10-K 1 v363466_10k.htm FORM 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x	Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended September 30, 2013 or
¨	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to ________.

Commission file number: 333-60608

JANEL WORLD TRADE, LTD.

(Exact name of registrant as specified in its charter)

NEVADA		86-1005291
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

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

Registrant’s telephone number, including area code		(718) 527-3800

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
None	None

Securities registered pursuant to Section 12(g) of the Act:

Title of Class

Common Stock, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Act). Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or other information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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

Large Accelerated Filer ¨ Accelerated Filer ¨ Non-Accelerated Filer ¨ Smaller Reporting Company x

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

The aggregate market value of Common Stock, $0.001 par value, held by non-affiliates of the registrant based on the closing sales price of the Common Stock on the Over-The-Counter (OTC) market on March 31, 2013, was $464,499.

The number of shares of Common Stock outstanding as of December 26, 2013 was 27,710,214.

JANEL WORLD TRADE, LTD.

2013 ANNUAL REPORT ON FORM 10-K

Table of Contents

		Page

	PART I

Item 1.	Business	2
Item 1A.	Risk Factors	6
Item 1B.	Unresolved Staff Comments	9
Item 2.	Properties	9
Item 3.	Legal Proceedings	10

	PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	12
Item 7.	Management’s Discussion and Analysis of Financial Conditions and Results of Operations	13
Item 8.	Financial Statements and Supplementary Data	18
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	18
Item 9A.	Controls and Procedures	18
Item 9B.	Other Information	19

	PART III

Item 10.	Directors, Executive Officers and Corporate Governance	20
Item 11.	Executive Compensation	23
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	25
Item 13.	Certain Relationships, Related Transactions and Director Independence	26
Item 14.	Principal Accountant Fees and Services	27

	PART IV

Item 15.	Exhibits and Financial Statement Schedules	29

	Signatures	31

PART I

ITEM 1. BUSINESS

Background

Janel World Trade, Ltd. (“we”, “the Company” or “Janel”) provides logistics services for importers and exporters worldwide, through its wholly owned subsidiaries. Our principal executive office is located at 150-14 132^nd Avenue, Jamaica, NY 11434, adjacent to the John F. Kennedy International Airport, and our telephone number is 718-527-3800. Information about us may be obtained from our website www.janelgroup.net. Copies of our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, are available free of charge on the website as soon as they are filed with the Securities and Exchange Commission (SEC) through a link to the SEC’s EDGAR reporting system. Simply select the “Investors” menu item, and then click on the “SEC Filings” link. The SEC’s EDGAR reporting system can also be accessed directly at www.sec.gov. The Company was incorporated in Nevada in August 2000 as the successor to operations commenced in 1975 – see history, below.

As previously reported, on August 30, 2013, the Company, and its wholly-owned subsidiary, The Janel Group of New York, Inc. sold to Allports Logistics Anchor Wharehouse, LLC, an entity affiliated with Nicholas V. Ferrara, a former director of the Company, certain of the Seller’s assets used by Janel in the Company’s Hillside, New Jersey freight forwarding and logistics operations. The Company had originally acquired its New Jersey operations from an affiliate of Mr. Ferrara in two transactions in 2008 and 2010. The purchase price for the sale to the Purchaser of the New Jersey assets consisted of $401,067 in cash, and the assumption of all future lease obligations with respect to the three office and warehouse facilities from which the Company conducted its New Jersey operations. Janel used the cash portion of the purchase price to repay outstanding obligations secured by the New Jersey assets, including the $229,241 outstanding balance on the Seller’s term loan from Community National Bank, and an aggregate $58,245 on two outstanding equipment financing arrangements. Simultaneously with the closing, Mr. Ferrara paid the Company $110,000 for the release of restrictions on competition which were agreed to as part of the 2008 portion of the acquisition of the New Jersey business.

Also as previously reported, on October 30, 2013, subsequent to the period covered by this report, the Company sold to Oaxaca Group LLC, an aggregate 7,692,308 shares of Janel’s Common Stock at a purchase price of $0.065 per share, or an aggregate of $500,000. As part of the purchase, the investor received warrants to purchase an aggregate 12,500,000 shares of Common Stock at $0.08 per share. In addition, the Company agreed that, at the investor’s option, the Company will present two nominees nominated by the investor to become members of the Company’s Board of Directors, and from and after such time the size of the Company’s Board of Directors will be limited to no more than four members, unless approved by the investor. In conjunction with the closing of the transaction, options to purchase 4,750,000 shares were granted to key employees of the Company.

Description of Business

Our traditional freight forwarding and customs brokerage activities include various value-added logistics services, such as freight consolidation, insurance, a direct client computer access interface, logistics planning, landed-cost calculations, in-house computer tracking, product repackaging, online shipment tracking and electronic billing. The value-added services and systems are intended to help our customers streamline operations, reduce inventories, increase the speed and reliability of worldwide deliveries and improve the overall management and efficiency of the customer’s supply-chain activities.

We operate out of five leased locations in the United States: Jamaica (headquarters) and Lynbrook (accounting) in New York; Elk Grove Village (Chicago, Illinois); Forest Park (Atlanta, Georgia) and Inglewood (Los Angeles, California). Each Janel office is managed independently, with each manager having over 20 years experience with the Company. Janel Shanghai, Janel Hong Kong and Janel China (Shenzhen) operate as independently owned franchises within the Company’s network.

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Janel conducts its business through a network of Company-operated facilities and independent agent relationships in most trading countries. During fiscal 2013 (Janel’s fiscal year ends September 30), the Company handled approximately 39,000 individual import and export shipments, predominately originating or terminating in the United States, Europe and the Far East. Janel generated gross revenue of approximately $44.7 million in fiscal 2013 and $49.8 million in fiscal 2012. In fiscal 2013, approximately 67% of revenue related to import activities, 7% to export, 22% to break-bulk and forwarding, and 4% to warehousing, distribution and trucking.

History

Janel commenced business in 1975 as Janel International Forwarding Company, Inc., a New York corporation. In 1976, the “Janel Group” was established in New York City as a company primarily focused on quality import customs brokerage and related transportation services. Janel’s initial customer base consisted of importers and exporters of machines and machine parts, principally through what was then West Germany. Shortly thereafter, the Company began expanding its business scope into project transportation and high-value general cargo forwarding. In 1979, Janel expanded to the Midwest and West Coast, opening branches in Chicago and Los Angeles, respectively. Additional locations were opened in Atlanta (1995) and Miami (franchise agent) (1997). In 1980, C and N Corp. was organized as a Delaware corporation to be the corporate parent of the various Janel Group operating subsidiaries.

In 1990, Janel agreed to the use of its name by a Bangkok, Thailand office to facilitate business operations during 1990 and 1992 in which it serviced a United States cellular communications carrier. In 1997, Janel designed and manufactured (through a subcontractor) electronic switching equipment shelters, which it sold to the carrier together with consulting services on transportation logistics and coordination for construction of cellular telephone sites in Thailand.

In 2000, Janel opened the office in Shanghai, China, followed by the opening of the Hong Kong office in 2001 and the opening of an office in Shenzhen, China in 2003. These offices utilize the Janel name but are independently owned and operated by non-related third parties.

In June and July 2002, the corporate parent, C and N Corp., entered into and completed a reverse merger transaction with Wine Systems Design, Inc. in which it formally changed its state of incorporation from Delaware to Nevada, changed its corporate name to Janel World Trade, Ltd. and became a public company traded on the Nasdaq Bulletin Board under the symbol “JLWT.”

Operations

Freight Forwarding Services. As a cargo freight forwarder, Janel procures shipments from its customers, consolidates shipments bound for a particular destination from a common place of origin, determines the routing over which the consolidated shipment will move, selects a carrier (air, ocean, land) serving that route on the basis of departure time, available cargo capacity and rate, and books the consolidated shipment for transportation with the selected carrier. In addition, Janel prepares all required shipping documents, delivers the shipment to the transporting carrier and, in many cases, and arranges clearance of the various components of the shipment through customs at the final destination. If so requested by its customers, Janel will also arrange for delivery of the individual components of the consolidated shipment from the arrival terminal to their intended consignees.

As a result of its consolidation of customer shipments and its ongoing volume relationships with numerous carriers, a freight forwarder is usually able to obtain lower rates from such carriers than its customers could obtain directly. Accordingly, a forwarder is generally able to offer its customers a lower rate than would otherwise be available directly to the customer, providing the forwarder with its profit opportunity as an intermediary between the carrier and end-customer. The forwarder’s gross profit is represented by the difference between the rate it is charged by the carrier and the rate it, in turn, charges its customer.

In fulfilling its intermediary role, the forwarder can draw upon the transportation assets and capabilities of any individual carrier or combination thereof comprised of airlines and/or air cargo carriers, ocean shipping carriers and land-based carriers, such as trucking companies. Janel solicits freight from its customers to fill containers, charging rates lower than the rates that would be offered directly to its customers for similar type shipments.

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Customs Brokerage Services. As part of its integrated logistics services, Janel provides customs brokerage clearance services in the United States and in most foreign countries. These services typically entail the preparation and assembly of required documentation in many instances (Janel provides in-house translation services into Chinese, Spanish or Italian), the advancement of customs duties on behalf of importers, and the arrangement for the delivery of goods after the customs clearance process is completed. Additionally, other services may be provided such as the procurement and placement of surety bonds on behalf of importers and the arrangement of bonded warehouse services, which allow importers to store goods while deferring payment of customs duties until the goods are delivered.

Janel has over 30 years of experience clearing a wide range of goods through U.S. Customs, from automobiles to heavy machinery to textiles. The Company currently has seven fully licensed customs house brokers on staff. Janel is fully certified with U.S. Customs for both ABI and AES transmissions. The Company has established an active “correspondent Customs House Broker Network” of individuals specially chosen for their ability to service customers throughout those locations in the United States where Janel does not have its own branch office. In addition, the Company regularly works with a group of proven independent attorneys, whose specialization in transportation, U.S. Customs law and classifications has resulted in substantial savings to customers.

Other Logistic Services. In addition to providing air, ocean and land freight forwarding and customs brokerage services, Janel provides its import and export customers with an array of fully integrated global logistics services. These logistics services include warehousing and distribution services, door-to-door freight pickup and delivery, cargo consolidation and de-consolidation, project cargo management, insurance, direct client computer access interface, logistics planning, landed-cost calculations, duty-drawback (recovery of previously paid duties when goods are re-exported), in-house computer tracking, product promotion, product packaging and repackaging utilizing Janel mobile packaging machinery, domestic pickup and forwarding, “hazmat” certifications for hazardous cargoes, letters of credit, language translation services, online shipment tracking and electronic billing.

Information Systems. Janel’s information system hardware consists of an IBM AS 400 system that is utilized by all of its offices in the United States. The Company’s information technology capabilities also include DCS/HBU Logistics software (a fully integrated freight forwarding and financial reporting system), a T-1 online national network, recently acquired Web-based supply-chain technology, and a nationwide in-house e-mail network. These systems enable Janel to perform in-house computer tracking and to offer customers landed-cost calculations and online Internet information availability via the Company’s websites relative to the tracing and tracking of customer shipments. The fully integrated real time performance provides us with accurate and timely financial information.

Customers, Sales and Marketing

While Janel’s customer base represents a multitude of diverse industry groups, the bulk of the Company’s shipments are related to three principal markets: consumer wearing apparel and textiles, machines and machine parts, and household appliances. During fiscal 2013, the Company shipped goods and provided logistics services for approximately 820 individual accounts. Janel markets its global cargo transportation and integrated logistics services worldwide. In markets where the Company does not operate its own facilities, its direct sales efforts are supplemented by the referral of business through one or more of the Company’s franchise or agent relationships. We have two customers that each account for over 10% of our revenues in fiscal 2013: The Conair Corporation (which accounts for approximately 35% of revenue) and H.H. Brown Shoe Company (which accounts for approximately 14% of revenue).

William J. Lally and Vincent Iacopella, the Company’s Chief Executive Officer and Chief Operating Officer, respectively, are principally responsible for the marketing of the Company’s services. Each branch office manager is responsible for sales activities in their U.S. local market area. Janel attempts to cultivate strong, long-term relationships with its customers and referral sources through high-quality service and management.

Competition

Competition within the freight forwarding industry is intense, characterized by low economic barriers to entry resulting in a large number of highly fragmented participants around the world. Janel competes for customers on the basis of its services and capabilities against other providers ranging from multinational, multi-billion dollar firms with hundreds of offices worldwide to regional and local freight forwarders to “mom-and-pop” businesses with only one or a few customers. Many of our customers utilize more than one transportation provider.

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Employees

As of September 30, 2013, Janel employed 52 people; 26 in its Jamaica, New York headquarters, and Lynbrook, New York back office; 10 in Elk Grove Village, Illinois; 4 in Forest Park, Georgia: and 12 in Inglewood, California. Approximately 34 of the Company’s employees are engaged principally in operations, 13 in finance and administration and five in sales, marketing and customer service. Janel is not a party to any collective bargaining agreement and considers its relations with its employees to be good.

Currency Risks

The nature of Janel’s operations requires it to deal with currencies other than the U.S. Dollar. This results in the Company being exposed to the inherent risks of international currency markets and governmental interference. A number of countries where Janel maintains offices or agent relationships have currency control regulations that influence its ability to hedge foreign currency exposure. The Company tries to compensate for these exposures by accelerating international currency settlements among those offices or agents.

