SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K/A





(Mark
One)





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


For
      the fiscal year ended: September 30,
2008





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


For
      the transition period from:





Commission
File No. 333-60608





JANEL WORLD TRADE,
LTD.


(Name of
small business issuer in its charter)





Nevada
              86-1005291(State
      of other jurisdiction of
              (IRS
      Employer Identification No.)Incorporation
      or organization)150-14
      132nd
      Avenue, Jamaica, NY
              11434(Address
      of principal executive offices)
              (Zip
      Code)Issuer's
      telephone number, including area code:
              (718)
      527-3800





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


Name
      of exchange onTitle of each class
                  
                  which registeredNone
                  
                  None





Securities
registered pursuant to Section 12(g) of the
Act:     None




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




Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section
15(d) of the Act .  Yes   Nox


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 (the “Act”)
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes x  No
 ̈





Indicate
by check mark 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 information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  x





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





Large accelerated filer ̈
            Accelerated filer ̈
            Non-Accelerated
      filer x





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant's most recently completed second fiscal
quarter: $4,173,120(last
sale as of 3/31/08).





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




(APPLICABLE
ONLY TO CORPORATE REGISTRANTS)




State the
number of shares outstanding of each of the issuer's class of common equity, as
of the latest practicable date:  18,013,332




DOCUMENTS
INCORPORATED BY REFERENCE




List
hereunder the following documents if incorporated by reference and the Part of
the Form 10-K into which the document is incorporated: (1) Any annual report to
security holders; (2) Any proxy or information statement; and (3) Any prospectus
filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The
listed documents should be clearly described for identification purposes (e.g.,
annual report to securities holders for fiscal year ended December 31,
1980).




None.





PART
1




Item
1.          Description of
Business.




General
Development of Business




Janel
World Trade, Ltd. has its executive offices at 150-14 132nd Avenue,
Jamaica, NY 11434, tel. (718) 527-3800, adjacent to the John F. Kennedy
International Airport. The company and its predecessors have been in business
since 1975 as a logistics services provider for importers and exporters
worldwide. The company operates its business as two reportable
segments.  It is primarily engaged, through its wholly owned
subsidiaries, 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.  Its
second, smaller segment is computer software sales, support and
maintenance.




Related
to its traditional freight forwarding and customs brokerage activities, Janel
offers 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 its 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.




Janel
conducts its business through a network of company-operated facilities and
independent agent relationships in most trading countries, principally China,
Korea, Vietnam, India, Bangladesh, Japan, Oman, Guatemala, Honduras, Australia,
England, France, Italy and Germany. During fiscal 2007 (Janel’s fiscal year ends
September 30), the company handled approximately 28,000 individual import and
export shipments, predominately originating or terminating in the United States,
Europe and the Far East. Janel generated gross revenue of approximately $82.7
million in fiscal 2008, $74.9 million in fiscal 2007 and $77.2 million in 2006.
In fiscal 2008, approximately 70% of revenue related to import activities
(unchanged from 2007), 5% to export, 20% to break-bulk and forwarding, and 5% to
warehousing, distribution and trucking (unchanged from 2007). By operating
segment, total 2008 revenue was comprised $82.3 million for transportation
logistics and $0.5 million for computer software. By market, the company’s
revenue in fiscal 2008 derived from four principal industries: consumer wearing
apparel/textiles - approximately 35% (unchanged from 2007); machines/machine
parts - approximately 10% (unchanged from 2007); household appliances -
approximately 20% (unchanged from 2007); and sporting goods and accessories –
approximately 10% (unchanged from 2007).




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.


2




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.




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.”




In
October 2007, the company acquired certain assets of Order Logistics, Inc. (OLI)
consisting of proprietary technology, intellectual property (including the name
“Order Logistics”), office locations and equipment and customer lists for use in
the management and expansion of the company’s international integrated logistics
transport services business. The company filed a Form 8-K report with the SEC
regarding the OLI transaction on October 22, 2007. Due to changes in economic
circumstances relating to OLI, the company has determined that the carrying
value of certain OLI intangible assets exceeded their estimated undiscounted
future cash flows and their eventual disposition. Accordingly, the company has
recorded an impairment loss of $1,812,750 (see Note 2(A) to the financial
statements).




In July
2008, the company acquired the customs brokerage “book of business” of Ferrara
International Logistics, Inc. (Ferrara), consisting of books, records, forms,
manuals, access codes, goodwill, customer lists and contact information,
telephone and advertising listings for the expansion of the company’s
international integrated logistics transport services business. The company
filed a Form 8-K report with the SEC regarding the Ferrara transaction on July
24, 2008.




The
company operates out of eight leased locations in the United States: Jamaica
(headquarters) and Lynbrook (accounting) in New York; Champaign, Illinois, Elk
Grove Village (Chicago, Illinois); Downers Grove (Chicago, Illinois); Forest
Park (Atlanta, Georgia); Inglewood (Los Angeles, California); and Miami, Florida
(Janel Group of Los Angeles Miami Branch). Each Janel office is managed
independently, with each manager having over 20 years experience with the
company (except for Champaign, which was recently acquired).  Janel
Shanghai, Janel Hong Kong and Janel China (Shenzhen) operate as independently
owned franchises within the company’s network. Janel’s former President, Stephen
P. Cesarski, and its Executive Vice President, James N. Jannello, each
personally own a 10% profit interest in each of Janel Shanghai and Janel Hong
Kong. Janel Miami (Florida) and Janel Bangkok (Thailand) operate only as
franchises under the Janel name, but are not otherwise affiliated with the
company’s corporate network. Mr. Jannello, Janel’s Executive Vice President,
owns 50% of the Janel Miami office.


3




Freight Forwarding and Related
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.




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.


4


In July
2008, the company acquired the customs brokerage “book of business” of Ferrara
International Logistics, Inc. (Ferrara), consisting of books, records, forms,
manuals, access codes, goodwill, customer lists and contact information,
telephone and advertising listings for the expansion of the company’s
international integrated logistics transport services
business.  Ferrara will provide the company with related marketing,
advertising, sales, and related administrative services pursuant to a three-year
term agreement, which includes non-competition provisions. Janel filed a Form
8-K report regarding the Ferrara transaction with the SEC on July 24,
2008.




Other
Logistics 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.




In
October 2007, Janel completed the acquisition of certain assets of Order
Logistics, Inc. (“OLI”), a Delaware corporation, comprised of proprietary
technology, intellectual property (including the brand name “Order Logistics”),
office locations and equipment, and customer relationships, for use in the
management and expansion of Janel’s international integrated logistics transport
services business. The Web-based supply-chain technology acquired by Janel
enables its customers to collaborate in the planning, execution, management and
tracking of shipments, financial settlement, procurement and quality control
activities on a worldwide basis. Janel filed a Form 8-K report regarding the
asset acquisition transaction with the SEC on October 22, 2007.




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 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 tracking and
tracking of customer shipments.




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 2007, the
company shipped goods and provided logistics services for approximately 1,000
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. The company’s six largest accounts in fiscal 2008 were: H.H.
Brown Shoe Company (which accounts for approximately 10.85% of revenue), The
Conair Corporation, Leisure Merchandise, Modell’s Sporting Goods, and The Selmer
Company.


5




James N. Jannello and William J. Lally
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.




Employees




As of September 30, 2008, Janel
employed 79 people; 36 in its Jamaica, New York headquarters and Lynbrook, New
York back office; 2 in Champaign, Illinois; 9 in Elk Grove Village, Illinois; 5
in Downers Grove, Illinois; 8 in Forest Park, Georgia; 2 in Miami, Florida; and
17 in Inglewood, California. Approximately 62 of the company’s employees are
engaged principally in operations, 11 in finance and administration and 6 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.




To retain the services of highly
qualified, experienced and motivated employees, Janel management emphasizes an
incentive compensation program and adopted a stock option plan in December
2002.




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.




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.




Seasonality




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. 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.


6


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. 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. Many of Janel’s customers may ship a significant portion of their goods
at or near the end of a quarter and the company may not learn of a resulting
shortfall in revenue until late in a quarter.




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.




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.


7




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




We
May Not Be Successful in Growing Either Internally or Through
Acquisitions.




Our growth strategy primarily focuses
on internal growth in domestic and international freight forwarding, local pick
up and delivery, customs brokerage and acquisitions. Our ability to grow will
depend on a number of factors, including:




- existing and emerging
competition;




- ability to operate profitably in the
face of competitive pressures;




- the recruitment, training and
retention of operating and management employees;




- the strength of demand for our
services;




- the availability of capital to
support our growth; and




- the ability to identify, negotiate
and fund acquisitions when appropriate.




Acquisitions
Involve Risks, Including Those Relating to:




- the integration of acquired
businesses, including different information systems;




- the retention of prior levels of
business;




- the retention of
employees;




- the diversion of management
attention;




- the write-offs resulting from
impairment of acquired intangible assets; and




- unexpected liabilities.




We cannot assure that we will be
successful in implementing any of our business strategies or plans for future
growth.


8




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, are influenced by many factors,
including:




- economic and political conditions in
the United States and abroad;




- major work stoppages, such as the
2002 West Coast work stoppage;




- 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.




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.




Our
Business Has Been and Could Continue to Be Adversely Affected by Negative
Conditions in the United States and World Economy, or the Industries of Our
Principal Customers.




Demand for our services can be
adversely affected by negative conditions in the United States and world
economy, or the industries of our customers. A substantial number of our
principal customers are in the household products, garments, industrial
equipment, telecommunications and related industries, and their business is
subject to being adversely affected, such as during the 2001-2002 recession
period, and the current economic recession. These customers collectively account
for a substantial percentage of our revenue. Adverse conditions or worsening
conditions in the industries of our customers could cause us to lose significant
customers, or experience decreased shipping volume and business levels of our
customers. Either of these events could negatively affect our financial results.
Adverse economic conditions in the international markets also have an adverse
effect on our customers and our business. We expect that demand for our
services, and consequently our results of operations, will be sensitive to
domestic and global economic conditions and other factors beyond our
control.




Failure
to Comply with a Debt Service Coverage Ratio Covenant in the Company's Credit
Agreement with its Bank could result in accelerated Payment of all Obligations
to the Bank, which could Adversely affect the Company's Business
Operations.




The company at year-end had outstanding
borrowings of approximately $750,000 on a line note, and  $1,700,000
on a term loan under a Credit Agreement with J.P. Morgan Chase Bank, N.A., which
requires a Debt Service Coverage Ratio with respect to the cash flow available
to meet interest and principal payments on the outstanding debt. Although the
company is current in its repayments under the Credit Agreement, it does not
currently meet the required ratio, which results in a technical default under
the agreement. The bank could accelerate full payment of the company's
borrowings based upon the technical default, which could adversely affect the
company's business operations. However, as of the date of this prospectus, the
bank has been accommodating to the company, and has not exercised any of its
rights under the Debt Service Coverage Ratio covenant


9




The
Terrorist Attacks on September 11, 2001, and their Aftermath, Have Created
Economic, Political and Regulatory Uncertainties, Some of Which May Materially
Harm Our Business and Prospects and Our Ability to Conduct Business in the
Ordinary Course.




The terrorist attacks that took place
in the United States on September 11, 2001, have adversely affected many
businesses, including our business. The national and global responses to these
terrorist attacks, which are varied and unpredictable, may materially adversely
affect us in ways we cannot currently predict. Some of the possible future
effects include reduced business activity by our customers, increased shipping
costs, changes in security measures or regulatory requirements for air and other
travel and reductions in available commercial flights that may make it more
difficult for us to arrange for the transport of our customers' freight and
increased credit and business risk for customers in industries that were
severely affected by the attacks.




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
May Lose Business to Competitors.




Competition within the freight industry
is intense. We compete in North America primarily with fully integrated
carriers, including much larger and well-financed national companies and smaller
freight forwarders. Internationally, we compete primarily with the major
European-based freight forwarders. We expect to encounter continued competition
from those forwarders that have a predominantly international focus and have
established international networks, including those based in the United States
and Europe. We also expect to continue to encounter competition from other
forwarders with nationwide networks, regional and local forwarders, passenger
and cargo air carriers, trucking companies, cargo sales agents and brokers, and
carriers and associations of shippers organized for the purpose of consolidating
their members' shipments to obtain lower freight rates from carriers. As a
customs broker and ocean freight forwarder, we encounter strong competition in
every port in which we do business, often competing with large domestic and
foreign firms as well as local and regional firms. Our inability to compete
successfully in our industry could cause us to lose customers or lower the
volume of our shipments.




10


Our
Success Depends on the Efforts of Our Founders and Other Key Managers and
Personnel.


Our founder, James N. Jannello,
continues to serve as Executive Vice President and Chief Executive Officer, and
William J. Lally serves as President and Chief Operating Officer. We believe
that our success is highly dependent on the continuing efforts of Mr. Jannello
and the other executive officers and key employees, as well as our ability to
attract and retain other skilled managers and personnel. 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.




Janel’s
Officers and Directors Control the Company.




The officers and directors of the
company control the vote of approximately 67% of the outstanding shares of
common stock. The company's stock option plan provides 1,600,000 shares of
common stock regarding which options may be 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, they will, by virtue of their
control of a large majority of the voting shares, 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 Could Result in
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 regulations that in many instances require
permits and licenses. Our failure to maintain 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.




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.


11




We
Have No History of Paying Dividends.




Janel has not paid cash dividends on
our common stock. We currently anticipate that we will retain all future
earnings for use in our business and do not anticipate paying any cash dividends
in the foreseeable future.




Item
1B. Unresolved Staff Comments.




None.





Item
      2.
            Properties.




Janel leases all of its office
facilities. The executive offices in Jamaica, New York consist of
approximately5,000
square feetof
office space adjoined by 9,000 square feet of warehouse space, all subject to a
lease with a term ending January 31, 2010, and an annual base rent of $145,500.
Its administrative office in Lynbrook, New York is approximately 1,459 square
feet and is occupied under a lease which is being renewed to expire February 28,
2013, with an annual rent of $42,690 for 2005, which increases at the rate of 3%
per year of the lease. The company also has the use of a small office in a
Ferrara warehouse in Hillside, New Jersey, without charge. Janel’s Elk Grove
Illinois office occupies approximately 2,063 square feet with an additional 800
square feet of warehouse space under a lease which expires November 30, 2009,
with an annual rent of $40,536. Janel’s Downers Grove, Illinois office occupies
approximately 2,095 square feet under a lease which expires October 31, 2011,
with an annual rent of $37,710. Janel’s Champaign, Illinois office occupies
approximately 1,200 square feet under a lease which expires August 31, 2009,
with an annual rent of $18,435. Janel’s Miami, Florida office occupies
approximately 506 square feet under a lease which expires August 31, 2010, with
an annual rent of $10,593. Janel’s Georgia location occupies approximately 3,000
square feet of office and warehouse space, under a lease which expires in August
31, 2009 with an annual rent of $30,066 which increases to $30,968 on September
1, 2008. Janel’s Los Angeles office occupies approximately 3,000 square feet of
office under a lease which expires in June 2012 with an annual rent of $72,000
through December 31, 2008, with annual increases 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.




