by this Annual Report on Form 10-K. Consistent with guidance issued by the SEC that an assessment of internal controls over financial reporting of a recently acquired business may be omitted from management’s evaluation of disclosure controls and procedures, management is excluding an assessment of such internal controls of ViraQuest and Airschott from its evaluation of the effectiveness of the Company’s disclosure controls and procedures. ViraQuest, which the Company acquired on February 1, 2024, constituted approximately 1 percent of the Company’s total assets and 4 percent of income before income taxes of the Company as of and for the quarter ended March 31, 2024. Airschott, which the Company acquired on June 5, 2024, constituted approximately 2 percent of the Logistics segment’s total assets and a 4 percent of income before income taxes of the Logistics segment as of and for the quarter ended June 30, 2024. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of the end of such period, the Company’s disclosure controls and procedures were effective. As referenced above, the Company acquired ViraQuest on February 1, 2024 and Airschott on June 5, 2024. The Company is in the process of reviewing the internal control structure of ViraQuest and Airschott and, if necessary, will make appropriate changes as it integrates ViraQuest and Airschott into the Company’s overall internal control over financial reporting process. Other than as described above, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the year ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 34 Table of Contents Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act, as amended, as a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have performed an evaluation of the effectiveness of our internal control over financial reporting under the framework in Internal Control-Integrated Framework (2013) , issued by the Committee of Sponsoring Organizations of the Commission. Based on this assessment, management, including our Chief Executive Officer and Chief Financial Officer, has concluded that our internal control over financial reporting was effective as of September 30, 2024. This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the exemption provided to issuers that are neither “large accelerated filers” nor “accelerated filers” under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Changes in Internal Control Over Financial Reporting There was no change in our internal control over financial reporting that occurred during the quarter ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION None . ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable 35 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Directors and Executive Officers The current executive officers and directors of the Company are as follows: Name Age Position Darren C. Seirer 50 Board Chairman, President and Chief Executive Officer John Eidinger 44 Board Vice Chairman Gerard van Kesteren 75 Director, Chair of Audit Committee Karen M. Ryan 60 Director, Chair of Compensation Committee, Senior Advisor to Life Sciences Gregory J. Melsen 72 Director, Chair of Nominating and Corporate Governance Committee John J. Gonzalez, II 74 Director, Senior Advisor for Mergers and Acquisitions Gregory B. Graves 64 Director Joseph R. Ferrara 60 Chief Financial Officer, Treasurer and Secretary Darren C. Seirer has served as Board Chairman, President and Chief Executive Officer of the Company since January 1, 2023. Mr. Seirer has been a private investor since 2019 and he has served as an advisor to the Company since 2021. Mr. Seirer was previously at Select Equity Group, L.P. from 1993 to 2019. Mr. Seirer has also served as a director of Rubicon since 2022. Mr. Seirer is well-qualified to serve as a member of the Company’s Board of Directors based on his extensive experience in financial services and mergers and acquisitions. John Eidinger has served as Vice Chairman of the Board since January 1, 2023. Since 2019, Mr. Eidinger has advised and assisted the Company in business development. Previously, Mr. Eidinger was a private investor. From 2011 until 2017, Mr. Eidinger was an associate portfolio manager from Select Equity Group, L.P. Mr. Eidinger is well-qualified to serve as a member of the Company’s Board of Directors based on his extensive experience in financial services and mergers and acquisitions. Gerard van Kesteren has served as a Director of Janel since November 2015. From 1999 until 2014, Mr. van Kesteren served as the Chief Financial Officer of Kuehne + Nagel Group, an international freight forwarder and leading global provider of innovative and fully integrated supply chain solutions. Mr. van Kesteren has served as a director of Raben Group NV (Netherlands) and Planzer Holding AG (Switzerland) since 2015, and Deufol SE (Germany) since 2022. Additionally, Mr. van Kesteren had previously served as a director of CTP NV (Netherlands) from 2021 to 2024. Mr. van Kesteren is well-qualified to serve as a member of the Company’s Board of Directors based on his extensive experience in the freight forwarding and logistics industry. Mr. van Kesteren serves as the chair of the Audit Committee. John J. Gonzalez, II has served as a Director of Janel since June 2016. Prior to that, he was a Senior Managing Director of Janel Group, following the August 2014 purchase by the Company of Alpha International and President Container Lines (“Alpha/PCL”), which he co-founded in 1979. Mr. Gonzalez has been involved in the transportation business since 1969. Mr. Gonzalez is well-qualified to serve as a member of the Company’s Board of Directors based on his extensive experience in the freight forwarding and logistics industry and also serves as a senior advisor to the Company. Gregory J. Melsen has served as a Director of Janel since January 2018. From 2005 to 2014, he was Vice President-Finance, Treasurer and Chief Financial Officer of Techne Corporation (now Bio-Techne Corporation), a leading developer and manufacturer of specialty biological products that were sold to biomedical researchers and clinical research laboratories, and hematology controls that were used in hospital and clinical laboratories to check the performance of blood analysis instruments. Mr. Melsen has 50 years of business experience, primarily in the accounting and finance areas. He has served as Chief Financial Officer at a number of companies and has 19 years of public accounting experience, including nine years as partner at Deloitte. Mr. Melsen is well-qualified to serve as a member of the Company’s Board of Directors based on his extensive experience in accounting and finance. Mr. Melsen serves as Chair of the Nominating and Corporate Governance Committee. Karen M. Ryan , also known professionally as Karen Padgett, has served as a Director of Janel since October 2021. Prior to that, she served as Vice President of Global Marketing and Vice President of the Antibody Business Unit of Bio-Techne, a public global life science business from 2014 until 2019. From 1996 until 2014, Ms. Ryan was the founder and Chief Executive Officer of Novus Biologicals, a private research reagent company, which she successfully grew until its sale to Bio-Techne. Ms. Ryan is well qualified to serve as a member of the Company’s Board of Directors based on her extensive life science and executive leadership experience. Ms. Ryan serves as chair of the Compensation Committee. 36 Table of Contents Gregory B. Graves has served as a Director of Janel since May 31, 2023. Mr. Graves served as Executive Vice President and Chief Financial Officer and Treasurer of Entegris, Inc. (“Entegris”), a company focused on specialty chemicals and advanced materials solutions, from March 2007 to May 15, 2023. Prior to March 2007, he served as Senior Vice President, Strategic Planning & Business Development of Entegris. Prior to joining Entegris Minnesota in September 2002, Mr. Graves held positions in investment banking, corporate development and public accounting, including at U.S. Bancorp Piper Jaffray, Dain Rauscher, The Pillsbury Company and Deloitte. Mr. Graves has served as a director of Axcelis Technology since February of 2024. In 2022, Mr. Graves joined the Board of Directors of Skywater Technologies, Inc. (a semiconductor manufacturer). Mr. Graves has served as a director of Laird Superfood, Inc. (a plant-based food company) since September 2018, and was a member of the Board of Directors of Plug Power Inc. (an energy solutions provider) from May 2017 to June 2019. Mr. Graves is well-qualified to serve as a member of the Company’s Board of Directors based on his extensive experience in accounting and finance. Joseph R. Ferrara is Chief Financial Officer, Treasurer and Secretary of the Company and has served in such capacities since February 2024. Before joining the Company, Mr. Ferrara was the Executive Officer and Chief Financial Officer of Rubicon Technology, Inc. (Rubicon), an OTC listed industrial company, from February 2023 to October 2023. Prior to joining Rubicon, Mr. Ferrara spent 15 years as a financial consultant to various other private companies. Prior to that Mr. Ferrara spent 17 years at Louis Dreyfus Commodities, North America, most recently as its Chief Financial Officer. Prior to that Mr. Ferrara spent five years with Ernst & Young as a senior auditor. Mr. Ferrara has a B.S. in Accounting from the University at Albany, State University of New York and an MBA in finance and international business from New York University’s Stern School of Business. Directors hold office for a one-year term until they are re-elected, or their successors have been duly elected and qualified. The executive officers are elected by the Board of Directors on an annual basis and serve under the direction of the Board. Executive officers devote all of their business time to the Company’s affairs. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own more than 10% of its Class A common stock to file reports of ownership and changes in ownership with the SEC and to furnish the Company with copies of all such reports they file. Based on the Company’s review of the copies of such forms received by it, or written representations from certain reporting persons, the Company believes that none of its directors, executive officers or persons who beneficially own more than 10% of the Company’s common stock failed to comply with Section 16(a) reporting requirements during the fiscal year ended September 30, 2024 . Board of Directors During the fiscal year ended September 30, 2024, the Board of Directors met eleven times. No incumbent director attended fewer than 75% of the aggregate of the total number of meetings of the Board of Directors of the Company and the total number of meetings held by all Board committees in which that director served. Committees. The Company’s Board of Directors has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Each committee operates under a charter that has been approved by the Company’s Board of Directors and is available on its website located at www.janelcorp.com . Audit Committee. The Company’s audit committee (“Audit Committee”) oversees its corporate accounting and financial reporting process. The Audit Committee consists of Mr. van Kesteren as the chair, Mr. Gonzalez, Mr. Melsen, Mr. Graves and Ms. Ryan. The Audit Committee met five times during fiscal 2024. The Audit Committee has the following responsibilities, among others, as set forth in the Audit Committee charter: • reviewing and assessing the effectiveness of external auditors, their independence from Janel and any additional assignments they may be given, as well as reviewing their appointment, termination and remuneration; • reviewing and assessing the scope and plan of the audit, the examination process, audit results and reports, as well as whether auditor recommendations have been implemented by management; • recommending the approval of the annual internal audit report, including the responses of management thereto; • assessing management’s established risk assessment and any proposed measures to reduce risk; 37 Table of Contents • assessing the Company’s efforts and policies of compliance with relevant laws and regulations; • reviewing, in tandem with external auditors, as well as the Chief Executive Officer and the Chief Financial Officer, whether accounting principles and the financial control mechanisms of Janel and its subsidiaries are appropriate in view of Janel’s size and complexity; and • reviewing annual and interim statutory and consolidated financial statements intended for publication and recommending such financial statements to the Board of Directors. The Board of Directors of the Company has determined that Messrs. Gonzalez, Graves, Melsen and van Kesteren and Ms. Ryan meet the definition of independent directors under the Company’s criteria. The Board of Directors of the Company has also determined that Mr. Graves and Mr. Melsen meet the Company’s independence criteria for audit committee membership, which is based on the Nasdaq rules regarding audit committee independence. The Board of Directors of the Company has determined that Mr. Gonzalez does not meet the Company’s independence criteria for audit committee membership, as he received an annual $90,000 consulting fee and cost of health insurance of $19,000 during fiscal year 2024 for services rendered to the Company’s Logistics segment. The Board of Directors of the Company has also determined that Ms. Ryan does not meet the Company’s independence criteria for audit committee membership, as she received $12,500 of consulting fees during fiscal year 2024 for services rendered to the Company’s Life Sciences segment. The Board of Directors of the Company has also determined that Mr. van Kesteren does not meet the Company’s independence criteria for audit committee membership, as he received an annual $40,000 consulting fee during fiscal year 2024 for services rendered to the Company’s Logistics segment. While the Company’s Board of Directors has determined each of Messrs. Graves, Melsen and van Kesteren to be an audit committee financial expert based on their respective experiences, the Company’s Board of Directors designated Gerard van Kesteren as the audit committee financial expert considering his experience as Chief Financial Officer of Kuehne + Nagel Group. Compensation Committee The Company’s compensation committee (the “Compensation Committee”) formulates, reviews and recommends compensation policies that are consistent with Janel’s established compensation philosophy and that will enable it to attract and retain high-quality leadership. The Compensation Committee met four times during fiscal 2024. The Compensation Committee has the following responsibilities, among others, as set forth in the Compensation Committee’s charter: • reviewing and approving the Company’s general compensation philosophy and objectives; • reviewing and approving the corporate goals and individual objectives relevant to the compensation of the Company’s Chief Executive Officer and evaluating the performance of the Chief Executive Officer considering these objectives; • approving base salary amounts, incentive and bonus compensation amounts and individual stock and/or option grants and awards for the Chief Executive Officer and, based on the recommendation of the Chief Executive Officer, all corporate officers at or above the Vice President level; • reviewing all forms of compensation for the Company’s senior management, including the form and amount of current salary, deferred salary, cash and non-cash benefits, and all compensation plans; • reviewing the Company’s significant severance or similar termination payments and administering the Company’s stock option and other incentive compensation plans and programs; • amending or modifying, where appropriate, the provisions of any compensation or benefit plan that does not require stockholder approval; • preparing and approving reports to stockholders on compensation matters which are required by the SEC and other government bodies; • performing an annual performance appraisal for members of the Company’s senior management designated by the Board of Directors; • establishing levels of director compensation to include marketplace reviews of retainers, meeting fees, stock plans and other similar components of compensation; and • annually reviewing succession plans for key positions within the Company. The Company’s Compensation Committee consists of Ms. Ryan as the chair and Messrs. Gonzalez, Graves, Melsen and van Kesteren. The Company’s Board of Directors has determined that Ms. Ryan and Messrs. Gonzalez, Graves, Melsen and van Kesteren are independent members of the Compensation Committee. 