JANEL CORP - Annual Report: 2009 (Form 10-K)

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 on
Title of each class	which registered

None	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.

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.

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

In 2000, Janel opened the office in Shanghai, China, followed by the opening of the Hong Kong office in 2001 and the opening of an office in Shenzhen, China in 2003.

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

In October 2007, the company acquired certain assets of Order Logistics, Inc. (OLI) consisting of proprietary technology, intellectual property (including the name “Order Logistics”), office locations and equipment and customer lists for use in the management and expansion of the company’s international integrated logistics transport services business.

The company 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.

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.

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.

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.

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.

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.

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.

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.

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 approximately 5,000 square feet of office space adjoined by 9,000 square feet of warehouse space, all subject to a lease with a term ending January 31, 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.

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.

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 Bid
First Quarter	$	1.05	$	.33
Second Quarter	$	1.01	$	.60
Third Quarter	$	.85	$	.41
Fourth Quarter	$	1.25	$	.71

Fiscal 2008	High Bid		Low Bid
First Quarter	$	1.28	$	.50
Second Quarter	$	1.43	$	1.05
Third Quarter	$	1.24	$	1.03
Fourth 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.

ISSUER PURCHASES OF EQUITY SECURITIES
Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
Month #1 (identify beginning and ending dates)		7 -1-09/ 7-31 -09 -0-		-0-		-0-		147,824
Month #2 (identify beginning and ending dates)		8 -1-09/ 8 -31-09 -0-		-0-		-0-		147,824
Month #3 (identify beginning and ending dates)		9 -1-09/ 9 -30-09 -0-		-0-		-0-		147,824
Total		-0-		-0-		-0-		147,824

Item 6.

Selected Financial Data.

	Year Ended September 30,
	2009			2008			2007		2006		2005

Revenue	$	71,852,806		$	82,745,383		$	74,947,442	$	77,220,070	$	73,484,334

Net Income (Loss)	$	(1,241,198	)	$	(1,645,427	)	$	322,979	$	56,995	$	430,019

Net Income (Loss) per common share	$	0.(0.07	)	$	0.(0.10	)	$	0.02	$	0.00	$	0.03

Total Assets	$	10,024,979		$	13,470,992		$	8,584,064	$	6,743,091	$	6,731,129

Long-Term Obligations	$	1,584,664		$	2,188,805		$	81,118	$	84,905	$	92,140

Cash Dividends Declared per common share		N/A			N/A			N/A		N/A		N/A

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

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

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.

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.

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.

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.

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.

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.

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.

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		2014
Long 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:

accounts receivable valuation;

the useful lives of long-term assets;

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

accrual of tax expense on an interim basis.

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

Item 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 in Internal 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	Position

William J. Lally	56	President, Chief Operating
		Officer and Director

James N. Jannello	65	Executive Vice President,
		Chief Executive Officer and
		Director

Noel J. Jannello	38	Director and Vice President

Vincent Iacopella	42	Director

Ruth Werra	68	Secretary

Linda Bieler	48	Controller and Chief Financial
		and 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 PENSION
								NON-EQUITY	VALUE AND NON-
								INCENTIVE	QUALIFIED DEFERRED
NAME AND PRINCIPAL						STOCK	OPTION	PLAN	COMPENSATION	ALL OTHER
POSITION	YEAR	SALARY		BONUS		AWARDS	AWARDS	COMPENSATION	EARNINGS	COMPENSATION			TOTAL
		($)		($)		($)	($)	($)	($)	($)			($)

James Jannello (1)	2009		185,000								47,088	(1)		232,088
Executive Vice President	2008		199,280								52,987	(1)		252,267
Chief Executive Officer	2007		195,436								46,713	(1)		242,149

Linda Bieler (2)	2009		105,192								6,494	(2)		111,686
Chief Financial Officer	2008		114,750								5,399	(2)		120,149
	2007		112,150								5,804	(2)		117,954