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.




Subsequent
to the October 2007 acquisition of certain assets of Order Logistics, Inc.
(“OLI”), a Delaware corporation, consisting principally of proprietary
technology, office locations and personnel, and customer relationships, Janel
learned that immediately prior to the closing of the acquisition, OLI had
entered into an undisclosed agreement with a third party (the “Settlement
Agreement”) which permitted that party to use OLI proprietary technology and
customer relationships being purchased by Janel, and to solicit OLI employees in
its South Carolina office. Janel believes that OLI’s failure to disclose the
Settlement Agreement prior to the closing of the asset acquisition was a
material violation of the OLI covenants, representations and warrantees set
forth in the October 18, 2007 Asset Purchase Agreement which has damaged the
value of the assets acquired by Janel. The company is in discussions to obtain
appropriate for the damage, and is considering the initiation of litigation
against OLI and its president to obtain an appropriate award of
damages.


12




In
February 2008, the company filed a lawsuit in the United States District Court
for the Southern
District of New York against defendants World Logistics Services, Inc. (World
Logistics), a Delaware Corporation formerly known as Order Logistics, Inc.;
Richard S. Francis, the President of World Logistics; and Brian P. Griffin, who
was the Chief Executive Officer of World Logistics when Janel completed an
acquisition in October 2007 of certain World Logistics assets.




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





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





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




There was no submission of matters to a
vote of security holders during the company’s fiscal year ended September 30,
2008, except for the re-election of the board of directors by written consent of
a majority of the company’s shareholders in July 2008.





PART
II





Item
      5.
            Market
      for Registrant’s Common Equity and Related Stockholder Matters, and Issuer
      Purchases of Equity Security
Securities.




(b)           The
company's common stock is quoted on the OTC Bulletin Board. The following table
sets forth the range of the high and low bid prices for the company's common
stock as reported on the OTC Bulletin Board for the periods indicated.
Quotations do not necessarily represent actual transactions and do not reflect
related mark-ups, mark-downs or commissions:




Fiscal 2008
                                          
                                          High Bid
                                          
                                          
                                          Low BidFirst
      Quarter
                                          
                                          $
                                          1.28
                                          
                                          
                                          $
                                          .50Second
      Quarter
                                          
                                          $
                                          1.43
                                          
                                          
                                          $
                                          1.05Third
      Quarter
                                          
                                          $
                                          1.24
                                          
                                          
                                          $
                                          1.03Fourth
      Quarter
                                          
                                          $
                                          1.22
                                          
                                          
                                          $
                                          .90Fiscal 2007
                                          
                                          High Bid
                                          
                                          
                                          Low BidFirst
      Quarter
                                          
                                          $
                                          .69
                                          
                                          
                                          $
                                          .30Second
      Quarter
                                          
                                          $
                                          .71
                                          
                                          
                                          $
                                          .43Third
      Quarter
                                          
                                          $
                                          .53
                                          
                                          
                                          $
                                          .42Fourth
      Quarter
                                          
                                          $
                                          .50
                                          
                                          
                                          $
                                          .40


13




At July 23, 2009, the company had 57
holders of record and approximately 630 beneficial holders of its shares of
common stock. On July 23, 2009, the last sale price of the shares of common
stock as reported by the OTC Bulletin Board was $.77 per share.




ISSUER PURCHASES OF EQUITY SECURITIESPeriod
                                                        
                                                        (a) Total
                                                          Number of
                                                          Shares (or
                                                          Units)
                                                          Purchased
                                                        
                                                        (b)
                                                          Average
                                                          Price
                                                          Paid per
                                                          Share (or
                                                          Unit)
                                                        
                                                        (c) Total
                                                          Number of
                                                          Shares (or
                                                          Units)
                                                          Purchased
                                                          as Part of
                                                          Publicly
                                                          Announced
                                                          Plans or
                                                          Programs
                                                        
                                                        (d) Maximum
                                                          Number (or
                                                          Approximate
                                                          Dollar Value)
                                                          ofShares (or
                                                          Units) that
                                                          MayYet Be
                                                          Purchased
                                                          Under the
                                                          Plans or
                                                          ProgramsMonth
      #1 (identify beginning and ending dates)
                                                        
                                                        7-1-08/ 7-31 -08
                                                          -0-
                                                        
                                                        -0-
                                                        
                                                        -0-
                                                        
                                                        163,000Month
      #2 (identify beginning and ending dates)
                                                        
                                                        8 -1-08/ 8 -31 -08
                                                          2500
                                                        
                                                        1.0972
                                                        
                                                        2500
                                                        
                                                        160, 500Month
      #3 (identify beginning and ending dates)
                                                        
                                                        9-1-08/ 9- 30 -08
                                                          -0-
                                                        
                                                        -0-
                                                        
                                                        -0-
                                                        
                                                        160, 500Total
                                                        
                                                        2500
                                                        
                                                        1.0972
                                                        
                                                        2500
                                                        
                                                        160,500


14




Item
      6.
            Selected
      Financial Data.




Year
      Ended September 30,2008
                        
                        
                        2007
                        
                        
                        2006
                        
                        
                        2005
                        
                        
                        2004Revenue
                        
                        $
                        82,745,383
                        
                        
                        $
                        74,947,442
                        
                        
                        $
                        77,220,070
                        
                        
                        $
                        73,484,334
                        
                        
                        $
                        69,981,639Net
      Income (Loss)
                        
                        $
                        (1,658,219
                        )
                        
                        $
                        322,979
                        
                        
                        $
                        56,995
                        
                        
                        $
                        430,019
                        
                        
                        $
                        264,355Net
      Income (Loss) per common share
                        
                        $
                        0.(0.10
                        )
                        
                        $
                        0.02
                        
                        
                        $
                        0.00
                        
                        
                        $
                        0.03
                        
                        
                        $
                        0.02Total
      Assets
                        
                        $
                        13,412,727
                        
                        
                        $
                        8,584,064
                        
                        
                        $
                        6,743,091
                        
                        
                        $
                        6,731,129
                        
                        
                        $
                        7,030,489Long-Term
      Obligations
                        
                        $
                        2,188,805
                        
                        
                        $
                        81,118
                        
                        
                        $
                        84,905
                        
                        
                        $
                        92,140
                        
                        
                        $
                        100,530Cash
      Dividends Declared per common share
                        
                        
                        N/A
                        
                        
                        
                        N/A
                        
                        
                        
                        N/A
                        
                        
                        
                        N/A
                        
                        
                        
                        N/A




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


15


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.




Overview




The following discussion and analysis
addresses the results of operations for the fiscal year ended September 30,
2008, as compared to the results of operations for the fiscal year ended
September 30, 2007; the fiscal year ended September 30, 2007 as compared to the
results of operations for the fiscal year ended September 30, 2006; and the
results of operations for the fiscal year ended September 30, 2006, as compared
to the results of operations for the fiscal year ended September 30, 2005. The
discussion and analysis then addresses the liquidity and financial condition of
the company, and other matters.




Results
of Operations




Janel operates its business as a single
segment primarily comprised of full-service cargo transportation logistics
management, including freight forwarding via air, ocean and land-based carriers,
customs brokerage services, warehousing and distribution services, and other
value-added logistics services.




Fiscal
Year Ended September 30, 2008 Compared to Fiscal Year Ended September 30,
2007




Revenue.Total revenue for
fiscal 2008 was $82,745,383, as compared to $74,947,442 for fiscal 2007, a
year-over-year increase of $7,797,941, or 10.4%. The increase in total revenue
was primarily due to the increase in the company’s transportation logistics
segment as a result of a generally stronger overall environment in domestic and
international trade during fiscal 2008 in all of the principal industry sectors
served by the company, which include wearing apparel and finished garments,
footwear, household appliances and electronics, and sporting goods and
accessories. Revenue in 2008 was also negatively affected by the continuing
substitution, when possible, of lower-priced ocean freight versus airfreight by
many of our customers. During fiscal 2008, the company essentially maintained
its overall business activities with existing clients, and also increased
business through the addition of new clients. Net revenue (revenue minus
forwarding expenses) in fiscal 2008 was a record $9,786,142, an increase of
$1,613,778, or 19.7%, as compared to $8,172,364 in fiscal 2007.




Forwarding Expense.Forwarding
expense is primarily comprised of the fees paid by Janel directly to cargo
carriers to handle and transport its actual freight shipments on behalf of its
customers between initial and final terminal points. Forwarding expense also
includes any duties and/or trucking charges related to the shipments. For fiscal
year 2008, forwarding expense increased by $6,184,163, or 9.3%, to $72,959,241,
as compared to $66,775,078 for fiscal year 2007.  The company’s export
business is conducted predominantly by ocean freight. Continuing customer
attention to and improvements in supply-chain management and inventory planning
resulted in a reduced reliance on and frequency of time-critical shipments which
require airfreight. These factors have resulted in the increased use of
lower-cost ocean freight. As a general rule, ocean freight costs less than
airfreight, and is marked up at a lower percentage than are shipments via
airfreight, i.e., forwarding expense as a percentage of revenue is generally
higher (and the company earns less) for ocean freight than for
airfreight.


16




Selling, General and Administrative
Expense. Selling, general and administrative expense increased
$1,952,371, or 25.6%, to $9,576,731 in fiscal 2008, as compared to $7,624,360 in
fiscal 2007. As a percentage of revenue, SG&A expense in fiscal 2008 was
11.57% as compared to 10.17% as a percentage of revenue in fiscal 2007. The
year-over-year dollar increase in SG&A resulted from a general increase in
most categories of SG&A expenses in fiscal 2008, including the addition of
up to ten persons principally in operational capacities as compared to fiscal
2007, primarily related to the company’s asset acquisition transactions with
Order Logistics, Inc. in October 2007, and with Ferrara International Logistics,
Inc. in July 2008.




Income (Loss) Before Taxes.Loss before taxes in fiscal 2008 was $(2,385,219), which represented a
year-to-year decrease of $(2,991,898), or (593.2)%, as compared to income before
taxes of $606,679 in fiscal 2007.  The principal reasons for the 2008
loss were nonrecurring pretax charges of $687,513 and of $1,812,750 related to
amortization of intangible assets and to impairment of identifiable intangible
assets, respectively, the former primarily and the latter wholly associated with
the company’s asset acquisition transaction with Order Logistics, Inc. in
October 2007.




Income Taxes (Credit)..The
effective income tax rates in fiscal 2008 (a credit) and fiscal 2007 are (30)%
and 47%, respectively.




Net Income (Loss).For fiscal
2008, Janel reported a net loss of $(1,658,219), a decrease of $(1,981,198), or
(713.4)%, as compared to the reported net income of $322,979 in fiscal 2007.
Janel’s net profit (loss) margin (net loss as a percent of net revenue) was
(16.94)% in fiscal 2008 as compared to a net profit margin of 3.95% in fiscal
2007. The principal reasons for the decrease were the extraordinary charges
related to amortization and impairment taken in 2008, as noted
above.




Fiscal
Year Ended September 30, 2007 Compared to Fiscal Year Ended September 30,
2006




Revenue.Total revenue for
fiscal 2007 was $74,947,442, as compared to $77,220,070 for fiscal 2006, a
year-over-year decrease of $(2,272,628), or (2.9)%. The slight decrease in
revenue was primarily due to a generally quieter overall environment in
international trade during fiscal 2007 in all of the principal industry sectors
served by the company, which include wearing apparel and finished garments,
footwear, household appliances and electronics, and sporting goods and
accessories. Revenue in 2007 was also negatively affected by the continuing
substitution, when possible, of lower-priced ocean freight versus airfreight by
many of our customers. During fiscal 2007, the company essentially maintained
its overall business activities with existing clients, and through the addition
of new clients. Net revenue (revenue minus forwarding expenses) in fiscal 2007
was a record $8,172,364, an increase of $119,542, or 1.5%, as compared to
$8,052,822 in fiscal 2006.


17




Forwarding Expense.Forwarding
expense is primarily comprised of the fees paid by Janel directly to cargo
carriers to handle and transport its actual freight shipments on behalf of its
customers between initial and final terminal points. Forwarding expense also
includes any duties and/or trucking charges related to the shipments. For fiscal
year 2007, forwarding expense decreased by $2,392,170, or 3.5%, to $66,775,078,
as compared to $69,167,248 for fiscal year 2006.  The company’s export
business is conducted predominantly by ocean freight. Continuing customer
attention to and improvements in supply-chain management and inventory planning
resulted in a reduced reliance on and frequency of time-critical shipments which
require airfreight. These factors have resulted in the increased use of
lower-cost ocean freight. As a general rule, ocean freight costs less than
airfreight, and is marked up at a lower percentage than are shipments via
airfreight, i.e., forwarding expense as a percentage of revenue is generally
higher (and the company earns less) for ocean freight than for
airfreight.




Selling, General and Administrative
Expense. Selling, general and administrative expense increased $325,321,
or 4.5%, to $ 7,624,360 in fiscal 2007, as compared to $7,299,039 in fiscal
2006. As a percentage of revenue, SG&A expense in fiscal 2007 was 10.17% as
compared to 9.45% as a percentage of revenue in fiscal 2006. The year-over-year
dollar increase in SG&A resulted from a general increase in most categories
of SG&A expenses in fiscal 2007, including the addition of up to seven
persons in sales and administrative capacities as compared to fiscal
2006.




Income Before Taxes.Income
before taxes in fiscal 2007 was $606,679, which represented a year-to-year
increase of $278,184, or 84.7%, as compared to income before taxes of $328,495
in fiscal 2006. The principal reason for the rise was the absence of any
stock-based compensation in fiscal 2007 in contrast to $452,360 of such
compensation, which was incurred in fiscal 2006.




Income Taxes..The
effective income tax rates in fiscal 2007 and fiscal 2006 are 47% and 83%,
respectively.  The decrease of 36% is attributable to the absence of
stock-based compensation in 2007 as was paid in 2006, the stock warrant portion
of which was non-deductible. No deferred taxes were provided in 2006 in
connection with the issuance of the warrant.




Net Income.For fiscal 2007,
Janel reported net income of $322,979, an increase of $265,984, or 466.7%, as
compared to the reported net income of $56,995 in fiscal 2006. Janel’s net
profit margin (net income as a percent of net revenue) was 3.95% in fiscal 2007,
an increase of 324 basis points as compared to 0.71% in fiscal 2006. The
principal reason for the significant increase was the absence of a stock-based
compensation expense in fiscal 2007 in contrast to thenegative effect on net
income resulting from the payment in fiscal 2006 of stock-based compensation in
the amount of $452,360.




Fiscal
Year Ended September 30, 2006 Compared to Fiscal Year Ended September 30,
2005




Revenue.Total revenue for
fiscal 2006 was a record $77,220,070, as compared to $73,484,334 for fiscal
2005, a year-over-year increase of $3,735,736, or 5.1%. The increase in revenue
was primarily due to the general improvement in international trade during
fiscal 2006 in all of the principal industry sectors served by the company, in
particular, wearing apparel and finished garments, household electronics, and
sporting goods and accessories. During fiscal 2006, the company increased its
overall business activities with existing clients, and through the addition of
new clients. Net revenue (revenue minus forwarding expenses) in fiscal 2006 was
a record $8,052,822, an increase of $442,161, or 5.8%, as compared to $7,610,661
in fiscal 2005.


