JANEL CORP

(in thousands except share and per share data)

SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Business description

Janel is a holding company with subsidiaries inthree business segments: Logistics, Life Sciences and Manufacturing. The Company strives to create shareholder value primarily through three strategic priorities: supporting its businesses' efforts to make investments and to build long-term profits; allocating Janel's capital at high risk-adjusted rates of return; and attracting and retaining exceptional talent.

Management at the Janel holding company focuses on significant capital allocation decisions, corporate governance and supporting Janel’s subsidiaries where appropriate. Janel expects to grow through its subsidiaries' organic growth and by completing acquisitions. We plan to either acquire businesses within our existing segments or expand into new strategic segments. Our acquisition strategy focuses on reasonably priced companies with strong and capable management teams, attractive existing business economics and stable, predictable earnings power.

The Company’s Logistics segment is comprised of several wholly-owned subsidiaries. The Logistics segment is a non-asset based, full-service provider of cargo transportation logistics management services, including freight forwarding via air, ocean and land-based carriers; customs brokerage services; warehousing and distribution services; trucking and other value-added logistics services. In addition to these revenue streams, the Company earns accessorial revenues in connection with its core services. Accessorial revenues include, but are not limited to, fuel service charges, wait time fees, hazardous cargo fees, labor charges, handling, cartage, bonding and additional labor charges.

On June 5, 2024, the Company completed a business combination whereby it acquired a majority ownership position in Airschott, Inc. (“Airschott”), a non-asset-based freight forwarder and customs broker. At closing, the Company purchased 80% of the outstanding stock of Airschott. The Company also agreed to purchase the remaining 20% of Airschott stock inthree years subject to certain closing conditions.

On September 2, 2025, the Company completed a business combination whereby it acquired a majority ownership position in Interlog USA, Inc. (“Interlog”), a non-asset-based freight forwarder and domestic truck broker, which we include in our Logistics segment. At closing, the Company purchased 80% of the outstanding stock of Interlog. The Company also agreed to purchase the remaining 20% of Interlog stocktwo years from the closing date, subject to certain closing conditions.

The Company’s Life Sciences segment is comprised of several subsidiaries. The Company’s Life Sciences segment manufactures and distributes antibodies as well as research and diagnostic reagents for, and provides custom services to, academic, non-profit and commercial customers.

On February 1, 2024, the Company completed a business combination whereby it acquired all the outstanding stock of ViraQuest Inc., which we include in our Life Sciences segment.

On June 4, 2025, the Company completed a business combination whereby it acquired 80% of the outstanding stock of Biosensis, which we include in our Life Sciences segment. The Company and the former shareholders of Biosensis have put-call options exercisable on June 4, 2028 for the remaining 20% of outstanding Biosensis stock.

The Company’s manufacturing segment is comprised of Indco, Inc. (“Indco”), a wholly-owned subsidiary of the Company that manufactures and distributes mixing equipment and apparatuses for specific applications within various industries. Indco’s customer base is comprised of small- to mid-sized businesses as well as other larger customers for which Indco fulfills repetitive production orders.

On January 14, 2025, two minority owners of Indco exercised 21,778 and 13,829 options to purchase Indco’s common stock at an average exercise price of $11.60 and $13.19, respectively, for an aggregate purchase price of $253 and $182, respectively. In conjunction with the exercise, Indco issued related party promissory notes to thetwo minority owners for amounts totaling the aggregate purchase price. The notes are included in security deposits and other long-term assets. As a result of the exercise of options to purchase Indco’s stock, the mandatorily redeemable non-controlling interest percentage increased from 9.8% to 14.4% as of the exercise date.

On September 29, 2025, Janel Corp acquired 100,722 shares of Indco, Inc. fromtwo minority shareholders at a purchase price of $19.00 per share, for an aggregate purchase price of $1,914. The purchase consideration consisted of $1,374 in cash and the extinguishment of existing notes receivable totaling $540. As a result of this transaction, Janel Corp increased its ownership interest in Indco, Inc. from 85.6% to 100%, thereby obtaining full ownership of the subsidiary and extinguishing the previous non-controlling interest.