Inflation

We do not believe that the relatively moderate rates of inflation in the United States in recent years have had a significant effect on our operations.

Seasonality and Shipping Patterns

Historically, Janel’s quarterly operating results have been subject to seasonal trends. The fiscal first quarter has traditionally been the weakest and the fiscal third and fourth quarters have traditionally been the strongest. This pattern has been the result of, or influenced by, numerous factors including climate, national holidays, consumer demand, economic conditions and other similar and subtle forces. This historical seasonality has also been influenced by the growth and diversification of Janel’s international network and service offerings.

A significant portion of Janel’s revenues are derived from customers in industries with shipping patterns closely tied to consumer demand and from customers with shipping patterns dependent upon just-in-time production schedules. Many of Janel’s customers may ship a significant portion of their goods at or near the end of a quarter. Therefore, the timing of Janel’s revenues are, to a large degree, affected by factors beyond the Company’s control, such as shifting consumer demand for retail goods and manufacturing production delays. The Company cannot accurately forecast many of these factors, nor can it estimate the relative impact of any particular factor and, as a result, there is no assurance that historical patterns will continue in the future.

Environmental Issues

In the United States, Janel is subject to federal, state and local provisions regulating the discharge of materials into the environment or otherwise for the protection of the environment. Similar laws apply in many foreign jurisdictions in which Janel operates. Although current operations have not been significantly affected by compliance with these environmental laws, governments are becoming increasingly sensitive to environmental issues and the Company cannot predict what impact future environmental regulations may have on its business. Janel does not anticipate making any material capital expenditures for environmental control purposes during the remainder of the current or succeeding fiscal years.

Regulation

With respect to Janel’s activities in the air transportation industry in the United States, it is subject to regulation by the Department of Transportation as an indirect air carrier. The Company’s overseas offices and agents are licensed as freight forwarders in their respective countries of operation. Janel is licensed in each of its offices as a freight forwarder by the International Air Transport Association. IATA is a voluntary association of airlines which prescribes certain operating procedures for freight forwarders acting as agents of its members. The majority of the Company’s freight forwarding businesses is conducted with airlines that are IATA members.

Janel is licensed as a customs broker by the Department of Homeland Security Customs and Border Service. All U.S. customs brokers are required to maintain prescribed records and are subject to periodic audits by the Customs Service. In other jurisdictions in which Janel performs clearance services, it is licensed by the appropriate governmental authority.

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Janel is registered as an Ocean Transportation Intermediary and licensed as a NVOCC carrier (non-vessel operating common carrier) by the Federal Maritime Commission. The FMC has established certain qualifications for shipping agents, including certain surety bonding requirements.

Janel does not believe that current U.S. and foreign governmental regulations impose significant economic restraint on its business operations.

Cargo Liability

When acting as an airfreight consolidator, Janel assumes a carrier’s liability for lost or damaged shipments. This legal liability is typically limited by contract to the lower of the transaction value or the released value ($9.07 per pound unless the customer declares a higher value and pays a surcharge), excepted for loss or damages caused by willful misconduct in the absence of an appropriate airway bill. The airline that the Company utilizes to make the actual shipment is generally liable to Janel in the same manner and to the same extent. When acting solely as the agent of an airline or shipper, Janel does not assume any contractual liability for loss or damage to shipments tendered to the airline.

When acting as an ocean freight consolidator, Janel assumes a carrier’s liability for lost or damaged shipments. This liability is strictly limited by contract to the lower of a transaction value or the released value ($500 for package or customary freight unit unless the customer declares a higher value and pays a surcharge). The steamship line which Janel utilizes to make the actual shipment is generally liable to the Company in the same manner and to the same extent. In its ocean freight forwarding and customs clearance operations, Janel does not assume cargo liability.

When providing warehouse and distribution services, Janel limits its legal liability by contract to an amount generally equal to the lower of fair value or $.50 per pound with a maximum of $50 per “lot,” defined as the smallest unit that the warehouse is required to track. Upon payment of a surcharge for warehouse and distribution services, Janel would assume additional liability.

The Company maintains marine cargo insurance covering claims for losses attributable to missing or damaged shipments for which it is legally liable. Janel also maintains insurance coverage for the property of others stored in company warehouse facilities.

ITEM 1A. RISK FACTORS

An investment in our Common Stock is subject to risks inherent to our business. The material risks and uncertainties that management believes affect the Company are described below. Additional risks and uncertainties that management is not aware of or focused on or that management currently deems immaterial may also impair the Company’s business operations.

Risk Factors Relating To Our Business Generally

We face aggressive competition from freight carriers with greater financial resources and with companies that operate in areas that we plan on expanding to in the future.

We face intense competition within the freight industry on a local, regional, national and global basis. Many of our competitors have much larger facilities and far greater financial resources than ours. In the freight forwarding industry, we compete with a large and diverse group of freight forwarding concerns, commercial air and ocean carriers and a large number of locally established companies in geographic areas where we do business or intend to do business in the future. The loss of customers, agents or employees to competitors could adversely impact our ability to maintain profitability.

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Our Ability to Serve Our Customers Depends on the Availability of Cargo Space from Third Parties.

Our ability to serve our customers depends on the availability of air and sea cargo space, including space on passenger and cargo airlines and ocean carriers that service the transportation lanes that we use. Shortages of cargo space are most likely to develop around holidays and in especially heavy transportation lanes. In addition, available cargo space could be reduced as a result of decreases in the number of passenger airlines or ocean carriers serving particular shipment lanes at particular times. This could occur as a result of economic conditions, transportation strikes, regulatory changes and other factors beyond our control. Our future operating results could be adversely affected by significant shortages of suitable cargo space and associated increases in rates charged by passenger airlines or ocean carriers for cargo space.

We intend to continue expansion through acquisition.

We have grown through the acquisitions of other freight forwarders and intend to continue our program of business expansion through acquisitions. There can be no assurance that our:

· financial condition will be sufficient to support the funding needs of an expansion program;

· that acquisitions will be successfully consummated or will enhance profitability; or

· that any expansion opportunities will be available upon reasonable terms.

We expect future acquisitions to encounter risks similar to the risks that past acquisitions have had such as:

	·	difficulty in assimilating the operations and personnel of the acquired businesses;
	·	potential disruption of our ongoing business;
	·	the inability of management to realize the projected operational and financial benefits from the acquisition or to maximize our financial and strategic position through the successful incorporation of acquired personnel and clients;
	·	the maintenance of uniform standards, controls, procedures and policies; and
	·	the impairment of relationships with employees and clients as a result of any integration of new management personnel.

We expect that any future acquisitions could provide for consideration to be paid in cash, stock or a combination of cash and stock. There can be no assurance that any of these acquisitions will be accomplished. If an entity we acquire is not efficiently or completely integrated with us, then our business, financial condition and operating results could be materially adversely affected.

We may not have sufficient working capital to continue operations.

Our cash needs are currently met by our commercial bank credit facilities and cash on hand. Our actual working capital needs for the short and long terms will depend upon numerous factors, including our operating results, the availability of a revolving line of credit, competition, and the cost associated with growing the Company either internally or through acquisition, none of which can be predicted with certainty. If our results of operations and our availability under our bank line of credit are insufficient to meet our cash needs, we will be required to obtain additional investment capital or debt funding to continue operations. On October 30, 2013, subsequent to the period covered by this report, the Company raised $500,000 from the sale of newly issued shares of the Company’s Common Stock at a price of $0.065 per share. The Company also issued five-year warrants to the investor for up to an additional $1,000,000 investment upon exercise for additional newly issued shares of the Company’s common stock at a price of $0.08. We intend to use the proceeds from these sales for general working capital purposes. We are also currently seeking a credit facility to replace our current bank financing. If the investor does not exercise the warrants, and/or the Company is not able to renew the CNB Facility upon acceptable terms to us or obtain replacement financing for the CNB Facility, the Company’s operations will be materially negatively impacted.

Events affecting the volume of international trade and international operations could adversely affect our international operations.

Our international operations are directly related to and dependent on the volume of international trade, particularly trade between the United States and foreign nations. This trade, as well as our international operations, is influenced by many factors, including:

	·	economic and political conditions in the United States and abroad;
	·	major work stoppages;
	·	exchange controls, currency conversion and fluctuations;
	·	war, other armed conflicts and terrorism; and
	·	United States and foreign laws relating to tariffs, trade restrictions, foreign investment and taxation.

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Trade-related events beyond our control, such as a failure of various nations to reach or adopt international trade agreements or an increase in bilateral or multilateral trade restrictions, could have a material adverse effect on our international operations. Our operations also depend on the availability of independent carriers that provide cargo space for international operations.

We are dependent upon key officers.

We believe that our success is highly dependent on the continuing efforts of our President and Chief Executive Officer, William J. Lally, and our Chief Operating Officer, Vincent Iacopella. Mr. Lally, Mr. Iacopella, and certain other key employees. None of our officers or key employees are subject to employment contracts. The loss of the services of any of our key personnel could have a material adverse effect on us.

Economic and other conditions in the markets in which we operate can affect demand for services and results of operations.

Our future operating results are dependent upon the economic environments of the markets in which we operate. Demand for our services could be adversely affected by economic conditions in the industries of our customers. Many of our principal customers are in the fashion, household products, industrial products, computer and electronics industries. Adverse conditions in any one of these industries or loss of the major customers in such industries could have a material adverse impact upon us. We expect the demand for our services (and consequently our results of operations) to continue to be sensitive to domestic and, increasingly, global economic conditions and other factors beyond our control.

In addition, the transport of freight, both domestically and internationally, is highly competitive and price sensitive. Changes in the volume of freight transported, shippers preferences as to the timing of deliveries as a means to control shipping costs, economic and political conditions, both in the United States and abroad, work stoppages, United States and foreign laws relating to tariffs, trade restrictions, foreign investments and taxation may all have significant impact on our overall business, growth and profitability.

Janel’s Officers, Directors and two other shareholder’s control the Company.

The officers and directors, plus two other shareholders of the Company control the vote of approximately 70.2% of the outstanding shares of Common Stock. In addition, options to purchase 4,750,000 shares have been granted to key employees of the Company. As a result, the officers and directors of the Company control the election of the Company’s directors and will have the ability to control the affairs of the Company. Furthermore, a recent investor in the Company has the right to appoint 50% of the members of the Company’s Board of Directors. As a result, these officers, directors and shareholders have controlling influence over, among other things, the ability to amend the Company’s Certificate of Incorporation and By-Laws or effect or preclude fundamental corporate transactions involving the Company, including the acceptance or rejection of any proposals relating to a merger of the Company or an acquisition of the Company by another entity.

Failure to comply with governmental permit and licensing requirements or statutory and regulatory requirements could result in civil and criminal sanctions, fines or revocation of our operating authorities, and changes in these requirements could adversely affect us.

Our operations are subject to various state, local, federal and foreign statutes and regulations prohibiting various activities that in many instances require permits and licenses. Our failure to maintain compliance with applicable law and regulations, required permits or licenses, or to comply with applicable regulations, could result in substantial fines or revocation of our operating authorities. Moreover, government deregulation efforts, “modernization” of the regulations governing customs clearance and changes in the international trade and tariff environment could require material expenditures or otherwise adversely affect us.

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Terrorist attacks and other acts of violence or war may affect any market on which our shares trade, the markets in which we operate, our operations and our profitability.

Terrorist acts or acts of war or armed conflict could negatively affect our operations in a number of ways. Primarily, any of these acts could result in increased volatility in or damage to the U.S. and worldwide financial markets and economy and could lead to increased regulatory requirements with respect to the security and safety of freight shipments and transportation. They could also result in a continuation of the current economic uncertainty in the United States and abroad. Acts of terrorism or armed conflict, and the uncertainty caused by such conflicts, could cause an overall reduction in worldwide sales of goods and corresponding shipments of goods. This would have a corresponding negative effect on our operations. Also, terrorist activities similar to the type experienced on September 11, 2001 could result in another halt of trading of securities, which could also have an adverse affect on the trading price of our shares and overall market capitalization.

Risk Factors Relating to our Articles of Incorporation and our Stock

The liability of our directors is limited.

Our Articles of Incorporation limit the liability of directors to the maximum extent permitted by Nevada law.

It is unlikely that we will issue dividends on our Common Stock in the foreseeable future.

We have never declared or paid cash dividends on our Common Stock and do not intend to pay dividends in the foreseeable future. The payment of dividends in the future will be at the discretion of our board of directors.

Our stock price is subject to volatility.

Our Common Stock trades on the OTC Bulletin Board under the symbol “JLWT”. The market price of our Common Stock has been subject to significant fluctuations. Such fluctuations, as well as economic conditions generally, may adversely affect the market price of our securities.

We have no assurance of a continued public trading market.