18




Forwarding Expense.Forwarding
expense is primarily comprised of the fees paid by Janel directly to cargo
carriers to handle and transport its actual freight shipments on behalf of its
customers between initial and final terminal points. Forwarding expense also
includes any duties and/or trucking charges related to the shipments. For fiscal
year 2006, forwarding expense increased by $3,293,575, or 5.0%, to $69,167,248,
as compared to $65,873,673 for fiscal year 2005.  The company’s export
business is conducted predominantly by ocean freight. Customer improvements in
supply-chain management and inventory planning have reduced the frequency of
time-critical shipments which require airfreight. These factors have resulted in
the increased use of lower-cost ocean freight. As a general rule, ocean freight
costs less than airfreight, and is marked up at a lower percentage than are
shipments via airfreight, i.e., forwarding expense as a percentage of revenue is
generally higher (and the company earns less) for ocean freight than for
airfreight.




Selling, General and Administrative
Expense. Selling, general and administrative expense increased $520,470,
or 7.7%, to $7,299,039 in fiscal 2006, as compared to $6,778,569 in fiscal 2005.
As a percentage of revenue, SG&A expense in fiscal 2006 was 9.45% as
compared to 9.22% as a percentage of revenue in fiscal 2005. The year-over-year
dollar increase in SG&A resulted from a general increase in most categories
of SG&A expenses in fiscal 2006, including increased commissions on
increased sales, as compared to fiscal 2005.




Income Before Taxes.Income
before taxes in fiscal 2006 was $328,495, which represented a year-to-year
decrease of $446,374, or 57.6%, as compared to income before taxes of $774,869
in fiscal 2005. The principal reason for the decline was the payment of
stock-based compensation in fiscal 2006 in the amount of $452,360, which
accounted for more than the total dollar decrease. No stock-based compensation
was paid in fiscal 2005.




Income Taxes.The
effective income tax rates in fiscal 2006 and fiscal 2005 are 83% and 44%,
respectively.  The increase of 39% is attributable to the
non-deductible stock warrant issued as part of the stock-based
compensation.  No deferred taxes have been provided in connection with
the issuance of the warrant.




Net Income.For fiscal 2006,
Janel reported record net income of $56,995, a decrease of $373,024, or 86.7%,
as compared to the reported net income of $430,019 in fiscal 2005. Janel’s net
profit margin (net income as a percent of net revenue) was 0.71% in fiscal 2006,
a decline of 494 basis points as compared to 5.65% in fiscal 2005. The principal
reason for the significant decline was the negative effect on net income
resulting from the payment in fiscal 2006 of stock-based compensation in the
amount of $452,360.




Liquidity
and Capital Resources




Janel’s ability to meet its liquidity
requirements, which include satisfying its debt obligations, funding working
capital, day-to-day operating expenses and capital expenditures depends upon its
future performance, which is subject to general economic conditions and other
factors, some of which are beyond its control.  During the 12 months
ended September 30, 2008, Janel’s net working capital (total current assets less
total current liabilities) decreased by $1,680,757, primarily as a result of an
aggregate increase in notes payable of $1,275,000 and an increase in the current
portion of long-term debt of $782,513.


19




For the 12 months ended September 30,
2008, Janel’s primary source of cash from operating activities was a substantial
aggregate increase in accounts payable and accrued expenses of $331,695, more
than offset by the increase in its accounts receivable of $758,247. During
fiscal 2008, the company largely financed its two acquisitions through the use
of net cash and through borrowings under its existing credit lines and the
issuance of notes and restricted equity.  The purchase price for Order
Logistics was $3,888,429 and for Ferrara International Logistics
$2,077,070.




At September 30, 2007, cash increased
by $1,127,775 to $2,469,727 from $1,341,952 at September 30, 2006. For the 12
months ended September 30, 2007, Janel’s primary source of cash from operating
activities was a substantial increase in accounts payable and accrued expenses
of $1,117,750 as well as its net income of $322,979. The increase in its
accounts payable was largely offset by an increase in accounts receivable of
$534,634. During fiscal 2007, net cash was also used in investing activities
represented by the acquisition of property and equipment in the amount of
$138,844.




In March 2004, Janel increased its line
of credit with a bank from $1,500,000 to $2,000,000. In January 2005, Janel
entered into agreements providing for a transfer of its line of credit to
another bank on identical terms, except that the available line of credit
increased to $3,000,000. In July 2005, Janel decreased its line of credit from
$3,000,000 to $1,500,000 because its cash flow is adequate for financing its
receivables, and it obtained a reduced interest rate. At September 30, 2008,
Janel had increased year-over-year its available borrowing under a term note of
$1,700,000, bearing interest at prime plus three-quarters of one percent (0.75%)
per annum, collateralized by substantially all the assets of Janel and personal
guarantees by certain shareholders of the company.




In May 2009, Janel, its subsidiaries
and affiliated companies, together with James N. Jannello and Stephen Cesarski,
entered into a forbearance agreement with J.P. Morgan Chase Bank, N.A. (the
Agreement") to resolve a default on the part of the Company in: (a) making
timely payment upon maturity of a promissory note due to the bank (the "Line
Note") in the sum of $750,000 on March 31, 2009 (messrs. Jannello and Cesarski
are guarantors of payment of the Line Note); and (b) the Debt Service Coverage
Ratio covenant in the Credit Agreement with the bank. The Agreement provides
that the bank will refrain from exercising its collection rights against the
company and guarantors, provided that the company delivers full payment of all
principal, interest and late fees due to the bank on the Line Note, amounting to
approximately $252,000.00, on or before July 31, 2009.




The Agreement also provides that
beginning May 22, 2009, interest on the Line Note, and on a Term Note in the
principal sum of $1,457,142.80, will accrue at a rate per annum which will equal
the CD Floating Rate plus three percent (3.0%) based upon the actual number of
days the principal is outstanding over a year of 360 days. The company is
required to furnish the bank with a projection of monthly cash receipts and
disbursements prepared and certified by the company’s chief financial officer
for the twelve (12) month period beginning July 2009. The company may not prepay
any indebtedness to any person without the prior written consent of the bank. If
the company or the guarantors default in payment of the amounts required to be
paid to the bank under the terms of the Agreement or the loan documents, if a
petition for bankruptcy under any chapter of the United States bankruptcy code
or any other debt relief law against the company or the guarantors, or any other
judicial action is taken with respect to the company or the guarantors by any
creditor, if any representation or warranty made to the bank by the company in
untrue, incorrect or misleading in any material respect, if any judgment is
filed against or with respect to any collateral securing the company’s
obligations to the bank in excess of $100,000.00, or there is any substantial
impairment of the prospect of the company’s full ,satisfaction of its
obligations to the bank or substantial impairment of the value of the collateral
or the priority of the bank's security interest in or lien upon any collateral,
the forbearance will be terminated, and all outstanding obligations will be
immediately due and payable at the bank's sole option. However, the company will
continue to be in technical default of the terms of the Term Note while it is
not in compliance with the Debt Service Coverage Ratio covenant in the Credit
Agreement with the bank.


20




Management believes that anticipated
cash flow before other items and availability under its expanded line of credit
are sufficient to meet its current working capital and operating needs. However,
the company is also proceeding with its comprehensive growth strategy for fiscal
2006 and beyond, which encompasses a number of potential elements, as detailed
below under “Current Outlook.” To successfully execute various of these growth
strategy elements in the coming months, the company will need to secure
additional capital funding estimated at up to $10,000,000 during that period.
There is no assurance either that such additional capital as necessary to
execute the company’s business plan and intended growth strategy will be
available or, if available, will be extended to the company at mutually
acceptable terms.




Current
Outlook




Janel is primarily engaged in the
business of providing full-service cargo transportation logistics management,
including freight forwarding – via air, ocean and land-based carriers – customs
brokerage services, warehousing and distribution services, and other value-added
logistics services. Its results of operations are affected by the general
economic cycle, particularly as it influences global trade levels and
specifically the import and export activities of Janel’s various current and
prospective customers.  Historically, the company’s quarterly results
of operations have been subject to seasonal trends which have been the result
of, or influenced by, numerous factors including climate, national holidays,
consumer demand, economic conditions, the growth and diversification of its
international network and service offerings, and other similar and subtle
forces.




Based upon the results for the fiscal
year ended September 30, 2008, and its current operations, Janel conservatively
projects that gross revenue from its currently existing accounts and businesses
for its fiscal year ending September 30, 2009 will approximate the level
reported for fiscal 2008. The company expects to revisit its full-year
projection subsequent to the end of its fiscal third quarter ended June 30,
2009.





In addition, Janel is progressing with
the implementation of its business plan and strategy to grow its revenue and
profitability for fiscal 2008 and beyond through other avenues. The company’s
strategy for 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;
proceed with negotiations and due diligence with privately held
transportation-related firms which may ultimately lead to their acquisition by
the company; expand its existing sales force by hiring additional
commission-only sales representatives with established customer bases; increase
its focus on growing revenue related to export activities; evaluate direct entry
into the trucking and warehouse distribution business as a complement to the
services already provided to existing customers; and continue its focus on
containing current and prospective overhead and operating expenses, particularly
with regard to the efficient integration of any additional offices or
acquisitions. Assuming successful execution of substantial elements of these
growth strategies, the company projects that gross revenue for fiscal 2009
(which may approximate $88-$91 million) will be greater than its gross revenue
for fiscal 2008, and that profitability will be commensurately greater than
Janel’s fiscal 2008 results, as well.


21




Contractual
Obligations and Commitments
 
 The following table presents, as of
September 30, 2008, the company’s significant fixed and determinable contractual
obligations, by payment date. All long-term debt interest fluctuates with the
changes in the prime rate. Further discussion of the nature of the obligations
is included in Notes 8 and 12 to the Consolidated Financial
Statements:
 
 Years
Ended September 30,
 2009
                        
                        
                        2010
                        
                        
                        2011
                        
                        
                        2012
                        
                        
                        2013
                        
                        
                        ThereafterLong
      term debt due as follows (1): Principal
                        
                        $
                        786,000
                        
                        
                        $
                        382,000
                        
                        
                        $
                        824,000
                        
                        
                        $
                        257,000
                        
                        
                        $
                        243,000
                        
                        
                        $
                        405,000Interest
                        
                        $
                        144,000
                        
                        
                        $
                        106,000
                        
                        
                        $
                        80,000
                        
                        
                        $
                        43,000
                        
                        
                        $
                        30,000
                        
                        
                        $
                        18,000Operating
      lease obligations (2)
                        
                        $
                        397,000
                        
                        
                        $
                        223,000
                        
                        
                        $
                        162,000
                        
                        
                        $
                        111,000
                        
                        
                        $
                        20,000
 _____________________
 (1)  Represents
principal and estimated interest payments only.
 
 (2)
Leases represent future minimum lease payments under non-cancellable operating
leases (primarily the rental of premises). In accordance with accounting
principles generally accepted in the United States, the company’s operating
leases are not recorded in its balance sheet.
 
 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 that are not readily apparent
from other sources, primarily allowance for doubtful accounts, accruals for
transportation and other direct costs, and accruals for cargo insurance.
Management bases its estimates on historical experience and on various
assumptions that are believed to be reasonable under the circumstances. We
reevaluate these significant factors as facts and circumstances change.
Historically, actual results have not differed significantly from our estimates.
These accounting policies are described at relevant sections in this discussion
and analysis and in the notes to the consolidated financial statements included
in this Annual Report on Form 10-K for the fiscal year ended September 30,
2008.
  22
 
 Management believes that the nature of
the company’s business is such that there are few, if any, complex challenges in
accounting for operations. Revenue recognition is considered the critical
accounting policy due to the complexity of arranging and managing global
logistics and supply-chain management transactions.
 
 Revenue
Recognition
 
 A.
Full-Service Cargo Transportation Logistics Management
 
 Revenues are derived from airfreight,
ocean freight and custom brokerage services. The company is a non-asset-based
carrier and accordingly does not own transportation assets. The company
generates the major portion of its air and ocean freight revenues by purchasing
transportation services from direct carriers (airlines, steam ship lines, etc.)
and reselling those services to its customers. By consolidating shipments from
multiple customers and availing itself of its buying power, the company is able
to negotiate favorable rates from the direct carriers, while offering to its
customers lower rates than the customers could obtain themselves.
 
 Airfreight revenues include the charges
for carrying the shipments when the company acts as a freight consolidator.
Ocean freight revenues include the charges for carrying the shipments when the
company acts as a Non-Vessel Operating Common Carrier (NVOCC).  In
each case, the company is acting as an indirect carrier.  When acting
as an indirect carrier, the company will issue a House Airway Bill (HAWB) or a
House Ocean Bill of Lading (HOBL) to customers as the contract of
carriage.  In turn, when the freight is physically tendered to a
direct carrier, the company receives a contract of carriage known as a Master
Airway Bill for airfreight shipments and a Master Ocean Bill of Lading for ocean
shipments.  At this point the risk of loss passes to the carrier,
however, in order to claim for any such loss, the customer is first obligated to
pay the freight charges.
 
 Based upon the terms in the contract of
carriage, revenues related to shipments where the company issues a HAWB or a
HOBL are recognized at the time the freight is tendered to the direct
carrier.  Costs related to the shipments are recognized at the same
time.
 
 Revenues realized when the company acts
as an agent for the shipper and does not issue a HAWB or a HOBL include only the
commission and fees earned for the services performed.  These revenues
are recognized upon completion of the services.
 
 Customs brokerage and other services
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.
  23
 
 The movement of freight may require
multiple services. In most instances the company may perform multiple services
including destination break-bulk and value added services such as local
transportation, distribution services and logistics management.  Each
of these services has separate fee that is recognized as revenue upon completion
of the service.
 
 Customers will frequently request an
all-inclusive rate for a set of services that is known in the industry as
“door-to-door services.”  In these cases, the customer is billed a
single rate for all services from pickup at origin to delivery.  The
allocation of revenue and expense among the components of services when provided
under an all inclusive rate are done in an objective manner on a fair value
basis in accordance with Emerging Issues Task Force (EITF) 00-21, “Revenue
Arrangements with Multiple Deliverables.”
 
 B.
Computer Software Sales, Support and Maintenance
 
 The
Company recognizes revenue, including multiple element arrangements, in
accordance with the provisions of the SEC's Staff Accounting bulletin ("SAB")
No. 104, Revenue
Recognition, and the Financial Accounting Standards Board's ("FASB"), and
EITF 00-21, Revenue Agreements
with Multiple Deliverables.  Revenue from the sale of the
Company's products and services are recognized when persuasive evidence of an
arrangement exists, delivery has occurred (or services have been rendered), the
price is fixed or determinable, and collectability is reasonably assured.
Amounts billed in excess of revenue recognized are recorded as deferred revenue
in the balance sheet.
 