William Lally (3)	2009		99,712								21,183	(3)		120,895
President	2008		108,382								24,689	(3)		133,071
	2007		119,188		15,000						14,046	(3)		148,234

Stephen Cesarski (4)	2009		107,684								46,158	(4)		153,842
(Retired) President	2008		183,189								46,627	(4)		229,816
	2007		182,489								50,965	(4)		233,454

Noel J. Jannello (5)	2009		182,180								27,377	(5)		209,557
Vice President	2008		199,680								32,079	(5)		231,759
	2007		169,515								19,192	(5)		188,707

Vincent Iacopella (6)	2009		127,662								13,955	(6)		141,617
Director	2008		142,200								18,133	(6)		160,333
	2007		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

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, 2010
	JANEL WORLD TRADE, LTD.

	By:	/s/ James N. Jannello
	James N. Jannello, Executive Vice President and Chief
	Executive 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, 2010
James N. Jannello	Officer and Director

/s/ William J. Lally	President, Chief Operating Officer	January 13, 2010
William J. Lally	and Director

/s/ Linda Bieler	Controller and Chief Financial and	January 13, 2010
Linda Bieler	Accounting Officer

/s/ Noel J. Jannello	Vice President and Director	January 13, 2010
Noel J. Jannello

/s/ Vincent Iacopella	Director	January 13, 2010
Vincent Iacopella

/s/ Ruth Werra	Secretary	January 13, 2010
Ruth 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

Certified Public Accountants

REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM

Board of Directors

Janel World Trade Ltd. and Subsidiaries

Jamaica, New York

We have audited the accompanying consolidated balance sheets of Janel World Trade Ltd. and Subsidiaries as of September 30, 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		2008

ASSETS
CURRENT ASSETS
Cash and cash equivalents ( Note 1)	$	1,483,150	$	2,428,098
Accounts receivable, net of allowance for doubtful accounts of $85,368 in 2009 and $129,953 in 2008		4,616,244		6,102,205
Marketable securities (Note 3)		52,100		52,044
Loans receivable - officers (Note 4)		114,616		142,574
- other		4,908		25,632
Prepaid expenses and sundry current assets		239,437		228,664
Tax refund receivable (Note 12)		289,000		83,000
TOTAL CURRENT ASSETS		6,799,455		9,062,217

Property and equipment, net (Note 6)		179,779		303,855

OTHER ASSETS:
Intangible assets, net (Note 7)		1,875,754		3,300,119
Security deposits		55,991		50,801
Deferred income taxes (Note 12)		1,114,000		754,000
TOTAL OTHER ASSETS		3,045,745		4,104,920

	$	10,024,979	$	13,470,992
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Convertible promissory notes (Note 8)	$	-	$	400,000
Note payable – bank (Note 9)		-		750,000
- other (Note 2A)		125,000		125,000
Accounts payable – trade		3,116,830		3,902,719
- related party (Note 5)		100,078		143,422
Accrued expenses and taxes payable		422,110		303,659
Current portion of long-term debt (Note 10)		544,141		786,308
TOTAL CURRENT LIABILITIES		4,308,159		6,411,108

OTHER LIABILITIES:
Long-term debt (Note 10)		1,506,096		2,110,237
Deferred compensation		78,568		78,568
TOTAL OTHER LIABILITIES		1,584,664		2,188,805

STOCKHOLDERS’ EQUITY (Note 11)		4,132,156		4,871,079

TOTAL 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			2007

REVENUES (Note 1)	$	71,852,806		$	82,745,383		$	74,947,442

COSTS AND EXPENSES:
Forwarding expenses		63,418,743			72,959,241			66,775,078
Selling, general and administrative		8,574,504			9,536,731			7,624,360
Amortization of intangible assets		416,392			702,846			-
TOTAL COSTS AND EXPENSES		72,409,639			83,198,818			74,399,438

