JANEL CORP - FORM 10-Q/A - December 10, 2010

Attached files

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EX-31 - JANEL CORP	v205225_ex31.htm
EX-32 - JANEL CORP	v205225_ex32.htm

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

x	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2009

¨	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 333-60608

JANEL WORLD TRADE, LTD.

(Exact name of registrant as specified in its charter)

NEVADA		86-1005291
(State of incorporation)		(I.R.S. Employer Identification Number)

150-14 132nd Avenue, Jamaica, NY		11434
(Address of principal executive offices)		(Zip Code)

(718) 527-3800

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “large accelerated filer” and “accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨ Non-Accelerated filer x

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

State the number of shares outstanding of each of the issuer's class of common equity, as of the latest practicable date: 17,426,661.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

(a) Janel’s unaudited, interim financial statements for its second fiscal quarter (the three and six months ended March 31, 2009) have been set forth below. Management’s Discussion and Analysis of the Company’s Financial Condition and the Results of Operations for the second fiscal quarter will be found at Item 2, following the financial statements.

JANEL WORLD TRADE LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	March 31, 2009		September 30, 2008
	(Unaudited)		(Audited)

ASSETS

Cash and cash equivalents	$	2,324,206	$	2,428,098
Accounts receivable, net of allowance for doubtful accounts of $105,556 at March 31, 2009 and $129,953 at September 30, 2008		4,101,968		6,102,205
Marketable securities		38,522		52,044
Loans receivable - officers		146,215		142,574
- other		19,584		25,632
Prepaid expenses and sundry current assets		221,001		228,664
Tax refund receivable		83,000		83,000
TOTAL CURRENT ASSETS		6,934,496		9,062,217

PROPERTY AND EQUIPMENT, NET		248,451		303,855

OTHER ASSETS:
Intangible assets, net		3,121,075		3,300,119
Security deposits		50,801		50,801
Deferred income taxes		946,000		754,000
TOTAL OTHER ASSETS		4,117,876		4,104,920

TOTAL ASSETS	$	11,300,823	$	13,470,992

LIABILITIES AND STOCKHOLDERS’ EQUITY

Convertible promissory note	$	400,000	$	400,000
Note payable – bank		750,000		750,000
- other		125,000		125,000
Accounts payable – trade		2,330,158		3,902,719
- related party		3,023		143,422
Accrued expenses and taxes payable		445,803		303,659
Current portion of long-term debt		807,970		786,308
TOTAL CURRENT LIABILITIES		4,861,954		6,411,108

OTHER LIABILITIES:
Long-term debt		1,919,238		2,110,237
Deferred compensation		78,568		78,568
TOTAL OTHER LIABILITIES		1,997,806		2,188,805

STOCKHOLDERS’ EQUITY		4,441,063		4,871,079

	$	11,300,823	$	13,470,992

See notes to financial statements

JANEL WORLD TRADE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



	SIX MONTHS ENDED MARCH 31,						THREE MONTHS ENDED MARCH 31,
	2009			2008			2009			2008

REVENUES	$	38,417,901		$	38,349,307		$	17,151,773		$	18,281,961

COSTS AND EXPENSES:
Forwarding expenses		34,088,675			33,483,443			15,111,987			15,934,980
Selling, general and administrative		4,607,086			4,666,805			2,311,073			2,366,265
Amortization of intangible assets		179,062			323,625			89,531			161,813
TOTAL COSTS AND EXPENSES		38,874,823			38,473,873			17,512,591			18,463,058

OPERATING LOSS		(456,922	)		(124,566	)		(360,818	)		(181,097	)

OTHER ITEMS:
Interest and dividend income		11,380			28,915			7,504			11,661
Interest expense		(109,683	)		(63,120	)		(51,421	)		(29,484	)
TOTAL OTHER ITEMS		(98,303	)		(34,205	)		(43,917	)		(17,823	)

LOSS BEFORE INCOME TAXES		(555,225	)		(158,771	)		(404,735	)		(198,920	)

Income taxes (credits)		(155,000	)		(18,000	)		(120,000	)		(36,100	)

NETLOSS		(400,225	)		(140,771	)		(284,735	)		(162,820	)

Preferred stock dividends		7,500			7,500			3,750			3,750

NET LOSS AVAILABLE TO COMMON STOCKHOLDERS	$	(407,725	)	$	(148,271	)	$	(288,485	)	$	(166,570	)