 Estimates
 
 While judgments and estimates are a
necessary component of any system of accounting, the company’s use of estimates
is limited primarily to the following areas that in the aggregate are not a
major component of the company’s consolidated statements of income:
 
 a.
              accounts
      receivable valuation;
 b.
              the
      useful lives of long-term assets;
 c.
              the
      accrual of costs related to ancillary services the company provides;
      and
 c.
              accrual
      of tax expense on an interim basis.
 
 Management believes that the methods
utilized in all of these areas are non-aggressive in approach and consistent in
application. Management believes that there are limited, if any, alternative
accounting principles or methods which could be applied to the company’s
transactions. While the use of estimates means that actual future results may be
different from those contemplated by the estimates, the company believes that
alternative principles and methods used for making such estimates would not
produce materially different results than those reported.
 
 Item
      7a.
              Quantitative
      and Qualitative Disclosures About Market
Risk.
 
 Not applicable.
  24
 
 Item
      8.
              Financial
      Statements and Supplementary Data.
 
 The financial statements and
supplementary data required by this Item 8 are included in the company’s
Consolidated Financial Statements listed in Item 15(a) of this Annual
Report.
 
 Item
      9.
              Changes
      in and Disagreements with Accountants on Accounting andFinancial
      Disclosure.
 
 Not applicable.
 
 Item
      9A.
              Controls
      and Procedures.
 
 We maintain a system of disclosure
controls and procedures that is designed to provide reasonable assurance that
information, which is required to be disclosed by the company in the reports
that it files or submits under the Securities and Exchange Act of 1934, as
amended, is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the SEC, and is accumulated and communicated
to management in a timely manner. Our Chief Executive Officer and Chief
Financial Officer have evaluated this system of disclosure controls and
procedures as of the end of the period covered by this annual report, and
believe that the system is effective. There have been no changes in our internal
control over financial reporting during the most recent fiscal year that have
materially affected, or are reasonably likely to materially affect, the
company’s internal control over financial reporting.
 
 Item
      9B.
              Other
      Information.
 
 None
 
 PART
III
 
 Item
      10.
              Directors,
      Executive Officers and Corporate
Governance.
 
 The executive officers and directors
of the Registrant are as follows:
  Name
                  
                  Age
                  
                  PositionWilliam
      J. Lally
                  
                  55
                  
                  President,
      Chief Operating
                    Officer
      and DirectorJames
      N. Jannello
                  
                  64
                  
                  Executive
      Vice President,
                    Chief
      Executive Officer and
                    DirectorStephen
      P. Cesarski
                  
                  64
                  
                  Director,
      and President EmeritusNoel  J.
      Jannello
                  
                  37
                  
                  Director
      and Vice PresidentVincent
      Iacopella
                  
                  41
                  
                  DirectorRuth
      Werra
                  
                  67
                  
                  SecretaryLinda
      Bieler
                  
                  47
                  
                  Controller
      and Chief Financial
                    and
      Accounting Officer
  25
  William J. Lally was elected
President and Chief Operating Officer on May 18, 2009, upon the retirement of
Stephen P. Cesarski after 31 years of service as President and Chief Operating
Officer. Mr. Lally was initially employed by Janel in New York City in 1975 and
moved to Chicago, Illinois in 1979, where he is the President of the Janel Group
of Illinois, Inc. Mr. Lally became a director of the company in July
2002.
  James N. Jannello is the Executive
Vice President and a director, and has been the Chief Executive Officer of Janel
since it was founded in 1974. Mr. Jannello's principal function is the
overseeing of all of the company's operations, management of the import side of
the business and the setting of billing rates and charges, and the maintenance
of relationships with overseas agents worldwide. Mr. Jannello is a licensed
Customs House Broker.
  Stephen P. Cesarski is a director of
Janel with a great deal of experience in sales, marketing and the export side of
the company's business. He served as the President and Chief Operating Officer
of Janel from 1978 to his retirement in May 2009.
  Noel J. Jannello was initially
employed by Janel in 1995, and has been a Vice President and operations
executive since 2003. His principal function is the overseeing of the company's
U.S. operations. Mr. Jannello is a graduate of Bradley University (B.A.,
Advertising & Marketing, 1993), and is the son of James N.
Jannello.
  Vincent Iacopella has been the
Managing Director of The Janel Group of Los Angeles since 2004, and was the
driving force in reorganizing the Los Angeles office into profitable operation.
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.
  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.
  Linda Bieler has been the Controller
of Janel since 1994. She is the Chief Financial and Accounting Officer and
oversees accounting operations for all branches, and manages its information
systems and generation of its reports.
  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.
  26
  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. The Board of Directors
met three times during fiscal 2008.
  Item
      11.
              Executive
      Compensation - Discussion and
Analysis
  The primary
objective of our compensation and benefits program is to attract, motivate and
retain our quality executive talent, and support our business goals. Our
executive compensation structure is linked to 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
compensation program has been characterized by below-median cash compensation
and below-median equity compensation, when compared with public companies in our
business group. Our board of directors review and approve executive
compensation, bonus, and benefits policies on a case-by-case basis, often based
on the recommendation of our chief executive officer as the result of his
subjective assessment.
 
 Compensation
of Directors
 
 Our directors are reimbursed for their
reasonable expenses as a member of the board of directors, but they do not
receive any compensation for serving as such.
 
 Employment
Agreements
 
 We have not entered into any 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.
 
 Committees
of the Board of Directors
  Our Board of Directors has not
established any committees, including an Audit Committee, a Compensation
Committee or a Nominating Committee, or any committee performing a similar
function. The functions of those committees are being undertaken by the entire
board as a whole.
  We do not have a policy regarding the
consideration of any director candidates, which may be recommended by our
stockholders, including the minimum qualifications for director candidates, nor
has our Board of Directors established a process for identifying and evaluating
director nominees. We have not adopted a policy regarding the handling of any
potential recommendation of director candidates by our stockholders, including
the procedures to be followed.  Our Board has not considered or
adopted any of these policies as we have never received a recommendation from
any shareholder for any candidate to serve on our Board of Directors. Given our
relative size and lack of directors and officer’s insurance coverage, we do not
anticipate that any of our stockholders will make such a recommendation in the
near future. While there have been no nominations of additional directors
proposed, in the event such a proposal is made, all members of our Board will
participate in the consideration of director nominees. None of our
directors is an "audit committee financial expert" within the meaning of Item
401(e) of Regulation S-K. In general, an "audit committee financial expert"
is an individual member of the audit committee or Board of Directors
who:
  27
  (a)
              understands
      generally accepted accounting principles and financial
      statements;
 (b)
              is
      able to assess the general application of such principles in connection
      withaccounting
      for estimates, accruals and
reserves;
 (c)
              has
      experience preparing, auditing, analyzing or evaluating financial
      statementscomparable
      to the breadth and complexity to our financial
  statements;
 (d)
              understands
      internal controls over financial reporting;
and
 (e)
              understands
      audit committee functions.
 
 Summary
Compensation Table
  The following table sets forth, for the
fiscal years ended September 30, 2008, 2007, and 2006, the cash compensation
paid by the company, as well as certain other compensation paid with respect to
those years and months, to the Chief Executive Officer and, to the extent
applicable, each of the five other most highly compensated executive officers of
the company in all capacities in which they served.
  JANEL
WORLD TRADE LTD.  AND SUBSIDIARIES
 SUMMARY
COMPENSATION TABLE
 
 ANNUAL COMPENSATION
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                LONG-TERM
                                                                                  COMPENSATIONNAME ANDPRINCIPALPOSITION
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                AWARDS
                                                                                
                                                                                
                                                                                SECURITIES
                                                                                
                                                                                
                                                                                PAYOUTSOTHER ANNUAL
                                                                                
                                                                                
                                                                                RESTRICTED
                                                                                
                                                                                
                                                                                UNDERLYING
                                                                                
                                                                                
                                                                                LTIP
                                                                                
                                                                                
                                                                                ALL OTHERYEAR
                                                                                
                                                                                SALARY
                                                                                
                                                                                
                                                                                BONUS
                                                                                
                                                                                
                                                                                COMPENSATION
                                                                                
                                                                                
                                                                                STOCK
                                                                                
                                                                                
                                                                                OPTIONS/
                                                                                  SARS
                                                                                
                                                                                
                                                                                PAYOUTS
                                                                                
                                                                                
                                                                                COMPENSATION($)
                                                                                
                                                                                
                                                                                ($)
                                                                                
                                                                                
                                                                                ($)
                                                                                
                                                                                
                                                                                AWARDS ($)
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                (#)
                                                                                
                                                                                
                                                                                ($)Stephen P. Cesarski (1)
                                                                                
                                                                                2006
                                                                                
                                                                                
                                                                                179,889
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                47,680
                                                                                (1)President
      Emeritus &
                                                                                  Director
                                                                                
                                                                                2007
                                                                                
                                                                                
                                                                                182,489
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                50,965
                                                                                (1)2008
                                                                                
                                                                                
                                                                                183,189
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                46,627
                                                                                (1)James
      N. Jannello (2)
                                                                                
                                                                                2006
                                                                                
                                                                                
                                                                                187,475
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                52,318
                                                                                (2)Executive
      Vice President
                                                                                
                                                                                2007
                                                                                
                                                                                
                                                                                195,436
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                46,713
                                                                                (2)2008
                                                                                
                                                                                
                                                                                199,280
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                52,987
                                                                                (2)Noel
      J. Jannello (3)
                                                                                
                                                                                2006
                                                                                
                                                                                
                                                                                164,460
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                17,510
                                                                                (3)Vice
      President
                                                                                
                                                                                2007
                                                                                
                                                                                
                                                                                169,515
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                19,192
                                                                                (3)2008
                                                                                
                                                                                
                                                                                199,680
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                32,079
                                                                                (3)William
      J. Lally (4)
                                                                                
                                                                                2006
                                                                                
                                                                                
                                                                                117,949
                                                                                
                                                                                
                                                                                
                                                                                10,000
                                                                                
                                                                                
                                                                                
                                                                                13,153
                                                                                (4)President
      & Director
                                                                                
                                                                                2007
                                                                                
                                                                                
                                                                                119,188
                                                                                
                                                                                
                                                                                
                                                                                15,000
                                                                                
                                                                                
                                                                                
                                                                                14,046
                                                                                (4)2008
                                                                                
                                                                                
                                                                                108,382
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                24,689
                                                                                (4)Vincent
      Iacopella (5)
                                                                                
                                                                                2006
                                                                                
                                                                                
                                                                                149,266
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                6,827
                                                                                (5)Director
                                                                                
                                                                                2007
                                                                                
                                                                                
                                                                                142,200
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                8,978
                                                                                (5)2008
                                                                                
                                                                                
                                                                                142,200
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                18,133
                                                                                (5)Linda
      Bieler (6)
                                                                                
                                                                                2006
                                                                                
                                                                                
                                                                                108,900
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                5,364
                                                                                (6)Chief
      Financial Officer
                                                                                
                                                                                2007
                                                                                
                                                                                
                                                                                112,150
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                5,804
                                                                                (6)2008
                                                                                
                                                                                
                                                                                114,750
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                5,399
                                                                                (6)
  28
  (1)          Includes
$15,991, $13,778, and $15,259 of medical insurance premiums paid on behalf of
such individual for each of the fiscal years ended 2008, 2007, and 2006
respectively, $28,430, $34,981, and $30,248 for automobile and
automobile-related costs, including insurance, incurred on behalf of
suchindividual, for each of the fiscal
years ended 2008, 2007, and 2006 respectively, and $2,206, $2,206, and $2,173 of
401K paid on behalf of such individual for each of the fiscal years ended 2008,
2007, and 2006 respectively.
  (2)          Includes
$12,165, $11,430, and $13,366 of medical insurance premiums paid on behalf of
such individual for each of the fiscal years ended 2008, 2007, and 2006,
respectively, $38,421, $32,947, and $36,714 for automobile and
automobile-related costs, including insurance, incurred on behalf of suchindividual,
for each of the fiscal years ended 2008, 2007, and 2006 respectively, and
$2,401, $2,336, and $2,238 of 401K paid on behalf of such
individual  for each of the fiscal years ended 2008, 2007, and 2006
respectively.
  (3)          Includes
$5,999, $6,000, and $5,995  of medical insurance premiums paid on
behalf of such individual for each of the fiscal years ended 2008, 2007, and
2006, respectively, $24,518, $11,678, and $10,025, for automobile and
automobile-related costs, including insurance, incurred on behalf of suchindividual,
for each of the fiscal years ended 2008, 2007, and 2006 respectively, and
$1,562, $1,514, and $1,487 of 401K paid on behalf of such individual for each of
the  fiscal years ended 2008, 2007, and 2006
respectively.
  (4)          Includes
$24,689, $14,046, and $13,153 for automobile and automobile-related costs,
including insurance, incurred on behalf of such individual for each of the
fiscal years ended 2008, 2007, and 2006.
  (5)          Includes
$3,734, $3,610, and $3,079 of medical insurance premiums paid on behalf of such
individual for each of the fiscal years ended 2008, 2007, and 2006,
respectively, $12,712, $3,946, and $3,748, for automobile and automobile-related
costs, incurred on behalf of such individual for each of the fiscal years ended
2008, 2007, and 2006 respectively, and $1,687 and $1,422 of 401K paid on behalf
of such individual for the fiscal years ended 2008 and 2007.
  (6)          Includes
$3,965, $4,402, and $4,331 of medical insurance premiums paid on behalf of such
individual for each of the fiscal years ended 2008, 2007, and 2006,
respectively, and $1,434, $1,402 and $1,033 of 401K paid on behalf of such
individual for the fiscal years ended 2008, 2007 and 2006.
  29
  
 Item
      12.
              Security
      Ownership Of Certain Beneficial Owners And
  Management,
 And
      Related Stockholder Matters.
 
 The following table sets forth certain
information regarding shares of common stock beneficially owned as of July 23,
2009, by (i) each person, known to the company, who beneficially owns more than
5% of the common stock, (ii) each of the company's directors and (iii) all
officers and directors as a group:
  Name and Address of
                          Beneficial Owner
                        
                        Shares Beneficially Owned
                        
                        
                        Percentage of Stock
                          OutstandingStephen
      P. Cesarski
                          150-14
      132nd Avenue
                          Jamaica,
      NY 11434
                        
                        
                        5,500,000
                        (1)
                        
                        
                        30.53
                        %James
      N. Jannello
                          150-14
      132nd Avenue
                          Jamaica,
      NY 11434
                        
                        
                        5,500,000
                        (1)
                        
                        
                        30.53
                        %William
      J.  Lally
                          17
      West 312th
      Deer Path Rd.
                          Bensenville,
      IL 60106
                        
                        
                        1,000,000
                        (1)
                        
                        
                        5.55
                        %Sands
      Brothers Venture
                          Capital,
      LLC (2)
                          90
      Park Avenue - 31st Floor
                          New
      York, NY 10010
                        
                        
                        1,000,000
                        
                        
                        
                        5.55
                        %Noel
      J. Jannello
                          150-14
      132nd Avenue
                          Jamaica,
      NY 11434
                        
                        
                        25,000
                        (1)
                        
                        
                        *Vincent
      Iacopella
                          150-14
      132nd Avenue
                          Jamaica,
      NY 11434
                        
                        
                        -0-Ruth
      Werra
                          150-14
      132nd Avenue
                          Jamaica,
      NY 11434
                        
                        
                        25,000
                        (1)
                        
                        
                        *Linda
      Bieler
                          150-14
      132nd Avenue
                          Jamaica,
      NY 11434
                        
                        
                        25,000
                        (1)
                        
                        
                        *All
      Officers and Directors as
                          a
      Group (7 persons)
                        
                        
                        12,075,000
                        (1)
                        
                        
                        67
                        %
 __________________________
  * Less
than one percent (1%).
  (1) All
of these shares are owned of record.
  30
  (2) Sands
Brothers Venture Capital, LLC is one of four affiliated Sands Brothers Venture
entities which collectively own 1,000,000 shares of Janel Series A Convertible
Preferred Stock, which is convertible into Janel common stock, and are therefore
beneficial owners of an aggregate of 1,000,000 shares of Janel common stock.
Scott Baily, the Chief Operating Officer of each the Sands Brothers Venture
Capital companies, has investment control over the shares held by these
companies.
 
