SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-K
 
 (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,
2009
 
 o
              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
                  Incorporation
      or organization)
                (IRS
      Employer Identification No.)
 
 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   No x
  Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (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
o
 
 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 o
                  Accelerated
      filer o
                  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. $4,988,199 (last sale as of 3/31/09).
 
 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. During fiscal 2009
(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 $71.9 million in fiscal 2009, $82.7 million in fiscal
2008 and $74.9 million in 2007. In fiscal 2009, approximately 70% of revenue
related to import activities (unchanged from 2008), 5% to export, 20% to
break-bulk and forwarding, and 5% to warehousing, distribution and trucking
(unchanged from 2008). By operating segment, total 2009 revenue was comprised
$71.7 million for transportation logistics and $200,000 for computer software.
By market, the company’s revenue in fiscal 2009 derived from four principal
industries: consumer wearing apparel/textiles - approximately 35% (unchanged
from 2008); machines/machine parts - approximately 10% (unchanged from 2008);
household appliances - approximately 20% (unchanged from 2008); and footware –
approximately 30% (unchanged from 2008).
  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.
  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 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. Mr. Jannello, Janel’s Executive Vice President and Chief
Executive Officer, owns 50% of the Janel Miami office.
  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.
  3
  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.
  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.
  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.
  4
  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 2009, 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 five largest accounts in fiscal 2009 were: H.H.
Brown Shoe Company (which accounts for approximately 26% of revenue), The Conair
Corporation, The Selmer Company, Nixon Incorporated and Oystar.
  James N. Jannello and William J. Lally,
the Company’s President, 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, 2009, Janel
employed 62 people; 28 in its Jamaica, New York headquarters, and Lynbrook, New
York back office; 2 in Hillside, New Jersey; 1 in Champaign, Illinois; 11 in Elk
Grove Village, Illinois; 7 in Forest Park, Georgia; 1 in Miami, Florida; and 12
in Inglewood, California. Approximately 48 of the company’s employees are
engaged principally in operations, 10 in finance and administration and 4 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.
  5
  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.
  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.
  6
  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.
  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.
  7
  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
  1.   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
pickup 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.
  2.   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.
  3.   Events
Affecting the Volume of International Trade and International Operations Could
Adversely Affect Our International Operations.
  Our international operations are
directly related to and dependent on the volume of international trade,
particularly trade between the United States and foreign nations. This trade, as
well as our international operations, is influenced by many factors,
including:
  - economic and political conditions in
the United States and abroad;
  - major work stoppages, 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.
  8
  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.
  4.  Our
Business Has Been and Could Continue to Be Adversely Affected by Negative
Conditions in the United States Economy or the Industries of Our Principal
Customers.
  Demand for our services had been
adversely affected by negative conditions in the United States 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 had been adversely affected,
particularly during the 2001-2002 period. 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 a
significant customer or experience a decrease in the shipment volume and
business levels of our customers. Either of these events could negatively affect
our financial results. Adverse economic conditions outside the United States can
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.
  5.   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.
  6.   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.
  9
  7.   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.
  8.  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, who replaced the Company’s former President in May 2009,
continues to serve 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 is subject to employment contracts. The loss of the services of any of
our key personnel could have a material adverse effect on us.
  9.   Janel’s
Officers and Directors Control the Company.
  The officers and directors of the
company control the vote of approximately 36.5% 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.
  10.  Failure
to Comply with Governmental Permit and Licensing Requirements, Statutory and
Regulatory Requirements Could Result in Civil and Criminal Sanctions, Fines or
Revocation of Our Operating Authorities, and Changes in These Requirements Could
Adversely Affect Us.
  Our operations are subject to various
state, local, federal and foreign statutes and regulations prohibiting various
activities, that in many instances require permits and licenses. Our failure to
maintain compliance with applicable law and regulations, required permits or
licenses, or to comply with applicable regulations, could result in substantial
fines or revocation of our operating authorities. Moreover, government
deregulation efforts, "modernization" of the regulations governing customs
clearance and changes in the international trade and tariff environment could
require material expenditures or otherwise adversely affect us.
  10
  11.   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.
  12.   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.
  13.  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. Janel’s Elk Grove Illinois office occupied approximately
2,063 square feet with an additional 800 square feet of warehouse space under a
lease which expired November 30, 2009. 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, 2012 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 2013, with an annual rent of $72,000
through December 31, 2008, and 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.
  11
  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.
  On February 11, 2008, Janel World
Trade, Ltd. (“Janel”) 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 consisting of proprietary technology,
intellectual property (including the name “Order Logistics”), office equipment,
and customer lists for Janel's exclusive use in the management and expansion of
Janel’s international integrated logistics transport services business. The
technology was acquired by Janel to enable it to integrate the tracking of all
of the different aspects of the production, movement and delivery of goods,
making the entire process electronically visible in “real time” by both its
managers and clients.
 
 Janel claims that the defendants made
false and misleading statements of material facts concerning the exclusivity of
the rights to the assets which were offered and 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 dismiss the case based upon the defendants' claim that the complaint
"fails to state a claim upon which relief may be granted." The company filed a
brief opposing the defendants' motion. In March 2009, the court entered an order
denying the defendants motions to dismiss in their entirety. In April 2009 the
defendants filed answers to the company's complaint, and counterclaimed that the
company breached agreements and withheld payments due to the defendants. In May
2009, the company filed replies denying each of the counterclaims as
meritless.
  12
  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,
2009, except for the re-election of the board of directors by written consent of
a majority of the company’s shareholders in July 2009.
 
 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 2009
                      
                      High Bid
                      
                      
                      Low BidFirst
      Quarter
                      
                      $
                      1.05
                      
                      
                      $
                      .33Second
      Quarter
                      
                      $
                      1.01
                      
                      
                      $
                      .60Third
      Quarter
                      
                      $
                      .85
                      
                      
                      $
                      .41Fourth
      Quarter
                      
                      $
                      1.25
                      
                      
                      $
                      .71
 
  Fiscal 2008
                    
                    High Bid
                    
                    
                    Low BidFirst
      Quarter
                    
                    $
                    1.28
                    
                    
                    $
                    .50Second
      Quarter
                    
                    $
                    1.43
                    
                    
                    $
                    1.05Third
      Quarter
                    
                    $
                    1.24
                    
                    
                    $
                    1.03Fourth
      Quarter
                    
                    $
                    1.22
                    
                    
                    $
                    .90
  At January 12, 2010, the company had 50
holders of record and approximately 465 beneficial holders of its shares of
common stock. On January_12, 2010, the last sale price of the shares of common
stock as reported by the OTC Bulletin Board was $0.37 per
share.
  13
  ISSUER PURCHASES OF EQUITY SECURITIESPeriod
                                    
                                    (a) Total
                                      Number of
                                      Shares (or
                                      Units)
                                      Purchased
                                    
                                    
                                    (b)
                                      Average
                                      Price
                                      Paid per
                                      Share
                                      (orUnit)
                                    
                                    
                                    (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) thatMayYet Be
                                      Purchased
                                      Under the
                                      Plans or
                                      ProgramsMonth
      #1 (identify beginning and ending dates)
                                    
                                    
                                    7 -1-09/ 7-31 -09
                                      -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    147,824Month
      #2 (identify beginning and ending dates)
                                    
                                    
                                    8 -1-09/ 8 -31-09
                                      -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    147,824Month
      #3 (identify beginning and ending dates)
                                    
                                    
                                    9 -1-09/ 9 -30-09
                                      -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    147,824Total
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    147,824
  Item
      6.
              Selected
      Financial Data.
  Year
      Ended September 30,2009
                        
                        
                        2008
                        
                        
                        2007
                        
                        
                        2006
                        
                        
                        2005Revenue
                        
                        $
                        71,852,806
                        
                        
                        $
                        82,745,383
                        
                        
                        $
                        74,947,442
                        
                        
                        $
                        77,220,070
                        
                        
                        $
                        73,484,334Net
      Income (Loss)
                        
                        $
                        (1,241,198
                        )
                        
                        $
                        (1,645,427
                        )
                        
                        $
                        322,979
                        
                        
                        $
                        56,995
                        
                        
                        $
                        430,019Net
      Income (Loss) per common share
                        
                        $
                        0.(0.07
                        )
                        
                        $
                        0.(0.10
                        )
                        