OTHER COMPREHENSIVE INCOME
NET OF TAX:
Unrealized gain(loss) from available for sale securities	$	(13,768	)	$	(15,150	)	$	(2,901	)	$	(8,142	)
Basic earnings (loss) per share	$	(.02	)	$	(.0088	)	$	(.02	)	$	(.0099	)
Fully diluted earnings (loss) per share	$	(.02	)	$	(.0086	)	$	(.02	)	$	(.0096	)
Basic weighted number of shares outstanding		17,513,130			16,906,000			17,511,485			16,906,000
Fully diluted weighted number of shares outstanding		17,913,130			17,306,000			17,911,485			17,306,000

See notes to financial statements

JANEL WORLD TRADE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY



	CAPITAL STOCK				PREFERRED STOCK				TREASURY			ADDITIONAL PAID-IN		RETAINED			ACCUMULATED OTHER COMPREHENSIVE
	SHARES		$		SHARES		$		STOCK			CAPITAL		EARNINGS			GAIN (LOSS)			TOTAL

BALANCE – SEPTEMBER 30, 2008		17,426,661	$	17,427		1,285,000	$	1,285	$	(2,743	)	$	3,438,677	$	1,430,043		$	(13,610	)	$	4,871,079

Net loss		-		-		-							-		(400,225	)		-			(400,225	)

Purchase of 12,676 shares of treasury stock		-		-		-		-		(8,523	)		-		-			-			(8,523	)

Dividends to preferred shareholders		-		-		-		-		-			-		(7,500	)		-			(7,500	)

Other comprehensive gains (losses):
Unrealized gains (losses) on available-for-sale marketable securities		-		-		-		-		-			-		-			(13,768	)		(13,768	)

BALANCE – MARCH 31, 2009		17,426,661	$	17,427		1,285,000	$	1,285	$	(11,266	)	$	3,438,677	$	1,022,318		$	(27,378	)	$	4,441,063

See notes to financial statements

JANEL WORLD TRADE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY



	CAPITAL STOCK				PREFERRED STOCK				TREASURY			ADDITIONAL PAID-IN		RETAINED			ACCUMULATED OTHER COMPREHENSIVE
	SHARES		$		SHARES		$		STOCK			CAPITAL		EARNINGS			GAIN (LOSS)			TOTAL

BALANCE – SEPTEMBER 30, 2007		17,043,000	$	17,043		1,000,000	$	1,000	$	(65,812	)	$	1,416,558	$	3,090,470		$	11,660		$	4,470,919

Net income		-		-		-							-		(140,771	)		-			(140,771	)

Convertible preferred stock issuance		-		-		285,000		285		-			1,424,715		-			-			1,425,000

Dividends to preferred shareholders		-		-		-		-		-			-		(7,500	)		-			(7,500	)

Other comprehensive gains (losses):
Unrealized gains (losses) on available-for-sale marketable securities		-		-		-		-		-			-		-			(15,150	)		(15,150	)

BALANCE – MARCH 31, 2008		17,043,000	$	17,043		1,285,000	$	1,285	$	(65,812	)	$	2,841,273	$	2,942,199		$	(3,490	)	$	5,732,498

See notes to financial statements

JANEL WORLD TRADE, LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	SIX MONTHS ENDED MARCH 31,
	2009			2008
OPERATING ACTIVITIES:
Net loss	$	(400,225	)	$	(140,771	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		246,684			387,282
Amortization of imputed interest		23,430			-
Deferred income taxes		(192,000	)		(67,000	)
Changes in operating assets and liabilities:
Accounts receivable		2,000,236			(77,366	)
Loans receivable		-			(11,810	)
Prepaid expenses and sundry current assets		7,665			11,714
Accounts payable and accrued expenses		(1,437,917	)		(803,230	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		247,873			(701,181	)

INVESTING ACTIVITIES:
Acquisition of intangible assets		-			(2,173,313	)
Acquisition of property and equipment		(12,238	)		(189,297	)
Purchase of marketable securities		(245	)		(6,434	)
NET CASH USED IN INVESTING ACTIVITIES		(12,483	)		(2,369,044	)

FINANCING ACTIVITIES:
Proceeds received from bank loan		-			1,700,000
Repayment of long-term debt		(192,767	)		-
Repayment (issuance) of loans receivable		2,407			(1,893	)
Repurchase of treasury stock		(8,523	)		-
Repayment of loans payable – related party		(140,399	)		-
Issuance of long-term debt		-			500,000
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(339,282	)		2,198,107