As of September 30, 2025 and September 30, 2024, the Company owned 1,108,000 shares or approximately 46.6%, of the common stock of Rubicon Technology, Inc., a Delaware corporation (“Rubicon”). Rubicon is an advanced materials provider specializing in monocrystalline sapphire for applications in optical and industrial systems. The purpose of our initial investment in Rubicon was for Janel to acquire a significant ownership interest in Rubicon, together with representation on Rubicon’s Board, in an attempt to (i) restructure the Rubicon business to achieve profitability and (ii) assist Rubicon in utilizing its net operating loss carry-forward assets. As of September 30, 2025 and September 30, 2024, the fair value of the Rubicon investment was $4,631 and $1,518, respectively. Refer to Note 20 – Subsequent Events for additional information regarding the investment.

The Company also has other investments in marketable securities whose fair value as of September 30, 2025 and September 30, 2024 was $283 and $56, respectively.

Basis of consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, as well as Biosensis and Interlog, of which Janel owns an 80% interest in each business, with the non-controlling interests held by existing and former management. The Biosensis and Interlog non-controlling interests are mandatorily redeemable and are recorded as liabilities. 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 in the United States (“U.S. GAAP”) 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 financial statements, as well as the reported amounts of revenues and expenses during the reporting period. The most critical estimates made by the Company are those relating to accounts receivables valuation, the useful lives of long-term assets, accrual of cost related to ancillary services the Company provides, accrual of tax expense on an interim basis and potential impairment of goodwill and intangible assets with indefinite lives, long-lived assets impairment.

Cash

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

Restricted Cash and Investments

Commencing in the second half of 2024, the Company insures certain risks through a newly formed wholly-owned captive insurance company, Gainesville Insurance Company, Inc. (“Gainesville”). In addition, we also maintain some of our normal, historical insurance policies with third-party insurers. Gainesville maintains $250 in cash, cash equivalents, or equity investments at all times as required by state insurance regulations. As of September 30, 2025 and September 30, 2024, Gainesville held $250 and $56 in restricted investments respectively.

During the first quarter of 2025, as part of the Eighth Amendment (the “Eighth Santander Amendment”) to the Santander Loan Agreement (as defined herein), the Company deposited $2,164 into a restricted cash account. Following a pre-approved earnout payment in January 2025, the Company held $1,078 in a restricted cash account as of September 30, 2025 to be used for the final earnout payment to be made in January 2026.

The Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents.

Accounts receivable and allowance for doubtful accounts receivable

Accounts receivable are recorded at the contractual amount. The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical collection experience, the age of the accounts receivable balances, credit quality of the Company’s customers, any specific customer collection issues that have been identified, current economic conditions and other factors that may affect the customers’ ability to pay. The Company writes off accounts receivable balances that have aged significantly once all collection efforts have been exhausted and the receivables are no longer deemed collectible from the customer. The allowance for doubtful accounts as of September 30, 2025 and September 30, 2024 was $367 and $582, respectively.

Inventory

Inventory is valued at the lower of cost (using the first-in, first-out method) or net realizable value. The Company maintains an inventory valuation reserve to provide for slow moving and obsolete inventory, inventory not meeting quality control standards and inventory subject to expiration for its Life Sciences business. The products of the Life Sciences business require the initial manufacture of multiple batches to determine if quality standards can consistently be met. In addition, the Company will produce larger batches of established products than current sales requirements due to economies of scale. The manufacturing process for these products, therefore, has and will continue to produce quantities in excess of forecasted usage. The Company values acquired manufactured antibody inventory based on athree-year forecast. Inventory quantities in excess of the forecast are not valued due to uncertainty over salability.