                        $
                        0.02
                        
                        
                        $
                        0.00
                        
                        
                        $
                        0.03Total
      Assets
                        
                        $
                        10,024,979
                        
                        
                        $
                        13,470,992
                        
                        
                        $
                        8,584,064
                        
                        
                        $
                        6,743,091
                        
                        
                        $
                        6,731,129Long-Term
      Obligations
                        
                        $
                        1,584,664
                        
                        
                        $
                        2,188,805
                        
                        
                        $
                        81,118
                        
                        
                        $
                        84,905
                        
                        
                        $
                        92,140Cash
      Dividends Declared per common share
                        
                        
                        N/A
                        
                        
                        
                        N/A
                        
                        
                        
                        N/A
                        
                        
                        
                        N/A
                        
                        
                        
                        N/A
  14
  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.
  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,
2009, as compared to the results of operations for the fiscal year ended
September 30, 2008; the fiscal year ended September 30, 2008 as compared to the
results of operations for the fiscal year ended September 30, 2007; and the
results of operations for the fiscal year ended September 30, 2007, as compared
to the results of operations for the fiscal year ended September 30, 2006. The
discussion and analysis then addresses the liquidity and financial condition of
the company, and other matters.
  15
  Results
of Operations
  Janel operates its business as two
reportable segments, 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 and computer software sales, support and
maintenance.
  Fiscal
Year Ended September 30, 2009 Compared to Fiscal Year Ended September 30,
2008
  Revenue.Total revenue for
fiscal 2009 was $71,852,806, as compared to $82,745,383 for fiscal 2008, a
year-over-year decrease of $(10,892,577), or (13.2)%. The decrease in total
revenue was primarily due to the decrease in the company’s transportation
logistics segment as a result of a generally weaker overall environment in
domestic and international trade during fiscal 2009 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 2009 was also negatively affected by the
continuing substitution, when possible, of lower-priced ocean freight versus
airfreight by many of our customers. During fiscal 2009, the Company’s overall
business activities with existing clients declined, primarily as a reflection of
the weaker overall economic conditions. Net revenue (revenue minus forwarding
expenses) in fiscal 2009 was $8,434,063, a decrease of $(1,352,079), or (13.8)%,
as compared to $9,786,142 in fiscal 2008.
  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 2009, forwarding expense decreased by $9,540,498, or 13.1%, to $63,418,743,
as compared to $72,959,241 for fiscal year 2008.  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 decreased $962,227,
or 10.1%, to $8,574,504 in fiscal 2009, as compared to $9,536,731 in fiscal
2008. As a percentage of revenue, SG&A expense in fiscal 2009 was 11.93% as
compared to 11.53% as a percentage of revenue in fiscal 2008. The year-over-year
dollar decrease in SG&A resulted from a general decrease in most categories
of SG&A expenses in fiscal 2009, including, in particular, lower commissions
earned on the lower level of logistics revenue.
  Income (Loss) Before Taxes.Loss before taxes in fiscal 2009 was $(1,833,198), which represented a
year-to-year improvement of $539,229, or 22.7%, as compared to the loss before
taxes of $(2,372,427) in fiscal 2008.  The principal reasons for the
2009 loss were nonrecurring pretax charges of $416,392 and of $1,066,240 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 acquisition of Order Logistics, Inc. in October
2007.
  16
  Income Taxes (Credit)..The
effective income tax rates in fiscal 2009 and fiscal 2008, a credit in each
year, are (32)% and (30)%, respectively.
  Net Income (Loss).For fiscal
2009, Janel reported a net loss of $(1,241,198), an improvement of $404,229, or
24.6%, as compared to the reported a net loss of $(1,645,427) in fiscal 2008.
Janel’s net (loss) margin (net loss as a percent of net revenue) was (14.72)% in
fiscal 2009 as compared to a net (loss) margin of (16.81)% in fiscal 2008. The
principal reasons for the improvement were the decrease in extraordinary charges
related to amortization and impairment taken in 2009 as compared to 2008, as
noted above.
  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.
  Selling, General and Administrative
Expense. Selling, general and administrative expense increased
$1,912,371, or 25.1%, to $9,536,731 in fiscal 2008, as compared to $7,624,360 in
fiscal 2007. As a percentage of revenue, SG&A expense in fiscal 2008 was
11.53% 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 acquisitions of Order Logistics, Inc.
in October 2007 and of Ferrara International Logistics, Inc. in July
2008.
  17
  Income (Loss) Before Taxes.Loss before taxes in fiscal 2008 was $(2,372,427), which represented a
year-to-year decrease of $(2,979,106), or (591.1)%, as compared to income before
taxes of $606,679 in fiscal 2007.  The principal reasons for the 2008
loss were nonrecurring pretax charges of $702,846 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 acquisition of 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 $(1,645,427), a decrease of $(1,968,406), or
(709.5)%, 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
(16.81)% 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.
  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.
  18
  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 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, 2009, Janel’s net working capital (total current assets less
total current liabilities) decreased by $159,813, primarily as a result of a
decrease in cash and cash equivalents of $945,000, an increase in accrued
expenses of $118,000, and a decrease in accounts receivable of $1,486,000, only
partially offset by a decrease in notes payable of $1,150,000, a decrease in
accounts payable of $829,000, a decrease in the current portion of long-term
debt of $242,000 and an increase in tax refund receivable of
$206,000.  In addition, during fiscal 2009, the company’s long-term
debt decreased to $1,506,096 from $2,110,237.
  For the 12 months ended September 30,
2009, Janel’s primary source of cash from operating activities was a substantial
aggregate decrease in accounts payable of $829,233, more than offset by the
decrease in its accounts receivable of $1,485,961.
  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.
  19
  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 had become adequate for financing
its receivables, and because it obtained a reduced interest rate. During the
first quarter of 2008, to help finance the Company’s acquisition of certain
assets of Order Logistics, Inc., the company borrowed $1,700,000 (including a
temporary increase of $200,000) under this existing line of credit, while also
issuing a note payable in the amount of $125,000.  In addition, Janel
entered into a term loan agreement with a different bank in the amount of
$500,000 (see Note 2 to financial statements).  At June 30, 2008,
Janel had no remaining available borrowing under its line of
credit.  The outstanding balance of notes payable of $1,825,000 bears
interest at prime plus three-quarters of one percent (0.75%) per annum and is
collateralized by substantially all the assets of Janel and personal guarantees
by certain shareholders of the company.  As of December 31, 2008, the
company had taken down the full $500,000 of available borrowing under its
three-year term loan agreement, bearing interest at prime plus one-half of one
percent (0.50%) per annum, collateralized by substantially all the assets of
Order Logistics, Inc.  In April 2008, the outstanding bank note
payable of $1,700,000 was converted into a term loan payable in monthly
installments of $20,238 plus interest at the bank’s prime rate plus 0.75% per
annum, or LIBOR plus 2% per annum.  In addition, the bank gave the
company a new credit line of $1,500,000, which expired on March 31,
2009.  To finance the acquisition of certain assets of Ferrara
International Logistics, Inc., the company issued a non-interest bearing note
payable, net of imputed interest, with payments of $435,000 in July 2009 and
July 2011.
  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 $250,868.06 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.
  20
  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.
 
 On January 4, 2010, the company amended
the term loan agreement with JPMorgan Chase Bank, its principal lender, under
the following terms. The company is required to make monthly installments of
principal of $25,000 through July 1, 2010, and $40,000 monthly commencing August
1, 2010, through December 1, 2010, plus interest at the bank’s prime rate plus
3% per annum, with a final payment due December 31, 2010. The agreement requires
the company to maintain certain net income levels, as defined by the agreement.
The loan is collateralized by substantially all assets of the company, and is
personally guaranteed by certain stockholders of the company. 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.
  In October 2007, Janel acquired the
brand and software technologies, customer relationships and related assets of
Order Logistics. Based upon the results for the fiscal year ended September 30,
2007, and its current operations, Janel conservatively projects that gross
revenue from its currently existing accounts and businesses for its fiscal year
ending September 30, 2010 will grow by approximately 5-7% to approximately
$75-$77 million.
  21


In
addition, Janel is progressing with the implementation of its business plan and
strategy to grow its revenue and profitability for fiscal 2010and 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 2010
(which may approximate $75-$77 million) will be greater than its gross revenue
for fiscal 2009, and that profitability will be commensurately greater than
Janel’s fiscal 2009 results, as well.
 