DECREASE IN CASH AND CASH EQUIVALENTS		(103,892	)		(872,118	)
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD		2,428,098			2,469,727
CASH AND CASH EQUIVALENTS – END OF PERIOD	$	2,324,206		$	1,597,609

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	42,855		$	63,120
Income taxes	$	76,973		$	151,448
Non-cash financing activities:
Unrealized loss on marketable securities	$	(13,768	)	$	(15,150	)
Dividends declared to preferred stockholders	$	(7,500	)	$	(7,500	)
Issuance of convertible preferred stock and note payable in connection with business acquisition	$	-		$	1,550,000

See notes to financial statements

JANEL WORLD TRADE, LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2009

(Unaudited)

1	BASIS OF PRESENTATION

The attached consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. As a result, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The Company believes that the disclosures made are adequate to make the information presented not misleading. The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company=s Form 10-K as filed with the Securities and Exchange Commission on or about January 14, 2009.

2	BUSINESS SEGMENT INFORMATION

The Company is organized into two reportable segments, full service cargo transportation logistics management and computer software sales, support and maintenance.

Six Months Ended March 31, 2009	Consolidated			Transportation Logistics			Computer Software

Total revenues	$	38,417,901		$	38,258,193		$	159,708
Net revenues	$	4,329,226		$	4,169,518		$	159,708
Operating income (loss)	$	(456,922	)	$	(116,411	)	$	(340,511	)
Identifiable assets	$	11,300,823		$	9,933,727		$	1,367,096
Capital expenditures	$	12,240		$	10,702		$	1,538
Depreciation and amortization	$	270,114		$	144,756		$	125,358
Equity	$	4,441,063		$	7,769,264		$	(3,328,201	)

Six Months Ended March 31, 2008	Consolidated			Transportation Logistics		Computer Software

Total revenues	$	38,349,307		$	38,031,108	$	318,199
Net revenues	$	4,865,864		$	4,547,665	$	318,199
Operating income (loss)	$	(124,566	)	$	323,183	$	(447,749	)
Identifiable assets	$	11,373,020		$	7,623,097	$	3,749,923
Capital expenditures	$	189,297		$	22,816	$	166,481
Depreciation and amortization	$	387,282		$	47,077	$	340,205
Equity	$	5,732,498		$	6,180,247	$	(447,749	)

Three Months Ended March 31, 2009	Consolidated			Transportation Logistics			Computer Software

Total revenues	$	17,151,773		$	17,115,139		$	36,634
Net revenues	$	2,039,786		$	2,003,152		$	36,634
Operating income (loss)	$	(360,818	)	$	(147,870	)	$	(212,948	)
Identifiable assets	$	11,300,823		$	9,933,727		$	1,367,096
Capital expenditures	$	7,315		$	5,777		$	1,538
Depreciation and amortization	$	135,235		$	72,534		$	62,701
Equity	$	4,441,063		$	7,769,264		$	(3,328,201	)

Three Months Ended March 31, 2008	Consolidated			Transportation Logistics		Computer Software

Total revenues	$	18,281,961		$	18,219,061	$	62,900
Net revenues	$	2,346,981		$	2,284,081	$	62,900
Operating income (loss)	$	(181,097	)	$	499,122	$	(318,025	)
Identifiable assets	$	11,373,020		$	7,623,097	$	3,749,923
Capital expenditures	$	17,801		$	16,437	$	1,364
Depreciation and amortization	$	194,146		$	24,010	$	170,136
Equity	$	5,732,498		$	6,180,247	$	(447,749	)

3	LONG-TERM DEBT

Long-term debt consists of the following:

	March 31, 2009		September 30, 2008

Term loan payable in monthly installments of $20,238, plus interest at the bank’s prime rate plus .75% per annum, or LIBOR plus 2% per annum with a final payment April 1, 2013. The loan is collateralized by substantially all assets of the Company and is personally guaranteed by certain stockholders of the Company.	$	1,497,619	$	1,619,048

Non-interest bearing note payable of $435,000 due in July 2009 and July 2011 net of imputed interest.		798,394		774,964

Term loan payable in monthly installments of $13,889, plus interest at a bank’s prime rate minus .50% per annum. The loan is collateralized by substantially all assets of a subsidiary of the Company.		430,555		500,000