Property and equipment and depreciation policy

Property and equipment are recorded at cost. Property and equipment acquired in business combinations are initially recorded at fair value. 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 and repairs are recorded as expenses when incurred.

Goodwill

The Company records as goodwill the excess of purchase price over the fair value of the tangible and identifiable intangible assets acquired in a business combination. Under current authoritative guidance, goodwill is not amortized but is tested for impairment annually as well as when an event or change in circumstance indicates impairment may have occurred. Goodwill is tested for impairment by comparing the fair value of the Company’s individual reporting units to their carrying amount to determine if there is potential goodwill impairment. If the fair value of the reporting unit is less than the 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. If there is a material change in economic conditions, or other circumstances influencing the estimate of future cash flows or significantly affecting the fair value of our reporting units, the Company could be required to recognize impairment charges in the future.

The fair value of our reporting units were in excess of carrying value and goodwill was not deemed to be impaired as of September 30, 2025 and 2024.

Intangibles and long-lived assets

Long-lived assets, including fixed assets and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In reviewing for impairment, the carrying value of such assets is compared to the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition.

If such cash flows are not sufficient to support the asset’s recorded value, an impairment charge is recognized to reduce the carrying value of the long-lived asset to its estimated fair value.

The determination of future cash flows, as well as the estimated fair value of long-lived assets, involves significant estimates on the part of management. 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.

The Company concluded that the fair value of intangibles and long-lived assets were not deemed to be impaired as of September 30, 2025 and 2024.

Equity-Method Investments

The Company has determined that its investment in Rubicon is subject to the equity method of accounting, and the Company has elected the fair value option under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 825-10, Financial Instruments ("ASC 825-10") to account for the equity method investment. In accordance with ASC 825-10, the Company will present its equity method investment in Rubicon at fair value each reporting period with changes in fair value and dividends received from Rubicon recorded to income from investment in unconsolidated affiliate on the Company's statements of operations.

See Notes 16 and 17 for further information about the Company's investment in Rubicon's equity securities accounted for under the fair value option.

Business segment information

The Company operates inthree reportable segments: Logistics, Life Sciences and Manufacturing. The Company’s Chief Executive Officer regularly reviews financial information at the reporting segment level in order to make decisions about resources to be allocated to the segments and to assess their performance.

Revenues and revenue recognition

Revenue Recognition

Revenues are recognized upon transfer of control of promised services to customers. With respect to its Logistics segment, the Company has determined that, in general, each shipment transaction or service order constitutes a separate contract with the customer. When the Company provides multiple services to a customer, different contracts may be present for different services.

The Company typically satisfies its performance obligations as services are rendered at a point in time. A typical shipment would include services rendered at origin, such as pick-up and delivery to port, freight services from origin to destination port and destination services, such as customs clearance and final delivery. The Company measures the performance of its obligations as services are completed at a point in time during the life of a shipment, including services at origin, freight and destination. The Company fulfills nearly all of its performance obligations within a one- to two-month period.

The Company evaluates whether amounts billed to customers should be reported as gross or net revenues. Generally, revenues are recorded on a gross basis when the Company is acting as principal and is primarily responsible for fulfilling the promise to provide the services, when it has discretion in setting the prices for the services to the customers, and the Company has the ability to direct the use of the services provided by the third party. Revenues are recognized on a net basis when the Company is acting as agent, and we do not have latitude in carrier selection or in establishing rates with the carrier.

In the Logistics segment, the Company disaggregates its revenue by itsfour primary service categories: trucking, ocean freight, air freight, and customs brokerage and other. A summary of the Company’s revenues disaggregated by major service lines for the fiscal year ended September 30, 2025 and 2024 is as follows (in thousands):

Life Sciences and Manufacturing

Revenues from the Life Sciences segment are derived from the sale of high-quality monoclonal and polyclonal antibodies, diagnostic reagents, diagnostic kits, and other immunoreagents for biomedical research and antibody manufacturing. Revenues from the Company’s Manufacturing segment, which is comprised of Indco, a wholly-owned subsidiary of the Company that manufactures and distributes mixing equipment and apparatus for specific applications within various industries, are derived from the engineering, manufacture and delivery of specialty mixing equipment and accessories. Revenues for Life Sciences and Manufacturing are recognized when products are shipped and risk of loss is transferred.