Janel’s Common Stock is quoted in the over-the-counter market on the OTC Bulletin Board and is subject to the low-priced security or so-called “penny stock” rules that impose additional sales practice requirements on broker-dealers who sell such securities. For any transaction involving a penny stock, the rules require, among other things, the delivery, prior to the transaction, of a disclosure schedule required by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information for the penny stocks held in the customer’s account. As a result, characterization as a “penny stock” can adversely affect the market liquidity for the securities.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

As of September 30, 2013, Janel leased office and warehouse space in 4 cities located in the United States. The executive offices in Jamaica, New York consist of approximately 5,000 square feet of office space adjoined by 9,000 square feet of warehouse space, all subject to a lease with a term ending January 31, 2015, with an annual base rent of $160,409. Its administrative office in Lynbrook, New York is approximately 1,459 square feet and is occupied under a lease which expires January 31, 2015, with an annual rent of $36,000. Janel’s Elk Grove Illinois office occupied approximately 2,170 square feet with an additional 450 square feet of warehouse space, all subject to a lease with a term ending May 31, 2014, with an annual base rent of $42,000. Janel’s Georgia location occupies approximately 3,000 square feet of office and warehouse space, under a lease which expires on August 31, 2014 with an annual rent of $28,836. Janel’s Los Angeles office occupies approximately 3,000 square feet of office under a lease which expires on June 30, 2016, with an annual rent of $83,100 through May 31, 2014, and increases every eighteen (18) months based upon the CPI with a limit of up to 4.5% per year. Certain of the leases also provide for annual increases based upon increases in taxes or service charges.

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ITEM 3. 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 financial position or results of operations.

Janel and/or one or more of its subsidiaries have been named as a defendant in the following lawsuits involving the Company’s food segment which the Company sold in 2012.

	·	On June 22, 2012 (amended September 5, 2012), Fratelli Masturzo S.R.L., Clematis, S.R.L., Fratelli Longobardi S.R.L. and Pancrazio S.P.A. filed a law suit in the Supreme Court of the State of New York County of Queens against The Janel Group of New York, Inc., Ferrara International Logistics, Inc., Tutto Italia USA, LLC and Paul Sorvino Foods, Inc. (Case No. 018503/2012). The complaint alleges the non-payment of food product purchases totaling $186,728. On February 26, 2013, the Company filed an answer on behalf of The Janel Group of New York, Inc. and Ferrara International Logistics, Inc. denying the allegations.

	·	On June 27, 2012, Allegiance Retail Services, LLC and Foodtown, Inc. filed a law suit in the Supreme Court of New Jersey against Janel Ferrara Logistics, LLC d/b/a Paul Sorvino Foods. (Case No. UNN-L-2301-12). The complaint alleges the non-payment of invoices for the placing, merchandising, marketing and promoting of food products totaling $103,856. On March 27, 2013, the Company filed an answer denying the allegations and counterclaiming for breach of contract and for the return of amounts previously paid for the placing, merchandising, marketing and promoting of food products, and other damages, including costs of suit.

	·	On January 29, 2013, UGO Foods Corporation filed a law suit in the Supreme Court of the State of New York County of Queens against Janel World Trade, Ltd., The Janel Group of New York, Inc., Mann Global Enterprises, LLC as Successor in interest of Janel Ferrara Logistics, LLC. (Case No. 700302/2013). The complaint alleges the non-payment of food product purchases totaling $41,281. On February 27, 2013, the Company filed an answer on behalf of Janel World Trade, Ltd. and The Janel Group of New York, Inc. denying the allegations.

	·	On January 29, 2013, Branch Banking and Trust Corporation filed a law suit in the Supreme Court of the State of New York County of New York against The Janel Group of New York, Inc., Mann Global Enterprises, LLC as Successor of Janel Ferrara Logistics, LLC. (Case No. 650322/2013). The complaint alleges the non-payment of food product purchases totaling $41,652. On February 27, 2013, the Company filed an answer on behalf of The Janel Group of New York, Inc. denying the allegations.

	·	On October 2, 2013, Casa OiliO Sperlonga, S.p.A. and Casa Oilio North America, LLC filed a law suit in the Supreme Court of the State of New Jersey County of Union against Ferrara International Logistics, Inc., Nicholas V. Ferrara, Gusto Italia, LLC, Janel-Ferrara Group, Janel-Ferrara Logistics, LLC, Janel Group of New York, Inc., Janel World Trade, Ltd., Mann Global Enterprises, LLC, Michael W. O’Gorman, and Tutto Italia USA, LLC (Case No. UNN-L-3511-13). The complaint alleges the non-payment of food product purchases totaling $1,046,241. On December 17, 2013, the Company filed an answer on behalf of Janel World Trade, Ltd., The Janel Group of New York, Inc., Janel Ferrara Logistics, LLC, and Janel Ferrara Group denying the allegations.

On April 27, 2012, the Company’s subsidiary, Janel Group of Illinois, Inc. (“Janel Illinois”), filed a law suit in the Circuit Court for Cook County, Illinois (Case No. 2012 L 4574) against Q Marketing Group, Ltd. and its principals, Eduardo and Marie Gordon, for non-payment of invoices for freight services, and on September 14, 2012 obtained a default judgment against the defendants. In an effort to collect on the judgment, Janel Illinois filed to register the Illinois default judgment with the New York Supreme Court, and on August 1, 2013, subsequent to the period covered by this Quarterly report on Form 10-Q, the defendants filed an answer with unspecified counterclaims against Janel Illinois (Supreme Court of New York for Queens County, Index No. 702364/13) seeking damages of $500,000, punitive damages of $1,000,000 and sanctions of $10,000. The Company believes that the defendants have no meritorious defenses or counterclaims against the Illinois judgment and will vigorously continue to pursue payment from the defendants.

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PART II

ITEM 5.

MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s Common Stock is traded on the Over-The-Counter (OTC) market under the symbol JLWT.

The following table sets forth the high and low prices for the Common Stock for each full quarterly period during the fiscal years indicated. The prices reflect the high and low bid prices as available through the OTC market and represent prices between dealers and do not reflect the retailer markups, markdowns or commissions, and may not represent actual transactions. There have been no dividends declared.

Fiscal Year Ended September 30, 2013
First Quarter	High	$	0.15
	Low	$	0.04

Second Quarter	High	$	0.11
	Low	$	0.04

Third Quarter	High	$	0.09
	Low	$	0.06

Fourth Quarter	High	$	0.09
	Low	$	0.04
Fiscal Year Ended September 30, 2012

First Quarter	High	$	0.17
	Low	$	0.09

Second Quarter	High	$	0.19
	Low	$	0.09

Third Quarter	High	$	0.15
	Low	$	0.06

Fourth Quarter	High	$	0.08
	Low	$	0.03

On December 19, 2013, the Company had 58 holders of record and approximately 456 beneficial holders of its shares of Common Stock. The closing price of the Common Stock on that date was $0.04 per share.

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ITEM 7.

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. 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 this Annual Report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those projected.

Introduction

The following discussion and analysis addresses the results of operations for the fiscal year ended September 30, 2013, as compared to the results of operations for the fiscal year ended September 30, 2012. The discussion and analysis then addresses the liquidity and financial condition of the Company, and other matters.

Results of Operations

Janel is a non-asset based third party logistics services company, engaged in full-service cargo transportation logistics management, including freight forwarding – via air, ocean and land-based carriers, customs brokerage services, and warehousing and distribution services. From April 2011 until June 2012, we operated a vertical sales and supply chain food industry business segment including supplier selection, manufacturing, transportation, import, distribution, marketing and sales within the food industry. During the June 2012 quarter the Company divested itself of and discontinued the food industry segment and now operates as one reportable business segment.

Effective with this Annual Report on Form 10-K, the Company has changed its accounting principle with regard to customs duty and no longer includes customs duty as a component of revenue or forwarding expense. The net effect of this change is a reduction to revenue with a corresponding equal reduction to forwarding expense. Refer to Note 2 to the Consolidated Financial Statements.

Years ended September 30, 2013 and 2012

Revenue. Total revenue from continuing operations for fiscal 2013 was $44,744,518, as compared to $49,837,461 for the same period of fiscal 2012, a decrease of $5,092,946 or 10.2%. This decrease is mainly the result of lower ocean import shipping activity when compared to the prior year. Net revenue (revenue minus forwarding expense) from continuing operations in fiscal 2013 was $6,264,544, a decrease of $554,851 or 8.1% as compared to net revenue of $6,819,395 for fiscal 2012.

Forwarding Expense. Forwarding expense from continuing operations 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, and includes any trucking and warehousing charges related to the shipments.

For fiscal 2013, forwarding expense from continuing operations decreased by $4,538,092, or 10.6%, to $38,479,974 as compared to $43,018,066 for fiscal 2012 and as a percentage of revenue decreased to 86.0% for fiscal 2013, from 86.3% for fiscal 2012, a 0.3 percentage point decrease. This percentage decrease is principally the result of higher forwarding expense on ocean import shipping activity when compared to the prior year.

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Selling, General and Administrative Expense. For fiscal 2013 and 2012, selling, general and administrative expenses from continuing operations were $6,433,722 and $6,757,816, respectively, a decrease of $324,094, or 4.8% when compared to the prior year mainly due to staff and payroll cost reductions. As a percentage of revenue, selling, general and administrative expenses were 14.4% and 13.6% of revenue for fiscal 2013 and 2012, respectively, an 0.8 percentage point increase which is mainly the result of the decrease in revenue for fiscal 2013 when compared to the prior year and expenses which do not decrease in proportion to lower revenue.

Depreciation and Amortization . For fiscal 2013 and 2012, depreciation and amortization expenses from continuing operations were $19,191 and $31,154, respectively. This represents a year over year decrease of $11,963, or 38.4%, and is mainly the result of a minimal amount of capital expenditure during fiscal 2013 and 2012.

Interest Expense . For fiscal 2013 and 2012, interest expense from continuing operations was $121,021 and $94,454, respectively, an increase of $25,567. This increase is primarily the result of higher interest costs due to increased borrowings under our revolving line of credit with Community National Bank during fiscal 2013 versus 2012.

Loss From Continuing Operations. For the reasons stated above, the Company incurred a loss before taxes from continuing operations of ($314,106) and ($65,029) for the fiscal years ended 2013 and 2012, respectively.

Income Taxes. The company recorded a net income tax provision of $17,000 and $1,221,304 for fiscal 2013 and 2012, respectively. Fiscal 2013 only reflects applicable state income taxes and fiscal 2012 reflects applicable state income taxes and an expense in the amount of $1,184,003 to provide for a valuation allowance against the deferred tax asset.

Loss From Discontinued Operations. On August 28, 2013 the Company sold its New Jersey freight forwarding and logistics operations and in June 2012 discontinued its food segment business. As a result, the New Jersey operations and some ongoing expenses associated with the food segment are included in discontinued operations. Fiscal 2013 and 2012 reflect a loss from discontinued operations of ($1,827,128) and ($1,392,383), respectively. Refer to Note 8 to the Consolidated Financial Statements.

Net Loss. For fiscal 2013 and 2012, the Company incurred a net loss of ($2,158,234) and ($2,678,716), respectively. Net loss available to common shareholders for fiscal 2013 and 2012 was ($2,173,234) or ($0.09) per diluted share and ($2,693,716) or ($0.12) per diluted share, respectively.

Liquidity and Capital Resources

General. Our ability to satisfy our liquidity requirements, which include satisfying our debt obligations and funding working capital, day-to-day operating expenses and capital expenditures depends upon our future performance, which is subject to general economic conditions, competition and other factors, some of which are beyond our control. We depend on our commercial credit facilities to fund our day-to-day operations as there is a timing difference between our collection cycles and the timing of our payments to vendors. Generally we do not have a need for significant capital expenditure as we are a non-asset based freight forwarder.

Janel’s cash flow performance for the 2013 fiscal year is not necessarily indicative of future cash flow performance.

As of September 30, 2013, and compared with the prior fiscal year, the Company’s cash and cash equivalents decreased by ($148,284), or (19.2%), to $625,584 from $773,868, respectively. During the fiscal year ended September 30, 2013, Janel’s net working capital (current assets minus current liabilities) decreased by ($2,159,572) from $1,976,234 at September 30, 2012, to a negative ($183,338) at September 30, 2013. This decrease is primarily due to the net loss of ($2,158,234) for the fiscal year ended September 30, 2013.

Cash flows from continuing operating activities. Net cash used in continuing operating activities for fiscal 2013 was ($283,267) and net cash provided by continuing operations for fiscal 2012 was $394,743. The change was principally driven by a decrease in the collection of outstanding accounts receivable, an increase in payments of outstanding accounts payable, the receipt in fiscal 2012 of a federal tax refund and a change in the deferred tax asset; which were partially offset by a reduction in the net loss from continuing operations when compared to the prior year and a decrease in payments for prepaid expenses and other sundry assets.

Cash flows from discontinued operating activities. Net cash provided by discontinued operating activities was $97,818 for fiscal 2013 and net cash used in discontinued operating activities was ($786,609) for fiscal 2012.

Cash flows from investing activities . Net cash provided by investing activities, primarily the sale of the assets of our New Jersey operations and marketable securities, was $528,065 for fiscal 2013. Net cash used for investing activities, primarily capital expenditures for property and equipment, was ($7,754) for fiscal 2012.

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Cash flows from financing activities . Net cash used in financing activities was ($490,900) for fiscal 2013 and net cash provided by financing activities was 698,733 for fiscal 2012. The cash used in financing activities for fiscal 2013 consisted primarily of the repayment of long-term debt of ($305,900) and a net decrease of ($170,000) under our bank line of credit. The cash provided by financing activities for fiscal 2012 consisted primarily of an increase of $650,000 in borrowings under our bank line of credit, the sale on October 14, 2011 of 750,000 shares of the Company’s common stock for $150,000 and the repayment of a loan receivable in the amount of $92,817; which were partially offset by the repayment of a note payable in the amount of $100,000.