Other		640		2,533
		2,727,208		2,896,545
Less current portion		807,970		786,308
	$	1,919,238	$	2,110,237

These obligations mature as follows:

2009	$	807,970
2010		381,996
2011		768,193
2012		242,856
2013		242,856
Thereafter		283,337
	$	2,727,208

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward Looking Statements

The statements contained in all parts of this document that are not historical facts are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, those relating to the following: the effect and benefits of the Company’s reverse merger transaction; Janel’s plans to reduce costs (including the scope, timing, impact and effects thereof); potential annualized cost savings; plans for direct entry into the trucking and warehouse distribution business (including the scope, timing, impact and effects thereof); the Company's ability to improve its cost structure; plans for opening additional domestic and foreign branch offices (including the scope, timing, impact and effects thereof); the sensitivity of demand for the Company's services to domestic and global economic and political conditions; expected growth; future operating expenses; future margins; fluctuations in currency valuations; fluctuations in interest rates; future acquisitions and any effects, benefits, results, terms or other aspects of such acquisitions; ability to continue growth and implement growth and business strategy; the ability of expected sources of liquidity to support working capital and capital expenditure requirements; future expectations and outlook and any other statements regarding future growth, cash needs, operations, business plans and financial results and any other statements that are not historical facts.

When used in this document, the words "anticipate," "estimate," "expect," "may," "plans," "project," and similar expressions are intended to be among the statements that identify forward-looking statements. Janel’s results may differ significantly from the results discussed in the forward-looking statements. Such statements involve risks and uncertainties, including, but not limited to, those relating to costs, delays and difficulties related to the Company's dependence on its ability to attract and retain skilled managers and other personnel; the intense competition within the freight industry; the uncertainty of the Company's ability to manage and continue its growth and implement its business strategy; the Company's dependence on the availability of cargo space to serve its customers; effects of regulation; its vulnerability to general economic conditions and dependence on its principal customers; accuracy of accounting and other estimates; risk of international operations; risks relating to acquisitions; the Company's future financial and operating results, cash needs and demand for its services; and the Company's ability to maintain and comply with permits and licenses; as well as other risk factors described in Janel’s Annual Report on Form 10-K filed with the SEC on January 15, 2009. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those projected.

Overview

The following discussion and analysis addresses the results of operations for the three and six months ended March 31, 2009, as compared to the results of operations for the three and six months ended March 31, 2008. The discussion and analysis then addresses the liquidity and financial condition of the Company, and other matters.

Results of Operations

Janel operates its business as two reportable segments comprised of: 1) full-service cargo transportation logistics management, including freight forwarding – via air, ocean and land-based carriers – customs brokerage services, warehousing and distribution services, and other value-added logistics services, and 2) computer software sales, support and maintenance.

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Revenue. Revenue for the second quarter of fiscal 2009 was $17,151,773, as compared to $18,281,961 for the same period of fiscal 2008, a year-over-year decrease of $(1,130,188), or (6.2)%. For the three months of fiscal 2009, transportation logistics accounted for revenue of $17,115,139, while computer software revenue was $36,634, generated during the quarter from the Company’s October 18, 2007 acquisition of certain assets of World Logistics, Inc. (formerly named "Order Logistics Inc"). The decreased level of transportation logistics revenue reflected the relative weakening of the U.S. economy year-over-year, and the consequent softening of shipping activity by existing customers between the two periods. Computer software-related revenue during the period was also negatively affected from the Company’s earlier closing of former World Logistics operations in South Carolina, which were then consolidated into the Company’s Chicago operations, and from the continuing cutbacks the Company has made in that business segment.

Forwarding Expense. Forwarding expense is primarily comprised of the fees paid by Janel directly to cargo carriers to handle and transport its actual freight shipments on behalf of its customers between initial and final terminal points. Forwarding expense also includes any duties and/or trucking charges related to the shipments. As a general rule, revenue received by the Company for shipments via ocean freight are marked up at a lower percentage versus their related forwarding expense than are shipments via airfreight, i.e., forwarding expense as a percentage of revenue is generally higher (and the Company earns less) for ocean freight than for airfreight.