 Contractual
Obligations and Commitments
 
 The
following table presents, as of September 30, 2009, the company’s significant
fixed and determinable contractual obligations, by payment date. Further
discussion of the nature of the obligations is included in Notes 10 and 14 to
the Consolidated Financial Statements:
 
 Years
Ended September 30,
 
 2010
                    
                    
                    2011
                    
                    
                    2012
                    
                    
                    2013
                    
                    
                    2014Long
      term debt due as follows (1):
                    
                    $
                    544,000
                    
                    
                    $
                    1,492,000
                    
                    
                    $
                    14,000
                    
                    
                    
                    —Operating
      lease obligations (2)
                    
                    $
                    222,000
                    
                    
                    $
                    160,000
                    
                    
                    $
                    159,000
                    
                    
                    $
                    81,670
 (1)  Represents
principal 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,
2009.
  
 
 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.
 
 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.
 
 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 and Financial
      Disclosure.
 
 Not
applicable.
 
 Item
      9A.
              Controls
      and Procedures.
 
 Management’s
Evaluation of Disclosure Controls and Procedures
  As of
September 30, 2009, the end of the period covered by this report, an evaluation
was performed, under the supervision of the Chief Executive Officer and Chief
Financial Officer, of the company’s disclosure controls and procedures, as such
term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the
Securities Exchange Act of 1934, as amended (the Exchange Act). Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer, concluded
that the company’s disclosure controls and procedures are effective. There have
been no changes during the most recent fiscal year in the company's internal
controls over financial reporting
 
 Management’s
Report On Internal Control Over Financial Reporting
 
 Our company’s management is responsible
for establishing and maintaining adequate internal control over financial
reporting, as such term is defined under Rule 13a-15(f) promulgated under
the Securities Exchange Act of 1934. Our system of internal control was designed
to provide reasonable assurance to Janel’s management and Board of Directors
regarding the preparation and fair presentation of published financial
statements.
  All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with policies or procedures may
deteriorate.
  Management
assessed the effectiveness of the Company’s internal control over financial
reporting as of September 30, 2009. In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission inInternal Control — Integrated Framework. Based on its assessment,
management has concluded that the company’s internal controls over financial
reporting were effective as of September 30, 2009.
  
  This
annual report does not include an attestation report of the company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the company to provide only management's report
in this annual report.
 
 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
                
                56
                
                President,
      Chief OperatingOfficer
      and DirectorJames
      N. Jannello
                
                65
                
                Executive
      Vice President,Chief
      Executive Officer andDirectorNoel  J.
      Jannello
                
                38
                
                Director
      and Vice PresidentVincent
      Iacopella
                
                42
                
                DirectorRuth
      Werra
                
                68
                
                SecretaryLinda
      Bieler
                
                48
                
                Controller
      and Chief Financialand
      Accounting Officer
  William
J. Lally has been the President and a director of Janel since May
2009.  Mr. Lally is the Chief Operating Officer and is principally
engaged in sales and marketing and also manages the export side of the company's
business. Mr. Lally was initially employed by Janel in New York City in 1975 and
moved to Chicago, Illinois in 1979, where he also serves as 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.
  
  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.
  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 one time during fiscal 2009.
  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
within the limits arising out of the company's revenue and profitability. Our
executive compensation structure is comprised of limited a small group of only
six executives, and the amount of their compensation is principally based on the
available funds and the achievement of our goals for growth and
profitability.
 
 Our
compensation approach is necessarily tied to our stage of development as a
company. Historically, our company is one of the smaller freight logistics
businesses whose securities are traded in the public market, with the result
that our compensation program is limited to cash compensation depending upon the
funds available, and is lower than the level of compensation of the public
companies in our business group. Our board of directors reviews and approves
executive compensation, bonus, and benefits policies on a case-by-case basis,
often based on the recommendation of our chief executive officer's subjective
assessment of the funding reasonably available for executive
compensation.
  
 
 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 written employment agreements with our officers and
directors. We do not contemplate entering into any employment agreements until
such time as the Board of Directors concludes that such agreements would be
appropriate under the circumstances.
 
 Long-Term
Incentive Plan Awards
 
 We do not
have any long-term incentive plans that provide compensation intended to serve
as incentive for performance.
 
 Committees
of the Board of Directors
 
 Our Board
of Directors has not established any committees. There is no Audit Committee,
Compensation Committee, or Nominating Committee, or any committee performing
similar functions. The functions which would have been assigned to those
committees are 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 minimum qualifications for
director candidates, nor has our Board of Directors established a process for
identifying and evaluating director nominees. We have not adopted any policy
procedure regarding the handling of any potential recommendation of director
candidates by our stockholders. Our Board has not considered or adopted any of
such 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:
 
 (a)
              understands
      generally accepted accounting principles and financial
      statements;
 (b)
              is
      able to assess the general application of such principles in connection
      with accounting for estimates, accruals and
  reserves;
 (c)
              has
      experience preparing, auditing, analyzing or evaluating financial
      statements comparable 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, 2009, 2008
and 2007, 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 three other most highly
compensated executive officers of the company in all capacities in which they
served.
 
 CHANGE
      IN PENSIONNON-EQUITY
                                                              
                                                              
                                                              VALUE
      AND NON-INCENTIVE
                                                              
                                                              
                                                              QUALIFIED
      DEFERREDNAME
      AND PRINCIPAL
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              STOCK
                                                              
                                                              
                                                              OPTION
                                                              
                                                              
                                                              PLAN
                                                              
                                                              
                                                              COMPENSATION
                                                              
                                                              
                                                              ALL
      OTHERPOSITION
                                                              
                                                              YEAR
                                                              
                                                              SALARY
                                                              
                                                              
                                                              BONUS
                                                              
                                                              
                                                              AWARDS
                                                              
                                                              
                                                              AWARDS
                                                              
                                                              
                                                              COMPENSATION
                                                              
                                                              
                                                              EARNINGS
                                                              
                                                              
                                                              COMPENSATION
                                                              
                                                              
                                                              TOTAL($)
                                                              
                                                              
                                                              ($)
                                                              
                                                              
                                                              ($)
                                                              
                                                              
                                                              ($)
                                                              
                                                              
                                                              ($)
                                                              
                                                              
                                                              ($)
                                                              
                                                              
                                                              ($)
                                                              
                                                              
                                                              ($)James
      Jannello (1)
                                                              
                                                              2009
                                                              
                                                              
                                                              185,000
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              47,088
                                                              (1)
                                                              
                                                              
                                                              232,088Executive
      Vice President
                                                              
                                                              2008
                                                              
                                                              
                                                              199,280
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              52,987
                                                              (1)
                                                              
                                                              
                                                              252,267Chief
      Executive Officer
                                                              
                                                              2007
                                                              
                                                              
                                                              195,436
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              46,713
                                                              (1)
                                                              
                                                              
                                                              242,149Linda
      Bieler (2)
                                                              
                                                              2009
                                                              
                                                              
                                                              105,192
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              6,494
                                                              (2)
                                                              
                                                              
                                                              111,686Chief
      Financial Officer
                                                              
                                                              2008
                                                              
                                                              
                                                              114,750
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              5,399
                                                              (2)
                                                              
                                                              
                                                              120,1492007
                                                              
                                                              
                                                              112,150
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              5,804
                                                              (2)
                                                              
                                                              
                                                              117,954William
      Lally (3)
                                                              
                                                              2009
                                                              
                                                              
                                                              99,712
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              21,183
                                                              (3)
                                                              
                                                              
                                                              120,895President
                                                              
                                                              2008
                                                              
                                                              
                                                              108,382
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              24,689
                                                              (3)
                                                              
                                                              
                                                              133,0712007
                                                              
                                                              
                                                              119,188
                                                              
                                                              
                                                              
                                                              15,000
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              14,046
                                                              (3)
                                                              
                                                              
                                                              148,234Stephen
      Cesarski (4)
                                                              
                                                              2009
                                                              
                                                              
                                                              107,684
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              46,158
                                                              (4)
                                                              
                                                              
                                                              153,842(Retired)
      President
                                                              
                                                              2008
                                                              
                                                              
                                                              183,189
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              46,627
                                                              (4)
                                                              
                                                              
                                                              229,8162007
                                                              
                                                              
                                                              182,489
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              50,965
                                                              (4)
                                                              
                                                              
                                                              233,454Noel
      J. Jannello (5)
                                                              
                                                              2009
                                                              
                                                              
                                                              182,180
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              27,377
                                                              (5)
                                                              
                                                              
                                                              209,557Vice
      President
                                                              
                                                              2008
                                                              
                                                              
                                                              199,680
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              32,079
                                                              (5)
                                                              
                                                              
                                                              231,7592007
                                                              
                                                              
                                                              169,515
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              19,192
                                                              (5)
                                                              
                                                              
                                                              188,707Vincent
      Iacopella (6)
                                                              
                                                              2009
                                                              
                                                              
                                                              127,662
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              13,955
                                                              (6)
                                                              
                                                              
                                                              141,617Director
                                                              
                                                              2008
                                                              
                                                              
                                                              142,200
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              18,133
                                                              (6)
                                                              
                                                              
                                                              160,3332007
                                                              
                                                              
                                                              142,200
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              8,978
                                                              (6)
                                                              
                                                              
                                                              151,178
 
 (1)
              Includes
      $12,953, $12,165, and $11,430 of medical insurance premiums paid on behalf
      of such individual for each of the fiscal years ended 2009, 2008, and
      2007, respectively, $31,974, $38,421, and $32,947 for automobile and
      automobile-related costs, including insurance, incurred on behalf of such
      individual, for each of the fiscal years ended 2009, 2008, and 2007
      respectively, and $2,161, $2,401, and $2,336 of 401K paid on behalf of
      such individual for each of the fiscal years ended 2009, 2008, and 2007
      respectively.
 