Community National Bank Borrowing Facility. On August 3, 2010, the Company’s Janel Group of New York, Inc. (“Janel New York”) subsidiary entered into a one year $3.5 million revolving line of credit agreement with Community National Bank (“CNB”). The CNB Facility has been periodically renewed. Currently, the interest rate of the CNB Facility is the prime rate plus 1%, with a minimum rate of 7%. On September 30, 2013, the CNB Facility was extended from September 30, 2013 to January 31, 2014. As part of the extension, CNB (i) reduced the Credit Facility to $1,731,336 (the amount of borrowings outstanding at that time), (ii) requires that 80% of the collections on eligible (under the borrowing base) accounts receivable from the Company’s former Hillside, New Jersey freight forwarding and logistics operations which was sold on August 30, 2013 (the “NJ Collections”), be used to pay down borrowings under the Credit Facility within 10 days of collection, and (iii) will not allow any additional borrowings during the extension period. Obligations under the CNB Facility are secured by all of the assets of the Company, are guaranteed by the Company, and are guaranteed by James N. Jannello, the Company’s retired founder and Chief Executive Officer. As of September 30, 2013, after the required repayment of $300,000 of NJ Collections, there were outstanding borrowings of $1,431,336 under the CNB Facility. On December 9, 2013, subsequent to the period covered by this report, the company repaid $156,000 to CNB, reducing the amount of borrowings outstanding under the Credit Facility to $1,275,336. This repayment was a result of NJ Collections for the period October 1, 2013 through November 30, 2013 and after this repayment there are no further repayments required from the NJ Collections. On August 30, 2013, the Company used a portion of the cash proceeds from the sale of its New Jersey operations to repay the $229,241outstanding balance on its 2011 term loan from CNB.

Working Capital Requirements. The Company’s cash needs are currently met by the CNB Facility and cash on hand. As of September 30, 2013 the Company had $625,584 in cash on hand and under the current extension with CNB the Company is not allowed any additional borrowings under the CNB Facility. Our actual working capital needs for the short and long terms will depend upon numerous factors, including our operating results, the availability of a revolving line of credit, competition, and the cost associated with growing the Company either internally or through acquisition, none of which can be predicted with certainty. If our results of operations and our availability under our bank line of credit are insufficient to meet our cash needs, we will be required to obtain additional investment capital or debt funding to continue operations. On October 30, 2013, subsequent to the period covered by this report, the Company raised $500,000 from the sale of newly issued shares of the Company’s Common Stock at a price of $0.065 per share. The Company also issued five-year warrants to the investor for up to an additional $1,000,000 investment upon exercise for additional newly issued shares of the Company’s common stock at a price of $0.08. We intend to use the proceeds from these sales for general working capital purposes. We are also currently seeking a credit facility to replace our current bank financing. If the investor does not exercise the warrants, and/or the Company is not able to renew the CNB Facility upon acceptable terms to us or obtain replacement financing for the CNB Facility, the Company’s operations will be materially negatively impacted.

	- 14 -

Current Outlook

Our 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. We cannot accurately forecast many of these factors nor can we estimate accurately the relative influence of any particular factor and, as a result, there can be no assurance that historical patterns, if any, will continue in future periods.

Our food segment incurred losses and the Company’s Board of Directors determined that it was in the Company’s best interests to divest the food segment and refocus our growth strategy on our transportation logistics business. During June 2012, the company divested itself of the food segment and as a result, the losses from the food segment have been eliminated.

Janel is progressing with the implementation of its business plan and strategy to grow its revenue and profitability for fiscal 2013 and beyond through several avenues. The Company’s strategy for further growth includes plans to: open, as warranted, additional branch offices domestically and/or outside the continental United States; introduce additional revenue streams for its existing headquarters and branch locations; 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; seek out and pursue privately held transportation-related firms which may ultimately lead to their acquisition by the Company; and continue its focus on containing current and prospective overhead and operating expenses, particularly with regard to the efficient integration of any additional offices or acquisitions.

Certain elements of our profitability and growth strategy, principally proposals for acquisition and accelerating our revenue growth are contingent upon the availability of adequate financing on terms acceptable to the Company. On October 30, 2013, subsequent to the period covered by this report, the Company raised $500,000 from the sale of newly issued shares of the Company’s Common Stock at a price of $0.065 per share. The Company also issued five-year warrants to the investor for up to an additional $1,000,000 investment upon exercise for additional newly issued shares of the company’s common stock at a price of $0.08. We are currently seeking a credit facility to replace our current bank financing. If the investor does not exercise the warrants, and/or the Company is not able to renew the CNB Facility upon acceptable terms to us or obtain replacement financing for the CNB Facility, the Company’s operations will be materially negatively impacted. Therefore, the implementation of significant aspects of our strategic growth plan may be delayed.

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, accruals for cargo insurance, and deferred income taxes. 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 more fully described in Note 1 of the Notes to the Consolidated Financial Statements.

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.

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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 involves provide 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. Effective with the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013, the Company has changed its accounting principle and no longer includes customs duty as a component of revenue. Refer to Note 2 to the Consolidated Financial Statements.

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.”

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 Comprehensive loss:

a. accounts receivable valuation;

b. the useful lives of long-term assets;

c. the accrual of costs related to ancillary services the Company provides;

d. accrual of tax expense on an interim basis; and

e. deferred tax valuation allowance.

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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.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations, and cash flows when implemented.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data required by this Item 8 are included in our Consolidated Financial Statements and set forth in the pages indicated in Item 15(a) of this Annual Report.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

None.

ITEM 9A.

CONTROLS AND PROCEDURES

Evaluation of Disclosure 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 us in the reports that we file or submit under the Securities and Exchange Act of 1934, as amended (“Exchange Act”), 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, Chief Operating Officer and Chief Financial Officer have evaluated this system of disclosure controls and procedures as of the end of the period covered by this annual report, and have concluded that the system is effective.

Management’s Annual Report on Internal Control over Financial Reporting

Our management, including our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles (GAAP). Internal control over financial reporting 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 US 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.

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Our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of September 30, 2013.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the fourth quarter of fiscal 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

The executive officers and directors of the Registrant are as follows:

Name	Age	Position

James N. Jannello	69	Executive Vice President and Director
William J. Lally	60	President, Chief Executive Officer and Director

Noel J. Jannello	42	Director and Vice President

Vincent Iacopella	46	Vice President and Chief Operating Officer

Ruth Werra	72	Secretary

Philip J. Dubato	57	Executive Vice President of Finance and Chief Financial and Accounting Officer

James N. Jannello is the Executive Vice President and a director, and through August 15, 2013 was the Chief Executive Officer of Janel since it was founded in 1974. On November 15, 2013, subsequent to the period covered by this report, Mr. Jannello notified the Company that he is retiring to spend more time with family and pursue personal interests and, as a result of retirement, Mr. Jannello resigned from the Board and from all of his positions as an officer of the Registrant and all of its subsidiaries. Mr. Jannello now holds the title of Director Emeritus. Mr. Jannello is a licensed Customs House Broker and the father of Noel J. Jannello.

Mr. Jannello is well qualified to serve as a Director based on his extensive experience in the freight forwarding business and his management position with the Company since its founding.

William J. Lally has been the President and Chief Executive Officer of Janel since August 15, 2013. Prior to that, Mr. Lally was the President and Chief Operating Officer of Janel since May 2009. Mr. Lally’s principal function is the overseeing of all of the Company’s operations, and sales and marketing efforts. Mr. Lally has been employed by Janel since 1975, first in New York and later in Chicago, Illinois. Since 1979, Mr. Lally has served as the President of the Janel Group of Illinois, Inc. Mr. Lally became a director of the Company in July 2002.

Mr. Lally is well qualified to serve as a member of the Company’s Board based on his extensive experience in the freight forwarding business and his management positions within the Company since 1975.

Noel J. Jannello has been employed by Janel since 1995, and has been a Vice President and operations executive since 2003. His principal function is the overseeing of the Company’s import operations. Mr. Jannello is a graduate of Bradley University (B.A., Advertising & Marketing, 1993), and is the son of James N. Jannello.

Mr. Jannello is well qualified to serve as a member of the Company’s Board based on his extensive experience in the freight forwarding business.

Vincent Iacopella has been the Vice President and Chief Operating Officer of Janel since August 15, 2013. Prior to that, Mr. Iacopella was the Vice President of Janel and the Managing Director of The Janel Group of Los Angeles since 2004. Mr. Iacopella is principally engaged in sales and marketing and also manages the Company’s Los Angeles office. Prior to joining Janel, Mr. Iacopella was the Managing Director and President of the California subsidiary of Delmar Logistics, Inc. Mr. Iacopella is a member of the board of directors of Los Angeles Customs Brokers Freight Forwarders Association, and is the Secretary of The Pacific Coast Council of Customs Brokers and Freight Forwarders Associations, Inc. Mr. Iacopella attended New York University, and is a licensed customs broker.

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Mr. Iacopella was a member of the Board of Directors of the Company from 2004 until he resigned in April of this year to focus his full attention on his operational responsibilities for the Company as Managing Director of The Janel Group of Los Angeles. On December 15, 2013, subsequent to the period covered by this report, Mr. Iacopella agreed to return to the Board to fill the vacancy created on November 15, 2013 when Mr. James N. Jannello resigned. Mr. Iacopella is well qualified to serve as a member of the Company’s Board based on his extensive experience in the freight forwarding business and leadership positions within the industry.

Ruth Werra has been the Secretary of Janel since 1994 and has been employed by the Company since 1975. She is the office manager of the New York executive office and oversees the maintenance of Janel’s corporate records. Mrs. Werra also oversees the entry and clearance of all personal effects shipments handled by the New York office.

Philip J. Dubato has been the Executive Vice President of Finance since May 2010. Mr. Dubato is the Chief Financial and Accounting Officer and oversees all accounting operations for the Company. From 1997 through 2007, Mr. Dubato was Vice President and Chief Financial Officer, Secretary and Treasurer, and from 1998 through 2007 a director of Target Logistics, Inc., a domestic and international freight forwarder publicly traded on the American Stock Exchange. From 2007 through May 2010, Mr. Dubato was a consultant in the freight forwarding industry and a private investor.

Directors hold office until the next annual meeting of shareholders and thereafter until 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.

Janel’s Board of Directors does not yet include any “independent” directors, and the Company does not have any standing Audit, Compensation or Nominating Committees.

Board of Directors

Board of Directors. During the fiscal year ended September 30, 2012, the Board of Directors met four times. No incumbent director attended fewer than 75% of the total number of meetings of the Board of Directors of the Company held during the year.

Our Board of Directors has not established any committees. There is no Audit Committee, Compensation Committee, or Nominating Committee, or any committee performing similar functions, and no charters have been adopted with respect to these functions. The functions which would have been assigned to those committees are undertaken by the entire board as a whole.

Audit Function. In its audit function, the Board oversees the Company’s accounting, financial reporting and internal control functions and the audit of the Company’s financial statements. The audit responsibilities include, among others, direct responsibility for hiring, firing, overseeing the work of and determining the compensation for the Company’s independent auditors. The Board does not include an “audit committee financial expert” (as defined in applicable Securities and Exchange Commission (SEC) rules), because the Board believes that the benefits provided by the addition to the Board of an individual who meets the SEC criteria at this time do not justify the cost of retaining such an individual.

Nominating Function. The Company’s full Board of Directors acts as a nominating committee for the annual selection of its nominees for election as directors. The Board of Directors held one meeting during the past fiscal year in order to make nominations for directors. The Board believes that the interests of the Company’s stockholders are served by relegating the nominations process to the full Board. While the Board of Directors will consider nominees recommended by stockholders, it has not actively solicited recommendations from the Company’s stockholders for nominees, nor established any procedures for this purpose. In considering prospective nominees, the Board of Directors will consider the prospect’s relevant financial and business experience, familiarity with and participation in the Company’s industry and market area, the integrity and dedication of the prospect and other factors the Board deems relevant. The Board of Directors will apply the same criteria to nominees recommended by stockholders as those recommended by the full Board.

Compensation Function. The Company’s full Board of Directors acts as a compensation committee for the Company. The Board believes that, due to the size of the Company and its management team, the interests of the Company’s stockholders are served by relegating the compensation process to the full Board.

	- 20 -

The primary objective of our compensation and benefits program is to attract, motivate and retain our quality executive talent, and support our business goals within the limits arising out of the Company’s revenue and profitability. Our executive compensation structure is comprised of and limited to a small group of only five executives, and the amount of their compensation is principally based on the available funds and the achievement of our goals for growth and profitability.

Our compensation approach is necessarily tied to our stage of development as a company. Historically, our Company is one of the smaller freight logistics businesses whose securities are traded in the public market, with the result that our compensation program is limited to cash compensation depending upon the funds available, and is lower than the level of compensation of the public companies in our business group. Our Board of Directors reviews and approves executive compensation, bonus, and benefits policies on a case-by-case basis, often based on the recommendation of our Chief Executive Officer’s subjective assessment of the funding reasonably available for executive compensation.

Director Compensation

Our directors are reimbursed for their reasonable expenses as members of the Board of Directors, but they do not receive any compensation for serving as such.

Code of Ethics

Due to its small size, the Company has not yet adopted a code of ethics.

Communications with the Board

Any shareholder 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, 150-14 132^nd Avenue, Jamaica, New York 11434. 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 judgment to determine whether such communication should be conveyed to the Board or, as appropriate, to the member(s) of the Board named in the communication.