38 Table of Contents Nominating and Corporate Governance Committee The Company’s nominating and corporate governance committee (the “Nominating and Corporate Governance Committee”) is responsible for developing and implementing policies and procedures that are intended to assure that Janel’s Board of Directors and the Boards of Directors (or equivalent) of its subsidiaries will be appropriately constituted and organized to meet its fiduciary obligations to the Company and its stockholders on an ongoing basis. The Nominating and Corporate Governance Committee met four times during fiscal 2024. Among other matters, the Nominating and Corporate Governance Committee is responsible for the following, as set forth in the Nominating and Corporate Governance Committee’s charter: • making recommendations to Janel’s Board of Directors regarding matters and practices concerning the Board, its committees and individual directors, as well as matters and practices of the Boards, committees and individual directors of each of Janel’s subsidiaries; • periodically evaluating the size, composition and governance structure of Janel’s Board of Directors and its committees and the Boards and committees of Janel’s subsidiaries and determining the future requirements of each such body; • periodically making recommendations concerning the qualifications, criteria, compensation and retirement age of members of Janel’s Board of Directors and the Boards of its subsidiaries, which recommendations, upon approval by Janel’s Board of Directors, shall be incorporated in Janel’s Corporate Governance Guidelines; • recommending nominees for election to Janel’s Board of Directors and the Boards of its subsidiaries and establishing and administering a Board evaluation process; and • reviewing timely nominations by stockholders for the election of individuals to Janel’s Board of Directors and ensure that such stockholders are advised of any action taken by the Board of Directors with respect thereto. The Company’s Nominating and Corporate Governance Committee consists of the Company’s full Board of Directors. Mr. Melsen serves as the chair of the Nominating and Corporate Governance Committee. Independence of Directors The Company is not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the Board of Directors be “independent” and, as a result, is not at this time required to (and does not) have a Board of Directors comprised of a majority of independent directors. Pursuant to Item 407(a) of Regulation S-K, however, Janel must disclose each director that is independent under the independence standards of either the New York Stock Exchange or Nasdaq, as selected by Janel. The Company has elected to use the independence standards prescribed under Nasdaq Rule 5605(a)(2), which defines an “independent director” as a person who does not have any relationship with the Company which, in the opinion of the Company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Based on the applicable criteria, the Company’s Board of Directors has determined that Messrs. Seirer and Eidinger are not independent by virtue of the fact that they are Executive Officers of the Company. The Board of Directors has determined that Messrs. Gonzalez, Graves, Melsen, and van Kesteren and Ms. Ryan are independent directors. Director Compensation The following table summarizes the compensation paid to the Company’s non-executive directors for their services during the Company’s fiscal year ended September 30, 2024 (actual dollar amounts): Name Fees Earned or Paid in Cash (1) Option Awards (2) All Other Compensation Total John J. Gonzalez $ 40,000 $ 41,567 $ 109,000 (3) $ 190,567 Gerard van Kesteren $ 50,000 $ 41,567 $ 40,000 (4) $ 131,567 Karen M. Ryan $ 50,000 $ 41,567 $ 12,500 (5) $ 104,067 Gregory J. Melsen $ 50,000 $ 41,567 $ — $ 91,567 Gregory B. Graves $ 40,000 $ 41,567 $ — $ 81,567 (1) Compensation is paid on a monthly basis. (2) The aggregate number of options outstanding as of September 30, 2024 for each director is as follows: Gerard van Kesteren – 9,999, John J. Gonzalez II – 9,999, Gregory J. Melsen – 16,875, Karen M. Ryan – 7,500, and Gregory B. Graves - 2,500. (3) Represents compensation paid to Mr. Gonzalez in connection with his consulting agreement and medical premium (4) Represents compensation paid to Mr. van Kesteren in connection with his consulting agreement. (5) Represents compensation paid to Ms. Ryan in connection with her consulting agreement 39 Table of Contents For fiscal year 2024 non-employee directors received a retainer at an annual rate of $40,000, payable on a monthly basis, and 2,500 options, pursuant to the Amended and Restated Janel Corporation 2017 Equity Incentive Plan or such other equity plan that the Company may adopt from time to time. Directors who also serve as executive officers of the Company do not receive additional compensation for their Board service. Committee chairs receive an additional retainer at an annual rate of $10,000. Non-employee directors are reimbursed for their reasonable travel and other expenses incurred to attend Board of Directors or Board committee meetings. Employment Arrangements The Company has no active employment agreements with any of its officers or directors. Code of Business Conduct and Ethics The Company has adopted a code of business conduct and ethics, including a whistleblower policy, that applies to all of its employees, including executive officers and directors. The code of business conduct and ethics, including our whistleblower policy, is available on the Company’s website at www.janelcorp.com . The Company intends to disclose, if required, any future amendments to, or waivers from, the code of business conduct and ethics within four business days of the waiver or amendment through a website posting or by filing a Current Report on Form 8-K with the SEC. Corporate Governance Guidelines The Company’s Board of Directors has adopted corporate governance guidelines that serve as a flexible framework within which its Board of Directors and its committees operate. These guidelines cover a number of areas, including the size and composition of the Board of Directors, director selection criteria and qualifications, the agenda for Board meetings, Board member access to management and independent advisors, director compensation, director orientation and continuing education and annual Board and committee self-evaluations. A copy of the corporate governance guidelines is available on the Company’s website at www.janelcorp.com . Communications with the Board Any stockholder desiring to contact the Board, or any specific director(s), may send written communications to: Board of Directors (Attention: (Name(s) of director(s), as applicable)), c/o the Company’s Secretary, 80 Eighth Avenue, New York, New York 10011. Any proper communication so received will be processed by the Secretary. If it is unclear from the communication received whether it was intended or appropriate for the Board, the Secretary will (subject to any applicable regulatory requirements) use his or her judgment to determine whether such communication should be conveyed to the Board of Directors or, as appropriate, to the member(s) of the Board of Directors named in the communication. Leadership Structure and Risk Oversight While the Board of Directors believes that there are various structures that can provide successful leadership to the Company, the Company’s executive functions are carried out by Mr. Seirer, the Company’s President and Chief Executive Officer, who also serves as chair of the Company’s Board of Directors and, together with the other directors, brings experience, oversight and expertise to the management of the Company. The Board of Directors believes that, due to the small size of the Company, this leadership structure best serves the Company and its stockholders. Management is responsible for the day-to-day management of risks the Company faces, while the Board of Directors has collective responsibility for the oversight of risk management. In its risk oversight role, the Board of Directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. To do this, management discusses with the Board of Directors the risks facing the Company and its strategy for managing them. Insider Trading Arrangements and Policies We have adopted an Insider Trading Policy governing the purchase, sale, and/or other dispositions of the Company’s securities by our directors, officers and employees, and the Company itself, that we believe is reasonably designed to promote compliance with insider trading laws, rules and regulations and the exchange listing standards applicable to us. A copy of our Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K. 40 Table of Contents ITEM 11. EXECUTIVE COMPENSATION Introduction (actual dollar amounts) The following table provides summary information concerning compensation paid by the Company to our Chief Executive Officer and President, Vice Chairman, our former Principal Financial Officer, Treasurer, and Secretary, and our Chief Financial Officer, Treasurer and Secretary. We refer to these individuals collectively as the “named executive officers”. Summary Compensation Table The following table sets forth information regarding the total compensation awarded to, paid to the named executive officers as compensation for their services in all capacities during the fiscal years ended September 30, 2024 and 2023 (actual dollar amounts): Name and Principal Position Year Base Salary ($) Bonus ($) All Other Comp. ($) Total ($) Darren C. Seirer, Chief Executive Officer and President 2024 100,000 — 1,252 (1) 101,252 2023 100,000 — 751 100,751 John Eidinger, Vice Chairman 2024 144,000 — — 144,000 2023 144,000 — — 144,000 Vincent A. Verde, Principal Financial Officer, Treasurer and Secretary 2024 105,885 26,131 (2) 165,008 (2) 297,024 2023 215,000 208,355 35,494 458,849 Joseph R. Ferrara, Chief Financial Officer, Treasurer and Secretary 2024 155,754 25,000 3,254 (3) 184,008 (1) The amount reported under “All Other Compensation” for the fiscal year ended September 30, 2024 includes $1,252 of 401(k) contributions paid on behalf of Mr. Seirer for the fiscal year ended 2024. (2) Mr. Verde served as Principal Financial Officer, Treasurer and Secretary through February 16, 2024. The amount reported under the “Bonus” column for fiscal year ended September 30, 2024 includes a discretionary bonus of $26,131 related to fiscal year 2023 performance. Amounts reported under “All Other Compensation” for the fiscal year ended September 30, 2024 includes $150,000 relating to a separation agreement, $11,531 of insurance premiums, and $3,477 of 401(k) contributions paid on behalf of Mr. Verde for the fiscal year ended 2024. (3) Mr. Ferrara was appointed as Chief Financial Officer, Treasurer and Secretary on February 14, 2024. The amount reported under the “Bonus” column for fiscal year ended September 30, 2024 includes a discretionary bonus of $25,000 related to fiscal year 2024 performance. The amount reported under “All Other Compensation” for the fiscal year ended September 30, 2024 includes $3,254 of 401(k) contributions paid on behalf of Mr. Ferrara for the fiscal year ended 2024. Long-Term Incentive Plan Awards While the Company has adopted the Amended and Restated 2017 Equity Incentive Plan pursuant to which certain stock awards may be granted to the Company’s directors, officers, employees and consultants, our current intent is to utilize this plan only to make annual equity awards to the Company’s non-employee directors. Savings and Stock Option Plans 401(k) and Profit-Sharing Plan (actual dollar amounts) The Company maintains a qualified retirement plan, commonly referred to as a 401(k) plan covering substantially all full-time employees under each segment. The Janel Corporation 401(k) Plan allows for employee salary deferrals including Roth 401(k) deferrals, employer matching contributions, employer profit sharing contributions and employee rollovers. The Janel Corporation 401(k) Plan provides for participant contributions of up to 50% of annual compensation (not to exceed the IRS limit), as defined by the plan. The Company contributes an amount equal to 50% of the participant’s first 6% of contributions. The combined expenses charged to operations for contributions made to the plans for the benefit of the employees for the fiscal years ended September 30, 2024 and 2023 were approximately $548,500 and $535,200, respectively. 41 Table of Contents The administrative expense charged to operations for the fiscal years ended September 30, 2024 and 2023 aggregated approximately $75,800 and $65,600, respectively. Equity Plans On October 30, 2013, the Board of Directors adopted Janel’s 2013 Non-Qualified Stock Option Plan (the “2013 Option Plan”) providing for options to purchase up to 100,000 shares of common stock for issuance to directors, officers, employees of and consultants to the Company and its subsidiaries. The exercise price and other terms of any nonqualified option granted under the 2013 Option Plan is determined by the Compensation Committee of the Board of Directors. On September 21, 2021, the Board of Directors of the Company adopted the Amended and Restated 2017 Janel Corporation Equity Incentive Plan (the “Amended and Restated Plan”), which amended and restated the prior 2017 Equity Incentive Plan, as previously amended, and pursuant to which non-statutory stock options, restricted stock awards and stock appreciation rights with respect to up to 200,000 shares of the Company’s Common Stock, par value $.001 per share, may be granted to employees, directors and consultants to the Company and its subsidiaries. Participants and all terms of any grant under the Amended and Restated Plan are in the discretion of the Company’s Compensation Committee. Outstanding Equity Awards at September 30, 2024 None of our named executive officers had any outstanding stock awards at September 30, 2024. Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information As noted above, we do not grant equity awards to our named executive officers or other employees of the Company and therefore do not have a policy regarding the timing of grants of option awards in relation to the disclosure of material non-public information by the Company. If, in the future, we anticipate granting stock options, SARs or similar option-like instruments to our named executive officers or other employees of the Company, we expect to establish a policy and/or practice regarding how the Board of Directors determines when to grant such awards and how the Board or Compensation Committee will take material non-public information into account when determining the timing and terms of such awards. 