 (2)
              Includes
      $5,196, $3,965, and $4,402 of medical insurance premiums paid on behalf of
      such individual for each of the fiscal years ended 2009, 2008, and 2007,
      respectively, and $1,298, $1,434, and $1,402 of 401K paid on behalf of
      such individual for the fiscal years ended 2009, 2008 and
      2007.
 
 (3)
              Includes
      $21,183, $24,689, and $14,046 for automobile and automobile-related costs,
      including insurance, incurred on behalf of such individual for each of the
      fiscal years ended 2009, 2008, and
2007.
 
 (4)
              Includes
      $17,823, $15,991, and $13,778 of medical insurance premiums paid on behalf
      of such individual for each of the fiscal years ended 2009, 2008, and 2007
      respectively, $27,013, $28,430, and $34,981 for automobile and
      automobile-related costs, including insurance, incurred on behalf of such
      individual, for each of the fiscal years ended 2009, 2008, and 2007
      respectively, and $1,322, $2,206, and $2,206 of 401K paid on behalf of
      such individual for each of the fiscal years ended 2009, 2008, and 2007
      respectively.
 
 (5)
              Includes
      $6,000, $5,999, and $6,000  of medical insurance premiums paid
      on behalf of such individual for each of the fiscal years ended 2009,
      2008, and 2007, respectively, 19,973, $24,518, and $11,678 for automobile
      and automobile-related costs, including insurance, incurred on behalf of
      such individual, for each of the fiscal years ended 2009, 2008, and 2007
      respectively, and $1,404, $1,562, and $1,514 of 401K paid on behalf of
      such individual for each of the fiscal years ended 2009, 2008, and 2007
      respectively.
 
 (6)
              Includes
      $2,215, $3,734, and $3,610 of medical insurance premiums paid on behalf of
      such individual for each of the fiscal years ended 2009, 2008, and 2007,
      respectively, $11,670, $12,712, and $3,946 for automobile and
      automobile-related costs, incurred on behalf of such individual for each
      of the fiscal years ended 2009, 2008, and 2007 respectively, and $70,
      $1,687 and $1,422 of 401K paid on behalf of such individual for the fiscal
      years ended 2009, 2008 and 2007.
  
 
 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 January 12, 2010, 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
                        Outstanding (1)Stephen
      P. Cesarski
                        150-14
      132nd Avenue
                        Jamaica,
      NY 11434
                      
                      
                      5,500,000
                      
                      
                      
                      30.53
                      %James
      N. Jannello
                        150-14
      132nd Avenue
                        Jamaica,
      NY 11434
                      
                      
                      5,500,000
                      
                      
                      
                      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
                      (2)
                      
                      
                      5.55
                      %Noel
      J. Jannello
                        150-14
      132nd Avenue
                        Jamaica,
      NY 11434
                      
                      
                      25,000
                      
                      
                      
                      *Vincent
      Iacopella
                        150-14
      132nd Avenue
                        Jamaica,
      NY 11434
                      
                      
                      -0-Ruth
      Werra
                        150-14
      132nd Avenue
                        Jamaica,
      NY 11434
                      
                      
                      25,000
                      
                      
                      
                      *Linda
      Bieler
                        150-14
      132nd Avenue
                        Jamaica,
      NY 11434
                      
                      
                      25,000
                      
                      
                      
                      *All
      Officers and Directors as a Group (5 persons)
                      
                      
                      6,575,000
                      
                      
                      
                      36.5
                      %
  
 
 * Less
than one percent (1%).
  (1) All
of these shares are owned of record.
 
 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
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.
  
  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.
  
  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
Cesarski, Janel’s former President and Chief Operating Officer, and James N.
Jannello, Janel’s Executive Vice President and Chief Executive Officer, 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 $6,000 per year.”
  As of the
fiscal year end of September 30, 2009, James N. Jannello was indebted to the
company in the aggregate sum of $92,935, and William J. Lally was indebted in
the aggregate amount of $1,550. 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.
  On July
22, 2009, Vincent Iacopella, a director of the company, obtained a short-term
personal loan of $16,500 from The Janel Group of Los Angeles, Inc., a
wholly-owned subsidiary of the company.  Mr. Iacopella had previously
been issued a Janel corporate credit card from The Janel Group of Los Angeles,
Inc., for his use in the course of the Janel business activities. Mr. Iacopella
had used the corporate credit card for business charges, and also personal
charges amounting to approximately $3,500. Neither Janel senior management, nor
Mr. Iacopella, were aware that the short term personal loan to Mr. Iacopella or
the personal charges on his business credit card might be a violation of the of
the Sarbanes-Oxley Act, until November 27, 2009. On December 2, 2009, Mr.
Iacopella repaid his personal loan from Janel with interest, and reimbursed the
personal expenses charged to Mr. Iacopella's corporate credit card.
 
 Section
402 of the Sarbanes-Oxley Act makes it unlawful for any public company, directly
or indirectly, to extend credit, maintain credit, or arrange for the extension
of credit in the form of a personal loan to or for the benefit of any director
or executive officer, except for loan transactions completed prior to July 30,
2002, when the Sarbanes-Oxley Act was signed into law. Janel has made
appropriate adjustments to its internal controls to assure compliance with the relevant
provisions of the Sarbanes-Oxley Act.
 
 Violations
of Section 402 of the Sarbanes-Oxley Act are also violations Section 13(K) of
the Securities Exchange Act of 1934. Such violations can result in sanctions
ranging from civil cease-and-desist proceedings to the prosecution of criminal
proceedings, depending upon the nature and seriousness of the
violation.
  
 
 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 and $30,000 for the fiscal years ended September 30, 2009 and 2008,
respectively, and their fees for review of the interim financial statements were
$15,000 and 15,000 for the fiscal years ended September 30, 2009 and 2008,
respectively.
  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, 2009 and 2008.
  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,
2009 and 2008, other than audit services, were $10,612 in the fiscal year ended
September 30, 2009, and $17,375 for the fiscal year ended September 30, 2008.
These "other fees" were for services related to abandoned acquisitions and tax
services.
 
 PART
IV
  Item
      15.
              Exhibits,
      Financial Statement Schedules.
  (a)           Financial
Statements.
  Report of
Independent Registered Accounting Firm
  Consolidated
Balance Sheets as at September 30, 2009 and 2008
  Consolidated
Statement of Operations for the Years Ended September 30, 2009, 2008 and
2007
  Consolidated
Statement of Changes in Stockholders’ Equity for the Years Ended September 30,
2009, 2008 and 2007
  Consolidated
Statement of Cash Flows for the Years Ended September 30, 2009, 2008 and
2007
  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.)3.1
                
                Articles
      of Incorporation of Wine Systems Design, Inc. (predecessor name) filed on
      August 31, 2000.*(a)3.2
                
                By-laws
      of Wine Systems Design, Inc. (predecessor name) adopted on September 1,
      2000.*(a)3.3
                
                Certificate
      of Correction of the preferences, rights, qualifications, limitations and
      restrictions of Series A Convertible Preferred
  Stock.*(j)3.4
                
                Articles
      of Incorporation of Janel World Trade, Ltd.*(j)3.5
                
                Restated
      and Amended By-Laws of Janel World Trade, Ltd.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.5.1
                
                Opinion
      of counsel regarding the validity of the shares being
    offered.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)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,
      2009.10.17
              
              Form
      of the JPMorgan Chase Bank, N.A. January 4, 2010 Amendment to the Credit
      Agreement.10.18
              
              Form
      of the JPMorgan Chase Bank, N.A. Term Note dated January 4,
      2010.10.19
              
              Form
      of the Promissory Note of Vincent Iacopella to the Janel Group of Los
      Angeles, Inc. dated July 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)99.1
              
              Janel
      World Trade, Ltd. earnings release dated January 11, 2006, regarding the
      fiscal year and fourth quarter ended September 30,
    2005.*(e)99.1
              
              August
      17, 2006 Janel World Trade, Ltd. press release regarding the consolidated
      financial results for the three and nine month periods ended June 30,
      2006.*(g)99.1
              
              October
      12, 2006 Janel World Trade, Ltd. press release regarding adoption of a
      stock buy-back program.*(h)99.1
              
              February
      20, 2008 Janel World Trade, Ltd. press release regarding the consolidated
      financial results for the three month period ended December 31,
      2008*(m)99.1
              
              May
      16, 2008 Janel World Trade, Ltd. press release regarding the consolidated
      financial results for the three month period ended March 31,
      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
      dated July 22, 2002, filed July 30, 2002.*(c)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K/A report
      dated July 22, 2002, filed August 1,
2002.
 