Leadership Structure and Risk Oversight

While the Board believes that there are various structures which can provide successful leadership to the Company, the Company’s executive functions are shared by the Company’s President/Chief Executive Officer and Chief Operating Officer. Both individuals serve on the Company’s Board of Directors and they, together with the other directors bring experience, oversight and expertise to the management of the Company. The Board 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, as a whole has responsibility for the oversight of risk management. In its risk oversight role, the Board 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 members strategy and the risks facing the Company.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act, as amended, requires that the Company’s directors and executive officers and each person who owns more than 10% of the Company’s Common Stock, file with the Securities and Exchange Commission in a timely manner an initial report of beneficial ownership and subsequent reports of changes in beneficial ownership of the Shares. In January 2012, Mr. Cesarski filed a late report reflecting 19 sales. To the Company’s knowledge, all reports are now up to date.

Audit Committee Report

The Board of Directors in its audit function has reviewed and discussed with management the annual audited financial statements of the Company and its subsidiaries.

	- 21 -

The Board of Directors in its audit function has discussed with Paritz & Company, P.A., the independent auditors for the Company for the fiscal year ended September 30, 2013, the matters required to be discussed by Statement on Auditing Standards 61, as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T. The Board has received the written disclosures and the letter from the independent auditors required by Rule 3526, Communication with Audit Committees Concerning Independence, as adopted by the Public Company Accounting Oversight Board and has discussed with the independent auditors the independent auditors’ independence.

Based on the foregoing review and discussions, the Board of Directors approved the inclusion of the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013 for filing with the Securities and Exchange Commission.

	The Board of Directors
	William J. Lally
	Vincent Iacopella
	Noel J. Jannello

ITEM 11. EXECUTIVE COMPENSATION

Introduction

The individuals who served as the Company’s principal executive officers during the fiscal year ended September 30, 2013, two individuals (other than principal executive officers) who were the Company’s most highly compensated executive officers as of September 30, 2013, and up to two additional individuals who were the Company’s most highly compensated employees whose total compensation during the fiscal year exceeded $100,000 (listed in the Summary Compensation Table below), are referred to in the following discussion as the “named executive officers”. The following executive compensation tables and related narrative describe the compensation awarded to, earned by or paid to the named executive officers for services provided to the Company during the fiscal years ended September 30, 2013 and 2012.

Employment Agreements

We have not entered into any written employment agreements with our officers and directors. We do not contemplate entering into any employment agreements until such time as the Board of Directors concludes that such agreements would be appropriate under the circumstances.

Long-Term Incentive Plan Awards

We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.

The Company has a 401K Plan covering eligible employees. The Plan is voluntary with respect to participation and is subject to the provisions of ERISA. The plan provides that the Company contributes an amount equal to 25% of the participant’s first 5% of contributions. The Company’s contributions to the plan on behalf of named executive officers are included in the “All Other Compensation” column in the “Summary Compensation Table” below.

Summary Compensation Table

The following table sets forth information regarding the total compensation paid or earned by the named executive officers as compensation for their services in all capacities during the fiscal years ended September 30, 2013 and 2012.

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Name and		Base Salary	Bonus	Stock Awards	Option Awards	All Other	Total
Principal Position	Year	$	$	$	$	Compensation	$
(a)	(b)	(c)	(d)	(e)	(f)	$ (i)	(j)
James N. Jannello,	2013	88,037	0	0	0	49,024⁽¹⁾	137,061
EVP	2012	178,775	0	0	0	60,588⁽¹⁾	239,363
Philip J. Dubato,	2013	175,000	0	0	0	18,000⁽²⁾	193,000
EVP of Finance and CFO	2012	175,000	0	0	0	18,000⁽²⁾	193,000
William J. Lally	2013	125,000	0	0	0	40,979⁽³⁾	165,979
President and CEO	2012	116,900	0	0	0	38,046⁽³⁾	154,946
Noel J. Jannello	2013	168,795	0	0	0	46,817⁽⁴⁾	215,612
Vice President	2012	167,291	0	0	0	46,074⁽⁴⁾	213,365
Vincent Iacopella	2013	121,500	43,234	0	0	17,587⁽⁵⁾	182,321
Vice President and COO	2012	121,500	17,549	0	0	16,948⁽⁵⁾	155,997

_______________________________________________

(1) Includes $18,525 and $18,183 of medical insurance premiums paid on behalf of such individual for each of the fiscal years ended 2013 and 2012, respectively, $29,438 and $37,953 for automobile and automobile-related costs, including insurance, incurred on behalf of such individual, for each of the fiscal years ended 2013 and 2012, respectively, $1,061 and $1,958 of 401K paid on behalf of such individual for each of the fiscal years ended 2013 and 2012, respectively, and $2,494 of life insurance paid on behalf of such individual for fiscal year ended 2012.

(2) Includes $12,000 and $12,000 of medical insurance premiums reimbursed on behalf of such individual for each of the fiscal years ended 2013 and 2012, respectively, and $6,000 and $6,000 for an automobile allowance for each of the fiscal years ended 2013 and 2012, respectively.

(3) Includes $14,676 and $15,994 for automobile and automobile-related costs, including insurance, incurred on behalf of such individual for each of the fiscal years ended 2013 and 2012, respectively, and $26,303 and $22,052 of medical insurance premiums paid on behalf of such individual for fiscal year ended 2013 and 2012, respectively.

(4) Includes $23,888 and $22,812 of medical insurance premiums paid on behalf of such individual for each of the fiscal years ended 2013 and 2012, respectively, $21,655 and $21,988 for automobile and automobile-related costs, including insurance, incurred on behalf of such individual, for each of the fiscal years ended 2013 and 2012, respectively, and $1,274 and $1,274, of 401K paid on behalf of such individual for the fiscal year ended 2013 and 2012, respectively.

(5) Includes $4,835 and $4,246 of medical insurance premiums paid on behalf of such individual for each of the fiscal years ended 2013 and 2012, respectively, $12,752 and $12,702 for automobile and automobile-related costs, including insurance, incurred on behalf of such individual, for each of the fiscal years ended 2013 and 2012, respectively.

Savings and Stock Option Plans

401(k) and Profit-Sharing Plan.

The Company maintains an Internal Revenue Code Section 401(k) salary deferral savings and profit-sharing plan (the “401K Plan”) for all of its eligible employees who have been employed for at least one year and are at least 21 years old. Subject to certain limitations, the 401K Plan allows participants to voluntarily contribute up to 15% of their pay on a pre-tax basis. Under the 401K Plan, the Company may make matching contributions on behalf of the pre-tax contributions made up to a maximum of 25% of the participant’s first 5% of compensation contributed as Elective Deferrals in the year. All participants are fully vested in their accounts in the 401K Plan with respect to their salary deferral contributions, and are vested in company matching contributions at the rate of 20% after two years of service, 40% after three years of service, 60% after four years of service, 80% after five years of service, with 100% vesting after six years of service.

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Stock Option Plans.

Prior to 2012, the Company maintained the Janel World Trade, Ltd. Stock Option Incentive Plan (the “2002 Option Plan”) which was approved by the Company’s Board of Directors and shareholders in 2002. Options to purchase 23,750 shares of Common Stock previously granted under the 2002 Plan expire on June 29, 2015. To date, 23,750 options have been granted under the Option Plan. The Option Plan is administered by the Board of Directors, which is authorized to grant incentive stock options and non qualified stock options to selected employees and consultants of the Company and to determine the participants, the number of options to be granted and other terms and provisions of each option.

On October 30, 2013 (subsequent to the period covered by this Annual Report), the Board of Directors adopted the Janel World Trade, Ltd. 2013 Non-Qualified Stock Option Plan (the “2013 Plan”) providing for options to purchase up to 5,000,000 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 Plan is determined by the Compensation Committee (the “Committee”) of the Board of Directors or, if the Board does not create the Committee, by the Board which shall function as the Committee.

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, 2013. For purposes of calculating beneficial ownership, Rule 13d-3 of the Securities 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 known to the Company to be the beneficial owners of 5% or more of the Shares outstanding as September 30, 2013.

Name and Address	Shares	Percent
of Beneficial Owner	Beneficially Owned	of Class

James N. Jannello	5,500,000(1)	27.48	%
150-14 132nd Avenue
Jamaica, NY 11434

Stephen P. Cesarski	5,205,600(1)	26.00	%
150-14 132nd Avenue
Jamaica, NY 11434

William J. Lally	1,000,000(1)	5.00	%
150-14 132nd Avenue
Jamaica, NY 11434

__________________________

(1) All of these shares are owned of record.

Management

The following table sets forth information with respect to the beneficial ownership of the shares of Common Stock as of September 30, 2013 by (i) each executive officer of the Company named in the Summary Compensation Table included elsewhere in this Annual Report, (ii) each current director and each nominee for election as a director and (iii) all directors and executive officers of the Company as a group. An asterisk (*) indicates ownership of less than 1%.

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Name of Beneficial Owner	Shares Beneficially Owned		Percent of Class

James N. Jannello		5,500,000		27.48	%
William J. Lally		1,000,000		5.00	%
Noel J. Jannello		25,000			*
Vincent Iacopella		0			*
Ruth Werra		25,000			*
Philip J. Dubato		0			*
All directors and executive officers as a group (6 persons)		6,550,000		32.72	%

Equity Compensation Plan Information

The following table provides information, as of September 30, 2013, with respect to all compensation arrangements maintained by the Company under which shares of Common Stock may be issued:

Plan Category	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 (excluding securities reflected in column (a)
		(a)		(b)		(c)
Equity compensation plans approved by security holders		23,750*	$	1.00		0*
Equity compensation plans not approved by security holders		0		0		0
Total		23,750*	$	1.00		0*

* Shares are issuable pursuant to options granted under the Company’s 2002 Option Plan. The 2002 Option Plan has expired.

ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Janel’s Board of Directors does not yet include any “independent” directors.

On August 28, 2013, Janel World Trade, Ltd. (the “Company”), and its wholly-owned subsidiary, The Janel Group of New York, Inc. (collectively, the “Seller”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Allports Logistics Anchor Wharehouse, LLC (the “Purchaser”), an entity affiliated with Nicholas V. Ferrara, a former director of the Company. Under the terms of the Agreement, the Purchaser purchased certain of the Seller’s assets (the “NJ Assets”) used by the Seller in the Company’s Hillside, New Jersey freight forwarding and logistics operations (the “NJ Business”). The Company had originally acquired its New Jersey operations from an affiliate of Mr. Ferrara in two transactions in 2008 and 2010. The purchase price for the sale to the Purchaser of the NJ Assets consisted of $401,066.85 in cash, and the assumption of all future lease obligations with respect to the three office and warehouse facilities from which the Company conducted its New Jersey operations. At the closing of the sale on August 30, 2013, the Seller used the cash portion of the purchase price to repay outstanding obligations secured by the NJ Assets, including the $229,240.91 outstanding balance on the Seller’s term loan from Community National Bank, and an aggregate $58,245.36 on two outstanding equipment financing arrangements. Simultaneously with the closing under the Asset Purchase Agreement, Mr. Ferrara paid the Company $110,000 for the release of restrictions on competition which were agreed to as part of the 2008 portion of the acquisition of the NJ Business. All of the expenses of the NJ Business from and after the closing will be the responsibility of the Purchaser. The Company retained its pre-closing accounts receivable and accounts payable with respect to the NJ Business and anticipates that the net proceeds on these accounts receivable and payable will be used to further reduce the Company’s obligations to Community National Bank. As previously reported by the Company, as of September 30, 2012 the Company had determined that there was full impairment of the goodwill relating to its 2008 and 2010 acquisitions of the NJ Business, and recorded an impairment loss of $1,167,070, representing the write-off of all of the goodwill acquired in those transactions. As a result of the sale of the NJ Business to the Purchaser, the Company recorded a write off of $1,562,061 associated with the customer list from the 2008 and 2010 acquisitions of the NJ Business.

	- 25 -

With regard to the October 4, 2010 acquisition, the Company had acquired the international freight forwarding assets of FIL, a company owned by Nicholas V. Ferrara, pursuant to the terms of the Purchase Agreement between the Company and FIL dated October 4, 2010. Mr. Ferrara became a director of the Company following the closing. The purchase price paid and to be paid under the terms of the Purchase Agreement consists of (i) cash in an amount equal to 70% of the annual actual earnings before interest, taxes, depreciation and amortization (EBITDA) achieved over the three 12-month periods following the Closing (the “Earn-Out Period”) from revenues generated from the customers included in the purchased assets, and (ii) 1,714,286 restricted shares of the Company’s Common Stock valued at $600,000 based on the closing market price of the stock on October 1, 2010 (the “Share Allocation”), issued pursuant to an exemption from registration set forth in Section 4(2) of the Securities Act of 1933 and Regulation D promulgated thereunder. The Share Allocation was subject to decrease if actual EBITDA from revenues generated from the customers included in the purchased assets during the Earn-Out Period is below $2 million, and will be issued in three installments on October 4, 2011, 2012 and 2013. The 1,714,286 restricted shares were returned to the Company in conjunction with the August 28, 2013 Asset Purchase Agreement described in the previous paragraph.