42 Table of Contents ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following tables set forth information concerning beneficial ownership of shares of Common Stock outstanding as of September 30, 2024. For purposes of calculating beneficial ownership, Rule 13d-3 of the Exchange Act requires inclusion of shares of common stock that may be acquired within sixty days of the stated date. Unless otherwise indicated in the footnotes to a table, beneficial ownership of shares represents sole voting and investment power with respect to those shares. Certain Beneficial Owners The following table reflects the names and addresses of the only persons or entities known to the Company to be the beneficial owners of 5% or more of the outstanding shares of the Company’s common stock as of September 30, 2024. Name and address of Beneficial Owner (1) Shares Beneficially Owned Percent of Class Oaxaca Group L.L.C. (2) 485,302 40.0 % John Eidinger 186,704 15.4 % John J. Gonzalez, II (3) 96,069 7.9 % van Kesteren Foundation (4) 85,000 7.0 % Brendan Killackey 61,300 5.1 % (1) The address of each person and entity included in this table is 80 Eighth Avenue, New York, NY 10011, except for the van Kesteren Foundation which is Seestrasse 39, 8846 Willerzell, Switzerland . (2) These shares are held by Oaxaca Group L.L.C. Dominique Schulte is the sole member of Oaxaca Group L.L.C. and, therefore, shares beneficial ownership of the shares. (3) Includes 833 shares of common stock issuable upon the exercise of stock options that may be exercised within 60 days of September 30, 2024. (4) Mr. van Kesteren, a director of the Company, and his wife are members of the Board of Directors of the van Kesteren Foundation. Mr. van Kesteren disclaims beneficial ownership of the shares of the Company’s common stock held by the van Kesteren Foundation. Directors and Executive Officers The following table sets forth information with respect to the beneficial ownership of the shares of common stock as of September 30, 2024 by each “named executive officer”, each current director and each nominee for election as a director and all directors and executive officers of the Company as a group. An asterisk (*) indicates ownership of less than 1%. Name of Beneficial Owner Shares Beneficially Owned Percent of Class John Eidinger 186,704 15.4 % John J. Gonzalez, II (1) 96,069 7.9 % Gerard van Kesteren (1) 37,999 3.1 % Gregory J. Melsen (1) 11,875 * Karen M. Ryan (1) 6,944 * Gregory B. Graves 3,082 * Joseph R. Ferrara — * Darren C. Seirer (2) — * All directors and executive officers as a group (8 persons) 342,673 26.4 % (1) Includes 833 shares of common stock issuable upon the exercise of stock options that may be exercised within 60 days of September 30, 2024. (2) Does not include shares beneficially owned by Dominique Schulte, Mr. Seirer’s spouse, which are referenced above. 43 Table of Contents Equity Compensation Plan Information The following table provides information, as of September 30, 2024, with respect to all compensation arrangements maintained by the Company under which shares of common stock may be issued: Column A Column B Column C Plan Category: Equity Compensation plans not approved by security holders: Number of securities to be issued, upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans 2013 Non-Qualified Stock Option Plan (1) 3,121 $ 8.01 39,201 Amended and Restated 2017 Equity Incentive Plan (2) 46,872 $ 26.46 57,254 Total 49,993 $ 25.31 96,455 (1) On October 30, 2013, the Board of Directors of the Company adopted the Company’s 2013 Non-Qualified Stock Option Plan providing for options to purchase up to 100,000 shares of common stock for issuance to directors, officers, employees of and consultants to the Company and its subsidiaries. The exercise price and other terms of any nonqualified option granted under the 2013 Option Plan is determined by the Compensation Committee of the Board of Directors. (2) On September 21, 2021, the Board of Directors of the Company adopted the Amended and Restated 2017 Janel Corporation Equity Incentive Plan pursuant to which non-statutory stock options, restricted stock awards and stock appreciation rights with respect to up to 200,000 shares of the Company’s common stock may be granted to employees, directors and consultants to the Company and its subsidiaries. Participants and all terms of any grant under the Amended and Restated Plan are in the discretion of the Compensation Committee. 44 Table of Contents ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Related Party Transactions (actual dollar amounts) Brendan J. Killackey, beneficial owner of 5.1% of the Company and serves as its Chief Information Officer. For fiscal year ended September 30, 2024, Mr. Killackey received a base salary of $173,333 and a discretionary bonus of $68,059. We are not aware of any other transactions since October 1, 2023 or any proposed transactions in which the Company was a party where the amount involved exceeded the lesser of 1% of the average of the Company’s total assets at year-end for the last two completed fiscal years and $120,000, and in which a director, executive officer, holder of more than 5% of our common stock or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES (actual dollar amounts) The following reflects the fees of Prager Metis CPAs, LLC, the Company’s sole independent public accountant, for the audit of our financial statements for the fiscal years ended September 30, 2024 and 2023, and fees billed for other services provided by Prager Metis during those periods. Year End September 30, Fee Category 2024 2023 Audit Fees $ 350,000 $ 338,750 Audit-Related Fees 16,582 50,195 Tax Fees — 55,495 Total Fees $ 366,582 $ 444,440 Audit Fees Audit fees include fees paid and accrued for professional services rendered by Prager Metis CPA’s for 2024 and 2023, fees for the audits of our financial statements included in our Annual Report on Form 10-K for 2024 and 2023, and reviews of the financial statements included in our Quarterly Reports on Form 10-Q. Audit fees also include comfort letter fees for 2023. Audit-Related Fees Audit-related services fees include fees paid and accrued for transaction related audit services and agreed upon procedures. Tax Fees Tax fees include fees paid and accrued for corporate tax compliance, counsel and advisory services. Approval of Independent Auditor Services and Fees The Audit Committee reviews all fees charged by the Company’s independent auditors and actively monitors the relationship between audit and non-audit services provided. The Audit Committee must pre-approve all audit and non-audit services provided by the Company’s independent auditors and fees charged. 45 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Documents filed as part of this report (1) Financial Statements. The Consolidated Financial Statements filed as part of this report are listed on the Table of Contents to Consolidated Financial Statements. All other schedules are omitted because they are not applicable, are not required, or because the required information is included in the consolidated financial statements or notes thereto. (b) Exhibits Exhibit No. Description * 2.1 Stock Purchase and Sale Agreement, dated July 1, 2022, between Janel Corporation and Rubicon Technology, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed July 5, 2022) 3.1 Articles of Incorporation of Wine Systems Design, Inc. (predecessor name) (incorporated by reference to Exhibit 3A to Wine Systems Design, Inc. (predecessor name) Registration Statement on Form SB-2 filed May 10, 2001) 3.2 Amended and Restated By-Laws of Janel Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed November 1, 2013) 3.3 Certificate of Designations of Series C Cumulative Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed August 29, 2014) 3.4 Certificate of Change filed Pursuant to NRS 78.209 for Registrant (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed April 21, 2015) 3.5 Certificate of Amendment to Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed April 21, 2015) 3.6 Amendment to Certificate of Designation After Issuance of Class or Series pursuant to NRS 78.1955 for Series C Cumulative Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 25, 2016) 3.7 Amendment to Certificate of Designation After Issuance of Class or Series pursuant to NRS 78.1955 for Series C Cumulative Preferred Stock (incorporated by reference to Exhibit 3.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017) 3.8 Amendment to Certificate of Designation After Issuance of Class or Series pursuant to NRS 78.1955 for Series C Cumulative Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K/A filed October 17, 2017) 3.9 Amendment to Certificate of Designation After Issuance of Class or Series pursuant to NRS 78.1955 for Series C Cumulative Preferred Stock (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 5, 2021) 3.10 Certificate, Amendment or Withdrawal of Designation pursuant to NRS 78.1955 with respect to Series C Cumulative Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 5, 2022) 4.1 Description of Registrant’s Securities (incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K for fiscal year ended December 31, 2022 filed December 9, 2022) † 10.1 Janel World Trade, Ltd. 2013 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 1, 2013) 10.2 Credit Agreement, effective as of February 29, 2016, by and between Indco, Inc. and First Merchants Bank (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed March 25, 2016) 10.3 Security Agreement, effective as of February 29, 2016, made by Indco and the Company, Inc. for the benefit of First Merchants Bank (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed March 25, 2016) 10.4 Continuing Guaranty Agreement, effective as of February 29, 2016, made by Janel Corporation for the benefit of First Merchants Bank (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed March 25, 2016) † 10.5 Restricted Stock Award Agreement between Janel Corporation and Gerard van Kesteren dated May 12, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September 5, 2017) 46 Table of Contents 10.6 Business Loan Agreement, dated June 14, 2018, by and between AB Merger Sub, Inc. and First Northern Bank of Dixon (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed June 27, 2018) 10.7 Promissory Note, dated June 14, 2018, made by AB Merger Sub, Inc. payable to First Northern Bank of Dixon (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed June 27, 2018) 10.8 Deed of Trust, dated June 14, 2018, by Antibodies Incorporated, as Trustor (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed June 27, 2018) 10.9 Commercial Guaranty, dated June 14, 2018, from Janel Corporation (as Guarantor) to First Northern Bank of Dixon (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed June 27, 2018) 10.10 Amendment No. 1 to Credit Agreement, effective as of August 30, 2019, by and between Indco, Inc. and First Merchants Bank (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on September 6, 2019) 10.11 Term Loan Promissory Note, effective as of August 30, 2019, made by Indco, Inc. payable to First Merchants Bank (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 6, 2019) 10.12 Revolving Loan Promissory Note, effective as of August 30, 2019, made by Indco, Inc. payable to First Merchants Bank (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on September 6, 2019) 10.13 Pledge Agreement, effective as of August 30, 2019, by Janel Corporation to First Merchants Bank (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed on September 6, 2019) † 10.14 Consulting Agreement, dated February 26, 2017, between Janel Corporation and John J. Gonzalez, II (incorporated by reference to Exhibit 10.30 of the Company’s Form 10-K for the year ended September 30, 2018, filed on July 26, 2019) † 10.15 Consulting Agreement, dated September 28, 2016, between Janel Corporation and Gerard van Kesteren (incorporated by reference to Exhibit 10.31 of the Company’s Form 10-K for the year ended September 30, 2018, filed on July 26, 2019) 10.16 Amendment No. 2 to Credit Agreement effective as of July 1, 2020, by and between Indco Inc. and First Merchants Bank (incorporated by reference to Exhibit 10.39 of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020) 10.17 Amended and Restated Loan and Security Agreement, by and among Santander Bank, N.A., as lender, and Janel Group, Inc., Expedited Logistics and Freight Services, LLC, a Texas limited liability company, and ELFS Brokerage, LLC (collectively as borrowers) and Janel Corporation and Expedited Logistics and Freight Services, LLC, an Oklahoma limited liability company, as loan party obligors dated September 21, 2021 (incorporated by reference to Exhibit 10.44 of the Company’s Annual Report on Form 10-K for the year ended September 30, 2021) 10.18 First Amendment to Amended and Restated Loan and Security Agreement between (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022) 10.19 Consent, Waiver and Second Amendment to Amended and Restated Loan Agreement, dated as of July 13, 2022, by and among Santander Bank, N.A., Janel Group, Inc., Expedited Logistics and Freight Services, LLC, ELFS Brokerage LLC, Janel Corporation and Expedited Logistics and Freight Services, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on July 13, 2022) 10.20 Form letter purchase agreement, dated March 31, 2022, between the Company and holders of Series C Stock (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022) 10.21 Amended and Restated 2017 Janel Corporation Equity Incentive Plan dated September 21, 2021 (incorporated by reference to Exhibit 10.45 of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021) 10.22 Subscription Agreement for sale of Series C Preferred Stock dated as of September 30, 2021 between Janel Corporation and Oaxaca Group LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 5, 2021) 10.23 Amendment No. 3 to Credit Agreement effective as of August 1, 2022 entered into by and among Indco, Inc., and First Merchants Bank (incorporated by reference to Exhibit 10.23 of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2022) 10.24 Third Amendment to Amended and Restated Loan and Security Agreement, by and among Santander Bank, N.A., as lender, and Janel Group, Inc., Expedited Logistics and Freight Services, LLC, a Texas limited liability company, and ELFS Brokerage, LLC (collectively as borrowers) and Janel Corporation and Expedited Logistics and Freight Services, LLC, an Oklahoma limited liability company, as loan party obligors dated January 30, 2023 (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2022) 10.25 Amended and Restated Credit Agreement, by and among Indco, Inc., Antibodies Incorporated, Aves Labs, Inc., Phosphosolutions LLC, Immunochemistry Technologies LLC, ECM Biosciences, LLC, Stephen Hall PhD LTD, Immunobioscience Corp., (collectively as borrowers), and each individually, a “Borrower”), and First Merchants Bank dated April 25, 2023 (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023). 47 Table of Contents 10.26 First Amendment to Amended and Restated Credit Agreement, by and among Indco, Inc. a Tennessee corporation, Antibodies Incorporated, a California corporation, Aves Labs, Inc., an Oregon corporation, PhosphoSolutions LLC, a Nevada limited liability company, ImmunoChemistry Technologies LLC, a Minnesota limited liability company, ECM BioSciences, LLC, a Kentucky limited liability company, Stephen Hall, PHD LTD, an Indiana corporation, ImmunoBioScience Corp., a Washington corporation (collectively as borrowers) and Janel Corporation, a Nevada corporation, as guarantor, and First Merchants Bank, as bank, dated January 10, 2024 (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024) 10.27 Fourth Amendment to Amended and Restated Loan and Security Agreement, by and among Santander Bank, N.A., as lender, and Janel Group, Inc., Expedited Logistics and Freight Services, LLC, and ELFS Brokerage, LLC (collectively as borrowers) and Janel Corporation and Expedited Logistics and Freight Services, LLC, as loan party obligors dated April 25, 2023 (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023). 10.28 Fifth Amendment to Amended and Restated Loan and Security Agreement, by and among Santander Bank, N.A., as lender, and Janel Group, Inc., Expedited Logistics and Freight Services, LLC, and ELFS Brokerage, LLC (collectively as borrowers) and Janel Corporation and Expedited Logistics and Freight Services, LLC, as loan party obligors dated August 22, 2023 (incorporated by reference to Exhibit 10.27 of the Company’s Annual Report on Form 10-K for the year ended September 30, 2023). 10.29 Sixth Amendment to Amended and Restated Loan and Security Agreement, by and among Santander Bank, N.A., as lender, and Janel Group, Inc., Expedited Logistics and Freight Services, LLC, and ELFS Brokerage, LLC (collectively as borrowers) and Janel Corporation and Expedited Logistics and Freight Services, LLC, as loan party obligors dated December 21, 2023 (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2023). 