  
  
 *(d)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K/A report
      dated July 6, 2005, filed July 12, 2005.*(e)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K report
      dated January 11, 2006, filed January 12, 2006.*(f)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K report
      dated March 10, 2006, filed March 17, 2006.*(g)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K report
      dated August 17, 2006, filed August 22, 2006.*(h)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K report
      dated October 13, 2006, filed October 16, 2006.*(i)
              Incorporated
      by reference to Exhibits filed as part of the company’s Form 8-K Report
      dated January 10, 2007, filed January 17, 2007.*(j)
              Incorporated
      by reference to Exhibits filed as part of the company’s Form 8-K Report
      dated October 18, 2007, filed October 22, 2007.*(k)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K report
      dated May 19, 2008, filed May 22, 2008.*(l)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K report
      dated July 18, 2008, filed July 24, 2008.*(m)
              Incorporated
      by reference to Exhibits filed as part of the company's Form 8-K report
      dated February 20, 2008, filed February 28, 2008.*(n)
              Incorporated
      by reference to Exhibits filed as part of the company’s Form 8-K Report
      dated May 19, 2008, filed May 22,
2008.
 
 (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.
   
  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.
  January
      13, 2010JANEL
      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
              
              January
      13, 2010James
      N. Jannello
              
              Officer
      and Director/s/ William J. Lally
              
              President,
      Chief Operating Officer
              
              January
      13, 2010William
      J. Lally
              
              and
      Director/s/ Linda Bieler
              
              Controller
      and Chief Financial and
              
              January
      13, 2010Linda
      Bieler
              
              Accounting
      Officer/s/ Noel  J.
    Jannello
              
              Vice
      President and Director
              
              January
      13, 2010Noel  J.
      Jannello/s/ Vincent Iacopella
              
              Director
              
              January
      13, 2010Vincent Iacopella/s/ Ruth Werra
              
              Secretary
              
              January
      13, 2010Ruth
      Werra


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.com
    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, 2009 and 2008 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, 2009.  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, 2009 and 2008 and the results of its operations
and its cash flows for each of the three years in the period ended September 30,
2009 in conformity with accounting principles generally accepted in the United
States of America.
 
 Paritz
      & Company, P.A.
 
 Hackensack,
New Jersey
 December
11, 2009, except as to the last paragraph of
 Note 10,
the date of which is January 4, 2010
  
  JANEL
WORLD TRADE LTD. AND SUBSIDIARIES
 
 CONSOLIDATED
BALANCE SHEETS
 
 
 SEPTEMBER
      30,2009
                    
                    
                    2008ASSETSCURRENT
      ASSETSCash
      and cash equivalents (
      Note 1)
                    
                    $
                    1,483,150
                    
                    
                    $
                    2,428,098Accounts
      receivable, net of allowance for doubtful accounts of $85,368 in 2009 and
      $129,953 in 2008
                    
                    
                    4,616,244
                    
                    
                    
                    6,102,205Marketable
      securities (Note
      3)
                    
                    
                    52,100
                    
                    
                    
                    52,044Loans
      receivable - officers (Note 4)
                    
                    
                    114,616
                    
                    
                    
                    142,574-
      other
                    
                    
                    4,908
                    
                    
                    
                    25,632Prepaid
      expenses and sundry current assets
                    
                    
                    239,437
                    
                    
                    
                    228,664Tax
      refund receivable (Note
      12)
                    
                    
                    289,000
                    
                    
                    
                    83,000TOTAL
      CURRENT ASSETS
                    
                    
                    6,799,455
                    
                    
                    
                    9,062,217Property and equipment,
      net (Note
      6)
                    
                    
                    179,779
                    
                    
                    
                    303,855OTHER
      ASSETS:Intangible
      assets, net (Note
      7)
                    
                    
                    1,875,754
                    
                    
                    
                    3,300,119Security
      deposits
                    
                    
                    55,991
                    
                    
                    
                    50,801Deferred
      income taxes (Note
      12)
                    
                    
                    1,114,000
                    
                    
                    
                    754,000TOTAL
      OTHER ASSETS
                    
                    
                    3,045,745
                    
                    
                    
                    4,104,920$
                    10,024,979
                    
                    
                    $
                    13,470,992LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESConvertible
      promissory notes (Note
      8)
                    
                    $
                    -
                    
                    
                    $
                    400,000Note
      payable – bank (Note
      9)
                    
                    
                    -
                    
                    
                    
                    750,000-
      other (Note
      2A)
                    
                    
                    125,000
                    
                    
                    
                    125,000Accounts
      payable – trade
                    
                    
                    3,116,830
                    
                    
                    
                    3,902,719-
      related party (Note
      5)
                    
                    
                    100,078
                    
                    
                    
                    143,422Accrued
      expenses and taxes payable
                    
                    
                    422,110
                    
                    
                    
                    303,659Current
      portion of long-term debt (Note
10)
                    
                    
                    544,141
                    
                    
                    
                    786,308TOTAL
      CURRENT LIABILITIES
                    
                    
                    4,308,159
                    
                    
                    
                    6,411,108OTHER
      LIABILITIES:Long-term
      debt (Note
      10)
                    
                    
                    1,506,096
                    
                    
                    
                    2,110,237Deferred
      compensation
                    
                    
                    78,568
                    
                    
                    
                    78,568TOTAL
      OTHER LIABILITIES
                    
                    
                    1,584,664
                    
                    
                    
                    2,188,805STOCKHOLDERS’
      EQUITY (Note 11)
                    
                    
                    4,132,156
                    
                    
                    
                    4,871,079TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                    
                    $
                    10,024,979
                    
                    
                    $
                    13,470,992
 
 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 30,2009
                                  
                                  
                                  2008
                                  
                                  
                                  2007REVENUES  (Note
      1)
                                  
                                  $
                                  71,852,806
                                  
                                  
                                  $
                                  82,745,383
                                  
                                  
                                  $
                                  74,947,442COSTS
      AND EXPENSES:Forwarding
      expenses
                                  
                                  
                                  63,418,743
                                  
                                  
                                  
                                  72,959,241
                                  
                                  
                                  
                                  66,775,078Selling,
      general and administrative
                                  
                                  
                                  8,574,504
                                  
                                  
                                  
                                  9,536,731
                                  
                                  
                                  
                                  7,624,360Amortization
      of intangible assets
                                  
                                  
                                  416,392
                                  
                                  
                                  
                                  702,846
                                  
                                  
                                  
                                  -TOTAL
      COSTS AND EXPENSES
                                  
                                  
                                  72,409,639
                                  
                                  
                                  
                                  83,198,818
                                  
                                  
                                  
                                  74,399,438OPERATING
      INCOME (LOSS)
                                  
                                  
                                  (556,833
                                  )
                                  
                                  
                                  (453,435
                                  )
                                  
                                  
                                  548,004OTHER
      ITEMS:Impairment
      loss (Note
      2)
                                  
                                  
                                  (1,066,240
                                  )
                                  
                                  
                                  (1,812,750
                                  )
                                  
                                  
                                  -Interest
      and dividend income
                                  
                                  
                                  14,581
                                  
                                  
                                  
                                  43,147
                                  
                                  
                                  
                                  59,175Interest
      expense
                                  
                                  
                                  (224,706
                                  )
                                  
                                  
                                  (149,389
                                  )
                                  
                                  
                                  (500
                                  )TOTAL
      OTHER ITEMS
                                  
                                  
                                  (1,276,365
                                  )
                                  
                                  
                                  (1,918,992
                                  )
                                  