For the second quarter of fiscal 2009, forwarding expense decreased by $822,993, or 5.2%, to $15,111,987, as compared to $15,934,980 for the second quarter of fiscal 2008. The percentage decrease in forwarding expense was less than the percentage decrease in transportation logistics revenue, down (6.1)% year-over-year, yielding a unfavorable increase of 0.9 percentage points in the measure of forwarding expense as a percentage of revenue to 88.1% in the second quarter of fiscal 2009, from 87.2% for the second fiscal quarter of 2008. This is principally the result of ocean freight shipments in the fiscal 2009 quarter accounting for a higher proportion of the overall shipping activity (versus airfreight) as compared to the fiscal 2008 quarter.

Selling, General and Administrative Expense. Selling, general and administrative expense in second quarter of fiscal 2009 decreased by $55,192, or 2.3%, to $2,311,073, as compared to $2,366,265 in the second quarter of fiscal 2008. The year-over-year absolute dollar decrease in SG&A primarily resulted from cutbacks made as part of the Company’s ongoing austerity program, during which personnel positions have been eliminated, workweek reductions have been implemented and all additional overhead expenses have been tightly monitored. In addition, the Company paid lower aggregate commissions commensurate with the quarter’s lower level of transportation revenue. Nonetheless, primarily because of the lower revenue base, SG&A as a percentage of revenue increased by 53 basis points from 12.94% in the second quarter of fiscal 2008 to 13.47% in the second quarter of fiscal 2009.

Income (Loss) Before Taxes. Janel’s results declined from a loss before taxes of $(198,920) in the second quarter of fiscal 2008 to a loss before taxes of $(404,735) in the second quarter of fiscal 2009. Second quarter 2009 charges of $89,531 related to amortization of intangible assets pertaining essentially to the Company’s asset acquisition in October 2007, and interest expense during the fiscal 2009 second quarter of $51,421, pertaining principally to acquisition financing, partially accounted for the reported quarterly pretax loss.

Income Taxes. The effective income tax rate in both the 2009 and 2008 fiscal periods reflects the U.S. federal statutory rate and applicable state income taxes.

Net Income (Loss). Net loss available to common shareholders for the second quarter of fiscal 2009 was $(288,485), or $(0.02) per fully diluted share, as compared to net loss available to common shareholders of $(166,570), or $(0.0096) per fully diluted share, in the second quarter of fiscal 2008. The same principal factors as described above for the second fiscal quarter 2009 loss before taxes contributed to the period’s net loss.

Six Months Ended March 31, 2009 Compared to Six Months Ended March 31, 2008

Revenue. Revenue for the six months ended March 31, 2009 was $38,417,901, as compared to $38,349,307 for the same period of fiscal 2008, a year-over-year increase of $68,594, or 0.2%. The higher level of revenue primarily reflected a small aggregate net year-over-year gain as the higher year-over-year first-quarter revenue was not entirely offset by the second quarter’s year-over-year revenue decline resulting from the reduced level of shipping activity as a consequence of the weakness in the U.S. economy. For the six months of 2009, transportation logistics accounted for revenue of $38,258,193, while computer software revenue was $159,708.

Forwarding Expense. For the six months ended March 31, 2009, forwarding expense was $34,088,675, as compared to $33,483,443 for the same period of fiscal 2008, a year-over-year increase of $605,232, or 1.8%. The percentage increase was greater than the increase in transportation logistics revenue, up 0.6%, for the six months ended March 31, 2009 as compared to fiscal 2008, resulting in forwarding expense as a percentage of revenue climbing marginally to 88.7% as compared to the year-earlier 87.3%, a worsening of 1.4 percentage points. This is principally the result of ocean freight shipments (with lower margins) in the fiscal 2009 six months accounting for a higher proportion (versus airfreight) of the half’s overall shipping activity than in the prior year six months.

Selling, General and Administrative Expense. For the six-month periods ended March 31, 2009 and 2008, selling, general and administrative expenses were $4,607,086 (11.99% of revenue) and $4,666,805 (12.17%), respectively. This represents a year-over-year decrease of $59,719, or 1.3%. The year-over-year absolute dollar decrease in SG&A primarily reflects second quarter savings as a result of cutbacks made as part of the Company’s ongoing austerity program, during which personnel positions have been eliminated, workweek reductions have been implemented and all additional overhead expenses have been tightly monitored.

Income (Loss) Before Taxes. Janel reported a loss before taxes of $(555,225) for the six months ended March 31, 2009 as compared to loss before taxes of $(158,771) for the six months ended March 31, 2008. First half 2009 charges, which included $179,062 related to amortization of intangible assets, which pertained essentially to the Company’s asset acquisition in October 2007 and interest expense of $109,683, pertaining principally to acquisition financing, accounted for approximately half the reported six-months’ pretax loss.