10.30 Consent, Joinder and Seventh Amendment to Amended and Restated Loan and Security Agreement, dated as of June 5, 2024, by and among Santander Bank, N.A., as lender, Janel Group, Inc., Expedited Logistics and Freight Services, LLC, ELFS Brokerage LLC, Janel Corporation, Expedited Logistics and Freight Services, LLC and Airschott, Inc (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter June 30, 2024) 10.31 Membership Interest Purchase Agreement dated September 21, 2021, by and among Janel Group, Expedited Logistics and Freight Services, LLC and former shareholders of Expedited Logistics and Freight Services, LLC (incorporated by reference to Exhibit 10.43 of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021) 10.32 Amendment, dated December 1, 2023, to Membership Interest Purchase Agreement dated September 21, 2021, by and among Janel Group, Expedited Logistics and Freight Services, LLC and former shareholders of Expedited Logistics and Freight Services, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2023) † 10.33 Separation Agreement with Vincent A. Verde, dated as of March 4, 2024 (filed herewith) † 10.34 Consulting Agreement, dated July 3, 2024, between Janel Corporation and Karen Ryan (filed herewith) 19.1 Insider Trading Policy, effective May 2, 2024 (filed herewith) 21 Subsidiaries of the Registrant (filed herewith) 23.1 Consent of Prager Metis CPAs, LLC (filed herewith) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer (filed herewith) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer (filed herewith) 32.1 Section 1350 Certification of Principal Executive Officer (furnished herewith) 32.2 Section 1350 Certification of Principal Financial Officer (furnished herewith) 101 Interactive data files providing financial information from the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024 in Inline XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of September 30, 2024 and September 30, 2023, (ii) Consolidated Statements of Operations for the years ended September 30, 2024 and 2023, (iii) Consolidated Statements of Stockholders’ Equity for the years ended September 30, 2024 and 2023, (iv) Consolidated Statements of Cash Flows for the years ended September 30, 2024 and 2023, and (v) Notes to Consolidated Financial Statements (filed herewith) 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Interactive Data Files submitted as Exhibit 101) (filed herewith) † Represents management contract, compensatory plan or arrangement in which directors and/or executive officers are entitled to participate. 48 Table of Contents * Schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Registration S-K. The Registrant hereby agrees to furnish a copy of any omitted schedules to the SEC upon request The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time. ITEM 16. FORM 10-K SUMMARY None. 49 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Janel Corporation has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized. JANEL CORPORATION (Registrant) Date: December 6, 2024 By: /s/ Darren C. Seirer Darren C. Seirer Director, Board Chair, President and Chief Executive Officer (Principal Executive Officer) Date: December 6, 2024 By: /s/ Joseph R. Ferrara Joseph R. Ferrara Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Darren C. Seirer Director, Board Chairman, President and Chief Executive Officer December 6, 2024 Darren C. Seirer /s/ John Eidinger Director, Board Vice Chairman December 6, 2024 John Eidinger /s/ Joseph R. Ferrara Chief Financial Officer, Treasurer and Secretary December 6, 2024 Joseph R. Ferrara /s/ John J. Gonzalez, II Director December 6, 2024 John J. Gonzalez, II /s/ Gregory J. Melsen Director December 6, 2024 Gregory J. Melsen /s/ Karen M. Ryan Director December 6, 2024 Karen M. Ryan /s/ Gerard van Kesteren Director December 6, 2024 Gerard van Kesteren /s/ Gregory B. Graves Director December 6, 2024 Gregory B. Graves 50 Table of Contents Report of Registered Independent Public Accounting Firm – Prager Metis CPAs, LLC (PCAOB ID number 273 ) F-2 Consolidated Balance Sheets as of September 30, 2024 and 2023 F-3 Consolidated Statements of Operations for the Years Ended September 30, 2024 and 2023 F-4 Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended September 30, 2024 and 2023 F-5 Consolidated Statements of Cash Flows for the Years Ended September 30, 2024 and 2023 F-6 Notes to Consolidated Financial Statements F-7 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Janel Corporation and Subsidiaries Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Janel Corporation and Subsidiaries (the “Company”) as of September 30, 2024 and 2023, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the years ended September 30, 2024 and 2023, and the related notes to the consolidated financial statements (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of September 30, 2024 and 2023, and the results of its operations, changes in stockholders’ equity and its cash flows for the years ended September 30, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are a matter arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to an account or disclosure that is material to the consolidated financial statements and (2) involved especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ Prager Metis CPAs, LLC We have served as the Company’s auditor since 2019 Basking Ridge, New Jersey December 6, 2024 F-2 Table of Contents JANEL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) September 30, 2024 2023 ASSETS Current Assets: Cash $ 2,832 $ 2,461 Accounts receivable, net of allowance for doubtful accounts 33,815 27,518 Inventory, net 4,478 4,850 Prepaid expenses and other current assets 4,829 4,459 Total current assets 45,954 39,288 Property and Equipment, net 5,492 4,922 Other Assets: Intangible assets, net 25,117 22,683 Goodwill 23,030 20,317 Restricted cash 250 — Investment in marketable securities at fair value 1,574 1,573 Operating lease right of use asset 8,621 7,460 Security deposits and other long-term assets 572 591 Total other assets 59,164 52,624 Total assets $ 110,610 $ 96,834 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Line of credit $ 23,013 $ 19,709 Accounts payable - trade 32,000 25,447 Accrued expenses and other current liabilities 7,489 6,337 Dividends payable 2,271 2,029 Current portion of earnout 1,262 592 Current portion of long-term debt 1,276 715 Current portion of subordinated promissory note- related party 1,628 1,988 Current portion of operating lease liabilities 2,419 2,020 Total current liabilities 71,358 58,837 Other Liabilities: Long-term debt 3,028 5,784 Long-term portion of earnout 2,119 1,738 Subordinated promissory notes- related party 3,445 3,424 Mandatorily redeemable non-controlling interest 1,529 565 Deferred income taxes 2,514 1,341 Long-term operating lease liabilities 6,585 5,689 Other liabilities 531 483 Total other liabilities 19,751 19,024 Total liabilities 91,109 77,861 Stockholders’ Equity: Preferred Stock, $ 0.001 par value; 100,000 shares authorized — — Series C 30,000 shares authorized and 11,368 shares issued and outstanding at September 30, 2024 and September 30, 2023 , liquidation value of $ 7,957 and $ 7,713 at September 30, 2024 and September 30, 2023 , respectively — — Common stock, $ 0.001 par value; 4,500,000 shares authorized, 1,206,354 issued and 1,186,354 outstanding as of September 30, 2024 and September 30, 2023 , respectively 1 1 Paid-in capital 17,084 17,107 Common treasury stock, at cost, 20,000 shares ( 240 ) ( 240 ) Accumulated earnings 2,656 2,105 Total stockholders’ equity 19,501 18,973 Total liabilities and stockholders’ equity $ 110,610 $ 96,834 The accompanying notes are an integral part of these consolidated financial statements. F-3 Table of Contents JANEL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Year Ended September 30, 2024 2023 Revenues: Logistics $ 159,958 $ 166,052 Life Sciences and Manufacturing 23,226 20,397 Total Revenues 183,184 186,449 Forwarding expenses and cost of revenues: Forwarding expenses - Logistics 117,501 123,938 Cost of revenues - Life Sciences and Manufacturing 7,299 6,839 Total forwarding expenses and cost of revenues 124,800 130,777 Gross profit 58,384 55,672 Operating Expenses: Selling, general and administrative 52,327 50,975 Amortization of intangible assets 2,299 2,098 Total Operating Expenses 54,626 53,073 Income from Operations 3,758 2,599 Other Items: Interest expense ( 2,318 ) ( 1,998 ) Other expense ( 346 ) ( 76 ) Income Before Income Taxes 1,094 525 Income tax benefit (expense) ( 543 ) 198 Net Income 551 723 Preferred stock dividends ( 328 ) ( 284 ) Net Income Available to Common Stockholders $ 223 $ 439 Net income per share: Basic $ 0.46 $ 0.61 Diluted $ 0.45 $ 0.60 Net income per share attributable to common stockholders: Basic $ 0.19 $ 0.37 Diluted $ 0.18 $ 0.36 Weighted average number of shares outstanding: Basic 1,186.4 1,186.4 Diluted 1,206.2 1,206.2 The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents JANEL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands, except share and per share data) PREFERRED STOCK COMMON STOCK PAID-IN CAPITAL COMMON TREASURY STOCK ACCUMULATED EARNING (DEFICIT) TOTAL EQUITY Shares $ Shares $ $ Shares $ $ $ Balance - September 30, 2022 11,368 $ — 1,206,354 $ 1 $ 17,184 20,000 $ ( 240 ) $ 1,382 $ 18,327 Net Income — — — — — — — 723 723 Dividends to preferred stockholders — — — — ( 284 ) — — — ( 284 ) Stock based compensation — — — — 207 — — — 207 Balance - September 30, 2023 11,368 $ — 1,206,354 $ 1 $ 17,107 20,000 $ ( 240 ) $ 2,105 $ 18,973 Net Income — — — — — — — 551 551 Dividends to preferred stockholders — — — — ( 328 ) — — — ( 328 ) Stock based compensation — — — — 305 — — — 305 Balance - September 30, 2024 11,368 $ — 1,206,354 $ 1 $ 17,084 20,000 $ ( 240 ) $ 2,656 $ 19,501 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents JANEL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended September 30, 2024 2023 Cash Flows from Operating Activities: Net income $ 551 $ 723 Adjustments to reconcile net income to net cash provided by operating activities: Recovery of uncollectible accounts ( 37 ) ( 100 ) Depreciation 551 508 Deferred income tax provision 196 ( 1,200 ) Amortization of intangible assets 2,299 2,098 Amortization of acquired inventory valuation 342 425 Amortization of loan costs 81 89 Stock based compensation 321 231 Unrealized loss on marketable securities 41 798 Change in fair value of earnout 774 ( 857 ) Change in fair value of mandatorily redeemable noncontrolling interest 964 135 Gain on extinguishment ( 21 ) — Changes in operating assets and liabilities, net of effects of acquisitions: Accounts receivable ( 4,515 ) 29,799 Inventory 39 34 Prepaid expenses and other current assets ( 250 ) ( 1,036 ) Security deposits and other long-term assets 19 ( 48 ) Accounts payable and accrued expenses 5,296 ( 20,396 ) Other liabilities 181 185 Net cash provided by operating activities 6,832 11,388 Cash Flows from Investing Activities: Acquisition of property and equipment, net of disposals ( 1,003 ) ( 360 ) Investment in marketable securities (net of dividends) ( 42 ) — Acquisitions, net of cash acquired ( 3,851 ) ( 4,447 ) Earnout payment ( 740 ) ( 1,693 ) Net cash used in investing activities ( 5,636 ) ( 6,500 ) Cash Flows from Financing Activities: Dividends paid to preferred stockholders ( 84 ) — Repayments of term loan ( 2,277 ) ( 1,748 ) Line of credit borrowings (payments) 3,304 ( 6,687 ) Repayment of subordinated promissory note-related party ( 1,517 ) ( 583 ) Net cash used in financing activities ( 574 ) ( 9,018 ) Net (decrease) increase in cash 621 ( 4,130 ) Cash at beginning of the period 2,461 6,591 Cash and restricted cash at end of period 3,082 2,461 Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: Interest 1,999 1,862 Income taxes 585 1,393 Non-cash operating activities: Contingent earnout acquisition 64 300 Due to former owner 740 455 Non-cash investing activities: Airschott subordinated promissory note 1,200 — Airschott contingent deferred consideration 952 — Non-cash financing activities: Dividends declared to preferred stockholders 328 284 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands except share and per share data) 1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Business description Janel 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. Management at the 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. 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. Logistics 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; customs brokerage services; warehousing and distribution services; 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 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 subject to certain closing conditions. Life Sciences The Company’s Life Sciences segment is comprised of several wholly-owned subsidiaries. The Company’s Life Sciences segment manufactures and distributes antibodies as well as research and diagnostic reagents for, and provides custom services to, 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 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”), a majority-owned subsidiary of the Company that manufactures and distributes mixing equipment and apparatuses 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. F-7 Table of Contents Investment in Marketable Securities - Rubicon As of each of September 30, 2023 and September 30, 2024, the Company owned 1,108,000 shares, or approximately 46.6 %, of the common stock of Rubicon. Rubicon is an advanced materials provider specializing in monocrystalline sapphire for applications in optical and industrial systems. The purpose of our investment in Rubicon was 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. Basis of consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, as well as Indco, of which Janel owns 90.2 %, with a non-controlling interest held by existing Indco management. The Indco non-controlling interest is mandatorily redeemable and is recorded as a liability. All intercompany transactions and balances have been eliminated in consolidation. Uses of estimates in the preparation of financial statements The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements, as well as the reported amounts of revenues and expenses during the reporting period. The most critical estimates made by the Company are those relating to accounts receivables valuation, the useful lives of long-term assets, accrual of cost related to ancillary services the Company provides, accrual of tax expense on an interim basis and potential impairment of goodwill and intangible assets with indefinite lives, long-lived assets impairment. Cash The Company maintains cash balances at various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $ 250 . The Company’s accounts at these institutions may, at times, exceed the federally insured limits. The Company has not experienced any losses in such accounts. Restricted Cash Commencing in the second half of 2024, the Company insures certain risks through a newly formed wholly-owned captive insurance company, Gainesville Insurance Company, Inc. (“Gainesville”). In addition, we also maintain some of our normal, historical insurance policies with third-party insurers. Restricted cash represents deposits held by Gainesville that are required by state insurance regulations to remain in the captive insurance company as cash or cash equivalents. The Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents. Accounts receivable and allowance for doubtful accounts receivable Accounts receivable are recorded at the contractual amount. The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical collection experience, the age of the accounts receivable balances, credit quality of the Company’s customers, any specific customer collection issues that have been identified, current economic conditions and other factors that may affect the customers’ ability to pay. The Company writes off accounts receivable balances that have aged significantly once all collection efforts have been exhausted and the receivables are no longer deemed collectible from the customer. The allowance for doubtful accounts as of September 30, 2024 and September 30, 2023 was $ 582 and $ 1,255 , respectively. Inventory Inventory is valued at the lower of cost (using the first-in, first-out method) or net realizable value. The Company maintains an inventory valuation reserve to provide for slow moving and obsolete inventory, inventory not meeting quality control standards and inventory subject to expiration for its Life Sciences business. The products of the Life Sciences business require the initial manufacture of multiple batches to determine if quality standards