                                  
                                  58,675INCOME
      (LOSS) BEFORE INCOME TAXES
                                  
                                  
                                  (1,833,198
                                  )
                                  
                                  
                                  (2,372,427
                                  )
                                  
                                  
                                  606,679Income
      taxes (credit) (Note
      12)
                                  
                                  
                                  (592,000
                                  )
                                  
                                  
                                  (727,000
                                  )
                                  
                                  
                                  283,700NET
      INCOME (LOSS)
                                  
                                  
                                  (1,241,198
                                  )
                                  
                                  
                                  (1,645,427
                                  )
                                  
                                  
                                  322,979Preferred
      stock dividends (Note
      11)
                                  
                                  
                                  15,000
                                  
                                  
                                  
                                  15,000
                                  
                                  
                                  
                                  10,833NET
      INCOME (LOSS) AVAILABLE TOCOMMON
      STOCKHOLDERS
                                  
                                  $
                                  (1,256,198
                                  )
                                  
                                  $
                                  (1,660,427
                                  )
                                  
                                  $
                                  312,146OTHER
      COMPREHENSIVE INCOMENET
      OF TAX:Unrealized
      gain (loss)  from available for sale securities
                                  
                                  $
                                  (197
                                  )
                                  
                                  $
                                  (25,270
                                  )
                                  
                                  $
                                  8,897Basic
      earnings (loss) per share
                                  
                                  $
                                  (.07
                                  )
                                  
                                  $
                                  (.10
                                  )
                                  
                                  $
                                  .02Diluted
      earnings (loss) per share
                                  
                                  $
                                  (.07
                                  )
                                  
                                  $
                                  (.10
                                  )
                                  
                                  $
                                  .02Basic
      weighted average number of shares outstanding
                                  
                                  
                                  17,545,712
                                  
                                  
                                  
                                  17,011,278
                                  
                                  
                                  
                                  16,978,142Diluted
      weighted average number of shares outstanding
                                  
                                  
                                  17,945,712
                                  
                                  
                                  
                                  17,431,552
                                  
                                  
                                  
                                  17,378,142
 
 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, 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
                            )
                            
                            
                            4,871,079Net
      loss
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (1,241,198
                            )
                            
                            
                            -
                            
                            
                            
                            (1,241,198
                            )Common
      stock issuance
                            
                            
                            586,671
                            
                            
                            
                            5,867
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            502,879
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            508,746Dividends
      to preferred shareholders
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (15,000
                            )
                            
                            
                            -
                            
                            
                            
                            (15,000
                            )Options
      issued
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            17,249
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            17,249Purchase
      of 12,676 shares treasury stock
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (8,523
                            )
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (8,523
                            )Other
      comprehensive gains (losses):Unrealized
      gains (losses) on available-for-sale marketable securities
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (197
                            )
                            
                            
                            (197
                            )BALANCE-SEPTEMBER
      30, 2009
                            
                            
                            18,013,332
                            
                            
                            $
                            23,294
                            
                            
                            
                            1,285,000
                            
                            
                            $
                            1,285
                            
                            
                            $
                            (11,266
                            )
                            
                            $
                            3,958,805
                            
                            
                            $
                            173,845
                            
                            
                            $
                            (13,807
                            )
                            
                            $
                            4,132,156
 
 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 30,2009
                    
                    
                    2008
                    
                    
                    2007OPERATING
      ACTIVITIES:Net
      income (loss)
                    
                    $
                    (1,241,198
                    )
                    
                    $
                    (1,645,427
                    )
                    
                    $
                    322,979Adjustments
      to reconcile net income (loss) to net cash
      provided by (used in) operating activities:Depreciation
      and amortization
                    
                    
                    552,707
                    
                    
                    
                    838,674
                    
                    
                    
                    99,415Amortization
      of imputed interest
                    
                    
                    46,860
                    
                    
                    
                    13,332
                    
                    
                    
                    -Deferred
      income taxes
                    
                    
                    (360,000
                    )
                    
                    
                    (754,000
                    )Issuance
      of options
                    
                    
                    17.249
                    
                    
                    
                    -
                    
                    
                    
                    -Impairment
      loss
                    
                    
                    1,066,240
                    
                    
                    
                    1,812,750
                    
                    
                    
                    -Changes
      in operating assets and liabilities:Accounts
      receivable
                    
                    
                    1,485,961
                    
                    
                    
                    (758,247
                    )
                    
                    
                    (534,634
                    )Tax
      refund receivable
                    
                    
                    (206,000
                    )
                    
                    
                    (83,000
                    )
                    
                    
                    -Loans
      receivable
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (30,124
                    )Prepaid
      expenses and sundry current assets
                    
                    
                    (69,038
                    )
                    
                    
                    (53,597
                    )
                    
                    
                    383Accounts
      payable and accrued expenses
                    
                    
                    (573,693
                    )
                    
                    
                    163,146
                    
                    
                    
                    1,117,750Security
      deposits
                    
                    
                    (5,190
                    )
                    
                    
                    (1,766
                    )
                    
                    
                    -NET
      CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
                    
                    
                    713,898
                    
                    
                    
                    (468,135
                    )
                    
                    
                    975,769INVESTING
      ACTIVITIES:Acquisition
      of subsidiaries (Note
      2)
                    
                    
                    -
                    
                    
                    
                    (423,867
                    )
                    
                    
                    -Acquisition
      of property and equipment, net
                    
                    
                    (12,239
                    )
                    
                    
                    (57,036
                    )
                    
                    
                    (138,844
                    )Purchase
      of marketable securities
                    
                    
                    (253
                    )
                    
                    
                    (6,434
                    )
                    
                    
                    (2,761
                    )NET
      CASH USED IN INVESTING ACTIVITIES
                    
                    
                    (12,492
                    )
                    
                    
                    (487,337
                    )
                    
                    
                    (141,605
                    )FINANCING
      ACTIVITIES:Proceeds
      from (repayment of) bank loan
                    
                    
                    (750,000
                    )
                    
                    
                    750,000
                    
                    
                    
                    -Repayment
      of long-term debt
                    
                    
                    (893,169
                    )
                    
                    
                    (84,764
                    )
                    
                    
                    (7,236
                    )Repayment
      (issuance) of loans receivable
                    
                    
                    48,682
                    
                    
                    
                    (3,772
                    )
                    
                    
                    (97,736
                    )Purchase
      of treasury stock
                    
                    
                    (8,523
                    )
                    
                    
                    (2,743
                    )
                    
                    
                    (65,812
                    )Proceeds
      from sale of preferred stock, net of related expenses of
      $35,605
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    464,395Proceeds
      from (repayment of) loans receivable (payable) – related
    party
                    
                    
                    (43,344
                    )
                    
                    
                    111,700
                    
                    
                    
                    -Proceeds
      from loans payable – related party
                    
                    
                    -
                    
                    
                    
                    143,422
                    
                    
                    
                    -NET
      CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
                    
                    
                    (1,646,354
                    )
                    
                    
                    913,843
                    
                    
                    
                    293,611INCREASE
      (DECREASE) IN CASH AND CASH EQUIVALENTS
                    
                    
                    (944,948
                    )
                    
                    
                    (41,629
                    )
                    
                    
                    1,127,775CASH
      AND CASH EQUIVALENTS – BEGINNING OF YEAR
                    
                    
                    2,428,098
                    
                    
                    
                    2,469,727
                    
                    
                    
                    1,341,952CASH
      AND CASH EQUIVALENTS – END OF YEAR
                    
                    $
                    1,483,150
                    
                    
                    $
                    2,428,098
                    
                    
                    $
                    2,469,727SUPPLEMENTAL
      DISCLOSURES OF CASH FLOW INFORMATION:Cash
      paid during the year for:Interest
                    
                    $
                    87,312
                    
                    
                    $
                    177,583
                    
                    
                    $
                    500Income
      taxes
                    
                    $
                    134,753
                    
                    
                    $
                    200,788
                    
                    
                    $
                    294,429Non-cash
      activities:Unrealized
      gain (loss) on marketable securities
                    
                    $
                    (197
                    )
                    
                    $
                    (25,270
                    )
                    
                    $
                    8,897Dividends
      declared to preferred shareholders
                    
                    $
                    15,000
                    
                    
                    $
                    15,000
                    
                    
                    $
                    10,833Issuance
      of common stock, convertible preferred stock and notes payable in
      connection with business acquisitions
                    
                    $
                    -
                    
                    
                    $
                    2,941,632
                    
                    
                    $
                    -Deferred
      financing charges
                    
                    $
                    58,267 -
                    
                    
                    $
                    33,600
                    
                    
                    $
                    -Conversion
      of debt to equity
                    
                    $
                    508,746
                    
                    
                    $
                    -
                    
                    
                    $
                    -
 
 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 $250,000.  The Company’s accounts
at these institutions may, at times, exceed the federally insured
limits.  The Company has not experienced any losses in such
accounts.
 