Income Taxes. The effective income tax rate in both the 2009 and 2008 fiscal periods reflects the U.S. federal statutory rate and applicable state income taxes.

Net Income. Janel reported net loss available to common shareholders for the six months ended March 31, 2009 of $(407,725), or $(0.02) per diluted share, down an additional $259,454 as compared to a net loss available to common shareholders of $(148,271), or $(0.0086) per diluted share, for the six months ended March 31, 2008. The same principal factors as described above for the first half 2009 loss before taxes contributed to the period’s net loss.

Liquidity and Capital Resources

Janel’s ability to meet its liquidity requirements, which include satisfying its debt obligations and funding working capital, day-to-day operating expenses and capital expenditures depends upon its future performance, and is subject to general economic conditions and other factors, some of which are beyond its control.

As of March 31, 2009 and compared with the year-earlier figure, the Company has increased its cash and cash equivalents by $726,597, or 45.5%, to $2,324,206 from $1,597,609, respectively. During the six months ended March 31, 2009, Janel’s net working capital (current assets minus current liabilities) decreased by $578,567, or 21.8%, from $2,651,109 at September 30, 2008, to $2,072,542 at March 31, 2009. This decline reflected decreases in cash and cash equivalents and accounts receivable of approximately $104,000 and $2,000,000, respectively, and an increase in accrued expenses and taxes payable of approximately $142,000, only partially offset by lower accounts payable of approximately $1,713,000. Janel’s cash flow performance for the six months is not necessarily indicative of future cash flow performance.

In July 2005, Janel decreased its line of credit from $3,000,000 to $1,500,000, because cash flow had become adequate for financing its receivables, and because it obtained a reduced interest rate. During the first quarter of fiscal 2008, to help finance the Company’s acquisition of certain assets of Order Logistics, Inc., the Company borrowed $1,700,000 (including a temporary increase of $200,000) under this existing line of credit. The $1,700,000 was then converted to a term loan bearing interest at prime plus three-quarters of one percent (0.75%) per annum and collateralized by substantially all assets of Janel and personal guarantees of certain shareholders of the Company. The Company also issued a note payable in the amount of $125,000. In addition, Janel entered into a term loan agreement with a different bank in the amount of $500,000 (approximately $430,600 of which was outstanding as of March 31, 2009) bearing interest at prime minus one-half of one percent (0.50%) per annum and collateralized by substantially all the assets of a subsidiary of the Company. The Company then renewed its line of credit with the bank for $1,500,000. Advances under this facility bear interest at prime minus three-quarters of one percent (0.75%). As of March 31, 2009, borrowings under this credit line totaled $750,000. To finance the acquisition of certain assets of Ferrara International Logistics, Inc. the Company issued a non-interest bearing note payable, net of imputed interest, with payments of $435,000 in July 2009 and July 2011.

Management believes that anticipated cash flow is sufficient to meet its current working capital and operating needs. However, the Company is also proceeding with its comprehensive growth strategy for fiscal 2009 and beyond, which encompasses a number of potential elements, as discussed below under “Current Outlook.” To successfully execute several of these growth strategy elements in the coming months, the Company may need to secure additional financing estimated at up to $10,000,000. There is no assurance that such additional capital as necessary to execute the Company’s business plan and intended growth strategy will be available or, if available, will be extended to the Company at mutually acceptable terms.

Current Outlook

Janel is primarily engaged in the business of providing full-service cargo transportation logistics management, including freight forwarding via air, ocean and land-based carriers, customs brokerage services, warehousing and distribution services, and other value-added logistics services and in the business of computer software sales, support and maintenance. Its results of operations are affected by the general economic cycle, particularly as it influences global trade levels and specifically the import and export activities of Janel’s various current and prospective customers.

Historically, the Company’s quarterly results of operations have been subject to seasonal trends which have been the result of, or influenced by, numerous factors including climate, national holidays, consumer demand, economic conditions, the growth and diversification of its international network and service offerings, and other similar and subtle forces.

Management has been engaged in reviewing the profitability of various customer accounts with a view toward eliminating accounts which are only marginally profitable, and focusing on accounts that are more profitable, with a view to increasing its overall profit margin. Based upon the results for the six months ended March 31, 2009, and its current expectations for the remainder of fiscal 2009, Janel projects that gross revenue from its currently existing accounts and businesses for its fiscal year ending September 30, 2009, will approximate the level reported for fiscal 2008. The Company expects to revisit its full-year projection subsequent to the end of its fiscal third quarter ended September 30, 2009.