Income (loss) per common share

Basic net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding, excluding unvested restricted stock, during the period. Diluted net income (loss) per share reflects the additional dilution from potential issuances of common stock, such as stock issuable pursuant to the exercise of stock options. The treasury stock method is used to calculate the potential dilutive effect of these common stock equivalents. Potentially dilutive shares are excluded from the computation of diluted net income (loss) per share when their effect is anti-dilutive.

Equity classified share-based awards

The Company recognizes compensation expense for stock-based payments granted based on the grant-date fair value estimated in accordance with ASC Topic 718, “Compensation - Stock Compensation.” For employee stock-based awards, we calculate the fair value of the award on the date of grant using the Black-Scholes method for stock options and the quoted price of our common stock for restricted shares; the expense is recognized over the service period for awards expected to vest.

Stock-based compensation to non-employees

Non-employee share-based awards

The Company grants restricted stock awards, restricted stock units and stock options to certain directors, officers and employees. The Company accounts for share-based compensation as equity awards such that compensation cost is measured at the grant date based on the fair value of the award and is expensed ratably over the vesting period. The fair value of restricted stock is the market price as of the grant date, and the fair value of each stock option grant is estimated as of the grant date using the Black-Scholes option pricing model. Determining the fair value of share-based awards at the grant date requires judgment about, among other things, stock volatility, the expected life of the award and other inputs. The Company accounts for forfeitures as they occur.

The Company issues new shares of common stock to satisfy exercises and vesting of awards granted under its stock plans. Share-based compensation expense is reflected in the consolidated statements of operations as part of selling general and administrative expenses.

Mandatorily Redeemable Non-Controlling Interests

The non-controlling interests that are reflected as mandatorily redeemable non-controlling interests in the consolidated financial statements consist of non-controlling interests related to the Biosensis and Interlog acquisitions whose owners have certain redemption rights that allow them to require the Company to purchase the non-controlling interests of those owners upon certain events outside the control of the Company, including upon the death of the holders.

On January 14, 2025, two minority owners of Indco exercised 21,778 and 13,829 options to purchase Indco’s common stock at an average exercise price of $11.60 and $13.19, respectively, for an aggregate purchase price of $253 and $182, respectively. In conjunction with the exercise, Indco issued related party promissory notes to thetwo minority owners for amounts totaling the aggregate purchase price. As a result of the exercise of the options to purchase Indco’s stock, the mandatorily redeemable non-controlling interest percentage was 14.4% as of the exercise date. On September 29, 2025, Janel Corp acquired 100,722 shares of Indco, Inc. fromtwo minority shareholders at a purchase price of $19.00 per share, for an aggregate purchase price of $1,914. The purchase consideration consisted of $1,374 in cash and the extinguishment of existing notes receivable totaling $540. As a result of this transaction, Janel Corp increased its ownership interest in Indco from 85.6% to 100%, thereby obtaining full ownership of the subsidiary and extinguishing the Company’s previous non-controlling interest.

On June 4, 2025, the Company completed a business combination whereby it acquired 80% of the outstanding stock of Biosensis. The Company and the former shareholders of Biosensis have put-call options exercisable on June 4, 2028 for the remaining 20% of outstanding Biosensis common stock. As a result of the acquisition, the Life Sciences segment recorded a mandatorily redeemable non-controlling interest of $1,486.

On September 2, 2025, the Company completed a business combination whereby it acquired 80% of the outstanding stock of Interlog. The Company is required to purchase the remaining 20% of the outstanding Interlog stock on September 2, 2027, subject to certain closing conditions. As a result of the acquisition, the Logistics segment recorded a mandatorily redeemable non-controlling interest of $1,580.