 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.
 
 (b)           Computer
software sales, support and maintenance
 
 The
Company recognizes revenue, including multiple element arrangements, in
accordance with current authoritative guidance.   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, 2009, 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 current authoritative
guidance 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, current authoritative guidance
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.  Current
authoritative guidance 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 June
2009, the FASB issued Accounting Standards Update No. 2009-01 which amends ASC
105, Generally Accepted
Accounting Principles.  This guidance states that the ASC will
become the source of authoritative U.S. GAAP recognized by the FASB to be
applied by nongovernmental entities.  Once effective, the
Codification’s content will carry the same level of authority.  Thus,
the U.S. GAAP hierarchy will be modified to include only two levels of U.S.
GAAP; authoritative and non-authoritative. This is effective for financial
statements issued for interim and annual periods ending after September 15,
2009.  The Company adopted ASC 105 as of September 30, 2009 and thus
have incorporated the new Codification citations in place of the corresponding
reference to legacy accounting pronouncements.
 
 Current
authoritative guidance 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, 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.
 
 Current
authoritative guidance requires most identifiable assets, liabilities,
non-controlling interests and goodwill acquired in a business combination to be
recorded at “full fair value”.  All business combinations will be
accounted for under the acquisition method.  Significant changes,
among others, from current guidance 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.
 
 Current
authoritative guidance 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.  Unrealized gains and losses on items for
which the fair value option has been elected be reported in earnings at each
reporting date.
 
 In August
2009, the FASB issued Accounting Standards Update No. 2009-05, Measuring Liabilities at Fair Value,
which amends ASC 820, Fair Value Measurements and
Disclosures.  This Update provides clarification that in
circumstances in which a quoted price in an active market for the identical
liability is not available, a reporting entity is required to measure the fair
value using one or more of the following techniques: a valuation technique that
uses the quoted price of the identical liability or similar liabilities when
traded as an asset, which would be considered a Level 1 input, or another
valuation technique that is consistent with ASC 820. This Update is effective
for the first reporting period (including interim periods) beginning after
issuance.  Thus, the Company adopted this guidance as of September 30,
2009, which did not have a material impact on its consolidated financial
statements.
 
 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 a goodwill impairment
test effective as of September 30, 2008 and determined that there was no
impairment of the goodwill relating to OLI.  The Company also
performed an impairment test on the other identifiable intangible assets
acquired relating to OLI and determined that, due to changes in economic
circumstances relating to OLI, 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 as of September 30, 2008 representing the write-off of:
 
 Customer
      relationships
                    
                    $
                    414,451Software
      valuation
                    
                    
                    508,299Development
      agreement
                    
                    
                    890,000$
                    1,812,750
 
 The
Company, with the assistance of a third party, performed a goodwill impairment
test effective as of September 30, 2009 and determined that there was full
impairment of the intangible assets relating to the acquisition of certain
assets of OLI.  Accordingly, the Company recorded an impairment loss
of $1,066,240 as of September 30, 2009 representing the write-off
of:
 
 Customer
      relationships
                    
                    $
                    96,250Software
      valuation
                    
                    
                    280,000Development
      agreement
                    
                    
                    226,678Goodwill
                    
                    
                    463,312$
                    1,066,240
 
 (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, 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 Thousands except per share data)
                      
                      Year
      ended September 30,2008
                      
                      
                      2007Revenues
                      
                      $
                      86,735
                      
                      
                      $
                      83,977Loss
      before income taxes (exclusive of 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, 2009:Mutual
      Funds
                    
                    $
                    52,297
                    
                    
                    $
                    (197
                    )
                    
                    $
                    52,100As
      of September 30, 2008:Mutual
      Funds
                    
                    $
                    77,314
                    
                    
                    $
                    (25,270
                    )
                    
                    $
                    52,044
 
 4        
   LOANS RECEIVABLE – OFFICERS
 
 The loans
receivable – officers bear interest at 4% per annum and are due on
demand.
 
 On July
22, 2009, Vincent Iacopella, a director of the Company, obtained a short-term
personal loan of $16,500 from the Janel Group of Los Angeles, Inc., a
wholly-owned subsidiary of the Company. Mr. Iacopella had previously been issued
a Janel corporate credit card from the Janel Group of Los Angeles, Inc. for his
use in the course of Janel business activities.  Mr. Iacopella had
used the corporate credit card for business charges and also personal charges
amounting to approximately $3,500.  Neither Janel senior management
nor Mr. Iacopella were aware that the short-term personal loan to Mr. Iacopella
or the personal charges on his business credit card might be a violation of the
Sarbanes-Oxley act until November 22, 2009.  On December 2, 2009, Mr.
Iacopella repaid his personal loan from Janel with interest and reimbursed the
Company for the personal expenses charged to Mr. Iacopella’s corporate credit
card.
 
 Section
402 of the Sarbanes-Oxley Act makes it unlawful for any public company, directly
or indirectly, to extend credit, maintain credit or arrange for the extension of
credit in the form of a personal loan to or for the benefit of any director or
executive officer, except for loan transactions completed prior to July 30,
2002, when the Sarbanes-Oxley Act was signed into law.
 
 Violations
of Section 402 of the Sarbanes-Oxley Act are also violations of Section 13(K) of
the Securities Exchange Act of 1934.  Such violations can result in
sanctions ranging from civil cease-and-desist proceedings to the prosecution of
criminal proceedings, depending upon the nature and seriousness of the
violation.
 
 5      
     LOAN PAYABLE – RELATED PARTY
 
 The loan
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
      30,2009
                            
                            
                            2008
                            
                            LifeFurniture
      and fixtures
                            
                            $
                            224,661
                            
                            
                            $
                            230,780
                            
                            5-7
      yearsComputer
      equipment
                            
                            
                            503,514
                            
                            
                            
                            524,694
                            
                            5
      years728,175
                            
                            
                            
                            755,474Less
      accumulated depreciation andAmortization
                            
                            
                            548,396
                            
                            
                            
                            451,619$
                            179,779
                            
                            
                            $
                            303,855
  
  
  7         
  INTANGIBLE ASSETS
 
 A summary
of intangible assets resulting from the Ferrara acquisition and the estimated
useful lives used in the computation of amortization is as follows:
 
 Customer
      relationships
                      
                      $
                      1,530,000
                      
                      9.5
      yearsGoodwill
                      
                      
                      547,0702,077,070Less
      accumulated amortization
                      
                      
                      201,316$
                      1,875,754
 
 A summary of the changes in intangible
assets is as follows:
 
 Order Logistics, Inc.
                            
                            
                            Ferrara International
                              Logistics, Inc.Balance
      – beginning of year
                            
                            $
                            1,263,312
                            
                            
                            $
                            2,036,807Amortization
                            
                            
                            (197,072
                            )
                            
                            
                            (161,053
                            )Impairment
      loss
                            
                            
                            (1,066,240
                            )
                            
                            
                            -Balance
      – end of year
                            
                            $
                            -
                            
                            
                            $
                            1,875,754
 
 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.
 
 In July
2009 the $400,000 convertible promissory notes plus accrued interest of $40,000
were converted into 586,671 shares of common stock.
 
 9      
     NOTE PAYABLE – BANK
 
 As of
September 30, 2008, the Company had 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.
  
  
  In May
2009, the Company, together with its principal stockholders, entered into a
forbearance agreement with JP 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 on March 30, 2009 in the sum of
$250,868, 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
on or before July 31, 2009.  As of July 31, 2009, the balance due on
the note payable was paid in full.
 
 10       
    LONG-TERM DEBT
 
 Long-term
debt consists of the following:
 September 30,2009
                    
                    
                    2008Term
      loan payable, as amended.   (1)
                    
                    $
                    1,316,191
                    
                    
                    $
                    1,619,048Non-interest
      bearing note payable, net of imputed interest, in payments of $435,000 in
      July 2011 (see Note 2B).
                    
                    
                    386,824
                    
                    
                    
                    774,964Term
      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.
                    