Prior to August 28, 2013, we received trucking and warehouse related services from Allports Logistics Warehouse, LLC (“Allports”) and Ferrara International Worldwide, Inc. (“FIW”), located in Hillside, New Jersey and controlled and owned by Nicholas V. Ferrara, a former Director of the Company. We paid approximately $1,311,000 and $2,009,000 to Allports for such services in fiscal 2013 and 2012, respectively; and, approximately $439,000 and $160,000 to FIW for such services in fiscal 2013 and 2012, respectively. We believe that the terms of this arrangement were consistent with third party arrangements that provide similar services.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The firm of Paritz & Company, P.A. (the “Auditor”) has served as the Company’s independent public accountants since 2002. The following is a description of the fees billed to the Company by the Auditor during the fiscal years ended September 30, 2013 and 2012:

Audit Fees

Audit fees include fees paid by the Company to the Auditor in connection with the annual audit of the Company’s consolidated financial statements, and review of the Company’s interim financial statements. Audit fees also include fees for services performed by the Auditor that are closely related to the audit and in many cases could only be provided by the Auditor. Such services include consents related to SEC and other regulatory filings. The aggregate fees billed to the Company by the Auditor for audit services rendered to the Company for the years ended September 30, 2013 and 2012 totaled $63,000 and $60,450, respectively.

Audit Related Fees

Audit related services include due diligence services related to accounting consultations, internal control reviews, and employee benefit plan audits. The Auditor did not bill any fees for audit related services rendered to the Company for 2013 and 2012.

Tax Fees

Tax fees include corporate tax compliance, counsel and advisory services. The aggregate fees billed to the Company by the Auditor for the tax related services rendered to the Company for the years ended September 30, 2013 and 2012 totaled $8,025 and $7,150, respectively.

All Other Fees

The aggregate fees billed to the Company by the Auditor for all other fees for the year ended September 30, 2013 and 2012 totaled $750 and $1,925, respectively. The “other fees” for 2013 were for services related to the sale of our New Jersey operations and for 2011 were for services related to the wind down of the food industry segment.

	- 26 -

Approval of Independent Auditor Services and Fees

The Company’s Chief Executive Officer and Chief Financial Officer review all fees charged by the Company’s independent auditors, and actively monitor the relationship between audit and non-audit services provided. The Chief Executive Officer must pre-approve all audit and non-audit services provided by the Company’s independent auditors and fees charged.

	- 27 -

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) 1. Financial Statements

	Page
Report of Registered Independent Public Accounting Firm	F-1
Consolidated Balance Sheets as of September 30, 2013 and 2012	F-2
Consolidated Statements of Operations for the Years Ended September 30, 2013 and 2012	F-3
Consolidated Statements of Shareholders’ Equity for the Years Ended September 30, 2013 and 2012	F-4
Consolidated Statements of Cash Flows for the Years Ended September 30, 2013 and 2012	F-5
Notes to Consolidated Financial Statements	F-7

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.

(a) 2. Exhibits required to be filed by Item 601 of Regulation S-K

Exhibit No.

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, File No. 333-60608)
3.2	Restated and Amended By-Laws of Janel World Trade, Ltd. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed November 1, 2013, File No. 333-60608)
3.3	Certificate of Designation of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed January 17, 2007 File No. 333-60608)
3.4	Certificate of Designations of Series B Convertible Stock (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed October 22, 2007, File No. 333-60608)
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, File No. 333-60608)
10.2	Revised Promissory Note dated October 29, 2012, made by Registrant’s subsidiary, The Janel Group of New York, Inc., payable to Community National Bank (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 29, 2012, File No. 333-60608)
10.3	Revised Business Loan Agreement dated October 29, 2012 between Registrant’s subsidiary, The Janel Group of New York, Inc., and Community National Bank (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed October 29, 2012, File No. 333-60608)
10.4	Commercial Guaranty dated August 2, 2010 made by Registrant with respect to the obligation of Registrant’s subsidiary, The Janel Group of New York, Inc., to Community National Bank (incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2010, File No. 333-60608)
10.5	Commercial Security Agreement dated August 2, 2010 made by Registrant for the benefit of Community National Bank, securing Registrant’s obligations under its guaranty of the obligation of Registrant’s subsidiary, The Janel Group of New York, Inc., to Community National Bank (incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2010, File No. 333-60608)
21	Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2011, File No. 333-60608)

	- 28 -

31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Operating Officer
31.3	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1	Section 1350 Certifications
99.1	Press release dated January 14, 2014
101	Interactive data files providing financial information from the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013 in XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets, September 30, 2013 and September 30, 2012, (ii) Consolidated Statements of Operations for the years ended September 30, 2013, 2012 and 2011, (iii) Consolidated Statements of Shareholders’ Equity for the years ended September 30, 2013, 2012, and 2011 (iv) Consolidated Statements of Cash Flows for the years ended September 30, 2013, 2012 and 2011, and (v) Notes to Consolidated Financial Statements

	- 29 -

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, thereto duly authorized.

	JANEL WORLD TRADE, LTD.

Date: January 14, 2014	By:	/s/ William J. Lally
		William L. Lally
		President and Chief Executive 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/ William J. Lally	President, Chief Executive	January 14, 2014
William J. Lally	Officer and Director

/s/ Vincent Iacopella	Vice President, Chief	January 14, 2014
Vincent Iacopella	Operating Officer and Director

/s/ Philip J. Dubato	Executive Vice President of	January 14, 2014
Philip J. Dubato	Finance and Chief Financial
	and Accounting Officer

/s/ Noel J. Jannello	Vice President and Director	January 14, 2014
Noel J. Jannello

/s/ Ruth Werra	Secretary	January 14, 2014
Ruth Werra

	- 30 -

Paritz & Company, P.A.	15 Warren Street, Suite 25 Hackensack, New Jersey 07601 (201)342-7753 Fax: (201) 342-7598
Certified Public Accountants

REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM

Board of Directors

Janel World Trade Ltd. and Subsidiaries

Jamaica, New York

We have audited the accompanying consolidated balance sheets of Janel World Trade Ltd. and Subsidiaries as of September 30, 2013 and 2012 and the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Janel World Trade Ltd. and Subsidiaries as of September 30, 2013 and 2012 and the results of its operations and its cash flows for the years ended September 30, 2013 and September 30, 2012 in conformity with accounting principles generally accepted in the United States of America.

/s/Paritz & Company, P.A

Hackensack, New Jersey

January 14, 2014

	F-1

JANEL WORLD TRADE LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	SEPTEMBER 30,
	2013		2012
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	625,584	$	773,868
Accounts receivable, net of allowance for doubtful accounts of $394,294 in 2013 and $325,335 in 2012		3,615,302		4,578,006
Marketable securities (Note 3)		-		65,568
Loans receivable - other (Note 4)		42,276		-
Prepaid expenses and sundry current assets		74,871		78,316
Assets of discontinued operations (Note 8)		305,454		3,508,034
TOTAL CURRENT ASSETS		4,663,487		9,003,792

Property and equipment, net (Note 5)		21,922		38,196

OTHER ASSETS:
Security deposits		60,724		57,049
TOTAL OTHER ASSETS		60,724		57,049

TOTAL ASSETS	$	4,746,133	$	9,099,037

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Note payable - bank (Note 6)	$	1,431,336	$	1,601,336
Accounts payable – trade		3,031,135		3,924,901
Accrued expenses and other current liabilities		311,369		313,869
Liabilities of discontinued operations (Note 8)		72,985		1,187,452
TOTAL CURRENT LIABILITIES		4,846,825		7,027,558

OTHER LIABILITIES:
Deferred compensation (Note 1)		78,568		78,568
TOTAL OTHER LIABILITIES		78,568		78,568

STOCKHOLDERS’ EQUITY (DEFICIENCY) (Note 9)		(179,260)		1,992,911

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)	$	4,746,133	$	9,099,037

The accompanying notes are an integral part of these consolidated financial statements

	F-2

JANEL WORLD TRADE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

	YEAR ENDED
	SEPTEMBER 30,
	2013		2012

REVENUES	$	44,744,518	$	49,837,461

COSTS AND EXPENSES:
Forwarding expenses		38,479,974		43,018,066
Selling, general and administrative		6,433,722		6,757,816
Depreciation and amortization		19,191		31,154
TOTAL COSTS AND EXPENSES		44,932,887		49,807,036

(LOSS) INCOME FROM CONTINUING OPERATIONS		(188,369)		30,425

OTHER ITEMS:
Interest expense, net of interest and dividend income		(121,021)		(95,454)
Realized loss from available for sale securities		(4,716)		-
TOTAL OTHER ITEMS		(125,737)		(95,454)

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(314,106)		(65,029)
Income taxes (Note 10)		17,000		1,221,304

NET LOSS FROM CONTINUING OPERATIONS		(331,106)		(1,286,333)
Loss from discontinued operations, net of loss on sale of discontinued operations of $1,351,795 in 2013 (Note 8)		(1,827,128)		(1,392,383)

NET LOSS		(2,158,234)		(2,678,716)
Preferred stock dividends (Note 9)		15,000		15,000

NET LOSS AVAILABLE TO COMMON STOCKHOLDERS	$	(2,173,234)	$	(2,693,716)

OTHER COMPREHENSIVE LOSS NET OF TAX:
Unrealized gain from available for sale securities		1,063		12,968
COMPREHENSIVE LOSS	$	(2,172,171)	$	(2,680,748)
(Loss) per share from continuing operations:
Basic	$	(.02)	$	(.06)
Diluted	$	(.01)	$	(.06)
(Loss) per share from discontinued operations:
Basic	$	(.08)	$	(.06)
Diluted	$	(.08)	$	(.06)
Net (Loss) per share available to common shareholders:
Basic	$	(.10)	$	(.12)
Diluted	$	(.09)	$	(.12)
Basic weighted average number of shares outstanding		21,577,202		21,705,553
Fully diluted weighted average number of shares outstanding		23,212,452		23,340,803

The accompanying notes are an integral part of these consolidated financial statements

	F-3

JANEL WORLD TRADE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	COMMON STOCK				PREFERRED STOCK
	SHARES		$		SHARES		$		TREASURY STOCK		ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS		ACCUMULATED OTHER COMPREHENSIVE GAIN (LOSS)		TOTAL
BALANCE-SEPTEMBER 30, 2011		21,104,868	$	21,105		1,063,525	$	1,064	$	(48,891)	$	4,695,415	$	(131,003)	$	(14,032)	$	4,523,658
Net loss		-		-		-		-		-		-		(2,678,716)		-		(2,678,716)
Dividends to preferred shareholders		-		-		-		-		-		-		(15,000)		-		(15,000)
Common stock issuance		750,000		750		-		-		-		149,250		-		-		150,000
Treasury Stock retired		(122,676)		(123)		-		-		48,891		(48,768)		-		-		-
Other comprehensive gains (losses):
Unrealized gain on available-for-sale marketable securities		-		-		-		-		-		-		-		12,969		12,969
BALANCE-SEPTEMBER 30, 2012		21,732,192	$	21,732		1,063,525	$	1,064		-	$	4,795,897	$	(2,824,719)	$	(1,063)	$	1,992,911
Net loss		-		-		-		-		-		-		(2,158,234)		-		(2,158,234)
Dividends to preferred shareholders		-		-		-		-		-		-		(15,000)		-		(15,000)
Common Stock retired		(1,714,286)		(1,714)		-		-		-		1,714		-		-		-
Other comprehensive gains (losses):
Unrealized gain on available-for-sale marketable securities		-		-		-		-		-		-		-		1,063		1,063
BALANCE-SEPTEMBER 30, 2013		20,017,906	$	20,018		1,063,525	$	1,064		-	$	4,797,611	$	(4,997,953)	$	-	$	(179,260)

The accompanying notes are an integral part of these consolidated financial statements

	F-4

JANEL WORLD TRADE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	YEAR ENDED SEPTEMBER 30,
	2013		2012
OPERATING ACTIVITIES:
Net (loss)	$	(2,158,234)	$	(2,678,716)
Plus (loss) from discontinued operations		475,333		1,392,383
Plus (loss) from sale of assets		1,351,795		-
Adjustments to reconcile net loss to net cash provided by operating activities:
Bad debt reserve		(22,849)		(12,898)
Depreciation and amortization		19,191		31,154
Deferred income taxes		-		1,184,003
Changes in operating assets and liabilities:
Accounts receivable		943,277		1,073,757
Tax refund receivable		-		148,000
Prepaid expenses and sundry current assets		3,445		(109,788)
Accounts payable and accrued expenses		(891,550)		(633,402)
Security deposits		(3,675)		250
NET CASH PROVIDED BY (USED IN) CONTINUING OPERATIONS		(283,267)		394,743

NET CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS		97,818		(786,609)

NET CASH (USED IN) OPERATING ACTIVITIES		(185,449)		(391,866)

INVESTING ACTIVITIES:
Acquisition of property and equipment, net		(2,917)		(7,506)
Sale (purchase) of marketable securities		61,915		(248)
Proceeds from sale of assets		469,067		-
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		528,065		(7,754)

FINANCING ACTIVITIES:
Dividends paid		(15,000)		(15,000)
Proceeds from the sale of common stock		-		150,000
Borrowings under bank line of credit		130,000		650,000
Repayment under bank line of credit		(300,000)		-
Repayments of long-term debt		(305,900)		(79,084)
Repayment of other note payable		-		(100,000)
Repayment of loans receivable		-		92,817
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(490,900)		698,733

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(148,284)		299,113

CASH AND CASH EQUIVALENTS – BEGINNING OF YEAR		773,868		474,755

CASH AND CASH EQUIVALENTS – END OF YEAR	$	625,584	$	773,868

The accompanying notes are an integral part of these consolidated financial statements

	F-5

JANEL WORLD TRADE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	YEAR ENDED SEPTEMBER 30,
	2013		2012

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest	$	138,989	$	122,880
Income taxes	$	27,000	$	19,870
Non-cash activities:
Unrealized gain on marketable securities	$	1,063	$	12,969
Dividends declared to preferred shareholders	$	15,000	$	15,000
Loan receivable (Note 4)	$	42,000	$	-

The accompanying notes are an integral part of these consolidated financial statements

	F-6

JANEL WORLD TRADE LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business description

Janel World Trade Ltd. and Subsidiaries (“the Company” or “Janel”) operates its business as a full-service cargo transportation logistics management, including freight forwarding – via air, ocean and land-based carriers – custom brokerage services, warehousing and distribution services, and other value-added logistics services.