Income taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible. The benefit of tax positions taken or expected to be taken in the Company’s income tax returns are recognized in the consolidated financial statements if such positions are more likely than not of being sustained.

Leases

The Company determines if an arrangement is a lease at inception. Assets and obligations related to operating leases are included in operating lease right-of-use (“ROU”) assets; current portion of operating lease liability; and operating lease liability, net of current portion in our consolidated balance sheets. Assets and obligations related to finance leases are included in property, technology and equipment, net; current portion of finance lease liability; and finance lease liability, net of current portion in our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the incremental borrowing rate based on the information available at commencement date is used in determining the present value of lease payments. We use the implicit rate when readily determinable. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

The Company’s agreements with lease and non-lease components are all each accounted for as a single lease component.

For leases with an initial term of twelve months or less, the Company elected the exemption from recording right of use assets and lease liabilities for all leases that qualify and records rent expense on a straight-line basis over the lease term. Expenses for these short-term leases for the fiscal year ended September 30, 2025 and September 30, 2024 amounted to $314 and $348 respectively.

Contingent Earnout Liabilities

The Company accounts for contingent consideration relating to business combinations as a contingent earnout liability and a decrease (increase) to goodwill at the date of the acquisition and continually remeasures the asset or liability at each balance sheet date by recording changes in the fair value through change in fair value of contingent consideration in the consolidated statements of operations. The ultimate settlement of contingent earnout liabilities relating to business combinations may be for amounts that are materially different from the amounts initially recorded and may cause volatility in the Company’s results of operations.

Reclassifications

Certain amounts in the prior-period financial statements have been reclassified to conform to the current-period presentation. These reclassifications had no effect on previously reported net income, total assets, total liabilities, or stockholders’ equity.

Recent accounting pronouncements

Recently issued accounting pronouncements adopted

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." ASU No. 2023-07 is intended to provide financial statement users with more information about reportable segments, including more disaggregated expense information. We adopted ASU 2023-07 effective for our annual fiscal year 2025 reporting period, on a retrospective basis. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements and disclosures.

Recently issued accounting pronouncements not yet adopted

In December 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures", which enhances the transparency, effectiveness and comparability of income tax disclosures by requiring consistent categories and greater disaggregation of information related to income tax rate reconciliations and the jurisdictions in which income taxes are paid. The guidance is effective for public business entities for annual periods years beginning after December 15, 2024 with early adoption and prospective or retrospective application permitted. The Company will adopt the standard on the effective date in our annual reporting for the year ended September 30, 2026.

In November 2024, the FASB issued ASU No. 2024-03, "Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses." ASU No. 2024-03 requires that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption and prospective or retrospective application permitted. We are currently assessing the effect the adoption of this standard will have on our consolidated financial statement disclosures.

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this update provide a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current classified accounts receivable and contract assets. This update is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years. Adoption of this ASU can be applied prospectively for reporting periods after its effective date. Early adoption is permitted. We are currently assessing the effect the adoption of this standard will have on our consolidated financial statement disclosures.

ACQUISITIONS

Fiscal 2025 Acquisitions

On September 2, 2025, the Company completed a business combination whereby it acquired a majority ownership position in Interlog for an aggregate purchase price of $9,410 and recorded a liability of $1,580 relating to the non-controlling interest. At closing, the Company purchased 80% of the outstanding stock of Interlog for $6,825 in cash with an additional $1,005 to be paid within 90 days subject to the achievement of certain integration goals. The Company also agreed to purchase the remaining 20% of Interlog stocktwo years from the closing date for an amount equal totwo times Interlog’s average annual gross profit. The acquisition was funded through our existing asset-backed facility with Santander Bank, N.A (“Santander”). In connection with the combination, the Company recorded an aggregate of $4,264 in goodwill and $5,844 in other identifiable intangibles during the quarter ended September 30, 2025. Supplemental pro forma information has not been provided as the acquisition did not have a significant impact on Janel’s consolidated results of operations, individually or in aggregate. Interlog is a non-asset-based freight forwarder and domestic truck broker. The acquisition of Interlog was completed to expand our service offerings in our Logistics segment.