 Common Stock
  Janel is authorized to issue up to
225,000,000 shares of common stock, $.001 par value each, of which 18,013,332
shares are currently issued and outstanding. The holders of common stock are
entitled to one vote for each share held of record on all matters to be voted on
by shareholders. There is no cumulative voting with respect to the election of
directors, with the result that the holders of more than 50% of the shares of
common stock can elect all of the directors. The company's principal officers
and directors, James N. Jannello, William J. Lally, Noel J. Jannello and Stephen
P. Cesarski, collectively own 66.76% of the issued and outstanding common stock
and therefore can elect all of the directors. The holders of common stock are
entitled to receive dividends when and if declared by the Board of Directors out
of funds legally available therefore. In the event of
liquidation,  dissolution or winding up of the company, the owners of
common stock are entitled to share all assets remaining available for
distribution after the payment of liabilities and after provision has been made
for each class stock, if any, having a preference over the common stock as such.
The common stock has no conversion, preemptive or other subscription rights, and
there are no redemption revisions applicable to the common stock.
  Preferred Stock
 
 The Board of Directors of the company
is authorized to issue up to 5,000,000 shares of preferred stock in one or more
series and to fix the rights, preferences, privileges and restrictions thereof,
including the dividend rights, dividend rate, conversion rights, voting rights,
terms of redemption (including sinking fund provisions), redemption price or
prices, liquidations preferences and the number of shares constituting any
series or the designations of such series, without any further vote or action by
the stockholders.  It would be possible for the Board of Directors to
issue shares of such preferred stock in a manner which would make acquisition of
control of the company, other than as approved by the Board, exceedingly
difficult.
 
 The company currently has outstanding
one million (1,000,000) shares of its Series A Convertible Preferred Stock, each
share of which is convertible at any time into one (1) share of its common
stock, and has authorized the issuance of up to 285,000 shares of its Series B
Convertible Preferred Stock, each share of which is convertible after October
18, 2009 into ten (10) shares of its common stock.
 
 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
"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 Plan allows participants to voluntarily contribute up to 15% of
their pay on a pre-tax basis.  Under the 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 Plan with respect to their salary deferral contributions, and
are vested in company matching contributions at the rate of 20% after three
years of service, 40% after four years of service, 60% after five years of
service, 80% after six years of service, with 100% vesting after seven years of
service.
  31
  Stock Option Plan.
  On December 12, 2002, Janel’s Board of
Directors and majority of its shareholders approved and adopted the Janel World
Trade, Ltd. Stock Option Incentive Plan (the “Option Plan”) providing for
options to purchase up to 1,600,000 shares of common stock for issuance to
valued employees and consultants of the company as an incentive for superior
performance.
  To date, no 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.
  The exercise price of any incentive
stock option or nonqualified option granted under the Option Plan may not be
less than 100% of the fair market value of the shares of common stock of the
company at the time of the grant.  In the case of incentive stock
options granted to holders of more than 10% of the voting power of the company,
the exercise price may not be less than 110% of the fair market
value.
  Under the terms of the Option Plan, the
aggregate fair market value (determined at the time of grant) of shares issuable
to any one recipient upon exercise of incentive stock options exercisable for
the first time during any one calendar year may not exceed
$100,000.  Options granted under the Option Plan may be exercisable in
either one, two or three equal annual installments at the discretion of the
Board of Directors, but in no event may a stock option be exercisable prior to
the expiration of six months from the date of grant, unless the grantee dies or
becomes disabled prior thereto.  Stock options granted under the
Option Plan have a maximum term of 10 years from the date of grant, except that
with respect to incentive stock options granted to an employee who, at the time
of the grant, is a holder of more than 10% of the voting power of the company,
the stock option shall expire not more than five years from the date of the
grant.  The option price must be paid in full on the date of exercise
and is payable in cash or in shares of common stock having a fair market value
on the date the option is exercised equal to the option price, as determined by
the Board of Directors.
  If a grantee’s employment by, or
provision of services to, the company shall be terminated,  the Board
of Directors may, in its discretion, permit the exercise of stock options for a
period not to exceed one year following such termination
of  employment  with respect to incentive  stock
options and for a period not to extend beyond the expiration date with respect
to non qualified options,  except that no incentive stock option may
be exercised after three months following the grantee’s termination of
employment, unless due to death or permanent disability, in which case the
option may be exercised  for a period of up to one year following such
termination.
  32
 Transfer Agent.
 The company's transfer agent for shares
of its Common Stock is Madison Stock Transfer, Inc., Brooklyn, NY
11229.
 .
 Item
13.         Certain Relationships
and Related Transactions and Director Independence.
  Stephen P. Cesarski, a director and
Janel’s former President and Chief Operating Officer, and James N. Jannello,
Janel’s Executive Vice President and Chief Executive Officer, each own a 10%
profit interest in each of Janel Shanghai and Janel Hong Kong, and jointly own
FCL/LCL International, Inc., a New York corporation which is a consolidating
indirect carrier executing paperwork for Janel, from which they each receive
approximately $10,000 per year. Mr. Jannello also owns 50% of Janel Miami
(Florida), which is a franchisee using the Janel name, but in which the company
has no equity or other direct economic interest.
  As of the fiscal year end of September
30, 2008, James N. Jannello was indebted to the company in the aggregate sum of
$138,490, and William J. Lally was indebted in the aggregate amount of $3,950.
The officer loan to Mr. Jannello bears interest at 4% per annum. The officer
loan to Mr. Lally is non-interest bearing. The officer loans are due on
demand.
  The transactions described above
involve actual or potential conflicts of interest between Janel and its
officers. To reduce the potential for conflicts of interest between the company
and its officers and directors in the future, Janel's policy will be not to
enter into potential conflict-of-interest transactions with officers, directors
or other affiliates unless the terms of such transactions are at least as
favorable to Janel as those which would have been obtainable from an
unaffiliated source. The company has no plans to enter into any additional
transactions that involve actual or potential conflicts of interest between
Janel and its officers or directors, and will not enter into any such
transaction in the future without first obtaining an independent opinion with
regard to fairness to Janel of the terms and conditions of any such
transaction.
  Item
14.         Principal Accounting
Fees and Services.
  Audit Fees
  The aggregate fees billed by Paritz
& Company, P.A. for the annual audit were $40,000, $30,000 for the
fiscal years ended September 30, 2008 and 2007, respectively, and their fees for
review of the interim financial statements were $15,000 for each of the
fiscal years ended September 30, 2008 and 2007.
  Financial
Information Systems Design and Implementation Fees
  Paritz & Company, P.A. did not
render any professional services to Janel World Trade, Ltd. for financial
information systems design and implementation, as described in Paragraph
(c)(4)(ii) of Rule 2-01 of Regulation  S-X, during the fiscal years
ended September 30, 2008 and 2007.
  All Other Fees
  The aggregate fees billed by Paritz
& Company, P.A. for all other services rendered to Janel World Trade, Ltd.
during the fiscal years ended September 30, 2008 and 2007, other than audit
services, were $12,375 in the fiscal year ended September 30, 2008, and $1,100
for the fiscal year ended September 30, 2007. These "other fees" were for
services related to abandoned acquisitions and tax services.
  33
 
 PART
IV
  Item
15.             
Exhibits, Financial Statement Schedules.
  (a)          Financial
Statements.
  Report of
Independent Registered Accounting Firm
  Consolidated
Balance Sheets as at September 30, 2008 and 2007
  Consolidated
Statement of Operations for the Years Ended September 30, 2008, 2007 and
2006
  Consolidated
Statement of Changes in Stockholders’ Equity for the Years Ended September 30,
2008, 2007 and 2006
  Consolidated
Statement of Cash Flows for the Years Ended September 30, 2008, 2007 and
2006
  Notes to
Consolidated Financial Statements
  (c)          Exhibits.
  2.
              Agreement and Plan of Merger
      dated July 18, 2002 by and among Wine Systems Design, Inc., WSD
      Acquisition, Inc. and Janel World Transport,
    Ltd.*(b)
  2.1
              Acquisition
      Agreement dated July 6, 2005 by and among Janel World Trade, Ltd., Freight
      Wings, Inc. and Harjinder P. Singh.*(d) (The transaction proposed in this
      document was subsequently
cancelled.)
  3
    (i)
              Articles
      of Incorporation of Wine Systems Design, Inc. (predecessor name) filed on
      August 31, 2000.*(a)
  3
      (ii)
              By-laws
      of Wine Systems Design, Inc. (predecessor name) adopted on September 1,
      2000.*(a)
  3(iii)
              Certificate
      of Correction of the preferences, rights, qualifications, limitations and
      restrictions of Series A Convertible Preferred
  Stock.*(j)
  3(iv)
              Restated
      and Amended Articles of Incorporation of Janel World Trade,
      Ltd.*(j)
  4.
              Form
      of Series A Warrant Agreement dated March 10, 2006, and form of Series A
      Warrant.*(f)
  4.1
              Certificate
      of Designation of Series A Convertible Preferred Stock dated January 10,
      2007.*(i)
  4.2
              Certificate
      of Designation of Series B Convertible Preferred Stock dated October 16,
      2007.*(j)
  4.3
              Form
      of the Series B Warrant Agreement dated August 27, 2008, and the Form of
      the Series B Warrant.
  10.1
              Janel
      Stock Option Incentive Plan adopted December 12,
  2002.
  10.2
              Financial
      Public & Investor Relations Agreement signed March 10, 2006 by Janel
      World Trade, Ltd. and Strategic Growth International,
    Inc.*(f)
   34
  
  10.3
              Janel
      World Trade, Ltd. Securities Purchase Agreement with the Institutional
      Purchaser entered into January 10,
2007.*(i)
  10.4
              Janel
      World Trade, Ltd. Registration Rights Agreement with the Institutional
      Purchaser entered into January 10,
2007.*(i)
  10.5
              Asset
      Purchase Agreement among Janel World Trade, Ltd., Janel Newco, Inc. and
      Order Logistics, Inc. entered into October 18,
    2007.*(j)
  10.6
              Asset
      Purchase Agreement between Janel World Trade, Ltd. and Ferrara
      International Logistics, Inc. entered into May 19, 2008.
      *(k)
  10.7
              Sales
      Agency and Service Agreement between Janel World Trade, Ltd. and Ferrara
      International Logistics, Inc. entered into May 19, 2008.
      *(k)
  10.8
              July
      18, 2008 Addendum to the Asset Purchase Agreement between Ferrara
      International Logistics, Inc. and Janel World Trade, Ltd. dated May 19,
      2008. *(l)
  10.9
              Sands
      Brothers Series A Convertible Preferred Stock Purchase Agreement dated
      January 10, 2007.
  10.10
              Sands
      Brothers Series A Convertible Preferred Stock Registration Rights
      Agreement dated January 10, 2007.
  10.11
              Form
      of the Convertible Term Note Subscription
  Agreement.
  10.12
              Form
      of the Convertible Term Note.
  10.13
              Form
      of the Convertible Term Note Registration Rights
  Agreement.
  10.14
              Form
      of the Series B Warrant Agreement dated August 27,
  2008.
  10.15
              Form
      of the Placement Agent Agreement and Addendum dated July 17,
      2008.
  10.16
              Form
      of the JPMorgan Chase Bank, N.A. Forbearance  Agreement dated
      May 22, 2009.
  23.1
              Consent
      of Paritz & Company, P.A.
 23.2
                Letter
      dated August 1, 2002, from Michael L. Stuck, C.P.A., P.C., the former
      independent certifying
accountant.*(c)
  31
              Rule
      13(a)-14(a)/15(d)-14(a)
Certifications.
 
 32
              Section
      1350 Certification.
 99.1
                January
      11, 2006 Janel World Trade, Ltd. earnings release regarding thefiscal year
      and fourth quarter ended September 30,
2005.*(e)
 99.1
                  August
      17, 2006 Janel World Trade, Ltd. press release regarding theconsolidated
      financial results for the three and ninemonth periods ended
      June 30,
2006.*(g)
 
 99.1
                October
      12, 2006 Janel World Trade, Ltd. press release regarding adoptionof a
      stock buy back
program.*(h)
  35
 99.1
                  February
      20, 2008 Janel World Trade, Ltd. press release regarding theconsolidated
      financial results for the three month period ended December31,
      2008*(m)
 99.1
                    May
      16, 2008 Janel World Trade, Ltd. press release regarding theconsolidated
      financial results for the three month period ended March31,
      2008*(n)
 _________________________
 *(a)
              Incorporated
      by reference to Exhibits filed as part of the Wine Systems Design, Inc.
      (predecessor name) Registration Statement on Form SB-2 under File No.
      333-60608, filed May 10, 2001.
  *(b)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K report,
      filed July 30, 2002.
  *(c)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K/A report,
      filed August 1, 2002.
  *(d)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K/A report,
      filed July 12, 2005.
  *(e)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K report,
      filed January 12, 2006.
  *(f)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K report,
      filed March 17, 2006.
  *(g)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K report,
      filed August 22, 2006.
  *(h)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K report,
      filed October 16, 2006.
  *(i)
              Incorporated
      by reference to Exhibits filed as part of the company’s Form 8-K Report
      filed January 17, 2007.
  *(j)
              Incorporated
      by reference to Exhibits filed as part of the company’s Form 8-K Report
      filed October 22, 2007.
  *(k)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K report,
      filed May 22, 2008.
  *(l)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K report,
      filed July 24, 2008.
  *(m)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K report,
      filed February 28, 2008.
  *(n)
              Incorporated
      by reference to Exhibits filed as part of the company’s Form 8-K Report
      filed May 22, 2008.
  36
  (d)
              Financial
      Statement Schedules.
  Schedules
are omitted because they are not applicable, are not required or because the
information is included in the company’s Consolidated Financial Statements or
notes thereto.
  37
  SIGNATURES
  Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
  July 23,
2009
  JANEL
      WORLD TRADE, LTD.By:
                  /s/ James N. JannelloJames
      N. Jannello, Executive Vice President and ChiefExecutive
      Officer
  Pursuant to the requirements of the
Securities Exchange Act of 1934, this Report been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated.
  /s/ James N. Jannello
                                
                                Executive
      Vice President, Chief Executive
                                
                                July
      23, 2009James
      N. Jannello
                                
                                Officer
      and Director/s/ William J. Lally
                                
                                President,
      Chief Operating Officer
                                
                                July
      23, 2009William
      J. Lally
                                
                                and
      Director/s/ Stephen P. Cesarski
                                
                                Director
                                
                                July
      23, 2009Stephen
      P. Cesarski/s/ Noel  J.
    Jannello
                                
                                Vice
      President and Director
                                
                                July
      23, 2009Noel  J.
      Jannello/s/ Vincent Iacopella
                                
                                Director
                                
                                July
      23, 2009Vincent Iacopella/s/ Linda Bieler
                                
                                Controller
      and Chief Financial and
                                
                                July
      23, 2009Linda
      Bieler
                                
                                Accounting
      Officer/s/ Ruth Werra
                                
                                Secretary
                                
                                July
      23, 2009Ruth
      Werra
  38


Paritz
& Company, P.A.