Basis of consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. 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 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 the financial statements and the reported amounts of net revenue and expenses during each reporting period. Actual results could differ from those estimates.

Cash and cash equivalents

Cash and cash equivalents consist of cash and highly liquid investments with remaining maturities of less than ninety days at the date of purchase.

The Company maintains cash balances at various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. 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.

Accounts receivable and allowance for doubtful accounts receivable

The Company has a policy of reserving for uncollectible accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company extends credit to its customers based on an evaluation of their financial condition and other factors. The Company generally does not require collateral or other security to support accounts receivable. The Company performs ongoing credit evaluations of its customers and maintains an allowance for potential bad debts if required.

The Company determines whether an allowance for doubtful accounts is required by evaluating specific accounts where information indicates the customers may have an inability to meet financial obligations. In these cases, the Company uses assumptions and judgment, based on the best available facts and circumstances, to record a specific allowance for those customers against amounts due to reduce the receivable to the amount expected to be collected. These specific allowances are re-evaluated and adjusted as additional information is received. The amounts calculated are analyzed to determine the total amount of the allowance. The Company may also record a general allowance as necessary.

Direct write-offs are taken in the period when the Company has exhausted its efforts to collect overdue and unpaid receivables or otherwise evaluate other circumstances that indicate that the Company should abandon such efforts.

	F-7

Marketable securities

The Company classifies all of its short-term investments as available-for-sale securities. Such short-term investments consist primarily of mutual funds which are stated at market value, with unrealized gains and losses on such securities reflected as other comprehensive income (loss) in stockholders’ equity. Realized gains and losses on short-term investments are included in earnings and are derived using the specific identification method for determining the cost of securities. Therefore, all securities are considered to be available for sale and are classified as current assets.

Property and equipment and depreciation policy

Property and equipment are recorded at cost. 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, repairs and minor renewals are charged to expense when incurred. Replacements and major renewals are capitalized.

Business segment information

The Company operates as one reportable segment which is full service cargo transportation logistics management. The food sales segment was discontinued during the fiscal year ended September 30, 2012. Refer to Note 9, below.

Revenues and 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 to the Company for carrying the shipments when the Company acts as a freight consolidator. Ocean freight revenues include the charges to the Company 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.

Customs brokerage and other services involves 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.

	F-8

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

Customers will frequently request an all inclusive rate for a set of services, which 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 service when provided under an all inclusive rate are done in an objective manner on a fair value basis.

(b)

Food sales of discontinued operations

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery of products has occurred, the sales price is fixed or determinable, and collectability is reasonably assured. This generally means that the Company recognizes revenue when title to its products is transferred to its customers. Title usually transfers upon shipment to, or receipt at, the Company’s customer’s locations, as determined by the specific sales terms of each transaction.

The Company’s customers can earn certain incentives, which are included as deductions from revenue in the consolidated statements of operations. To date, these incentives include, but are not limited to cash discounts for early payment of the Company’s invoices.

Income per common share

Basic net income per common share is calculated by dividing net income available to common shareholders by the weighted average of common shares outstanding during the period. Diluted net income per common share is calculated using the weighted average of common shares outstanding adjusted to include the potentially dilutive effect of stock options and warrants.

Share based compensation

The Company accounts for other based compensation in accordance with ASC 718-10. Under the provisions of this statement the compensation costs relating to share-based payment transactions are to be recognized in the Company’s consolidated financial statements based on their fair values.

Comprehensive income

Comprehensive income encompasses all changes in stockholders’ equity other than those arising from stockholders, and generally consists of net income and unrealized gains and losses on unrestricted available-for-sale marketable equity securities. As of September 30, 2009, accumulated other comprehensive income consists of unrealized gains on unrestricted available-for-sale marketable equity securities.

	F-9

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 to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

Goodwill, other intangibles and long-lived assets

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. Current authoritative guidance requires goodwill to be 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 its 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.

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. In order to estimate the fair value of a long-lived asset, the Company may engage a third-party to assist with the valuation. 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.

Fair Value Measurements

The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

The estimated fair value of certain financial instruments, including cash and cash equivalents, prepaid expenses, and accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

	F-10

Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

Refer to Note 3, below, regarding marketable securities which are remeasured at fair value on a recurring basis.

Deferred compensation

Deferred compensation of $78,568 represents compensation due to an officer of the Company upon termination, retirement or death. This amount has not changed since 1992 and was accrued during the years 1984 through 1992.

Rental expense

Rental expense is accounted for on the straight-line method.

Deferred rent payable as of September 30, 2013 and 2012 which amounted to $2,026 and $4,237 represents the excess of recognized rent expense over scheduled lease payments and is included in accrued expenses and other current liabilities..

Recent accounting pronouncements

2	CHANGES IN ACCOUNTING PRINCIPLE – RECLASSIFICATION

Effective with this Annual Report on Form 10-K, management has elected to reclassify certain revenues in its consolidated statements of income. Previously, the Company classified its payments of customs duties on behalf of customers as forwarding expenses, and the Company’s collections of those customs duties from customers as revenues. Management has now removed these payments and collections of customs duties from revenues and forwarding expenses. These reclassifications have resulted in a decrease to revenues and a corresponding decrease to forwarding expenses of $31,839,927 for the fiscal year ended September 30, 2013, and $35,671,828 for the fiscal year ended September 30, 2012, with no change to previously reported net income (loss). In management’s judgment, the revised methodology makes the presentation more useful and informative and better reflects industry practice.

3	MARKETABLE SECURITIES

On November 21, 2012, the Company sold its marketable securities for $61,915 and realized a loss on the sale in the amount of $4,716. For the fiscal year ending September 30, 2012, marketable securities consisted of the following:

	Cost		Unrealized Holding Gains		Sale of Securities		Fair Value

As of September 30, 2012:
Mutual Funds	$	52,599	$	12,969	$	-	$	65,568

All of the Company’s marketable securities were Level 1 type assets, based on quoted prices in active markets.

	F-11

4	LOANS RECEIVABLE – OTHER

On August 28, 2013, in connection with the sale of certain assets of the Company’s New Jersey business (refer to Note 8, below), the Company issued a $42,000 promissory note to Nicholas V. Ferrara, a former employee and director of the Company. The promissory note bears interest at a rate of 8.0% beginning September 1, 2013. Principal and interest shall be due and payable in 36 equal and consecutive monthly installments in the amount of $1,343 beginning January 1, 2014.

5	PROPERTY AND EQUIPMENT

A summary of property and equipment and the estimated lives used in the computation of depreciation and amortization is as follows:

	September 30,
	2013		2012		Life

Furniture and fixtures	$	18,944	$	18,944		5-7 years
Computer equipment		109,691		106,763		5 years
		128,635		125,707
Less accumulated depreciation and
Amortization		106,713		87,511
	$	21,922	$	38,196

6	NOTE PAYABLE – BANK

In August 2010, the Company’s subsidiary Janel Group of New York, Inc. (“Janel New York”) entered into a one-year $3.5 million revolving line of credit agreement with Community National Bank (“CNB”). The new credit facility (the “CNB Facility”) replaced Janel New York’s previous term loan agreement. At that time, the interest rate of the CNB Facility was the prime rate plus 1%, with a minimum rate of 5% and under the CNB Facility, Janel New York could borrow the lesser of $3.5 million or 80% of the Company’s aggregate outstanding eligible accounts receivable, as defined. Janel New York’s obligations under the CNB Facility are collateralized by all of the assets of the Company and are guaranteed by the Company and James N. Jannello, the Company’s Chief Executive Officer.

On November 2, 2011, the Company amended the terms of the CNB Facility. Pursuant to the revised terms, James N. Jannello was released from his personal guarantee of the Company’s obligations to CNB, the minimum interest rate was increased from 5.0% per annum to 7.0% per annum, and the Company agreed to pay an unused line fee equal to one-half of one percent per annum. All other terms of the CNB Facility remained unchanged.

On August 10, 2012, the maturity of the CNB Facility was extended for two months until September 30, 2012, the maximum amount available under the CNB Facility was reduced from $3.5 million to $2.5 million, subject to the borrowing base limit referenced above, and the personal guarantee of James N. Jannello was reinstated. On September 20, 2012 the CNB Facility was extended until October 29, 2012.

On October 29, 2012 the CNB Facility was extended until September 30, 2013. As part of the extension, CNB eliminated the unused line fee. All other terms of the CNB Facility remained unchanged.

On September 30, 2013, the CNB Facility was extended to January 31, 2014. As part of the extension, CNB (i) reduced the Credit Facility to $1,731,336 (outstanding borrowings at that date), (ii) requires that 80% of the collections on eligible accounts receivable from the Registrant’s former Hillside, New Jersey freight forwarding and logistics operations which was sold on August 30, 2013 (the “NJ Collections”), be used to pay down borrowings under the Credit Facility within 10 days of collection, and (iii) will not allow any additional borrowings during the extension period. All other terms of the CNB credit facility remained unchanged.

On September 30, 2013, the company repaid $300,000 to CNB, reducing the amount of borrowings outstanding under the Credit Facility to $1,431,336. This repayment was a result of NJ Collections during the month of September.

	F-12

On December 9, 2013, subsequent to the period covered by this report, the company repaid $156,000 to CNB, reducing the amount of borrowings outstanding under the Credit Facility to $1,275,336. This repayment was a result of NJ Collections for the period October 1, 2013 through November 30, 2013.

7	RELATED PARTY

Prior to August 28, 2013, we received trucking and warehouse related services from Allports Logistics Warehouse, LLC (“Allports”) and Ferrara International Worldwide, Inc. (“FIW”), which is controlled and owned by Nicholas V. Ferrara, a former employee and Director of the Company. We paid approximately $1,311,000 and $2,009,000 to Allports for such services in fiscal 2013 and 2012, respectively; and, approximately $439,000 and $160,000 to FIW for such services in fiscal 2013 and 2012, respectively. Refer to Note 8, below, regarding the sale of the New Jersey operations to a related party.

8	DISCONTINUED OPERATIONS

On August 28, 2013, the Company, and its wholly-owned subsidiary, The Janel Group of New York, Inc. (collectively, the “Seller”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Allports Logistics Anchor Wharehouse, LLC (the “Purchaser”), an entity affiliated with Nicholas V. Ferrara, a former director of the Company. Under the terms of the Agreement, the Purchaser purchased certain of the Seller’s assets (the “NJ Assets”) used by the Seller in the Company’s Hillside, New Jersey freight forwarding and logistics operations (the “NJ Business”). The Company had originally acquired its New Jersey operations from an affiliate of Mr. Ferrara in two transactions in 2008 and 2010. The sale price of the NJ Assets consisted of $401,067 in cash, and the assumption of all future lease obligations with respect to the three office and warehouse facilities from which the Company conducted its New Jersey operations. At the closing of the sale on August 30, 2013, the Seller used the cash portion of the purchase price to repay outstanding obligations secured by the NJ Assets, including the $229,241 outstanding balance on the Seller’s term loan from CNB, and an aggregate $58,245 on two outstanding equipment financing arrangements. Simultaneously with the closing Mr. Ferrara (i) paid the Company $110,000 for the release of restrictions on competition which were agreed to as part of the 2008 portion of the acquisition of the NJ Business and (2) returned to the Company the 1,714,286 restricted common shares that were previously issued as part of the 2010 portion of the acquisition of the NJ Business (the restricted common shares were subject to an earn out, however, none of the restricted common shares were earned). All of the expenses of the NJ Business from and after the closing are the responsibility of the Purchaser. The Company retained its pre-closing accounts receivable and accounts payable with respect to the NJ Business the net proceeds on these accounts receivable and payable will be used to further reduce the Company’s obligations to Community National Bank. As previously reported by the Company, as of September 30, 2012 the Company had determined that there was full impairment of the goodwill relating to its 2008 and 2010 acquisitions of the NJ Business, and recorded an impairment loss of $1,167,070 on September 30, 2012, representing the write-off of all of the goodwill acquired in those transactions. As a result of the sale of the NJ Business to the Purchaser, the Company recorded a write off of $1,562,061 associated with the customer list from the 2008 and 2010 acquisitions of the NJ Business.

As a result of the above, the Company elected to discontinue the operations of the NJ Business. Also, during June 2012 the Company elected to discontinue the operations of the food sales segment. The assets, liabilities and operations associated with the NJ Business and the food sales segment are summarized below.