OPERATING INCOME (LOSS)		(556,833	)		(453,435	)		548,004

OTHER ITEMS:
Impairment loss (Note 2)		(1,066,240	)		(1,812,750	)		-
Interest and dividend income		14,581			43,147			59,175
Interest expense		(224,706	)		(149,389	)		(500	)
TOTAL OTHER ITEMS		(1,276,365	)		(1,918,992	)		58,675

INCOME (LOSS) BEFORE INCOME TAXES		(1,833,198	)		(2,372,427	)		606,679

Income taxes (credit) (Note 12)		(592,000	)		(727,000	)		283,700

NET INCOME (LOSS)		(1,241,198	)		(1,645,427	)		322,979

Preferred stock dividends (Note 11)		15,000			15,000			10,833

NET INCOME (LOSS) AVAILABLE TO
COMMON STOCKHOLDERS	$	(1,256,198	)	$	(1,660,427	)	$	312,146

OTHER COMPREHENSIVE INCOME
NET OF TAX:
Unrealized gain (loss) from available for sale securities	$	(197	)	$	(25,270	)	$	8,897
Basic earnings (loss) per share	$	(.07	)	$	(.10	)	$	.02
Diluted earnings (loss) per share	$	(.07	)	$	(.10	)	$	.02
Basic weighted average number of shares outstanding		17,545,712			17,011,278			16,978,142
Diluted 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 STOCK
	SHARES			$			SHARES		$		TREASURY STOCK			ADDITIONAL PAID-IN CAPITAL			RETAINED EARNINGS			ACCUMULATED OTHER COMPREHENSIVE GAIN (LOSS)			TOTAL
BALANCE-SEPTEMBER 30, 2006		17,043,000		$	17,043			-	$	-		-		$	953,163		$	2,778,324		$	2,763		$	3,751,293
Net income		-			-			-		-		-			-			322,979			-			322,979
Convertible preferred stock issuancenet of expenses of $35,605		-			-			1,000,000		1,000		-			463,395			-			-			464,395
Purchase 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			8,897
BALANCE-SEPTEMBER 30, 2007		17,043,000			17,043			1,000,000		1,000		(65,812	)		1,416,558			3,090,470			11,660			4,470,919
Net loss		-			-			-		-		-			-			(1,645,427	)		-			(1,645,427	)
Common stock issuance		520,661			521			-		-		-			629,479			-			-			630,000
Convertible preferred stock issuance								285,000		285		-			1,424,715			-			-			1,425,000
Retirement of treasury stock		(137,000	)		(137	)		-		-		65,812			(65,675	)		-			-			-
Dividends to preferred shareholders		-			-			-		-		-			-			(15,000	)		-			(15,000	)
Deferred financing charges related to
Issuance of convertible debt		-			-			-		-		-			33,600			-			-			33,600
Purchase of 2,500 shares treasury stock		-			-			-		-		(2,743	)		-			-			-			(2,743	)
Other comprehensive gains (losses):
Unrealized gains (losses) on available-for-sale marketable securities		-			-			-		-		-			-			-			(25,270	)		(25,270	)
BALANCE-SEPTEMBER 30, 2008		17,426,661			17,427			1,285,000		1,285		(2,743	)		3,438,677			1,430,043			(13,610	)		4,871,079
Net loss		-			-			-		-		-			-			(1,241,198	)		-			(1,241,198	)
Common stock issuance		586,671			5,867			-		-		-			502,879			-			-			508,746
Dividends to preferred shareholders		-			-			-		-		-			-			(15,000	)		-			(15,000	)
Options issued		-			-			-		-		-			17,249			-			-			17,249
Purchase 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			2007
OPERATING ACTIVITIES:
Net income (loss)	$	(1,241,198	)	$	(1,645,427	)	$	322,979
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		552,707			838,674			99,415
Amortization 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	)		383
Accounts payable and accrued expenses		(573,693	)		163,146			1,117,750
Security deposits		(5,190	)		(1,766	)		-
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		713,898			(468,135	)		975,769