                    
                    347,222
                    
                    
                    
                    500,000Other
                    
                    
                    -
                    
                    
                    
                    2,5332,050,237
                    
                    
                    
                    2,896,545Less
      current portion
                    
                    
                    544,141
                    
                    
                    
                    786,308$
                    1,506,096
                    
                    
                    $
                    2,110,237
 
 These
obligations mature as follows:
 
 2010
                    
                    $
                    544,1412011
                    
                    
                    1,492,2112012
                    
                    
                    13,885$
                    2,050,237
 
 (1)           On
January 4, 2010 the Company amended the term loan agreement with its principal
lender under the following terms.  The Company is required to make
monthly installments of principal of $25,000 through July 1, 2010 and $40,000
monthly commencing August 1, 2010 through December 1, 2010, plus interest at the
bank’s prime rate plus 3% per annum, with a final payment due December 31,
2010.  The agreement requires the Company to maintain certain net
income levels, as defined.  The loan is collateralized by
substantially all assets of the Company and is personally guaranteed by certain
stockholders of the Company.
 
 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, 2009 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, 2009, 152,176 shares of the Company’s
common stock have been repurchased under the plan at a cost of
$77,078.
 
 12      
     INCOME TAXES
 
 Income taxes consist of the
following:
 Year
      Ended September 30,2009
                      
                      
                      2008
                      
                      
                      2007Federal
      – current
                      
                      $
                      (267,500
                      )
                      
                      $
                      (83,000
                      )
                      
                      $
                      187,000-
      deferred
                      
                      
                      (360,000
                      )
                      
                      
                      (754,000
                      )
                      
                      
                      -State
      and local
                      
                      
                      35,500
                      
                      
                      
                      110,000
                      
                      
                      
                      96,700$
                      (592,000
                      )
                      
                      $
                      (727,000
                      )
                      
                      $
                      283,700
 
 The
reconciliation of income tax computed at the Federal statutory rate to the
provision for income taxes is as follows:
 
 Year
      Ended September 30,2009
                      
                      
                      2008
                      
                      
                      2007Federal
      taxes (credits) at statutory rates
                      
                      $
                      (627,500
                      )
                      
                      $
                      (811,160
                      )
                      
                      $
                      207,700Non-deductible
      expenses
                      
                      
                      11,740
                      
                      
                      
                      11,560
                      
                      
                      
                      12,200State
      and local taxes, net of Federal benefit
                      
                      
                      23,760
                      
                      
                      
                      72,600
                      
                      
                      
                      63,800$
                      (592,000
                      )
                      
                      $
                      (727,000
                      )
                      
                      $
                      283,700
 
 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, 2009, 2008, and 2007 aggregated
approximately $24,000, $30,000 and $28,000, respectively.
  
  
  14     
      RENTAL COMMITMENTS
 
 The
Company conducts its operations from leased premises.  Rental expense
on operating leases for the years ended September 30, 2009, 2008 and 2007 was
approximately $412,000, $404,000, and $331,000, respectively.
 
 Future
minimum lease commitments (excluding renewal options) under noncancelable leases
are as follows:
 Year
      ended September 30, 2010
                    
                    $
                    222,0002011
                    
                    
                    160,0002012
                    
                    
                    159,0002013
                    
                    
                    81,670
 
 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. In March 2009 the court entered an order denying the defendants’ motions
to dismiss in their entirety.
 
 In April
2009 the defendants Francis and Griffin filed answers to the Janel complaint and
they each counterclaimed that Janel breached agreements and withheld payments
from them.
 
 Griffin
claims that, under the Asset Acquisition Agreement, he is entitled to 38,000
shares of Janel’s Series B Convertible stock and 12,500 shares of Janel’s common
stock, and payment of $125,000 that was due on March 30, 2008. He also claims
that, under an October 18, 2008 employment agreement with Janel for a period of
years, which he quit within the first week of his employment, he is entitled to
$600,000, plus interest, and 500,000 “unrestricted” shares of Janel’s common
stock.
 
 Francis
claims that, under the Asset Acquisition Agreement, he is entitled to receive
$125,000 accounts receivable attributable to services World Logistics provided
to customers prior to October 1, 2007, and 97,500 shares of Janel’s Class B
convertible preferred stock which Janel failed to deliver to him.
 
 In May
2009, Janel filed replies denying each of the counterclaims as
meritless.  This litigation is presently in the discovery phase, and
is likely to go to trial during 2010.
 
 (d)           Relationships
with officers
 
 Janel’s
former President and Chief Operating Officer and Executive Vice President and
Chief Executive Officer (“EVP”), 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.
 
 These
relationships involve actual or potential conflicts of interest between Janel
and its officers.
  (e)           Concentration
of sales
 
 Sales to
one customer aggregated approximately 26%, 16.5% and 19.9% of consolidated sales
for the years ended September 30, 2009, 2008 and 2007,
respectively.  Amounts due from this customer aggregated $399,110,
$162,000 and $860,000 at September 30, 2009, 2008 and 2007
respectively.
  
  
  16       
    QUARTERLY RESULTS OF OPERATIONS (Unaudited)
 
 First
                    
                    
                    Second
                    
                    
                    Third
                    
                    
                    FourthFiscal
      2009Net
      sales
                    
                    $
                    21,266,128
                    
                    
                    $
                    17,151,773
                    
                    
                    $
                    15,524,769
                    
                    
                    $
                    17,910,136Operating
      income (loss)
                    
                    
                    (96,104
                    )
                    
                    
                    (360,818
                    )
                    
                    
                    (81,857
                    )
                    
                    
                    (18,054
                    )Net
      income (loss)
                    
                    
                    (115,490
                    )
                    
                    
                    (284,735
                    )
                    
                    
                    (105,847
                    )
                    
                    
                    (735,126
                    )Per
      share data (1):Basic
      earnings per share
                    
                    $
                    (.01
                    )
                    
                    $
                    (.02
                    )
                    
                    $
                    (.01
                    )
                    
                    $
                    .04Diluted
      earnings per share
                    
                    $
                    (.01
                    )
                    
                    $
                    (.02
                    )
                    
                    $
                    (.01
                    )
                    
                    $
                    (.04
                    )Fiscal
      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
                    )
                    
                    $
                    (
      0.080
                    )
 
 (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 years ended September 30, 2009 and 2008.
 
 2009
                                        
                                        Consolidated
                                        
                                        
                                        Transportation
                                          Logistics
                                        
                                        
                                        Computer
                                          SoftwareTotal
      revenues
                                        
                                        $
                                        71,852,806
                                        
                                        
                                        $
                                        71,663,175
                                        
                                        
                                        $
                                        189,631Net
      revenues
                                        
                                        $
                                        8,434,063
                                        
                                        
                                        $
                                        8,244,432
                                        
                                        
                                        $
                                        189,631Operating
      income (loss)
                                        
                                        $
                                        (556,833
                                        )
                                        
                                        $
                                        99,871
                                        
                                        
                                        $
                                        (656,704
                                        )Identifiable
      assets
                                        
                                        $
                                        10,024,979
                                        
                                        
                                        $
                                        9,902,506
                                        
                                        
                                        $
                                        122,473Capital
      expenditures
                                        
                                        $
                                        12,239
                                        
                                        
                                        $
                                        10,701
                                        
                                        
                                        $
                                        1,538Depreciation
      and amortization
                                        
                                        $
                                        552,706
                                        
                                        
                                        $
                                        301,770
                                        
                                        
                                        $
                                        250,936Equity
                                        
                                        $
                                        4,132,156
                                        
                                        
                                        $
                                        8,934,203
                                        
                                        
                                        $
                                        (4,802,047
                                        )
 
 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
                                        
                                        
                                        $
                                        167,364Depreciation
      and amortization
                                        
                                        $
                                        838,674
                                        
                                        
                                        $
                                        158,400
                                        
                                        
                                        $
                                        680,274Equity
                                        
                                        $
                                        4,871,079
                                        
                                        
                                        $
                                        7,809,919
                                        
                                        
                                        $
                                        (2,938,840
                                        )
  
  
  18       
    SUBSEQUENT EVENTS
 
 The
Company evaluated subsequent events through the date the financial statements
were issued, which was December 11, 2009. There were no subsequent events that
required recognition or disclosure other than as discussed below.
 
 In
December 2009, Janel entered into an executive search agreement with a company
to recruit prospective employees for Janel.  Per the agreement, the
executive search firm shall be compensated in cash at a rate of 10% of the
estimated first year total annual cash compensation of all candidates hired by
Janel.  In addition, the search firm shall be further compensated by
the issuance of stock options at a rate of 10% of the estimated first year total
annual cash compensation (including signing bonuses and other cash
incentives).  The stock options shall have an exercise price of $1.00
per share, effective as of the date of the first hiring by Janel pursuant to the
agreement.  The option expires five years after the effective date of
the option.