JANEL
      WORLD TRADE LTD. AND SUBSIDIARIES
                              
                              CONSOLIDATED
      FINANCIAL STATEMENTS
                              WITH
                              REPORT
      OF INDEPENDENT REGISTERED ACCOUNTING FIRM




Paritz
      & Company, P.A.
              15
      Warren Street, Suite 25
                Hackensack,
      New Jersey 07601
                (201)342-7753
                Fax:
      (201) 342-7598
                E-Mail:
      paritz @paritz.comCertified
      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, 2008 and 2007 and the related consolidated
statements of operations, changes in stockholders’ equity and cash flows for
each of the three years in the period ended September 30, 2008.  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, 2008 and 2007 and the results of its operations
and its cash flows for each of the three years in the period ended September 30,
2008 in conformity with accounting principles generally accepted in the United
States of America.





Paritz
& Company, P.A.





Hackensack,
New Jersey


December
29, 2008





JANEL
WORLD TRADE LTD. AND SUBSIDIARIES





CONSOLIDATED
BALANCE SHEETS





SEPTEMBER
      30,2008
                            
                            
                            2007ASSETSCURRENT
      ASSETSCash
      and cash equivalents (
      Note 1)
                            
                            $
                            2,428,098
                            
                            
                            $
                            2,469,727Accounts
      receivable, net of allowance for doubtful accounts of $129,953 in 2008 and
      $42,600 in 2007
                            
                            
                            6,102,205
                            
                            
                            
                            5,343,958Marketable
      securities (Note
      3)
                            
                            
                            52,044
                            
                            
                            
                            70,880Loans
      receivable - officers (Note 4)
                            
                            
                            142,574
                            
                            
                            
                            142,440-
      related party (Note
      5)
                            
                            
                            -
                            
                            
                            
                            111,700-
      other
                            
                            
                            25,632
                            
                            
                            
                            21,994Prepaid
      expenses and sundry current assets
                            
                            
                            228,664
                            
                            
                            
                            156,802Tax
      refund receivable (Note
      12)
                            
                            
                            83,000
                            
                            
                            
                            -TOTAL
      CURRENT ASSETS
                            
                            
                            9,062,217
                            
                            
                            
                            8,317,501Property and equipment,
      net (Note
      6)
                            
                            
                            303,855
                            
                            
                            
                            217,528OTHER
      ASSETS:Intangible
      assets, net (Note
      7)
                            
                            
                            3,300,119
                            
                            
                            
                            -Security
      deposits
                            
                            
                            50,801
                            
                            
                            
                            49,035Deferred
      income taxes (Note
      12)
                            
                            
                            754,000
                            
                            
                            
                            -TOTAL
      OTHER ASSETS
                            
                            
                            4,104,920
                            
                            
                            
                            49,035$
                            13,470,992
                            
                            
                            $
                            8,584,064LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESConvertible
      promissory notes (Note
      8)
                            
                            $
                            400,000
                            
                            
                            $
                            -Note
      payable – bank (Note
      9)
                            
                            
                            750,000- other (Note
      2A)
                            
                            
                            125,000Accounts
      payable – trade
                            
                            
                            3,902,719
                            
                            
                            
                            3,822,677- related party (Note
      5)
                            
                            
                            143,422Accrued
      expenses and taxes payable
                            
                            
                            303,659
                            
                            
                            
                            205,555Current
      portion of long-term debt (Note
10)
                            
                            
                            786,308
                            
                            
                            
                            3,795TOTAL
      CURRENT LIABILITIES
                            
                            
                            6,411,108
                            
                            
                            
                            4,032,027OTHER
      LIABILITIES:Long-term
      debt (Note
      10)
                            
                            
                            2,110,237
                            
                            
                            
                            2,550Deferred
      compensation
                            
                            
                            78,568
                            
                            
                            
                            78,568TOTAL
      OTHER LIABILITIES
                            
                            
                            2,188,805
                            
                            
                            
                            81,118STOCKHOLDERS’
      EQUITY (Note 11)
                            
                            
                            4,871,079
                            
                            
                            
                            4,470,919TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                            
                            $
                            13,470,992
                            
                            
                            $
                            8,584,064





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





JANEL
WORLD TRADE LTD. AND SUBSIDIARIES





CONSOLIDATED
STATEMENTS OF OPERATIONS





YEAR
      ENDED SEPTEMBER 30,2008
                                              
                                              
                                              2007
                                              
                                              
                                              2006REVENUES  (Note
      1)
                                              
                                              $
                                              82,745,383
                                              
                                              
                                              $
                                              74,947,442
                                              
                                              
                                              $
                                              77,220,070COSTS
      AND EXPENSES:Forwarding
      expenses
                                              
                                              
                                              72,959,241
                                              
                                              
                                              
                                              66,775,078
                                              
                                              
                                              
                                              69,167,248Selling,
      general and administrative
                                              
                                              
                                              9,536,731
                                              
                                              
                                              
                                              7,624,360
                                              
                                              
                                              
                                              7,299,039Amortization
      of intangible assets
                                              
                                              
                                              702,846
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Stock
      based compensation
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              452,360TOTAL
      COSTS AND EXPENSES
                                              
                                              
                                              83,198,818
                                              
                                              
                                              
                                              74,399,438
                                              
                                              
                                              
                                              76,918,647OPERATING
      INCOME (LOSS)
                                              
                                              
                                              (453,435
                                              )
                                              
                                              
                                              548,004
                                              
                                              
                                              
                                              301,423OTHER
      ITEMS:Impairment
      loss (Note
      2)
                                              
                                              
                                              (1,812,750
                                              )
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Interest
      and dividend income
                                              
                                              
                                              43,147
                                              
                                              
                                              
                                              59,175
                                              
                                              
                                              
                                              28,212Interest
      expense
                                              
                                              
                                              (149,389
                                              )
                                              
                                              
                                              (500
                                              )
                                              
                                              
                                              (1,140
                                              )TOTAL
      OTHER ITEMS
                                              
                                              
                                              (1,918,992
                                              )
                                              
                                              
                                              58,675
                                              
                                              
                                              
                                              27,072INCOME
      (LOSS) BEFORE INCOME TAXES
                                              
                                              
                                              (2,372,427
                                              )
                                              
                                              
                                              606,679
                                              
                                              
                                              
                                              328,495Income
      taxes (credit) (Note
      12)
                                              
                                              
                                              (727,000
                                              )
                                              
                                              
                                              283,700
                                              
                                              
                                              
                                              271,500NET
      INCOME (LOSS)
                                              
                                              
                                              (1,645,427
                                              )
                                              
                                              
                                              322,979
                                              
                                              
                                              
                                              56,995Preferred
      stock dividends (Note
      11)
                                              
                                              
                                              15,000
                                              
                                              
                                              
                                              10,833
                                              
                                              
                                              
                                              -NET
      INCOME (LOSS) AVAILABLE TOCOMMON
      STOCKHOLDERS
                                              
                                              $
                                              (1,660,427
                                              )
                                              
                                              $
                                              312,146
                                              
                                              
                                              $
                                              56,995OTHER
      COMPREHENSIVE INCOMENET
      OF TAX:Unrealized
      gain from availablefor sale securities
                                              
                                              $
                                              (25,270
                                              )
                                              
                                              $
                                              8,897
                                              
                                              
                                              $
                                              1,147Basic
      earnings (loss) per share
                                              
                                              $
                                              (.10
                                              )
                                              
                                              $
                                              .02
                                              
                                              
                                              $
                                              .00Diluted
      earnings (loss) per share
                                              
                                              $
                                              (.10
                                              )
                                              
                                              $
                                              .02
                                              
                                              
                                              $
                                              .00Basic
      weighted average number of shares outstanding
                                              
                                              
                                              17,011,278
                                              
                                              
                                              
                                              16,978,142
                                              
                                              
                                              
                                              16,955,329Diluted
      weighted average number of shares outstanding
                                              
                                              
                                              17,431,552
                                              
                                              
                                              
                                              17,378,142
                                              
                                              
                                              
                                              17,179,986





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





JANEL
WORLD TRADE LTD. AND SUBSIDIARIES





CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY





CAPITAL
      STOCK
                                          
                                          PREFERRED
      STOCKSHARES
                                          
                                          
                                          $
                                          
                                          SHARES
                                          
                                          
                                          $
                                          
                                          TREASURY
                                            STOCK
                                          
                                          ADDITIONAL
                                            PAID-IN
                                            CAPITAL
                                          
                                          RETAINED
                                            EARNINGS
                                          
                                          ACCUMULATED
                                            OTHER
                                            COMPREHENSIVE
                                            GAIN
      (LOSS)
                                          
                                          TOTALBALANCE-SEPTEMBER
      30, 2005
                                          
                                          
                                          16,843,000
                                          
                                          
                                          $
                                          16,843
                                          
                                          
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          -
                                          
                                          $
                                          501,003
                                          
                                          $
                                          2,721,329
                                          
                                          $
                                          1,616
                                          
                                          $
                                          3,240,791Net
      income
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          56,995
                                          
                                          
                                          -
                                          
                                          
                                          56,995Stock
      based compensation
                                          
                                          
                                          200,000
                                          
                                          
                                          
                                          200
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          452,160
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          452,360Other
      comprehensive gains:Unrealized
      gains on available-for- sale marketable securities
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          1,147
                                          
                                          
                                          1,147BALANCE-SEPTEMBER
      30, 2006
                                          
                                          
                                          17,043,000
                                          
                                          
                                          
                                          17,043
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          953,163
                                          
                                          
                                          2,778,324
                                          
                                          
                                          2,763
                                          
                                          
                                          3,751,293Net
      income
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          322,979
                                          
                                          
                                          -
                                          
                                          
                                          322,979Convertible
      preferred stock issuancenet
      of expenses of $35,605
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          1,000,000
                                          
                                          
                                          
                                          1,000
                                          
                                          
                                          -
                                          
                                          
                                          463,395
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          464,395Purchase
      of 137,000 shares treasury stock
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          (65,812
                                          )
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          (65,812
                                          )Dividends
      to preferred shareholders
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          (10,833
                                          )
                                          
                                          -
                                          
                                          
                                          (10,833
                                          )Other
      comprehensive gains:Unrealized
      gains on available-for- sale marketable securities
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          8,897
                                          
                                          
                                          8,897BALANCE-SEPTEMBER
      30, 2007
                                          
                                          
                                          17,043,000
                                          
                                          
                                          
                                          17,043
                                          
                                          
                                          1,000,000
                                          
                                          
                                          
                                          1,000
                                          
                                          
                                          (65,812
                                          )
                                          
                                          1,416,558
                                          
                                          
                                          3,090,470
                                          
                                          
                                          11,660
                                          
                                          
                                          4,470,919Net
      loss
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          (1,645,427
                                          )
                                          
                                          -
                                          
                                          
                                          (1,645,427
                                          )Common
      stock issuance
                                          
                                          
                                          520,661
                                          
                                          
                                          
                                          521
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          629,479
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          630,000Convertible
      preferred stock issuance
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          285,000
                                          
                                          
                                          
                                          285
                                          
                                          
                                          -
                                          
                                          
                                          1,424,715
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          1,425,000Retirement
      of treasury stock
                                          
                                          
                                          (137,000
                                          )
                                          
                                          
                                          (137
                                          )
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          65,812
                                          
                                          
                                          (65,675
                                          )
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          -Dividends
      to preferred shareholders
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          (15,000
                                          )
                                          
                                          -
                                          
                                          
                                          (15,000
                                          )Deferred
      financing charges related toIssuance
      of convertible debt
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          33,600
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          33,600Purchase
      of 2,500 shares treasury stock
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          (2,743
                                          )
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          (2,743
                                          )Other
      comprehensive gains (losses):Unrealized
      gains (losses) on available-for-sale marketable securities
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          -
                                          
                                          
                                          (25,270
                                          )
                                          
                                          (25,270
                                          )BALANCE-SEPTEMBER
      30, 2008
                                          
                                          
                                          17,426,661
                                          
                                          
                                          $
                                          17,427
                                          
                                          
                                          1,285,000
                                          
                                          
                                          $
                                          1,285
                                          
                                          $
                                          (2,743
                                          )
                                          $
                                          3,438,677
                                          
                                          $
                                          1,430,043
                                          
                                          $
                                          (13,610
                                          )
                                          $
                                          4,871,079





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





JANEL
WORLD TRADE LTD. AND SUBSIDIARIES





CONSOLIDATED
STATEMENTS OF CASH FLOWS





YEAR
      ENDED SEPTEMBER 30,2008
                                  
                                  
                                  2007
                                  
                                  
                                  2006OPERATING
      ACTIVITIES:Net
      income (loss)
                                  
                                  $
                                  (1,645,427
                                  )
                                  
                                  $
                                  322,979
                                  
                                  
                                  $
                                  56,995Adjustments
      to reconcile net income (loss) to netcash
      provided by (used in) operating activities:Depreciation
      and amortization
                                  
                                  
                                  838,674
                                  
                                  
                                  
                                  99,415
                                  
                                  
                                  
                                  107,649Amortization
      of imputed interest
                                  
                                  
                                  13,332
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Deferred
      income taxes
                                  
                                  
                                  (754,000
                                  )Stock
      based compensation
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  452,360Impairment
      loss
                                  
                                  
                                  1,812,750
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Changes
      in operating assets and liabilities:Accounts
      receivable
                                  
                                  
                                  (758,247
                                  )
                                  
                                  
                                  (534,634
                                  )
                                  
                                  
                                  524,990Tax
      refund receivable
                                  
                                  
                                  (83,000
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Loans
      receivable
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (30,124
                                  )
                                  
                                  
                                  (50,558
                                  )Prepaid
      expenses and sundry current assets
                                  
                                  
                                  (53,597
                                  )
                                  
                                  
                                  383
                                  
                                  
                                  
                                  -Accounts
      payable and accrued expenses
                                  
                                  
                                  163,146
                                  
                                  
                                  