On June 4, 2025 the Company acquired a majority ownership position in Biosensis for an aggregate purchase price of $5,136, net of $199 cash received and net non-interest-bearing liabilities assumed of $166. Additionally, the Company assumed debt of $563 and recorded a liability of $1,486 relating to the non-controlling interest during the quarter ended June 30, 2025. At closing, the Company purchased 80% of the outstanding common stock of Biosensis for $2,754 in cash and $298 in the form of conversion of a note receivable. The Company and the former shareholders have put-call options exercisable on June 4, 2028 for the remaining 20% of outstanding common stock. The acquisition was funded by the Company’s existing acquisition draw facility with First Merchants Bank (“First Merchants”), and the results of operations of Biosensis are included in Janel’s consolidated results of operations since the date of the acquisition. In connection with the combination, the Company recorded an aggregate of $2,607 in goodwill and $1,700 in other identifiable intangible assets during the quarter ended June 30, 2025. Supplemental pro forma information has not been provided as the acquisition did not have a significant impact on Janel’s consolidated results of operations, individually or in aggregate. Biosensis is a developer and manufacturer of antibodies and cell culture media for research and diagnostic uses. Biosensis was founded in 2006 and is headquartered in Thebarton, Australia. The acquisition of Biosensis was completed to expand our product offerings in our Life Sciences segment.

Fiscal 2024 Acquisitions

On June 5, 2024, the Company completed a business combination whereby it acquired a majority ownership position in Airschott , a non-asset-based freight forwarder and customs broker, for an aggregate purchase price of $7,155. At closing, the Company purchased 80% of the outstanding stock of Airschott for $3,600 in cash, a $1,200 floating-rate seller’s note, and net liabilities assumed of $170. The Company also agreed to purchase the remaining 20% of Airschott stock three years from the closing date for deferred consideration of the greater of 20% of 1.25 times the trailing twelve months gross profit of Airschott and $1,200. The acquisition was funded by our existing acquisition draw facility with First Merchants and through our existing asset-backed facility with Santander. In connection with the combination, the Company recorded an aggregate of $2,835 in goodwill and $4,320 in other identifiable intangibles during the quarter ended June 30, 2025. Supplemental pro forma information has not been provided as the acquisition did not have a significant impact on Janel’s consolidated results of operations, individually or in aggregate. Airschott was founded in 1977 and is headquartered in Dulles, Virginia. The acquisition of Airschott was completed to expand our service offerings in our Logistics segment.

On February 1, 2024, the Company completed a business combination whereby it acquired all the outstanding stock of ViraQuest, Inc. (“ViraQuest”), for an aggregate purchase price of $635, net of $29 cash received. At closing, $600 was paid in cash and $64 was recorded as a preliminary earnout consideration. The acquisition was funded with cash provided by operating activities, and the results of operations of ViraQuest are included in Janel’s consolidated results of operations since the date of the acquisition. In connection with the combination, the Company recorded an aggregate of $74 in goodwill and $412 in other identifiable intangibles during the quarter ended March 31, 2024. Supplemental pro forma information has not been provided as the acquisition did not have a significant impact on Janel’s consolidated results of operations, individually or in aggregate. ViraQuest is a biotechnology custom service provider specializing in adenovirus production services. ViraQuest was founded in 2000 and is headquartered in North Liberty, Iowa. The acquisition of ViraQuest was completed to expand our service offerings in our Life Sciences segment.