can consistently be met. In addition, the Company will produce larger batches of established products than current sales requirements due to economies of scale. The manufacturing process for these products, therefore, has and will continue to produce quantities in excess of forecasted usage. The Company values acquired manufactured antibody inventory based on a three-year forecast. Inventory quantities in excess of the forecast are not valued due to uncertainty over salability. F-8 Table of Contents Property and equipment and depreciation policy Property and equipment are recorded at cost. Property and equipment acquired in business combinations are initially recorded at fair value. Depreciation is provided for in amounts sufficient to amortize the costs of the related assets over their estimated useful lives on the straight-line and accelerated methods for both financial reporting and income tax purposes. Maintenance and repairs are recorded as expenses when incurred. Goodwill The Company records as goodwill the excess of purchase price over the fair value of the tangible and identifiable intangible assets acquired in a business combination. Under current authoritative guidance, goodwill is not amortized but is tested for impairment annually as well as when an event or change in circumstance indicates impairment may have occurred. Goodwill is tested for impairment by comparing the fair value of the Company’s individual reporting units to their carrying amount to determine if there is potential goodwill impairment. If the fair value of the reporting unit is less than the carrying value, an impairment loss is recorded to the extent that the implied fair value of the goodwill of the reporting unit is less than its carrying value. If there is a material change in economic conditions, or other circumstances influencing the estimate of future cash flows or significantly affecting the fair value of our reporting units, the Company could be required to recognize impairment charges in the future. The fair value of our reporting units were in excess of carrying value and goodwill was not deemed to be impaired as of September 30, 2024 and 2023. Intangibles and long-lived assets Long-lived assets, including fixed assets and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In reviewing for impairment, the carrying value of such assets is compared to the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition. If such cash flows are not sufficient to support the asset’s recorded value, an impairment charge is recognized to reduce the carrying value of the long-lived asset to its estimated fair value. The determination of future cash flows, as well as the estimated fair value of long-lived assets, involves significant estimates on the part of management. If there is a material change in economic conditions, or other circumstances influencing the estimate of future cash flows or fair value, the Company could be required to recognize impairment charges in the future. The Company concluded that the fair value of intangibles and long-lived assets were not deemed to be impaired as of September 30, 2024 and 2023. Equity-Method Investments The Company has determined that its investment in Rubicon is subject to the equity method of accounting, and the Company has elected the fair value option under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 825-10, Financial Instruments (“ASC 825-10”) to account for the equity method investment. In accordance with ASC 825-10, the Company will present its equity method investment in Rubicon at fair value each reporting period with changes in fair value and dividends received from Rubicon recorded to income from investment in unconsolidated affiliate on the Company’s statements of operations. See Notes 16 and 17 for further information about the Company’s investment in Rubicon’s equity securities accounted for under the fair value option. Business segment information The Company operates in three reportable segments: Logistics, Life Sciences and Manufacturing. The Company’s Chief Executive Officer regularly reviews financial information at the reporting segment level in order to make decisions about resources to be allocated to the segments and to assess their performance . F-9 Table of Contents Revenues and revenue recognition Logistics Revenue Recognition Revenue is recognized upon transfer of control of promised services to customers. With respect to its Logistics segment, the Company has determined that in general each shipment transaction or service order constitutes a separate contract with the customer. When the Company provides multiple services to a customer, different contracts may be present for different services. The Company typically satisfies its performance obligations as services are rendered at a point in time. A typical shipment would include services rendered at origin, such as pick-up and delivery to port, freight services from origin to destination port and destination services, such as customs clearance and final delivery. The Company measures the performance of its obligations as services are completed at a point in time during the life of a shipment, including services at origin, freight and destination. The Company fulfills nearly all of its performance obligations within a one to two-month period. The Company evaluates whether amounts billed to customers should be reported as gross or net revenues. Generally, revenues are recorded on a gross basis when the Company is acting as principal and is primarily responsible for fulfilling the promise to provide the services, when it has discretion in setting the prices for the services to the customers, and the Company has the ability to direct the use of the services provided by the third party. Revenues is recognized on a net basis when the Company is acting as agent and we do not have latitude in carrier selection or establish rates with the carrier. In the Logistics segment, the Company disaggregates its revenues by its four primary service categories: trucking, ocean freight, air freight, customs brokerage and other. A summary of the Company’s revenues disaggregated by major service lines for the fiscal year ended September 30, 2024 and 2023 was as follows: Year Ended September 30, Service Type 2024 2023 Trucking $ 73,193 $ 80,364 Ocean 40,567 42,047 Air 26,753 23,095 Customs Brokerage and Other 19,445 20,546 Total $ 159,958 $ 166,052 Life Sciences and Manufacturing Revenues from the Life Sciences segment are derived from the sale of high-quality monoclonal and polyclonal antibodies, diagnostic reagents and diagnostic kits and other immunoreagents for biomedical research and antibody manufacturing. Revenues from the Company’s Manufacturing segment, which is comprised of Indco, a majority-owned subsidiary of the Company that manufactures and distributes mixing equipment and apparatus for specific applications within various industries, are derived from the engineering, manufacture and delivery of specialty mixing equipment and accessories. Revenues for Life Sciences and Manufacturing are recognized when products are shipped, and risk of loss is transferred to the carrier(s) used. Income (loss) per common share Basic net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding, excluding unvested restricted stock, during the period. Diluted net income (loss) per share reflects the additional dilution from potential issuances of common stock, such as stock issuable pursuant to the exercise of stock options. The treasury stock method is used to calculate the potential dilutive effect of these common stock equivalents. Potentially dilutive shares are excluded from the computation of diluted net income (loss) per share when their effect is anti-dilutive. Equity classified share-based awards The Company recognizes compensation expense for stock-based payments granted based on the grant-date fair value estimated in accordance with ASC Topic 718, “Compensation- Stock Compensation.” For employee stock-based awards, we calculate the fair value of the award on the date of grant using the Black-Scholes method for stock options and the quoted price of our common stock for restricted shares; the expense is recognized over the service period for awards expected to vest. F-10 Table of Contents Stock-based compensation to non-employees Liability classified share-based awards The Company maintains other share unit compensation grants for shares of Indco, which vest over a period of up to three years following their grant. The shares contain certain put features where the Company is either required or expects to settle vested awards on a cash basis. These awards are classified as liability awards, measured at fair value at the date of grant and re-measured at fair value at each reporting date up to and including the settlement date. The determination of the fair value of the share units under these plans is described in Note 10. The fair value of the awards is expensed over the respective vesting period of the individual awards with recognition of a corresponding liability. Changes in fair value after vesting are recognized through compensation expense. Compensation expense reflects estimates of the number of instruments expected to vest. The impact of forfeitures and fair value revisions, if any, are recognized in earnings such that the cumulative expense reflects the revisions, with a corresponding adjustment to the settlement liability. Liability-classified share unit liabilities due within 12 months of the reporting date are presented in trade and other payables while settlements due beyond 12 months of the reporting date are presented in non-current liabilities. Non-employee share-based awards The Company grants restricted stock awards, restricted stock units and stock options to certain directors, officers and employees. The Company accounts for share-based compensation as equity awards such that compensation cost is measured at the grant date based on the fair value of the award and is expensed ratably over the vesting period. The fair value of restricted stock is the market price as of the grant date, and the fair value of each stock option grant is estimated as of the grant date using the Black-Scholes option pricing model. Determining the fair value of share-based awards at the grant date requires judgment about, among other things, stock volatility, the expected life of the award and other inputs. The Company accounts for forfeitures as they occur. The Company issues new shares of common stock to satisfy exercises and vesting of awards granted under its stock plans. Share-based compensation expense is reflected in the consolidated statements of operations as part of selling general and administrative expenses. Mandatorily Redeemable Non-Controlling Interests The non-controlling interests that are reflected as mandatorily redeemable non-controlling interests in the consolidated financial statements consist of non-controlling interests related to the Indco acquisition whose owners have certain redemption rights that allow them to require the Company to purchase the non-controlling interests of those owners upon certain events outside the control of the Company, including upon the death of the holders. The Company is required to purchase 20 % per year of the mandatorily redeemable non-controlling interest at the option of the holders beginning on the third anniversary of the date of the Indco acquisition, which was March 21, 2019. As of September 30, 2024, the holders had not exercised their redemption rights. On December 13, 2021, two minority owners of Indco exercised 7,000 and 3,372 options to purchase Indco’s common stock at an exercise price of $ 6.48 and $ 12.07 for an aggregate purchase price of $ 45 and $ 41 , respectively. Indco issued related party promissory notes in the amount of $ 45 and $ 41 , respectively, which bear interest at 1 % per annum; both interest and principal are payable on the maturity date of December 31, 2024 . On November 30, 2020, a minority owner of Indco exercised 7,000 options to purchase Indco’s common stock at an exercise price of $ 6.48 for an aggregate purchase price of $ 45 . Indco issued a related party promissory note in the amount of $ 45 , which bears interest at 1 % per annum; both interest and principal were payable on the maturity date of December 31, 2023 . These notes are included in security deposits and other long-term assets. The fair value of the shares issued of Indco’s common stock was recorded as an increase in mandatorily redeemable non-controlling interest. As a result of the exercise of options to purchase Indco’s stock, the mandatorily redeemable non-controlling interest percentage was 9.8 % as of each of September 30, 2024 and 2023. On the date the Company acquired the controlling interest in a business combination, the fair value of the non-controlling interest is recorded in the long-term liabilities section of the consolidated balance sheet under the caption “ Mandatorily redeemable non-controlling interest .” The mandatorily redeemable non-controlling interest is adjusted each reporting period, if required, to its then current redemption value, based on the predetermined formula defined in the respective agreement. The Company reflects any adjustment in the redemption value and any earnings attributable to the mandatorily redeemable non-controlling interest in its consolidated statements of operations by recording the adjustments and earnings to other income and expense in the caption “ Other expense .” F-11 Table of Contents Income taxes The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible. The benefit of tax positions taken or expected to be taken in the Company’s income tax returns are recognized in the consolidated financial statements if such positions are more likely than not of being sustained. Leases The Company determines if an arrangement is a lease at inception. Assets and obligations related to operating leases are included in operating lease right-of-use (“ROU”) assets; current portion of operating lease liability; and operating lease liability, net of current portion in our consolidated balance sheets. Assets and obligations related to finance leases are included in property, technology and equipment, net; current portion of finance lease liability; and finance lease liability, net of current portion in our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the incremental borrowing rate based on the information available at commencement date is used in determining the present value of lease payments. We use the implicit rate when readily determinable. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. The Company’s agreements with lease and non-lease components are all each accounted for as a single lease component. For leases with an initial term of twelve months or less, the Company elected the exemption from recording right of use assets and lease liabilities for all leases that qualify and records rent expense on a straight-line basis over the lease term. Expenses for these short-term leases for the fiscal year ended September 30, 2024 and 2023 amounted to $ 348 and 372 , respectively. Contingent Earnout Liabilities The Company accounts for contingent consideration relating to business combinations as a contingent earnout liability and a decrease (increase) to goodwill at the date of the acquisition and continually remeasures the asset or liability at each balance sheet date by recording changes in the fair value through change in fair value of contingent consideration in the consolidated statements of operations. The ultimate settlement of contingent earnout liabilities relating to business combinations may be for amounts that are materially different from the amounts initially recorded and may cause volatility in the Company’s results of operations. Recent accounting pronouncements Recently issued accounting pronouncements not yet adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020 - 04, Reference Rate Reform (Topic 848) . In December 2022, the FASB issued ASU 2022 - 06 to temporarily ease the potential burden in accounting for reference rate reform. The standards provide optional expedients and exceptions for applying accounting principles generally accepted in the United States to existing contracts, hedging relationships, and other transactions affected by reference rate reform. The standards apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate to be discontinued because of reference rate reform. The standards were effective upon issuance and can generally be applied through December 31, 2024. While there has been no material effect to our financial condition, results of operations, or cash flows from reference rate reform as of September 30, 2024, we continue to monitor our contracts and transactions for potential application of these ASUs. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024 (fiscal 2026). We are assessing the effect of this update on our consolidated financial statements and related disclosures. F-12 Table of Contents 2. ACQUISITIONS AND INVESTMENTS Fiscal 2024 Acquisitions Logistics On June 5, 2024, the Company completed a business combination whereby it acquired a majority ownership position in Airschott, Inc. (“Airschott”), a non-asset-based freight forwarder and customs broker, for an aggregate purchase price of $ 5,810 . At closing, the Company purchased 80 % of the outstanding stock of Airschott for $ 3,600 in cash, a $ 1,200 floating-rate seller’s note, and net liabilities assumed of $ 170 . The Company also agreed to purchase the remaining 20 % of Airschott stock in three years for deferred consideration of the greater of 20 % of 1.25 times the trailing twelve months gross profit of Airschott and $ 1,200 . The acquisition was funded by our existing acquisition draw facility with First Merchants Bank (“First Merchants”) and through our existing asset-backed facility with Santander Bank, N.A. (“Santander”). In connection with the combination, the Company recorded an aggregate of $ 1,661 in goodwill and $ 4,320 in other identifiable intangibles. Subsequently, the Company recorded a deferred tax liability related to the acquisition of $ 977 and increased the goodwill related to the acquisition by the same amount. Supplemental pro forma information has not been provided as the acquisition did not have a significant impact on Janel’s consolidated results of operations, individually or in aggregate. Airschott was founded in 1977 and is headquartered in Dulles, Virginia. The acquisition of Airschott was completed to expand our service offerings in our Logistics segment. Life Sciences On February 1, 2024, the Company completed a business combination whereby it acquired all the outstanding stock of ViraQuest, Inc. (“ViraQuest”), for an aggregate purchase price of $ 635 , net of $ 29 cash received. At closing, $ 600 was paid in cash and $ 64 was recorded as a preliminary earnout consideration. The acquisition was funded with cash provided by operating activities, and the results of operations of ViraQuest are included in Janel’s consolidated results of operations since the date of the acquisition. In connection with the combination, the Company recorded an aggregate of $ 74 in goodwill and $ 412 in other identifiable intangibles. Supplemental pro forma information has not been provided as the acquisition did not have a significant impact on Janel’s consolidated results of operations, individually or in aggregate. ViraQuest is a biotechnology custom service provider specializing in adenovirus production services. ViraQuest was founded in 2000 and is headquartered in North Liberty, Iowa. The acquisition of ViraQuest was completed to expand our service offerings in our Life Sciences segment. Fiscal 2023 Acquisitions Life Sciences On November 1, 2022, the Company completed a business combination whereby it acquired all of the outstanding stock of ImmunoBioScience Corporation (“IBSC”), for an aggregate purchase price of $ 3,602 , net of $ 153 cash received. At closing, $ 3,000 was paid in cash, $ 250 was due to the former stockholder of IBSC as a deferred acquisition payment upon integration, $ 300 was recorded as a preliminary earnout consideration (not to exceed $ 750 ) and $ 205 was recorded as a preliminary working capital adjustment. The acquisition was funded with cash provided by normal operations, and the results of operations of IBSC are included in Janel’s consolidated results of operations since the date of the acquisition. In connection with the combination, the Company recorded an aggregate of $ 1,468 in goodwill and $ 1,680 in other identifiable intangibles. Supplemental pro forma information has not been provided as the acquisition did not have a significant impact on Janel’s consolidated results of operations, individually or in aggregate. IBSC is a developer and manufacturer of high-quality reagents used by research and diagnostic customers. IBSC was founded in 2007 and is headquartered in Mukilteo, Washington. The acquisition of IBSC was completed to expand our product offerings in our Life Sciences segment. F-13 Table of Contents On March 2, 2023, the Company completed a business combination whereby it acquired all of the outstanding stock of Stephen Hall PhD, Ltd. (“SH”) for an aggregate purchase price of $ 600 . At closing, $ 500 was paid in cash and $ 100 was due to the former stockholder of SH as a deferred acquisition payment upon integration. The acquisition was funded with cash provided by normal operations, and the results of operations of SH are included in Janel’s consolidated results of operations since the date of the acquisition. In connection with the combination, the Company recorded an aggregate of $ 181 in goodwill and $ 202 in other identifiable intangibles. SH is a developer and manufacturer of antibodies and cell culture media for research and diagnostic uses. SH was founded in 2011 and is headquartered in Lafayette, Indiana. The acquisition of SH was completed to expand our product offerings 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 for a purchase price of $ 500 . The Company recorded this acquisition as a royalty asset, which is included in intangible assets in the accompanying consolidated balance sheet (reclassed from Security deposits and other long-term assets in fiscal year 2024) and will be amortized over the estimated life of ten years . Investment in Marketable Securities - Rubicon As of each of September 30, 2023 and September 30, 2024, the Company owned 1,108,000 shares, or approximately 46.6 %, of the common stock of Rubicon. Rubicon is an advanced materials provider specializing in monocrystalline sapphire for applications in optical and industrial systems. The purpose of our investment in Rubicon was 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. 3. INVENTORY Inventories consisted of the following (in thousands): Year End September 30, 2024 2023 Finished goods $ 1,860 $ 2,095 Work-in-process 768 969 Raw materials 1,884 1,811 Gross inventory 4,512 4,875 Less – reserve for inventory valuation ( 34 ) ( 25 ) Inventory net $ 4,478 $ 4,850 F-14 Table of Contents 4. PROPERTY AND EQUIPMENT A summary of property and equipment and the estimated lives used in the computation of depreciation and amortization is as follows (in thousands): September 30, 2024 2023 Life Building and improvements $ 3,083 $ 3,064 12 - 30 years Land and improvements 1,387 1,385 Indefinite Furniture and Fixture 561 373 3 - 7 years Computer Equipment 854 988 3 - 5 years Machinery & Equipment 1,984 1,454 3 - 15 years Leasehold Improvements 906 270 3 - 5 years 8,775 7,534 Less Accumulated Depreciation ( 3,283 ) ( 2,612 ) $ 5,492 $ 4,922 Depreciation expense for the fiscal year ended September 30, 2024 and 2023 was $ 551 and $ 508 , respectively. 5. INTANGIBLE ASSETS A summary of intangible assets and the estimated useful lives used in the computation of amortization is as follows (in thousands): September 30, 2024 2023 Life Customer relationships $ 29,790 $ 25,238 10 - 24 Years Trademarks/names 4,661 4,559 1 - 20 Years Trademarks/names 521 521 Indefinite Other 2,007 1,929 2 - 22 Years 36,979 32,247 Less: Accumulated Amortization ( 11,862 ) ( 9,564 ) $ 25,117 $ 22,683 The composition of the intangible assets balance at September 30, 2024 and 2023 is as follows (in thousands) : September 30, 2024 2023 Logistics $ 22,494 $ 18,174 Life Sciences 6,785 6,373 Manufacturing 7,700 7,700 36,979 32,247 Less: Accumulated Amortization ( 11,862 ) ( 9,564 ) $ 25,117 $ 22,683 Amortization expense of intangible assets for the year ended September 30, 2024 and 2023 was $ 2,299 and $ 2,098 , respectively. The future amortization of these intangible assets is expected to be as follows (in thousands): Fiscal Year 2025 $ 2,566 Fiscal Year 2026 2,566 Fiscal Year 2027 2,535 Fiscal Year 2028 2,513 Fiscal Year 2029 2,487 Thereafter 11,929 $ 24,596 6. GOODWILL The Company’s goodwill carrying amounts relate to the acquisitions in the Logistics, Life Sciences and Manufacturing businesses. The composition of the goodwill balance at September 30, 2024 and 2023 is as follows (in thousands) : September 30, 2024 2023 Logistics $ 11,813 $ 9,175 Life Sciences 6,171 6,096 Manufacturing 5,046 5,046 Total $ 23,030 $ 20,317 F-15 Table of Contents 7. NOTES PAYABLE - BANKS (A) Santander Bank Facility The wholly-owned subsidiaries that comprise the Company’s Logistics segment (collectively, the “Janel Group Borrowers”), with the Company as a guarantor, have a Loan and Security Agreement (as amended, the “Santander Loan Agreement”) with Santander with respect to a revolving line of credit facility (the “Santander Facility”). On January 30, 2023, the Santander Loan Agreement was further amended by the Third Amendment to the Amended and Restated Loan and Security Agreement (the “Third Santander Amendment”). As amended by the terms of the Third Santander Amendment, the percentage of the Borrowers’ eligible accounts receivable used to calculate the borrowing base under the Santander Loan Agreement was increased from 85 % to 90 % for Domestic Insured Accounts (as defined in the Third Santander Amendment), subject to adjustments set forth in the Santander Loan Agreement. On April 25, 2023, in connection with an amendment to the Credit Agreement entered into with First Merchants as described further below, we entered into the Fourth Amendment to the Amended and Restated Loan and Security Agreement (the “Fourth Santander Amendment”). The Fourth Santander Amendment (i) included modifications to address the amendments made to the First Merchants Credit Facilities (as defined below) and the consolidation of the debt thereunder and (ii) terminated the subordination agreement relating to the Company’s guarantee of the First Merchants Credit Facilities (as defined below). On August 22, 2023, we entered into the Fifth Amendment to the Santander Loan Agreement (the “Fifth Santander Amendment”). The Fifth Santander Amendment permitted certain unsecured guaranties by the Company in the ordinary course of business guarantying obligations of subsidiaries in an aggregate amount not to exceed $ 4,000 and related modifications to certain negative covenants. On December 1, 2023, in connection with an amendment (the “Purchase Agreement Amendment”) to that certain Membership Interest Purchase Agreement dated as of September 21, 2021 (the “Purchase Agreement”) among Janel Group, Inc. (“Janel Group”), a wholly-owned subsidiary of the Company, Expedited Logistics and Freight Services, LLC (“ELFS”) and former shareholders of ELFS (the “ELFS Sellers”), (i) the Janel Group Borrowers and Santander entered into an Acknowledgment and Consent Agreement pursuant to which Santander consented to the Purchase Agreement Amendment and the effect of the modifications thereunder on the Santander Loan Agreement and (ii) the ELFS Sellers and Santander entered into an Acknowledgment and Consent Agreement pursuant to which Santander consented to the Purchase Agreement Amendment and the effect of the modifications thereunder on the Subordination Agreement (as defined in the Santander Loan Agreement) between Santander and the ELFS Sellers. On December 21, 2023, we entered into the Sixth Amendment to the Santander Loan Agreement (the “Sixth Santander Amendment”). The Sixth Santander Amendment modified the reporting due date of the monthly borrowing base calculation from the fifth day to the fifteenth day of each month. On June 5, 2024, we entered into the Seventh Amendment to the Santander Loan Agreement (the “Seventh Santander Amendment”). The Seventh Santander Amendment added Airschott as a loan party obligor and borrower. The Santander Loan Agreement matures on September 21, 2026 . Interest accrues on the Santander Facility at an annual rate equal to the one-month SOFR plus 2.75 %. The Janel Group Borrowers’ obligations under the Santander Facility are secured by all of the assets of the Janel Group Borrowers, while the Santander Loan Agreement contains customary terms and covenants. As a result of its terms, the Santander Facility is classified as a current liability on the consolidated balance sheet. At September 30, 2024, outstanding borrowings under the Santander Facility were $ 19,313 , representing 55.2 % of the $ 35,000 available subject to limitations thereunder, and interest was accruing at an effective interest rate of 7.65 %. At September 30, 2023, outstanding borrowings under the Santander Facility were $ 18,759 , representing 53.6 % of the $ 35,000 available thereunder, and interest was accruing at an effective interest rate of 7.60 %. The Company was in compliance with the financial covenants defined in the Santander Loan Agreement at both September 30, 2024 and September 30, 2023. (B) First Merchants Bank Credit Facility On February 29, 2016, Indco entered into a Credit Agreement (as amended, the “Prior First Merchants Credit Agreement”) with First Merchants. F-16 Table of Contents On April 25, 2023, Indco and certain other Subsidiaries of the Company that are part of the Life Sciences and Manufacturing segments (together with Indco, the “Borrowers” and each, a “Borrower”), entered into a Credit Agreement (the “First Merchants Credit Agreement”) with First Merchants. The First Merchants Credit Agreement constitutes an amendment and restatement of the Prior First Merchants Credit Agreement. The credit facilities provided under the First Merchants Credit Agreement (the “First Merchants Credit Facilities”) consist of a $ 3,000 revolving loan (limited to the borrowing base and reserves), a $ 5,000 acquisition loan, a $ 6,905 Term A loan and a $ 620 Term B loan as a continuation of the mortgage loan under the Prior First Merchants Credit Agreement. Interest accrues on the outstanding revolving loan, Term A loan and acquisition loan at an annual rate equal to one-month adjusted term SOFR plus either (i) 2.75 % (if the Borrowers’ total funded debt to EBITDA ratio is less or equal to 1.75 :1.00) or (ii) 3.50 % (if the Borrowers’ total funded debt to EBITDA ratio is greater than to 1.75 :1.00). Interest accrues on the Term B loan at an annual rate of 4.19 %. The Borrowers’ obligations under the First Merchants Credit Facilities are secured by all of the Borrowers’ real property and other assets, and are guaranteed by the Company, and the Company’s guarantee of the Borrowers’ obligations is secured by a pledge of the Company’s equity interests in certain of the Borrowers. The revolving loan portion will expire on August 1, 2027 , the Term A loan portion will mature on April 25, 2033 , and the Term B loan portion will mature on July 1, 2025 . The acquisition loan will permit multiple draws until October 25, 2024, at which point the outstanding principal amount will amortize, with all remaining amounts of the acquisition loan due at maturity on April 25, 2029 . On January 10, 2024, the First Merchants Credit Facilities were amended to provide for, among other changes, permitted affiliate loans provided availability on its revolving loan both before and after giving effect to any such loan, is not less than $ 1,000 and maturity of such permitted affiliate loans are not to exceed fourteen days from disbursement. As of September 30, 2024, there were $ 3,700 of outstanding borrowings under the acquisition loan, $ 4,028 of outstanding borrowings under the Term A loan and $ 585 of outstanding borrowings under the Term B loan, with interest accruing on the acquisition loan and revolving loan at an effective interest rate of 7.82 % each, and on the Term A loan and Term B loan at an effective interest rate of 7.82 % and 4.19 %, respectively. As of September 30, 2023, there were $ 500 of outstanding borrowings under the acquisition loan, $ 450 of outstanding borrowings under the revolving loan, $ 6,235 of outstanding borrowings under the Term A loan and $ 610 of outstanding borrowings under the Term B loan, with interest accruing on the acquisition loan and revolving loan at an effective interest rate of 8.18 % and on the Term A loan and Term B loan at an effective interest rate of 8.18 % and 4.19 %, respectively. The Company was in compliance with the financial covenants define d in the First Merchants Credit Agreement at each of September 30, 2024 and September 30, 2023. The table below sets forth the total long-term debt, net of capitalized loan fees of $ 309 for the First Merchants Credit Agreement (in thousands): September 30, 2024 2023 Total Debt $ 4,304 $ 6,499 Less Current Portion ( 1,276 ) ( 715 ) Long-term Portion $ 3,028 $ 5,784 These obligations mature as follows (in thousands): Fiscal Year 2025 $ 1,276 Fiscal Year 2026 691 Fiscal Year 2027 691 Fiscal Year 2028 691 Fiscal Year 2029 691 Thereafter 264 $ 4,304 8. SUBORDINATED PROMISSORY NOTES – RELATED PARTY (A) ICT Subordinated Promissory Note Aves Labs, Inc., a wholly-owned subsidiary of the Company, is the obligor on a fixed 0.5 % subordinated promissory note in the amount of $ 1,850 (the “ICT Subordinated Promissory Note”) issued to the former owner of ImmunoChemistry Technologies, LLC (“ICT”), in connection with a business combination whereby the Company acquired all of the membership interests of ICT. The ICT Subordinated Promissory Note is payable in sixteen scheduled quarterly installments of principal and interest beginning March 4, 2021, matures on December 4, 2024 , and may be prepaid, in whole or in part, without premium or penalty. F-17 Table of Contents The ICT Subordinated Promissory Note is subordinate to and junior in right of payment for principal interest premiums and other amounts payable to Santander and First Merchants. As of September 30, 2024, the amount outstanding under the ICT Subordinated Promissory Note was $ 55 , all of which is included in the current portion of subordinated promissory notes. As of September 30, 2023, the amount outstanding under the ICT Subordinated Promissory Note was $ 312 , of which $ 288 is included in the current portion of subordinated promissory notes and $ 24 is included in the long-term portion of subordinated promissory notes. (B) ELFS Subordinated Promissory Notes Janel Group is the obligor on four fixed 4 % subordinated promissory notes totaling $ 6,000 in the aggregate (together, the “ELFS Subordinated Promissory Notes”), payable to certain former shareholders of ELFS, in connection with the Company’s business combination whereby it acquired all the membership interest of ELFS and its related subsidiaries. All of the ELFS Subordinated Promissory Notes are guaranteed by the Company and are subordinate to and junior in right of payment for principal, interest, premiums and other amounts payable to the Santander Facility and the First Merchants Credit Facility. The ELFS Subordinated Promissory Notes are payable in twelve equal consecutive quarterly installments of principal together with accrued interest. Beginning October 15, 2021 and on the same day of the next eight consecutive calendar quarters, thereafter payment of accrued interest and unpaid interest is due to the former shareholders. Beginning October 15, 2023, and on the same day of the next twelve consecutive calendar quarters thereafter payment of principal together with accrued interest and unpaid interest is due to the former shareholders. In June 2022, the principal amount of the ELFS Subordinated Promissory Notes was adjusted to $ 5,100 due to a revised working capital adjustment of $ 900 . On December 1, 2023, in connection with the Purchase Agreement Amendment among Janel Group and the ELFS Sellers, the Company extended the ELFS Subordinated Promissory Notes maturity by two years and restored the working capital adjustment (as defined in the Purchase Agreement) by $ 900 which increased the principal amount of the ELFS Subordinated Promissory Notes to $ 6,000 . The Company evaluated the accounting treatment related to the amendment and determined the agreements are substantially different and extinguished the original subordinated promissory notes and recorded the amended subordinated promissory notes at fair value of $ 4,654 . As a result, the Company recorded a debt discount of approximately $ 921 and a $ 21 gain on extinguishment. As of September 30, 2024, the amount outstanding under the ELFS Subordinated Promissory Notes was $ 3,918 , of which $ 1,173 is included in the current portion of subordinated promissory notes and $ 2,745 was included in the long-term portion of subordinated promissory notes. As of September 30, 2023, the amount outstanding under the ELFS Subordinated Promissory Notes was $ 5,100 , of which $ 1,700 was included in the current portion of subordinated promissory notes and $ 3,400 was included in the long-term portion of subordinated promissory notes. (C) Airschott Subordinated Promissory Note Janel Group is the obligor on a floating rate (Prime Rate plus 2 %) subordinated promissory note (the “Airschott Subordinated Promissory Note”) in the amount of $ 1,200 issued, to a former owner of Airschott, in connection with the business combination whereby Janel Group acquired Airschott. The note is payable in twelve consecutive quarterly payments, which commenced in July 2024, of $ 100 together with accrued interest on the outstanding principal balance. As of September 30, 2024, the amount outstanding under the Airschott Subordinated Promissory Note was $ 1,100 , of which $ 400 was included in the current portion of subordinated promissory notes and $ 700 was included in the long-term portion of subordinated promissory notes. September 30, 2024 2023 (in thousands) Total Subordinated Promissory Notes $ 5,073 $ 5,412 Less Current Portion of Subordinated Promissory Notes ( 1,628 ) ( 1,988 ) Long Term Portion of Subordinated Promissory Notes $ 3,445 $ 3,424 F-18 Table of Contents These obligations mature as follows (in thousands): Total 2025 $ 1,628 2026 1,315 2027 1,215 2028 915 Total $ 5,073 9. STOCKHOLDERS’ EQUITY (in thousands, except share per share data) Janel is authorized to issue 4,500,000 shares of common stock, par value $ 0.001 . In addition, the Company is authorized to issue 100,000 shares of preferred stock, par value $ 0.001 . The preferred stock is issuable in series with such voting rights, if any, designations, powers, preferences and other rights and such qualifications, limitations and restrictions as may be determined by the Company’s Board of Directors or a duly authorized committee thereof, without stockholder approval. The Board of Directors may fix the number of shares constituting each series and increase or decrease the number of shares of any series. (A) Preferred Stock Series C Cumulative Preferred Stock Shares of the Company’s Series C Cumulative Preferred Stock (the “Series C Stock”) were initially entitled to receive annual dividends at a rate of 7 % per annum of the original issuance price of $ 500 , when and if declared by the Company’s Board of Directors, with such rate to increase by 2 % annually beginning on the third anniversary of issuance of such Series C Stock to a maximum rate of 13 %. By the filing of the Certificate of Amendment to the Company’s Certificate of Incorporation on March 31, 2022, the annual dividend rate decreased to 5 % per annum of the original issuance price, when and if declared by the Company’s Board of Directors, and increased by 1 % on January 1, 2024. Such rate is 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 September 30, 2024 and 2023 was 6 % and 5 %, respectively . In the event of liquidation, holders of Series C Stock shall be paid an amount equal to the original issuance price, plus any accrued dividends thereon. Shares of Series C Stock may be redeemed by the Company at any time upon notice and payment of the original issuance price, plus any accrued dividends thereon. The liquidation value of Series C Stock was $ 7,957 and $ 7,713 as of September 30, 2024 and September 30, 2023, respectively. For the fiscal year ended September 30, 2024 and 2023, the Company declared dividends on Series C Stock of $ 328 and $ 284 , respectively. At September 30, 2024 and 2023, the Company had accrued dividends of $ 2,271 and $ 2,029 , respectively. (B) Equity Incentive Plan On May 12, 2017, the Company adopted the 2017 Equity Incentive Plan (the “2017 Plan”) pursuant to which (i) incentive stock options, (ii) non-statutory stock options, (iii) restricted stock awards and (iv) stock appreciation rights with respect to shares of the Company’s common stock may be granted to directors, officers, employees of and consultants to the Company. On September 21, 2021, the Board of Directors of the Company adopted the Amended and Restated 2017 Janel Corporation Equity Incentive Plan (the “Amended Plan”) pursuant to which non-statutory stock options, restricted stock awards and stock appreciation rights of the Company’s Common Stock, par value $ 0.001 per share (“Common Stock”), may be granted to employees, directors and consultants to the Company and its subsidiaries. The Amended Plan increases the number of shares of Common Stock that may be issued pursuant to the Amended Plan from 100,000 to 200,000 shares of Common Stock of the Company and adopts certain other non-substantive amendments. Participants and all terms of any grant under the Amended Plan are in the discretion of the Company’s Compensation Committee. 10. STOCK-BASED COMPENSATION (in thousands, except share per share data) On October 30, 2013, the Board of Directors of the Company adopted the Company’s 2013 Non-Qualified Stock Option Plan (the “2013 Option Plan”) providing for options to purchase up to 100,000 shares of Common Stock for issuance to directors, officers, employees of and consultants to the Company and its subsidiaries. On September 21, 2021, the Board of Directors of the Company adopted the Amended and Restated 2017 Janel Corporation Equity Incentive Plan (the “Amended and Restated Plan”), which amended and restated the prior 2017 plan, as previously amended, and pursuant to which non-statutory stock options, restricted stock awards and stock appreciation rights with respect to up to 200,000 shares of the Company’s Common Stock may be granted to directors, officers, employees of and consultants to the Company and its subsidiaries. The Amended and Restated Plan increased the number of shares of Common Stock that may be issued pursuant to the Amended and Restated Plan from 100,000 to 200,000 shares of Common Stock of the Company and adopts certain other non-substantive amendments. Participants and all terms of any grant under the Amended and Restated Plan are in the discretion of the Company’s Compensation Committee. F-19 Table of Contents Total stock-based compensation for the fiscal year ended September 30, 2024 and 2023 amounted to $ 321 and $ 231 , respectively, and was included in selling, general and administrative expense in the Company’s statements of operations. Stock Options The Company uses the Black-Scholes option pricing model to estimate the fair value of our share-based awards. In applying this model, we use the following assumptions: • Risk-free interest rate - We determine the risk-free interest rate by using a weighted average assumption equivalent to the expected term based on the U.S. Treasury constant maturity rate. • Expected term - We estimate the expected term of our options on the average of the vesting date and term of the option. • Expected volatility - We estimate expected volatility using daily historical trading data of our common stock. • Dividend yield - We have never paid dividends on our common stock and currently have no plans to do so; therefore, no dividend yield is applied. The fair values of our employee option awards were estimated using the assumptions below, which yielded the following weighted average grant date fair values for the periods presented: 2024 2023 Risk-free interest rate 4.63 % 3.98 % Expected option term in years 4.5 - 6.0 5.5 - 6.5 Expected volatility 58.2 % 93.6 % Dividend yield — % — % Weighted average grant date fair value 9.83 - 16.63 30.06 - 41.24 Options for Employees Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding balance at September 30, 2023 40,993 $ 22.53 6.6 $ 862.16 Granted 12,500 $ 28.25 9.3 $ 153.13 Expired ( 3,500 ) $ 3.25 — $ — Outstanding balance at September 30, 2024 49,993 $ 25.31 6.9 $ 884.91 Exercisable at September 30, 2024 24,162 $ 12.63 5.3 $ 673.48 The aggregate intrinsic value in the above table was calculated as the difference between the closing price of the Company’s Common Stock at September 30, 2024 of $ 40.50 per share and the exercise price of the stock options that had strike prices below such closing price. As of September 30, 2024, there was approximately $ 241 of total unrecognized compensation expense related to the unvested employee stock options which is expected to be recognized over the next year. F-20 Table of Contents Liability classified share-based awards During the fiscal year ended September 30, 2024 and 2023, there were no options granted and no options were exercised with respect to Indco’s common stock. Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding Balance at September 30, 2023 35,607 $ 12.22 5.8 $ 375.02 Outstanding Balance at September 30, 2024 35,607 $ 12.22 4.8 $ 375.02 Exercisable on September 30, 2024 33,269 $ 11.87 4.6 361.95 The aggregate intrinsic value in the above table was calculated as the difference between the valuation price of Indco’s common stock at September 30, 2024 of $ 22.75 per share and the exercise price of the stock options that had strike prices below such closing price. The liability classified awards were measured at fair value at each reporting date until the final measurement date, which was the date of completion of services required to earn the option. The accrued compensation cost related to these options was approximately $ 350 and $ 334 as of September 30, 2024 and September 30, 2023, respectively, and is included in other liabilities in the consolidated financial statement. The compensation cost related to these options was approximately $ 16 and $ 23 for the fiscal years ended September 30, 2024 and September 30, 2023, respectively, and is included in other liabilities in the consolidated financial statement. The cost associated with the options issued on each grant date is being recognized ratably over the period of service required to earn each tranche of options. Upon vesting, the options continue to be accounted for as a liability in accordance with ASC 480-10-25-8 and are measured in accordance with ASC 480-10-35 at every reporting period until the options are settled. As a result of previous option exercise and stock repurchase activity, the mandatorily redeemable non-controlling interest percentage was 9.8 % as of each of September 30, 2024 and 2023. Changes in the fair value of the vested options are recognized in earnings in the consolidated financial statements. The options are classified as liabilities, and the underlying shares of Indco’s common stock also contain put options which result in their classification as a mandatorily redeemable security. While their redemption does not occur on a fixed date, there is an unconditional obligation for the Company to repurchase the shares upon death. As of September 30, 2024, there was no unrecognized compensation expense related to the unvested Indco stock options. F-21 Table of Contents 11. INCOME PER COMMON SHARE The following table provides a reconciliation of the basic and diluted income (loss) per share (“EPS”) computations for the fiscal years ended September 30, 2024 and 2023 (in thousands, except share and per share data): Year Ended September 30, 2024 2023 Income: Net income $ 551 $ 723 Preferred stock dividends ( 328 ) ( 284 ) Non-controlling interest dividends — — Net income available to common stockholders $ 223 $ 439 Common Shares: Basic - weighted average common shares 1,186 1,186 Effect of dilutive stock options 20 20 Diluted - weighted average common stock 1,206 1,206 Income per Common Share: Basic - Net income $ 0.46 $ 0.61 Preferred stock dividends ( 0.27 ) ( 0.24 ) Non-controlling interest dividends — — Net income (loss) attributable to common stockholders $ 0.19 $ 0.37 Diluted - Net income $ 0.45 $ 0.60 Preferred stock dividends ( 0.27 ) ( 0.24 ) Non-controlling interest dividends — — Net income available to common stockholders $ 0.18 $ 0.36 The computation for the diluted number of shares excludes unexercised stock options that are anti-dilutive. There were 10,000 anti-dilutive shares for the fiscal year ended September 30, 2024 and 10,000 anti-dilutive shares for the fiscal years ended September 30, 2023. Potentially diluted securities as of September 30, 2024 and 2023 are as follows: September 30, 2024 2023 Employee stock options (Note 10) 49,993 40,993 49,993 40,993 12. INCOME TAXES The reconciliation of income tax computed at the Federal statutory rate to the provision for income taxes from operations is as follows (in thousands): Year Ended September 30, 2024 2023 Federal taxes at statutory rates $ 230 $ 110 Permanent differences 109 250 State and local taxes, net of Federal benefit 155 ( 273 ) Other 49 ( 285 ) Total $ 543 $ ( 198 ) F-22 Table of Contents The provisions of income taxes are summarized as follows (in thousands): Year Ended September 30, 2024 2023 Current $ 347 $ 1,048 Deferred 196 ( 1,246 ) Total $ 543 $ ( 198 ) The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows (in thousands): 2024 2023 Deferred tax assets - net operating loss carryforwards $ 48 $ 52 Lease liability 2,115 1,814 Other 744 768 Stock based compensation 445 374 Total deferred tax assets 3,352 3,008 Valuation allowance — — Total deferred tax assets net of valuation allowance 3,352 3,008 Deferred tax liabilities - depreciation and amortization 3,604 2,564 Prepaid expenses 237 30 Right of use assets 2,025 1,755 Total deferred tax liabilities 5,866 4,349 Net deferred tax liability $ ( 2,514 ) $ ( 1,341 ) As of September 30, 2024, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statement of operations. Income tax returns for tax years from 2019 through 2023 remain subject to examination by the taxing jurisdictions. 