Janel is continuing to implement its business plan and strategy to increase revenue and profitability through its fiscal year ending September 30, 2009 and beyond. The Company’s strategy, some of which has been implemented, includes plans to: open additional branch offices both domestically and in Southeast Asia; increase profit margins by avoiding low-margin business; introduce additional revenue streams for its existing headquarters and branch locations; proceed with negotiations and due diligence with privately held transportation-related firms which may ultimately lead to their acquisition by the Company; expand its existing sales force by hiring additional commission-only sales representatives with established customer bases; increase its focus on growing revenue related to export activities; evaluate direct entry into the trucking and warehouse distribution business as a complement to the services already provided to existing customers; and continue its efforts to reduce current and prospective overhead and operating expenses, particularly with regard to the efficient integration of any additional offices or acquisitions.

Certain elements of the Company’s growth strategy, principally proposals for acquisition, are contingent upon the availability of adequate financing at terms acceptable to the Company. The Company is continuing in its efforts to secure long-term financing, but has to date been unable to complete any such financing transactions at terms it deems acceptable, and cannot presently anticipate when or if financing on acceptable terms will become available. Therefore, the implementation of significant aspects of the Company’s strategic growth plan may be deferred beyond the originally anticipated timing.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Since future events and their effects cannot be determined with absolute certainty, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and such difference may be material to the financial statements. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources, primarily allowance for doubtful accounts, accruals for transportation and other direct costs, and accruals for cargo insurance. Management bases its estimates on historical experience and on various assumptions which are believed to be reasonable under the circumstances. We reevaluate these significant factors as facts and circumstances change. Historically, actual results have not differed significantly from our estimates. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2008.

Management believes that the nature of the Company’s business is such that there are few, if any, complex challenges in accounting for operations. Revenue recognition is considered the critical accounting policy due to the complexity of arranging and managing global logistics and supply-chain management transactions.

Revenue Recognition

A. Full-Service Cargo Transportation Logistics Management

Revenues are derived from airfreight, ocean freight and custom brokerage services. The Company is a non-asset-based carrier and accordingly does not own transportation assets. The Company generates the major portion of its air and ocean freight revenues by purchasing transportation services from direct carriers (airlines, steam ship lines, etc.) and reselling those services to its customers. By consolidating shipments from multiple customers and availing itself of its buying power, the Company is able to negotiate favorable rates from the direct carriers, while offering to its customers lower rates than the customers could obtain themselves.

Airfreight revenues include the charges for carrying the shipments when the Company acts as a freight consolidator. Ocean freight revenues include the charges for carrying the shipments when the Company acts as a Non-Vessel Operating Common Carrier (NVOCC). In each case, the Company is acting as an indirect carrier. When acting as an indirect carrier, the Company will issue a House Airway Bill (HAWB) or a House Ocean Bill of Lading (HOBL) to customers as the contract of carriage. In turn, when the freight is physically tendered to a direct carrier, the Company receives a contract of carriage known as a Master Airway Bill for airfreight shipments and a Master Ocean Bill of Lading for ocean shipments. At this point the risk of loss passes to the carrier, however, in order to claim for any such loss, the customer is first obligated to pay the freight charges.

Based upon the terms in the contract of carriage, revenues related to shipments where the Company issues a HAWB or a HOBL are recognized at the time the freight is tendered to the direct carrier. Costs related to the shipments are recognized at the same time.

Revenues realized when the Company acts as an agent for the shipper and does not issue a HAWB or a HOBL include only the commission and fees earned for the services performed. These revenues are recognized upon completion of the services.

Customs brokerage and other services involve providing multiple services at destination including clearing shipments through customs by preparing required documentation, calculating and providing for payment of duties and other charges on behalf of the customers, arranging for any required inspections, and arranging for final delivery. These revenues are recognized upon completion of the services.

The movement of freight may require multiple services. In most instances the Company may perform multiple services including destination break-bulk and value added services such as local transportation, distribution services and logistics management. Each of these services has separate fee that is recognized as revenue upon completion of the service.