As of September 30, 2025 and September 30, 2024, the Company owned 1,108,000 shares or approximately 46.6%, of the common stock of Rubicon. Rubicon is an advanced materials provider specializing in monocrystalline sapphire for applications in optical and industrial systems. The purpose of our initial investment in Rubicon was for Janel to acquire a significant ownership interest in Rubicon, together with representation on Rubicon’s Board, in an attempt to (i) restructure the Rubicon business to achieve profitability and (ii) assist Rubicon in utilizing its net operating loss carry-forward assets. As of September 30, 2025 and September 30, 2024, the fair value of the Rubicon investment was $4,631 and $1,518, respectively. Refer to Note 20 – Subsequent Events for additional information regarding the investment.

The Company also has other investments in marketable securities whose fair value as of September 30, 2025 and September 30, 2024 was $283 and $56, respectively.

INVENTORY

Inventories consisted of the following (in thousands):

PROPERTY AND EQUIPMENT

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

Depreciation expense for the fiscal year ended September 30, 2025 and 2024 was $645 and $551, respectively.

INTANGIBLE ASSETS

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

The composition of the intangible assets balance at September 30, 2025 and 2024 is as follows (in thousands):

Amortization expense of intangible assets for the year ended September 30, 2025 and 2024 was $2,688 and $2,299, respectively.

The future amortization of these intangible assets is expected to be as follows (in thousands):

GOODWILL

The Company’s goodwill carrying amounts relate to the acquisitions in the Logistics, Life Sciences and Manufacturing businesses.

The composition of the goodwill balance at September 30, 2025 and 2024 is as follows (in thousands):

NOTES PAYABLE - BANKS

(A)

Santander Bank Facility

The wholly-owned subsidiaries that comprise the Company’s Logistics segment (collectively, the “Janel Group Borrowers”), with the Company as a guarantor, have a Loan and Security Agreement (as amended, the “Santander Loan Agreement”) with Santander Bank with respect to a revolving line of credit facility (the “Santander Facility”).

On November 1, 2024, the Company entered in an 8 th Amendment to the Santander Loan Agreement allowing for maximum borrowings on the Santander Facility of $35,000. Borrowings are limited to 90% of the Janel Group Borrowers’ eligible accounts receivable borrowing base and reserves, subject to adjustments set forth in the Santander Loan Agreement. Interest accrues at an annual rate equal to theone-month SOFR plus 2.35%. The amount the Company is permitted to distribute to holders of the Company’s Series C Preferred Stock if specified conditions is $1,000.

For borrowings under the Santander Facility, the Company is subject to a minimum debt service coverage ratio covenant of 1.1.

The Santander Loan Agreement matures on September 21, 2026. The Janel Group Borrowers’ obligations under the Santander Facility are secured by all of the assets of the Janel Group Borrowers, while the Santander Loan Agreement contains customary terms and covenants. As a result of its terms, the Santander Facility is classified as a current liability on the consolidated balance sheet.

At September 30, 2025, outstanding borrowings under the Santander Facility were $0, representing 0% of the $35,000 available thereunder (subject to certain limitations), and interest was accruing at an effective interest rate of 6.68%.

At September 30, 2024, outstanding borrowings under the Santander Facility were $19,313, representing 55.2% of the $35,000 available thereunder, and interest was accruing at an effective interest rate of 7.65%.

The Company was in compliance with the financial covenants defined in the Santander Loan Agreement at both September 30, 2025 and September 30, 2024.

(B)

First Merchants Bank Credit Facility

On April 25, 2023, Indco and certain other Subsidiaries of the Company that are part of the Life Science and Manufacturing segment (together with Indco, the “Borrowers” and each, a “Borrower”) entered into a Credit Agreement (the “First Merchants Credit Agreement”) with First Merchants.

On November 22, 2024, the First Merchants Credit Agreement was amended to provide for, among other changes, the conversion and extinguishment of the $3,700 under the existing Acquisition A loan into the Term A loan, an incremental increase to the Term A loan of $1,000, and the establishment of a new Acquisition B loan with a borrowing capacity of $7,000.