	F-13

	2013		2012
ASSETS AND LIABILITIES IN DISCONTINUED OPERATIONS:

ASSETS:
Accounts receivable, net		305,454		1,053,407
Prepaid expenses and sundry current assets		-		49,894
Property and equipment, net		-		473,207
Security deposits		-		110,000
Intangible assets		-		1,821,526
TOTAL ASSETS		305,454		3,508,034

LIABILITIES:
Accounts payable		57,780		525,351
Accrued expenses		15,205		356,201
Current and long-term debt – bank		-		305,900
TOTAL LIABILITIES		72,985		1,187,452

	2013		2012
TOTAL DISCONTINUED OPERATIONS:
REVENUES	$	12,759,734	$	13,793,122

COSTS AND EXPENSES:
Cost of sales		9,683,566		10,936,669
Selling, general and administrative expenses		3,169,610		3,766,801
Depreciation and amortization		363,923		365,503
Change in fair value of contingent consideration		-		(1,129,650)
TOTAL COSTS AND EXPENSES		13,217,099		13,939,323

Interest expense		17,968		79,112
Sub-total		(475,333)		(225,313)

Loss on sale of assets		1,351,795		-
Impairment loss		-		1,167,070

LOSS FROM DISCONTINUED OPERATIONS	$	(1,827,128)	$	(1,392,383)

	F-14

	2013		2012
NEW JERSEY DISCONTINUED OPERATIONS:
REVENUES	$	12,759,734	$	13,193,358

COSTS AND EXPENSES:
Cost of sales		9,683,566		10,086,819
Selling, general and administrative expenses		3,131,687		3,356,388
Depreciation and amortization		363,923		361,683
Change in fair value of contingent consideration		-		(1,129,650)
TOTAL COSTS AND EXPENSES		13,179,176		12,675,240

Interest expense		17,968		76,105
Sub-total		(437,410)		442,013

Loss on sale of assets		1,351,795		-
Impairment loss		-		1,167,070

LOSS FROM DISCONTINUED OPERATIONS	$	(1,789,205)	$	(725,057)

	2013		2012
FOOD SALES DISCONTINUED OPERATIONS:
REVENUES		-	$	599,764

COSTS AND EXPENSES:
Cost of sales		-		849,850
Selling, general and administrative expenses		37,923		410,413
Depreciation and amortization		-		3,820
TOTAL COSTS AND EXPENSES		37,923		1,264,083

Interest expense		-		3,007

LOSS FROM DISCONTINUED OPERATIONS	$	(37,923)	$	(667,326)

9	STOCKHOLDERS’ EQUITY

Janel is authorized to issue 225,000,000 shares of common stock, par value $.001. In addition, the Company is authorized to issue 5,000,000 shares of preferred stock, par value $.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 may fix the number of shares constituting each series and increase or decrease the number of shares of any series.

	F-15

Convertible preferred stock

On January 10, 2007, the Company sold 1,000,000 unregistered shares of newly authorized $0.001 par value 3% Series A Convertible Preferred Stock (the “Series A Stock”) for a total of $500,000. The shares are convertible into shares of Janel’s $0.001 par value common stock at any time on a one-share for one-share basis. The Series A Stock pay a cumulative cash dividend at a rate of $15,000 per year payable quarterly. On September 30, 2013 there were 1,000,000 Series A Stock outstanding.

On October 18, 2007, the Company issued 285,000 unregistered shares of newly authorized $0.001 par value Series B Convertible Preferred Stock (the “Series B Stock”) in connection with the acquisition of Order Logistics, Inc. (a discontinued operation). The shares are convertible into shares of Janel’s $0.001 par value common stock at any time after October 18, 2009 on a one-share (of Series B Stock) for ten-shares (of common stock) basis. On September 30, 2013 there were 63,525 Series B Stock outstanding.

Common stock

On October 12, 2006, the Company’s Board of Directors authorized the purchase of up to 300,000 shares of the Company’s common stock, subject to certain conditions. The repurchase plan may be suspended by the Company at any time. As of September 30, 2013, 259,676 shares of the Company’s common stock have been repurchased under the plan at a cost of $114,703 and restored to the status of authorized and unissued.

On October 4, 2010, the Company issued 1,714,286 shares of common stock at $0.35 per share or an aggregate of $600,000 in connection with the Ferrara International Logistics, Inc. acquisition of the same date. On August 28, 2013 the 1,714,286 shares of common stock were returned to the Company in connection with the sale of the Company’s New Jersey operation on August 28, 2013.

On October 14, 2011, the Company sold 750,000 shares of common stock at $0.20 per share or an aggregate of $150,000.

10	INCOME TAXES

Income taxes from continuing operations consist of the following:

	Year Ended September 30,
	2013		2012

Federal – current	$	-	$	-
- deferred		-		1,084,304
State and local		17,000		37,000
	$	17,000	$	1,121,304

The reconciliation of income tax computed at the Federal statutory rate to the provision for income taxes from continuing operations is as follows:

	Year Ended September 30,
	2013		2012

Federal taxes (credits) at statutory rates	$	(116,000)	$	(209,000)
Permanent differences		10,000		10,000
State and local taxes, net of Federal benefit		6,000		(84,000)
Valuation allowance		(100,000)		(838,304)
	$	-	$	(1,121,304)

The components of deferred income tax are as follows:

Net operating loss carryforwards	$	2,718,000	$	838,304
Valuation allowance		(2,718,000)		(838,304)
Net deferred tax asset	$	-	$	-

	F-16

During the fiscal years ended September 30, 2013 and 2012, the Company provided a valuation allowance against deferred tax assets in the amount of $100,000 and $838,304, respectively, as the result of an evaluation of the Company’s net operating losses incurred in prior years, its recent history of two consecutive years of losses from continuing operations, there are no existing events (such as very large sales orders or non-recurring events) that would produce adequate taxable income to offset the carryforward and there are no appreciated assets available to sell in order to utilize the NOL. The Company assessed the likelihood that its deferred tax assets would be recovered from future taxable income and determined that recovery was not more likely than not based upon all available evidence, both positive and negative. The amount of the non-cash valuation allowance reduction was based on management’s estimates of future taxable income by taking jurisdictions and the period over which the Company believes deferred tax assets will be recoverable.

The Company has net operating loss carryforwards for income tax purposes which expire as follows:

2031	$	285,000
2032		1,555,000
2031		4,200,000
	$	6,040,000

11	PROFIT SHARING AND 401(k) PLANS

The Company maintains a non-contributory profit sharing plan and a contributory 401(k) plan covering substantially all full-time employees. The 401(k) plan provides for participant contributions of up to 25% of annual compensation (not to exceed the IRS limit), as defined by the plan. The Company contributes an amount equal to 25% of the participant’s first 5% of contributions. The expense charged to operations for the years ended September 30, 2013 and 2012 aggregated approximately $19,000 and $19,000, respectively.

12	RENTAL COMMITMENTS

The Company conducts its operations from leased premises. Rental expense on operating leases for the years ended September 30, 2013 and 2012 was approximately $388,000 and $406,000, respectively.

Future minimum lease commitments (excluding renewal options) under non-cancellable leases are as follows:

Year ended September 30, 2014	$	344,000
2015		149,000
2016		83,000
2017		62,000

13	RISKS AND UNCERTAINTIES

(a)

Currency risks

(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.

	F-17

(c)

Legal proceedings

(1) 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 predicated 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 financial position or results of operations.

(2) Janel and/or one or more of its subsidiaries have been named as a defendant in the following lawsuits involving the Company’s food segment which the Company sold in 2012.

	⋅	On June 22, 2012 (amended September 5, 2012), Fratelli Masturzo S.R.L., Clematis, S.R.L., Fratelli Longobardi S.R.L. and Pancrazio S.P.A. filed a law suit in the Supreme Court of the State of New York County of Queens against The Janel Group of New York, Inc., Ferrara International Logistics, Inc., Tutto Italia USA, LLC and Paul Sorvino Foods, Inc. (Case No. 018503/2012). The complaint alleges the non-payment of food product purchases totaling $186,728. On February 26, 2013, the Company filed an answer on behalf of The Janel Group of New York, Inc. and Ferrara International Logistics, Inc. denying the allegations.

	⋅	On June 27, 2012, Allegiance Retail Services, LLC and Foodtown, Inc. filed a law suit in the Supreme Court of New Jersey against Janel Ferrara Logistics, LLC d/b/a Paul Sorvino Foods. (Case No. UNN-L-2301-12). The complaint alleges the non-payment of invoices for the placing, merchandising, marketing and promoting of food products totaling $103,856. On March 27, 2013, the Company filed an answer denying the allegations and counterclaiming for breach of contract and for the return of amounts previously paid for the placing, merchandising, marketing and promoting of food products, and other damages, including costs of suit.

	⋅	On January 29, 2013, UGO Foods Corporation filed a law suit in the Supreme Court of the State of New York County of Queens against Janel World Trade, Ltd., The Janel Group of New York, Inc., Mann Global Enterprises, LLC as Successor in interest of Janel Ferrara Logistics, LLC. (Case No. 700302/2013). The complaint alleges the non-payment of food product purchases totaling $41,281. On February 27, 2013, the Company filed an answer on behalf of Janel World Trade, Ltd. and The Janel Group of New York, Inc. denying the allegations.

	⋅	On January 29, 2013, Branch Banking and Trust Corporation filed a law suit in the Supreme Court of the State of New York County of New York against The Janel Group of New York, Inc., Mann Global Enterprises, LLC as Successor of Janel Ferrara Logistics, LLC. (Case No. 650322/2013). The complaint alleges the non-payment of food product purchases totaling $41,652. On February 27, 2013, the Company filed an answer on behalf of The Janel Group of New York, Inc. denying the allegations.

	⋅	On October 2, 2013, Casa OiliO Sperlonga, S.p.A. and Casa Oilio North America, LLC filed a law suit in the Supreme Court of the State of New Jersey County of Union against Ferrara International Logistics, Inc., Nicholas V. Ferrara, Gusto Italia, LLC, Janel-Ferrara Group, Janel-Ferrara Logistics, LLC, Janel Group of New York, Inc., Janel World Trade, Ltd., Mann Global Enterprises, LLC, Michael W. O’Gorman, and Tutto Italia USA, LLC (Case No. UNN-L-3511-13). The complaint alleges the non-payment of food product purchases totaling $1,046,241. On December 17, 2013, the Company filed an answer on behalf of Janel World Trade, Ltd., The Janel Group of New York, Inc., Janel Ferrara Logistics, LLC, and Janel Ferrara Group denying the allegations.

(3) On April 27, 2012, the Company’s subsidiary, Janel Group of Illinois, Inc. (“Janel Illinois”), filed a law suit in the Circuit Court for Cook County, Illinois (Case No. 2012 L 4574) against Q Marketing Group, Ltd. and its principals, Eduardo and Marie Gordon, for non-payment of invoices for freight services, and on September 14, 2012 obtained a default judgment against the defendants. In an effort to collect on the judgment, Janel Illinois filed to register the Illinois default judgment with the New York Supreme Court, and on August 1, 2013, subsequent to the period covered by this Quarterly report on Form 10-Q, the defendants filed an answer with unspecified counterclaims against Janel Illinois (Supreme Court of New York for Queens County, Index No. 702364/13) seeking damages of $500,000, punitive damages of $1,000,000 and sanctions of $10,000. The Company believes that the defendants have no meritorious defenses or counterclaims against the Illinois judgment and will vigorously continue to pursue payment from the defendants.

	F-18

(e)

Concentration of sales

Sales to two major customers were approximately 49.5% and 45.9% of consolidated sales from continuing operations for the years ended September 30, 2013 and 2012, respectively. Amounts due from these customers aggregated approximately $423,000 and $845,000 at September 30, 2013 and 2012, respectively.

14	STOCK OPTIONS

On June 30, 2010, the Company issued options to purchase 23,750 shares of common stock at an exercise price of $1.00 per share, in partial satisfaction of half of the finder’s fees associated with the hiring of two new sales executives. The remaining obligation of $23,750 was paid in cash.

On October 30, 2013, subsequent to the period covered by this report, options to purchase 4,750,000 shares of common stock at an exercise price of $0.065 per share were granted to key employees of the Company. Refer to Note 18(1), below.

The Company has no other stock options outstanding.

15	SUBSEQUENT EVENTS

Management has evaluated events occurring after the date of these financial statements through the date that these financial statements were issued. Other than the below two items, there have been no other events that would require adjustment to or disclosure in the financial statements.

(1) On October 6, 2013, subsequent to the period covered by this report, the Company entered into a Securities Purchase Agreement (the “Agreement”) with Oaxaca Group LLC, (the “Investor”), for the sale to the Investor of an aggregate 7,692,308 shares of the Company’s common stock at a purchase price of $0.065 per share, or an aggregate of $500,000. On October 30, 2013 the transaction closed. As part of the purchase, the Investor received warrants to purchase an aggregate 12,500,000 shares of common stock at $0.08 per share. The warrants expire five years after the closing date. The Agreement contains anti-dilution protections for the Investor. In addition, under the terms of the Agreement, the Company agreed that, at the Investor’s option, the Company will present two nominees nominated by the Investor to become members of the Company’s Board of Directors either through an action by written consent or through the vote of the Company’s stockholders at the next meeting of the Company’s stockholders, and from and after such time the size of the Company’s Board of Directors will be limited to no more than four members, unless approved by the Investor. Furthermore, the Company agreed that it will not take certain actions without the approval of the Investor. Simultaneous with the closing of the transaction, options to purchase 4,750,000 shares of common stock at an exercise price of $0.065 per share were granted to key employees of the Company.

(2) On December 9, 2013, the company repaid $156,000 to CNB, reducing the amount of borrowings outstanding under the Credit Facility to $1,275,336. This repayment was a result of NJ Collections for the period October 1, 2013 through November 30, 2013. Refer to Note 6, above.

	F-19