Customers will frequently request an all-inclusive rate for a set of services that is known in the industry as “door-to-door services.” In these cases, the customer is billed a single rate for all services from pickup at origin to delivery. The allocation of revenue and expense among the components of services when provided under an all inclusive rate are done in an objective manner on a fair value basis in accordance with Emerging Issues Task Force (EITF) 00-21, “Revenue Arrangements with Multiple Deliverables.”

B. Computer Software Sales, Support and Maintenance

The Company recognizes revenue, including multiple element arrangements, in accordance with the provisions of the SEC's Staff Accounting bulletin ("SAB") No. 104, Revenue Recognition, and the Financial Accounting Standards Board's ("FASB"), and EITF 00-21, Revenue Agreements with Multiple Deliverables. Revenue from the sale of the Company's products and services are recognized when persuasive evidence of an arrangement exists, delivery has occurred (or services have been rendered), the price is fixed or determinable, and collectability is reasonably assured. Amounts billed in excess of revenue recognized are recorded as deferred revenue in the balance sheet.

Estimates

While judgments and estimates are a necessary component of any system of accounting, the Company’s use of estimates is limited primarily to the following areas that in the aggregate are not a major component of the Company’s consolidated statements of income:

accounts receivable valuation;

the useful lives of long-term assets;

the accrual of costs related to ancillary services the Company provides; and

accrual of tax expense on an interim basis.

Management believes that the methods utilized in all of these areas are non-aggressive in approach and consistent in application. Management believes that there are limited, if any, alternative accounting principles or methods which could be applied to the Company’s transactions. While the use of estimates means that actual future results may be different from those contemplated by the estimates, the Company believes that alternative principles and methods used for making such estimates would not produce materially different results than those reported.

Item 3 Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

We maintain a system of disclosure controls and procedures that is designed to provide reasonable assurance that information, which is required to be disclosed by the Company in the reports that it files or submits under the Securities and Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and is accumulated and communicated to management in a timely manner. Our Chief Executive Officer and Chief Financial Officer have evaluated this system of disclosure controls and procedures as of the end of the period covered by this quarterly report, and concluded that the system is effective. There have been no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

On February 11, 2008, Janel filed a lawsuit in the United States District Court for the Southern District of New York against World Logistics Services, Inc. (“World Logistics”), Richard S. Francis ("Francis”), the former President of World Logistics, and Brian P. Griffin (“Griffin”), who was the Chief Executive Officer of World Logistics in October 2007 when Janel completed an acquisition of certain World Logistics assets consisting of proprietary technology, intellectual property, office equipment, and customer lists for Janel's exclusive use in the management and expansion of Janel’s international integrated logistics transport services business. The technology was acquired by Janel to enable it to integrate the tracking of all of the different aspects of the production, movement and delivery of goods, making the entire process electronically visible in “real time” by both its managers and clients.

The company's complaint alleges that the defendants committed securities fraud in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and common law fraud, conversion, unjust enrichment, and breach of the covenant of good faith and fair dealing, all in violation of New York State Law.

In May 2008, the defendants filed a motion to dismiss the case based upon the defendants' claim that the complaint "fails to state a claim upon which relief may be granted." The company filed a brief opposing the defendants' motion. In March 2009, the court entered an order denying the defendants motions to dismiss in their entirety. In April 2009 the defendants filed answers to the company's complaint, and counterclaimed that the company breached agreements and withheld payments due to the defendants. In May 2009, the company filed replies denying each of the counterclaims as meritless.

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.

(a) Not applicable.

(c)

ISSUER PURCHASES OF EQUITY SECURITIES
Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs

Month #1 (identify beginning and ending dates)		1-1-09/1-31-09	-0-			-0-		147,824
		-0-

Month #2 (identify beginning and ending dates)		2-1-09/2-28-09		-0-		-0-		147,824
		-0-

Month #3 (identify beginning and ending dates)		3-1-09/3-31-09		-0-		-0-		147,824
		-0-

Total		-0-		-0-		-0-		147,824

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders.

There were no matters submitted to a vote of shareholders during the first fiscal quarter ended March 31, 2009.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits required by item 601 of Regulation S-K.

Exhibit
Number		Description of Exhibit

31		Rule 13(a)-14(a)/15(d)-14(a) Certifications.

32		Section 1350 Certification.

(b) Reports on Form 8-K. The Company filed a report on Form 8-K during the second fiscal quarter ended March 31, 2009 on January 28, 2009.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

December 10, 2010

JANEL WORLD TRADE, LTD.

By:	/s/ James N. Jannello
	James N. Jannello
	Chief Executive Officer

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