                                  1,117,750
                                  
                                  
                                  
                                  (490,156
                                  )Security
      deposits
                                  
                                  
                                  (1,766
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -NET
      CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
                                  
                                  
                                  (468,135
                                  )
                                  
                                  
                                  975,769
                                  
                                  
                                  
                                  601,280INVESTING
      ACTIVITIES:Acquisition
      of subsidiaries (Note
      2)
                                  
                                  
                                  (423,867
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Acquisition
      of property and equipment, net
                                  
                                  
                                  (57,036
                                  )
                                  
                                  
                                  (138,844
                                  )
                                  
                                  
                                  (43,478
                                  )Purchase
      of marketable securities
                                  
                                  
                                  (6,434
                                  )
                                  
                                  
                                  (2,761
                                  )
                                  
                                  
                                  (2,333
                                  )NET
      CASH USED IN INVESTING ACTIVITIES
                                  
                                  
                                  (487,337
                                  )
                                  
                                  
                                  (141,605
                                  )
                                  
                                  
                                  (45,811
                                  )FINANCING
      ACTIVITIES:Proceeds
      received from bank loan
                                  
                                  
                                  750,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Repayment
      of long-term debt
                                  
                                  
                                  (84,764
                                  )
                                  
                                  
                                  (7,236
                                  )
                                  
                                  
                                  (8,384
                                  )Repayment
      (issuance) of loans receivable
                                  
                                  
                                  (3,772
                                  )
                                  
                                  
                                  (97,736
                                  )
                                  
                                  
                                  1,629Purchase
      of treasury stock
                                  
                                  
                                  (2,743
                                  )
                                  
                                  
                                  (65,812
                                  )
                                  
                                  
                                  -Proceeds
      from sale of preferred stock, net of related expenses of
      $35,605
                                  
                                  
                                  -
                                  
                                  
                                  
                                  464,395
                                  
                                  
                                  
                                  -Repayment
      of loans receivable – related party
                                  
                                  
                                  111,700
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Proceeds
      from loans payable – related party
                                  
                                  
                                  143,422
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -NET
      CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
                                  
                                  
                                  913,843
                                  
                                  
                                  
                                  293,611
                                  
                                  
                                  
                                  (6,755
                                  )INCREASE
      (DECREASE) IN CASH AND CASH EQUIVALENTS
                                  
                                  
                                  (41,629
                                  )
                                  
                                  
                                  1,127,775
                                  
                                  
                                  
                                  548,714CASH
      AND CASH EQUIVALENTS – BEGINNING OF YEAR
                                  
                                  
                                  2,469,727
                                  
                                  
                                  
                                  1,341,952
                                  
                                  
                                  
                                  793,238CASH
      AND CASH EQUIVALENTS – END OF YEAR
                                  
                                  $
                                  2,428,098
                                  
                                  
                                  $
                                  2,469,727
                                  
                                  
                                  $
                                  1,341,952SUPPLEMENTAL
      DISCLOSURES OF CASH FLOW INFORMATION:Cash
      paid during the year for:Interest
                                  
                                  $
                                  177,583
                                  
                                  
                                  $
                                  500
                                  
                                  
                                  $
                                  1,140Income
      taxes
                                  
                                  $
                                  200,788
                                  
                                  
                                  $
                                  294,429
                                  
                                  
                                  $
                                  332,164Non-cash
      investing activities:Unrealized
      gain (loss) on marketable securities
                                  
                                  $
                                  (25,270
                                  )
                                  
                                  $
                                  8,897
                                  
                                  
                                  $
                                  1,147Dividends
      declared to preferred shareholders
                                  
                                  $
                                  15,000
                                  
                                  
                                  $
                                  10,833
                                  
                                  
                                  $
                                  -Issuance
      of common stock, convertible preferred stock andnotes
      payable in connection with business acquisitions
                                  
                                  $
                                  2,941,632
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -Deferred
      financing charges
                                  
                                  $
                                  33,600
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -





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





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 two reportable segments comprised of: 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, and B) computer
software sales, support and maintenance.





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 $100,000.  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.





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.








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.





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





The
movement of freight may require multiple services.  In most instances,
the Company may perform multiple services including destination 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 in accordance with Emerging Issues Task Force
(EITF) 00-21, “Revenue Arrangements with Multiple Deliverables”.





(b)
            Computer
      software sales, support and
maintenance





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








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.





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, 2008, accumulated other comprehensive
income consists of unrealized gains on unrestricted available-for-sale
marketable equity securities.





Deferred income taxes





The
Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS 109) which requires that deferred tax assets
and liabilities be recognized for future tax consequences attributable to
differences between financial statement carrying amounts of existing assets and
liabilities and their respective tax bases.  In addition, SFAS 109
requires recognition of future tax benefits, such as carryforwards, to the
extent that realization of such benefits is more likely than not and that a
valuation allowance be provided when it is more likely than not that some
portion of the deferred tax asset will not be realized.





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.  Statement
of Financial Accounting Standards 142, Goodwill and Other Intangible Assets
(SFAS 142), requires goodwill to be tested for impairment annually as
well as when an event or change in circumstance indicates an 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 a 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, involve 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.
(See Note 2A).





Fair
value of financial instruments





The
carrying values of cash and cash equivalents, receivables, prepaid expenses and
other assets, accounts payable, accrued expenses and other liabilities are
reasonable estimates of their fair values because of the short-term nature of
these instruments.












Recent
accounting pronouncements





In May
2008, the FASB issued Statement of Financial Accounting Standards No. 162,
“The Hierarchy of Generally
Accepted Accounting Principles”(“SFAS 162”), which identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements of non-governmental
entities that are presented in conformity with U.S. GAAP.  SFAS 162 is
effective for the Company sixty days following the SEC’s approval of the Public
Company Accounting Oversight Board (PCAOB) amendments to AU Section 411, “The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles”.





In March
2008, the FASB issued Statement of Accounting Standards No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133(“SFAS 161”). SFAS 161 is intended to improve transparency in financial
reporting by requiring enhanced disclosures of an entity’s derivative
instruments and hedging activities.  This statement requires
additional disclosures about the objectives of derivative instruments and
hedging activities, the method of accounting for such instruments under SFAS No.
133 and its related interpretations, and a tabular disclosure of the effects of
such instruments and related hedged items on the Company’s financial position,
financial performance, and cash flows.  SFAS 161 is effective for
fiscal years and interim periods beginning after November 15, 2008.





In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”
(“SFAS 141R”), which requires most identifiable assets, liabilities,
non-controlling interests and goodwill acquired in a business combination to be
recorded at “full fair value”.  Under SFAS 141R, all business
combinations will be accounted for under the acquisition
method.  Significant changes, among others, from current guidance
resulting from SFAS 141R include the requirement that contingent assets and
liabilities and contingent consideration shall be recorded at estimated fair
value as of the acquisition date, with any subsequent changes in fair value
charged or credited to earnings.  Further, acquisition-related costs
will be expensed rather than treated as part of the acquisition.  SFAS
141R is effective for periods beginning on or after December 15,
2008.





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities – including an amendment of FASB Statement No.
115”. SFAS No. 159 allows companies to choose to measure eligible
financial instruments and certain other items at fair value that are not
required to be measured at fair value.  SFAS No. 159 requires that
unrealized gains and losses on items for which the fair value option has been
elected be reported in earnings at each reporting date.  SFAS No. 159
is effective for fiscal years beginning after November 15, 2007.





On
September 15, 2006 FASB issued SFAS No. 157 (“SFAS 157”) “Fair Value
Measurements”.  SFAS 157 enhances existing guidance for
measuring assets and liabilities using fair value.  Previously,
guidance for applying fair value was incorporated in several accounting
pronouncements.  The statement provides a single definition of fair
value, together with a framework for measuring it, and requires additional
disclosure about the use of fair value to measure assets and
liabilities.  While the statement does not add any new fair value
measurements, it does change current practice.  One such change is a
requirement to adjust the value of non-vested stock for the effect of the
restriction even if the restriction lapses within one year.  SFAS 157
is effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years.  The
adoption of SFAS 157 is not expected to have a material impact on the financial
statements of the Company.





In the
opinion of management of the Company, the adoption of these new pronouncements
will not have a material effect on the financial position or results of
operations of the Company.










2
            ACQUISITIONS
      AND IMPAIRMENT LOSSES





(A)
            ORDER
      LOGISTICS, INC.





On
October 18, 2007, Janel World Trade, Ltd. (the “Company”) acquired certain
assets of Order Logistics, Inc. (“OLI”) consisting of proprietary technology,
intellectual property (including the name “Order Logistics”), office locations
and equipment and customer lists for use in the management and expansion of the
Company’s international integrated logistics transport services
business.  The technology acquired by the Company enables it to
integrate all of the different aspects of movement and delivery of goods, making
the entire process electronically visible in “real time”.  The
Agreement includes non-competition provisions restricting OLI from competing
with Janel.





The
purchase price for the acquired assets was $3,888,429 and was comprised of
$2,338,429 cash paid at closing, the issuance of a $125,000 note payable due
March 30, 2008 (see Note 15B) and the issuance of 285,000 restricted shares of
Janel’s newly-authorized $.001 par value Series B Convertible Preferred Stock
(“Series B”), each share of which is convertible into ten shares of Janel’s
$.001 par value common stock at any time after October 18, 2009.  In
connection therewith, the Company borrowed $1,700,000 under its existing line of
credit and entered into a term loan agreement for $500,000 with a different
bank.  The balance of the cash portion was paid from existing
cash.





The
Company, with the assistance of a third party, performed its annual goodwill
impairment test effective as of September 30, 2008 and determined that there was
no impairment of the goodwill relating to Order Logistics.  The
Company also performed an impairment test on the other identifiable intangible
assets acquired relating to Order Logistics and determined that, due to changes
in economic circumstances relating to Order Logistics, the carrying value of
certain intangible assets exceeded their estimated undiscounted future cash
flows and their


eventual
disposition.  Accordingly, the Company recorded an impairment loss of
$1,812,750 representing the write-off of:





Customer
      relationships
                    
                    $
                    414,451Software
      valuation
                    
                    
                    508,299Development
      agreement
                    
                    
                    890,000$
                    1,812,750





(B)
            FERRARA
      INTERNATIONAL LOGISTICS, INC.





On July
18, 2008 the Company acquired the customs brokerage “book of business”, as
defined, of Ferrara International Logistics, Inc. (“Ferrara”), consisting of
books, records, forms, manuals, access codes, goodwill, customer lists and
contact information, telephone and advertising listings (the “Business”) for the
expansion of the Company’s international integrated logistics transport services
business.  Ferrara will provide the Company with related marketing,
advertising, sales, and related administrative services pursuant to the May 19,
2008 Sales Agency and Service Agreement (the “Sales Agreement”), which has a
three-year term and non-competition provisions restricting Ferrara from
competing with the Company.





The
purchase price for the acquired assets was $2,077,070 (including transaction
costs of $85,438 and net of imputed interest of $108,368), comprised of a
$600,000 payment by the Company at closing, the issuance of 520,661 restricted
shares of the Company’s $0.001 common stock (the “Shares”) valued at $630,000,
based upon the $1.21 per share closing price of the Company’s common stock in
the Over-The-Counter market on the Friday immediately preceding the closing
date, a non-interest bearing $435,000 payment due one year after closing, and a
non-interest bearing $435,000 payment due three years after the
closing.  The Company has imputed interest on these obligations at 7%
per annum.  The Company issued $400,000 of fixed rate convertible
promissory notes to unrelated third parties, in part, fund this acquisition (see
Note 8).  The balance of the cash portion was paid from existing
cash.








If the
aggregate earnings of the Business before interest, taxes, depreciation and
amortization (“EBITDA”) for the three years immediately following the closing
fails to equal $2,100,000, the Company will be entitled to a reduction of the
purchase price in an amount equal to three times the total three year EBITDA
shortfall (the “Shortfall”).  If the final note is not sufficient to
satisfy the Shortfall, the appropriate number of Shares, valued at the closing
market price on the third anniversary of the closing date, will be cancelled and
returned to the Company’s authorized and unissued stock.





The
compensation payable to Ferrara pursuant to the Sales Agreement is contingent
upon the aggregate EBITDA of the Business for the three years immediately
following the closing exceeding $2,100,000, in which event the Company will pay
Ferrara 40% of the excess amount for that period, and for the following three
years pay Ferrara 40% of the excess amount of annual EBITDA exceeding
$700,000.





(C)
            PURCHASE
      PRICE ALLOCATION





In
accordance with the purchase method of accounting as prescribed by SFAS No. 141,
“Business Combinations”, the Company allocated the consideration to the net
tangible and identifiable intangible assets, based on their estimated fair
values.  Goodwill represents the excess of the purchase price over the
fair value of the underlying net tangible and identifiable intangible
assets.  The factors that contributed to the recognition of goodwill
included securing buyer-specific synergies that increase revenue and profits and
are not otherwise available to a marketplace participant, and the acquisition of
a talented workforce.





The consideration has been allocated as
follows:





ORDER
                          LOGISTICS,
      INC.
                        
                        
                        FERRARA
                          INTERNATIONAL
                          LOGISTICS,
      INC.Tangible
      assets:Furniture
      and equipment
                        
                        $
                        165,117
                        
                        
                        $
                        -Intangible
      assets:Identifiable
      intangibles, subject to amortization
                        
                        
                        3,260,000
                        
                        
                        
                        1,530,000Goodwill
                        
                        
                        463,312
                        
                        
                        
                        547,0703,723,312
                        
                        
                        
                        2,077,070Purchase
      price
                        
                        $
                        3,888,429
                        
                        
                        $
                        2,077,070





The
following table provides unaudited pro forma results of operations for the
fiscal years ended September 30, 2008 and 2007 as if the acquisitions had been
consummated as of the beginning of each period presented.  The pro
forma results include the effect of certain purchase accounting adjustments,
such as the estimated changes in depreciation and amortization expense on the
acquired intangible assets.  However, pro forma results do not include
any anticipated cost savings or other effects of the planned integration of the
companies.  Accordingly, such amounts are not necessarily indicative
of the results if the acquisition has occurred on the dates indicated, or which
may occur in the future.





(Unaudited)
                  
                  Pro
      Forma Results(Dollars
      in Millions except per share data)
                  
                  Year
      ended September 30,2008
                  
                  
                  2007Revenues
                  
                  $
                  86,735
                  
                  
                  $
                  83,977Loss
      before income taxes (exclusiveof
      impairment loss for 2008)
                  
                  $
                  (33
                  )
                  
                  $
                  (323
                  )Fully
      diluted earnings per share
                  
                  $
                  (.01
                  )
                  
                  $
                  (.02
                  )








3
            MARKETABLE
      SECURITIES





Marketable
securities consist of the following:





Cost
                    
                    
                    Unrealized
                      Holding
                      Gains
      (Losses)
                    
                    
                    Fair
      ValueAs
      of September 30, 2008:Mutual
      Funds
                    
                    $
                    77,314
                    
                    
                    $
                    (25,270
                    )
                    
                    $
                    52,044As
      of September 30, 2007:Mutual
      Funds
                    
                    $
                    61,983
                    
                    
                    $
                    8,897
                    
                    
                    $
                    70,880





4
            LOANS
      RECEIVABLE – OFFICERS





The loans
receivable – officers bear interest at 4% per annum and are due on
demand.