13. PROFIT SHARING AND 401(K) PLANS The Company maintains a qualified retirement plan commonly referred to as a 401(k) Plan covering substantially all full-time employees under each segment. The Janel Corporation 401(k) allows for employee salary deferrals including Roth 401(k) deferrals, employer matching contributions, employer profit sharing contributions and employee rollovers. The Janel Corporation 401(k) plan provides for participant contributions of up to 50 % of annual compensation (not to exceed the IRS limit), as defined by the plan. The Company contributes an amount equal to 50 % of the participant’s first 6 % of contributions. The combined expenses charged to operations for contributions made to the plans for the benefit of the employees for the years ended September 30, 2024 and 2023 were $ 549 and $ 535 , respectively. The administrative expense charged to operations for the years ended September 30, 2024 and 2023 aggregated $ 76 and $ 65 , respectively. F-23 Table of Contents 14. BUSINESS SEGMENT INFORMATION As discussed above in Note 1, the Company operates in three reportable segments: Logistics, Life Sciences and Manufacturing. The Company’s Chief Executive Officer regularly reviews financial information at the reporting segment level in order to make decisions about resources to be allocated to the segments and to assess their performance. The following tables presents selected financial information about the Company’s reportable segments and Corporate for the purpose of reconciling to the consolidated totals for the fiscal years ended September 30, 2024 and 2023: For the year ended September 30, 2024 (in thousands) Consolidated Logistics Life Sciences Manufacturing Corporate Revenues $ 183,184 $ 159,958 $ 13,154 $ 10,072 $ — Forwarding expenses and cost of revenues 124,800 117,501 2,638 4,661 — Gross profit 58,384 42,457 10,516 5,411 — Selling, general and administrative 52,327 37,057 7,216 3,129 4,925 Amortization of intangible assets 2,299 — — — 2,299 Income (loss) from operations 3,758 5,400 3,300 2,282 ( 7,224 ) Interest expense 2,318 1,667 367 284 — Identifiable assets 110,610 42,495 11,230 4,162 52,723 Capital expenditures, net of disposals $ 1,003 $ 84 $ 911 $ 8 $ — For the year ended September 30, 2023 (in thousands) Consolidated Logistics Life Sciences Manufacturing Corporate Revenues $ 186,449 $ 166,052 $ 11,059 $ 9,338 $ — Forwarding expenses and cost of revenues 130,777 123,938 2,376 4,463 — Gross profit 55,672 42,114 8,683 4,875 — Selling, general and administrative 50,975 37,310 6,149 2,978 4,538 Amortization of intangible assets 2,098 — — — 2,098 Income (loss) from operations 2,599 4,804 2,534 1,897 ( 6,636 ) Interest expense 1,998 1,357 248 393 — Identifiable assets 96,834 34,823 11,932 4,202 45,877 Capital expenditures, net of disposals $ 360 $ 271 $ 87 $ 2 $ — Goodwill and intangible assets are recorded at the Corporate level and are included in identifiable assets. 15. LEASES The Company has operating leases for office and warehouse space in all districts where it conducts business. As of September 30, 2024, the remaining terms of the Company’s operating leases were between one and 126 months and certain lease agreements contain provisions for future rent increases. Payments due under the lease contracts include the minimum lease payments that the Company is obligated to make under the non-cancelable initial terms of the leases as the renewal terms are at the Company’s option and the Company is not reasonably certain to exercise those renewal options at lease commencement. The components of lease cost for the years ended September 30, 2024 and 2023 are as follows: 2024 2023 Operating lease cost $ 2,522 $ 2,102 Short-term lease cost 348 372 T otal lease cost $ 2,870 $ 2,474 Rent expense for the year ended September 30, 2024 and 2023 was $ 2,870 and $ 2,474 , respectively. Operating lease right of use assets, current portion of operating lease liabilities and long-term operating lease liabilities reported in the consolidated balance sheets for operating leases as of September 30, 2024 were $ 8,621 , $ 2,419 and $ 6,585 , respectively. Operating lease right of use assets, current portion of operating lease liabilities and long-term operating lease liabilities reported in the consolidated balance sheets for operating leases as of September 30, 2023 were $ 7,460 , $ 2,020 and $ 5,689 , respectively. During the twelve months ended September 30, 2024 and 2023, the Company entered into new operating leases and recorded an additional $ 313 and $ 1,759 , respectively in operating lease right of use assets and corresponding lease liabilities. F-24 Table of Contents As of September 30, 2024 and 2023, the weighted-average remaining lease term and the weighted-average discount rate related to the Company’s operating leases were 5.3 years and 5.72 % and 5.9 years and 4.01 % respectively. Cash paid for amounts included in the measurement of operating lease obligations were $ 2,395 and $ 2,012 for the twelve months ended September 30, 2024 and 2023. Future minimum lease payments under non-cancelable operating leases as of September 30, 2024 are as follows (in thousands) : Year End September 30, 2024 2025 $ 2,883 2026 2,432 2027 1,726 2028 1,515 2029 505 Thereafter 1,559 Total undiscounted loan payments 10,620 Less imputed interest ( 1,616 ) Total lease obligation $ 9,004 16. RUBICON INVESTMENT (in thousands, except per share data) As of each of September 30, 2023 and September 30, 2024, the Company owned 1,108,000 shares, or approximately 46.6 %, of the common stock of Rubicon. Rubicon is an advanced materials provider specializing in monocrystalline sapphire for applications in optical and industrial systems. The purpose of our investment in Rubicon was 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. The Company revalued the investment in Rubicon’s securities on September 30, 2024 and 2023 and recorded a loss of $ 55 and $ 798 , respectively within other income (loss), net of dividends on the Company’s consolidated. Below is reconciliation for the changes to the investment in Rubicon for the year ended September 30, 2024 and 2023. September 30, September 30, 2024 2023 Balance at beginning of year $ 1,573 $ 2,371 Fair value adjustments to Rubicon investment ( 55 ) ( 798 ) Total $ 1,518 $ 1,573 17. FAIR VALUE MEASUREMENTS Topic 820 established a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy under Topic 820 are described below: Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access. Level 2: Inputs to the valuation methodology are quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. F-25 Table of Contents Recurring Fair Value Measurements The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis based on the three-level valuation hierarchy (in thousands): Total fair value at September 30, 2024 Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets: Investment in Rubicon at fair value $ 1,518 $ 1,518 $ — $ — Investment in other marketable securities 56 56 — — $ 1,574 $ 1,574 $ — $ — Liabilities: Contingent earnout liabilities $ 3,381 $ 2,100 $ — $ 1,281 $ 3,381 $ 2,100 $ — $ 1,281 The contingent earnout liability for ELFS was classified as Level 3 as of September 30, 2023. On December 1, 2023, in connection with the Purchase Agreement Amendment among Janel Group and the ELFS Sellers described above, the parties agreed to certain modifications fixing the amount of the remaining earnout payments to ELFS in earnout years three and four to $ 1,078 each year. As a result, the measurement of the earnout liability became a Level 1 fair value measurement based on the present value of the negotiated payments. Inputs to the valuation approach for contingent earnout liabilities for Airschott include the Company’s forecasted gross profit for each of the next 3 fiscal years from the acquisition date, estimated volatility measure of 20 %, expected term of 3 years, an underlying metric discount rate of 8.9 %, and a discount rate on the earnout payments of 8.25 %. Total fair value at September 30, 2023 Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets: Investment in Rubicon at fair value $ 1,573 $ 1,573 $ — $ — $ 1,573 $ 1,573 $ — $ — Liabilities: Contingent earnout liabilities $ 2,330 $ — $ — $ 2,330 $ 2,330 $ — $ — $ 2,330 Investment in Rubicon at fair value As of each of September 30, 2024 and September 30, 2023, the Company held 46.6 % of the total issued and outstanding shares of Rubicon and reported its investment under the fair value method pursuant to ASC 320. Management determined that it was appropriate to carry its investment in Rubicon at fair value because the investment was traded on the NASDAQ stock exchange through January 2, 2023, began trading on the OTCQB Capital Market on January 3, 2023 and had daily trading activity, the combination of which provide a better indicator of value. The investment in Rubicon is re-measured at the end of each quarter based on the trading price and any change in the value is reported on the income statement as an unrealized gain or loss on marketable securities in other income (expense). Refer to Note 16 to Consolidated Financial Statements for reconciliation of changes to the investment in Rubicon for the years ended September 30, 2024 and 2023. Contingent earnout liabilities For the period ending September 30, 2024, these liabilities relate to the estimated fair value of earnout payments to former IBSC,ELFS,ViraQuest and Airschott owners. For the period ending September 30, 2023, these liabilities relate to the estimated fair value of earnout payments to former IBSC and ELFS owners . The current and non-current portions of the fair value of the contingent earnout liability at September 30, 2024 were $ 1,262 and $ 2,119 , respectively. The current and non-current portions of the fair value of the contingent earnout liability at September 30, 2023 were $ 592 and $ 1,738 , respectively . F-26 Table of Contents The following table sets forth a summary of the changes in the fair value of the Company’s contingent earnout liabilities, which are measured at fair value on a recurring basis utilizing Level 1 and Level 3 assumptions in their valuation (in thousands): September 30, 2024 2023 Balance at beginning of year $ 2,330 $ 4,580 Fair value of contingent consideration recorded in connection with business combinations 1,017 300 Earnout payment ( 740 ) ( 1,693 ) Fair value adjustment of contingent earnout liabilities 774 ( 857 ) Total $ 3,381 $ 2,330 The Company determined the fair value of the Level 3 contingent earnout liability using forecasted results through the expected earnout periods. The principal inputs to the approach include expectations of the specific business’s revenues in fiscal years 2024 through 2025 using an appropriate discount rate. Given the use of significant inputs that are not observable in the market, the contingent earnout liability is classified within Level 3 of the fair value hierarchy. 18. COMMITMENTS AND CONTINGENCIES Employment Agreements The Company has various employment agreements, including employment agreements with the previous owners of ELFS and Airschott. 19. RISK AND UNCERTAINTIES (A) Currency Risks The nature of Janel’s operations requires it to deal with currencies other than the U.S. Dollar. As a result, the Company is exposed to the inherent risks of international currency markets and governmental interference. A number of countries where Janel maintains agent relationships have currency control regulations. The Company attempts to compensate for these exposures by accelerating international currency settlements among those agents. (B) Concentration of Credit Risk The Company’s assets that are exposed to concentrations of credit risk consist primarily of cash and receivables from customers. The Company places its cash with financial institutions that have high credit ratings. The receivables from clients are spread over many customers. The Company maintains an allowance for uncollectible accounts receivable based on expected collectability and performs ongoing credit evaluations of its customers’ financial condition. We have continued to experience heightened customer credit risk as a result of the negative impact to customers’ financial condition, employment levels and consumer confidence arising from economic disruptions related to the COVID-19 pandemic, and we expect that our risk in this area will remain high as long as the disruptions persist. (C) Legal Proceedings Janel is occasionally subject to claims and lawsuits which typically arise in the normal course of business. While the outcome of these claims cannot be predicted with certainty, management does not believe that the outcome of any of these legal matters will have a material adverse effect on the Company’s business, results of operations, financial condition, or cash flows. (D) Concentration of Customers No customer accounts for 10% or more of consolidated sales for the years ended September 30, 2024 and 2023. No customer accounted for 10% or more of consolidated accounts receivable at September 30, 2024 and 2023. (E) Auto Insurance In the ordinary course of our Logistics business, we are a defendant in several legal proceedings arising out of the conduct of our Logistics business. These proceedings include third party claims for property damage or bodily injury incurred in connection with our services. Although there can be no assurance as to the ultimate disposition of these proceedings, we do not believe, based upon the information available at this time, that these property damage or bodily injury claims, in the aggregate, will have a material impact on our consolidated financial statements. Within our Logistics segment, ELFS maintains auto liability for commercial trucking claims of up to $ 6,000 per occurrence, and general liability with of up to $ 6,000 per occurrence. 20. SUBSEQUENT EVENTS On November 22, 2024, Antibodies Incorporated, Aves Labs, Inc., Indco, Inc., and their wholly-owned subsidiaries, entered into the Second Amendment to the Amended and Restated Credit Agreement and Joinder Agreement dated as of April 25, 2023 and first amended as of January 10, 2024. The Second Amendment increased the borrowing capacity by $ 6,700 . F-27