INVESTING 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		-			-			464,395
Proceeds 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			293,611

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(944,948	)		(41,629	)		1,127,775
CASH AND CASH EQUIVALENTS – BEGINNING OF YEAR		2,428,098			2,469,727			1,341,952
CASH AND CASH EQUIVALENTS – END OF YEAR	$	1,483,150		$	2,428,098		$	2,469,727
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest	$	87,312		$	177,583		$	500
Income taxes	$	134,753		$	200,788		$	294,429
Non-cash activities:
Unrealized gain (loss) on marketable securities	$	(197	)	$	(25,270	)	$	8,897
Dividends declared to preferred shareholders	$	15,000		$	15,000		$	10,833
Issuance 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	$	414,451
Software valuation		508,299
Development 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	$	96,250
Software valuation		280,000
Development agreement		226,678
Goodwill		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.

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		1,530,000
Goodwill		463,312		547,070
		3,723,312		2,077,070

Purchase 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			2007

Revenues	$	86,735		$	83,977

Loss 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 Value
As of September 30, 2009:
Mutual Funds	$	52,297	$	(197	)	$	52,100

As 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		Life

Furniture and fixtures	$	224,661	$	230,780	5-7 years
Computer equipment		503,514		524,694	5 years
		728,175		755,474
Less accumulated depreciation and
Amortization		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 years
Goodwill		547,070
		2,077,070
Less 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		$	2,036,807
Amortization		(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		2008

Term loan payable, as amended. (1)	$	1,316,191	$	1,619,048

Non-interest bearing note payable, net of imputed interest, in payments of $435,000 in July 2011 (see Note 2B).		386,824		774,964

Term loan payable in monthly installments of $13,889, plus interest at a bank’s prime rate minus .50% per annum. The loan is collateralized by substantially all assets of a subsidiary of the Company.		347,222		500,000

Other		-		2,533
		2,050,237		2,896,545
Less current portion		544,141		786,308
	$	1,506,096	$	2,110,237

These obligations mature as follows:

2010	$	544,141
2011		1,492,211
2012		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			2007
Federal – 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			2007
Federal taxes (credits) at statutory rates	$	(627,500	)	$	(811,160	)	$	207,700
Non-deductible expenses		11,740			11,560			12,200
State 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	$	222,000
2011		160,000
2012		159,000
2013		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.

(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			Fourth
Fiscal 2009
Net sales	$	21,266,128		$	17,151,773		$	15,524,769		$	17,910,136
Operating 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	)	$	.04
Diluted earnings per share	$	(.01	)	$	(.02	)	$	(.01	)	$	(.04	)

Fiscal 2008
Net sales	$	20,067,346		$	18,281,961		$	19,962,837		$	24,433,239
Operating 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 Software

Total revenues	$	71,852,806		$	71,663,175	$	189,631
Net revenues	$	8,434,063		$	8,244,432	$	189,631
Operating income (loss)	$	(556,833	)	$	99,871	$	(656,704	)
Identifiable assets	$	10,024,979		$	9,902,506	$	122,473
Capital expenditures	$	12,239		$	10,701	$	1,538
Depreciation and amortization	$	552,706		$	301,770	$	250,936
Equity	$	4,132,156		$	8,934,203	$	(4,802,047	)

2008	Consolidated			Transportation Logistics		Computer Software

Total revenues	$	82,745,383		$	82,261,746	$	483,637
Net revenues	$	9,786,142		$	9,302,505	$	483,637
Operating income (loss)	$	(453,435	)	$	719,798	$	(1,173,233	)
Identifiable assets	$	13,470,992		$	11,879,833	$	1,591,159
Capital expenditures	$	222,153		$	54,789	$	167,364
Depreciation and amortization	$	838,674		$	158,400	$	680,274
Equity	$	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.