5
            LOAN
      RECEIVABLE (PAYABLE) – RELATED
PARTY





The loan
receivable (payable) – related party is due from a company owned by Janel’s
President and Executive Vice President.  The loan bears interest at 6%
per annum and is due on demand.





6
            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
      30,2008
                    
                    
                    2007
                    
                    LifeFurniture
      and fixtures
                    
                    $
                    230,780
                    
                    
                    $
                    77,108
                    
                    5-7
      yearsComputer
      equipment
                    
                    
                    524,694
                    
                    
                    
                    489,410
                    
                    5
      years755,474
                    
                    
                    
                    566,518Less
      accumulated depreciation and amortization
                    
                    
                    451,619
                    
                    
                    
                    348,990$
                    303,855
                    
                    
                    $
                    217,528





7
            INTANGIBLE
      ASSETS





A summary
of intangible assets and the estimated useful lives used in the computation of
amortization is as follows:





Order
      Logistics, Inc.
                      
                      Ferrara
      International
                        Logistics,
      Inc.Customer
      relationships
                      
                      $
                      110,000
                      
                      8
      years
                      
                      $
                      1,530,000
                      
                      9.5
      yearsSoftware
      valuation
                      
                      
                      350,000
                      
                      5
      years
                      
                      
                      -Development
      agreement
                      
                      
                      340,000
                      
                      3
      years
                      
                      
                      -Goodwill
                      
                      
                      463,312
                      
                      
                      
                      
                      547,0701,263,312
                      
                      
                      
                      
                      2,077,070Less
      accumulated amortization
                      
                      
                      -
                      
                      
                      
                      
                      40,263$
                      1,263,312
                      
                      
                      
                      $
                      2,036,807








A summary of the changes in intangible
assets is as follows:





Order
      Logistics, Inc.
                    
                    
                    Ferrara
      International
                      Logistics,
      Inc.Balance
      – beginning of year
                    
                    $
                    -
                    
                    
                    $
                    -Acquisitions
                    
                    
                    3,723,312
                    
                    
                    
                    2,077,070Amortization
                    
                    
                    (647,250
                    )
                    
                    
                    (40,263
                    )Impairment
      loss
                    
                    
                    (1,812,750
                    )
                    
                    
                    -Balance
      – end of year
                    
                    $
                    1,263,312
                    
                    
                    $
                    2,036,807





8
            CONVERTIBLE
      PROMISSORY NOTES





In July
2008 the Company issued $400,000 of fixed rate convertible promissory notes
which are due in July 2009 and bear interest at a weighted average interest rate
of 8.25% per annum, payable at maturity.  The Company has the right to
pay the principal and interest on these notes in cash or in shares of the
Company’s common stock at a weighted average conversion price of $.88 per
share.  The Company has the right, at its option and at any time prior
to the maturity, to convert all or a part of the principal and interest due on
this note into Conversion Shares at a weighted average conversion price of $.88
per share.  In addition, if the notes are converted prior to or at
maturity, the Company will issue the lender five-year warrants to purchase 15%
of the amount of the note exercisable at $1.25 per share.   If
the notes are not paid in full prior to maturity, they will convert into common
shares at a weighted average conversion price of $.88 per share.  If
the Company pays the notes in cash, it will issue the number of additional
shares of common stock to the holders of the note equal to 15% of the face value
of the note.





In
connection with the issuance of these notes, the Company issued 52,500 two year
warrants which are exercisable at $2.00 per share and 7,500 five year warrants
which are exercisable at $1.25 per share.  In addition, the Company
paid the placement agent of the notes $40,000 and issued 40,000 five year
warrants exercisable at $2.00.





The fair
value of all the warrants as determined using the Black Scholes Option Pricing
Model was $33,600, which amount was classified as a deferred finance charge and
is being amortized over the term of the notes.





9
            NOTE
      PAYABLE – BANK





The
Company has an available line of credit with a bank pursuant to which it may
borrow up to $1,500,000.  Advances under this facility bear interest
at prime minus .75%.  All borrowings are personally guaranteed by the
president and executive vice president of the Company.  The line is
secured by a blanket lien on the assets of the Company.  As of
September 30, 2008 borrowings under this credit line totaled
$750,000.








10
            LONG-TERM
      DEBT





Long-term
debt consists of the following:





September
      30,2008
                        
                        
                        2007Term
      loan payable in monthly installments of $20,238, plus interest at the
      bank’s prime rate plus .75% per annum, or LIBOR plus 2% per annum with a
      final payment April 1, 2013.  The loan is collateralized by
      substantially all assets of the Company and is personally guaranteed by
      certain stockholders of the Company.
                        
                        $
                        1,619,048
                        
                        
                        $
                        -Non-interest
      bearing note payable, net of imputed interest, in payments of $435,000 in
      July 2009 and July 2011 (see Note 2B).
                        
                        
                        774,964
                        
                        
                        
                        -Term
      loan payable in monthly installments of $13,889, plus interest at a bank’s
      prime rate minus .50% per annum.  The loan is collateralized by
      substantially all assets of a subsidiary of the Company.
                        
                        
                        500,000
                        
                        
                        
                        -Other
                        
                        
                        2,533
                        
                        
                        
                        6,3452,896,545
                        
                        
                        
                        6,345Less
      current portion
                        
                        
                        786,308
                        
                        
                        
                        3,795$
                        2,110,237
                        
                        
                        $
                        2,550





These
obligations mature as follows:





2009
                  
                  $
                  786,3082010
                  
                  
                  381,9962011
                  
                  
                  823,8762012
                  
                  
                  256,7412013
                  
                  
                  242,856Thereafter
                  
                  
                  404,768$
                  2,896,545





11
            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.





As of
September 30, 2008 there were 1,000,000 shares of Series A Convertible Preferred
Stock issued and 285,000 shares of Series B Convertible Preferred Stock issued
and outstanding.








A.
            Issuance
      of convertible preferred stock





(1)           On
January 10, 2007, the Company sold one million 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.





(2)           See
Note 2 in connection with the issuance of Series B Preferred Stock.





B.
            Stock
      repurchase program





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, 2008, 139,500 shares of the Company’s
common stock have been repurchased under the plan at a cost of
$68,555.





12
            INCOME
      TAXES





Income taxes consist of the
following:





Year
      Ended September 30,2008
                    
                    
                    2007
                    
                    
                    2006Federal
      - current
                    
                    $
                    (83,000
                    )
                    
                    $
                    187,000
                    
                    
                    $
                    182,000- deferred
                    
                    
                    (754,000
                    )
                    
                    
                    -
                    
                    
                    
                    -State
      and local
                    
                    
                    110,000
                    
                    
                    
                    96,700
                    
                    
                    
                    89,500$
                    (727,000
                    )
                    
                    $
                    283,700
                    
                    
                    $
                    271,500





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





Year
      Ended September 30,2008
                    
                    
                    2007
                    
                    
                    2006Federal
      taxes (credits) at statutory rates
                    
                    $
                    (811,160
                    )
                    
                    $
                    207,700
                    
                    
                    $
                    111,700Non-deductible
      expenses
                    
                    
                    11,560
                    
                    
                    
                    12,200
                    
                    
                    
                    100,700State
      and local taxes, net of Federal benefit
                    
                    
                    72,600
                    
                    
                    
                    63,800
                    
                    
                    
                    59,100$
                    (727,000
                    )
                    
                    $
                    283,700
                    
                    
                    $
                    271,500





The
deferred tax asset represents the tax effect of timing differences relating to
amortization of intangible assets and the related impairment loss.





13
            PROFIT
      SHARING AND 401(k) PLANS





The
Company maintains a non-contributory profit sharing and 401(k) plan covering
substantially all full-time employees.  The expense charged to
operations for the years ended September 30, 2008, 2007, and 2006 aggregated
approximately $30,000, $28,000 and $25,000, respectively.








14
            RENTAL
      COMMITMENTS





The
Company conducts its operations from leased premises.  Rental expense
on operating leases for the years ended September 30, 2008, 2007 and 2006 was
approximately $404,000, $331,000 and $324,000, respectively.





Future
minimum lease commitments (excluding renewal options) under noncancelable leases
are as follows:





Year
      ended September 30, 2009
                  
                  $
                  397,0002010
                  
                  
                  223,0002011
                  
                  
                  162,0002012
                  
                  
                  111,0002013
                  
                  
                  20,000





15
            RISKS
      AND UNCERTAINTIES





(a)
            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
officers or agents.





(b)
            Concentration
      of credit risk





The
Company’s assets that are exposed to concentrations of credit risk consist
primarily of cash and receivables from customers.  The Company places
its cash with financial institutions that have high credit
ratings.  The receivables from clients are spread over many
customers.  The Company maintains an allowance for uncollectible
accounts receivable based on expected collectibility and performs ongoing credit
evaluations of its customers’ financial condition.





(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)           On
February 11, 2008, The Company filed a lawsuit in the United States District
Court for the Southern District of New York against defendants World Logistics
Services, Inc. (“World Logistics”), a Delaware Corporation formerly known as
“Order Logistics, Inc.”; Richard S. Francis (“Francis”), the President of World
Logistics; and Brian P. Griffin (“Griffin”), who was the Chief Executive Officer
of World Logistics when Janel completed an acquisition in October 2007 of
certain World Logistics assets.





Janel claims that the defendants made
false and misleading statements of material facts concerning the exclusivity of
the rights to the assets which were sold to Janel by having concealed and
withheld the provisions of a settlement agreement with a third-party business
associate and creditor made only two days before the closing of the asset sale,
in which World Logistics agreed to the cancellation of a restrictive covenant
which had prevented the creditor from using World Logistics proprietary computer
software, or soliciting its list of valuable customers and
employees.








Janel has
charged that the defendants violated the anti-fraud provisions of the Federal
securities laws, committed common law fraud, breach of contract and other
wrongdoing, with the specific intent to defraud Janel and obtain 285,000 shares
of its newly authorized Class B convertible preferred stock, and more than
$2,300,000 in payments by Janel of the defendants’ long overdue obligations to
suppliers, creditors and tax authorities.





In May
2008, the defendants filed a motion to the court asking it to dismiss the case
based upon the defendants’ claim that the complaint “fails to state a claim upon
which relief may be granted”.  The Company, in turn, filed a brief in
opposition to the defendants’ motion showing that it is meritless and should be
denied. The motion has not yet been decided.





(d)
            Relationships
      with officers





Janel’s
President and Chief Operating Officer and Executive Vice President and Chief
Executive Officer (“EVP”), each own a 10% profit interest in each of Janel
Shanghai and Janel Hong Kong, as well as 100% ownership in FCL/LCL International
Inc. which operates as a “NVOCC” (non-vessel operating common
carrier).  In addition, the EVP owns 50% of Janel Miami (Florida),
which is a franchise using the Janel name, but in which the Company has no
equity or other direct economic interest.





These
relationships involve actual or potential conflicts of interest between Janel
and its officers.





(e)
            Concentration
      of sales





Sales to
one customer aggregated approximately 16.5%, 19.9% and 13.5% of consolidated
sales for the years ended September 30, 2008, 2007 and 2006,
respectively.  Amounts due from this customer aggregated $162,000,
$860,000 and $705,000 at September 30, 2008, 2007 and 2006
respectively.





16
            QUARTERLY
      RESULTS OF OPERATIONS (Unaudited)





First
                        
                        
                        Second
                        
                        
                        Third
                        
                        
                        FourthFiscal
      2008Net
      sales
                        
                        $
                        20,067,346
                        
                        
                        $
                        18,281,961
                        
                        
                        $
                        19,962,837
                        
                        
                        $
                        24,433,239Operating
      income (loss)
                        
                        
                        56,531
                        
                        
                        
                        (181,097
                        )
                        
                        
                        (192,647
                        )
                        
                        
                        (136,222
                        )Net
      income (loss)
                        
                        
                        22,049
                        
                        
                        
                        (162,820
                        )
                        
                        
                        (153,829
                        )
                        
                        
                        (1,350,827
                        )Per
      share data (1):Basic
      earnings per share
                        
                        $
                        0.001
                        
                        
                        $
                        (0.010
                        )
                        
                        $
                        (0.009
                        )
                        
                        $
                        (0.080
                        )Diluted
      earnings per share
                        
                        $
                        0.001
                        
                        
                        $
                        (0.010
                        )
                        
                        $
                        (
      0.009
                        )
                        
                        $
                        (
      0.008
                        )Fiscal
      2007Net
      sales
                        
                        $
                        16,727,869
                        
                        
                        $
                        18,303,590
                        
                        
                        $
                        18,851,199
                        
                        
                        $
                        21,064,784Operating
      income (loss)
                        
                        
                        79,257
                        
                        
                        
                        52,378
                        
                        
                        
                        227,434
                        
                        
                        
                        188,935Net
      income (loss)
                        
                        
                        52,198
                        
                        
                        
                        37,018
                        
                        
                        
                        140,490
                        
                        
                        
                        93,273Per
      share data (1):Basic
      earnings per share
                        
                        $
                        0.003
                        
                        
                        $
                        0.005
                        
                        
                        $
                        0.008
                        
                        
                        $
                        0.006Diluted
      earnings per share
                        
                        $
                        0.003
                        
                        
                        $
                        0.005
                        
                        
                        $
                        0.008
                        
                        
                        $
                        0.005





(1)
earnings per share were computed independently for each of the periods
presented.  Therefore, the sum of the earnings per share amounts for
the quarters may not equal the total for the year.








17
            BUSINESS
      SEGMENT INFORMATION





Prior to
the acquisition of Order Logistics, Inc. in October, 2007 (See Note 2A), the
Company operated in one reportable segment which was full service cargo
transportation logistics management.  Commencing with the acquisition
of Order Logistics, Inc, the Company began operating in a second reportable
segment which is supplying computer software sales, support and
maintenance.





The
following table presents financial information about the Company’s reportable
segments as of and for the year ended September 30, 2008.





Consolidated
                  
                  
                  Transportation
                    Logistics
                  
                  
                  Computer
                    SoftwareTotal
      revenues
                  
                  $
                  82,745,383
                  
                  
                  $
                  82,261,746
                  
                  
                  $
                  483,637Net
      revenues
                  
                  $
                  9,786,142
                  
                  
                  $
                  9,302,505
                  
                  
                  $
                  483,637Operating
      income (loss)
                  
                  $
                  (453,435
                  )
                  
                  $
                  719,798
                  
                  
                  $
                  (1,173,233
                  )Identifiable
      assets
                  
                  $
                  13,470,992
                  
                  
                  $
                  11,879,833
                  
                  
                  $
                  1,591,159Capital
      expenditures
                  
                  $
                  222,153
                  
                  
                  $
                  54,789
                  
                  
                  $
                  167,364Equity
                  
                  $
                  4,871,079
                  
                  
                  $
                  7,809,919
                  
                  
                  $
                  (2,938,840
                  )