Interest accrues on the outstanding revolving loan, Term A loan and acquisition loan at an annual rate equal toone-month adjusted term SOFR plus either (i)2.75% (if the Borrowers’ total funded debt to EBITDA ratio is less or equal to 1.75:1.00) or (ii)3.50% (if the Borrowers’ total funded debt to EBITDA ratio is greater than to 1.75:1.00). Interest accrues on the Term B loan at an annual rate equal to the Term A loan. The Borrowers’ obligations under the First Merchants Credit Agreement are secured by all of the Borrowers’ real property and other assets, and are guaranteed by the Company, and the Company’s guarantee of the Borrowers’ obligations is secured by a pledge of the Company’s equity interests in certain of the Borrowers. The revolving line of credit expires on November 22, 2029 and the acquisition line of credit expires on November 22, 2026.

For borrowings under the First Merchants Credit Agreement, the Company is subject to a minimum fixed charge coverage ratio of 1.25 and a maximum funded debt to EBITDA ratio of 2.50.

As of September 30, 2025, there were $2,900 of outstanding borrowings under the acquisition loan, $7,885 of outstanding borrowings under the Term A loan, $559 of outstanding borrowings under the Term B loan and $1,000 of outstanding borrowings on the revolving loan, with interest accruing on all four loans at an effective interest rate of 6.89%.

As of September 30, 2024, there were $3,700 of outstanding borrowings under the acquisition loan, $4,028 of outstanding borrowings under the Term A loan and $585 of outstanding borrowings under the Term B loan, with interest accruing on the acquisition loan, Term A loan and revolving loan at an effective interest rate of 7.82% each, and Term B loan at an effective interest rate of 4.19%.

The Company was in compliance with the financial covenants defined in the First Merchants Credit Agreement at September 30, 2025 and September 30, 2024.

The table below sets forth the total long-term debt, net of capitalized loan fees of $374 and $309 for the First Merchants Credit Agreement as of September 30, 2025 and September 30, 2024, respectively (in thousands):

SUBORDINATED PROMISSORY NOTES – RELATED PARTY

(A)

ICT Subordinated Promissory Note

Aves Labs, Inc., a wholly-owned subsidiary of the Company, was the obligor on a fixed 0.5% subordinated promissory note in the amount of $1,850 (the “ICT Subordinated Promissory Note”) issued to the former owner of ImmunoChemistry Technologies, LLC (“ICT”), in connection with a business combination whereby the Company acquired all of the membership interests of ICT. The ICT Subordinated Promissory Note was payable insixteen scheduled quarterly installments of principal and interest beginning March 4, 2021 and matured on December 4, 2024 when it was fully paid.

As of September 30, 2024, the amount outstanding under the ICT Subordinated Promissory Note was $55, all of which was included in the current portion of subordinated promissory notes.

(B)

ELFS Subordinated Promissory Notes

Janel Group is the obligor onfour fixed 4% subordinated promissory notes totaling $6,000 in the aggregate (together, the “ELFS Subordinated Promissory Notes”), payable to certain former shareholders of Expedited Logistics and Freight Services, LLC (“ELFS”), in connection with the Company’s business combination whereby it acquired all the membership interest of ELFS and its related subsidiaries. All of the ELFS Subordinated Promissory Notes are guaranteed by the Company and are subordinate to and junior in right of payment for principal, interest, premiums and other amounts payable to the Santander Facility and the First Merchants Credit Facility. The ELFS Subordinated Promissory Notes are payable intwelve equal consecutive quarterly installments of principal together with accrued interest. Beginning October 15, 2021 and on the same day of the next eight consecutive calendar quarters, thereafter payment of accrued interest and unpaid interest is due to the former shareholders. Beginning October 15, 2023, and on the same day of the next twelve consecutive calendar quarters thereafter payment of principal together with accrued interest and unpaid interest is due to the former shareholders. In June 2022, the principal amount of the ELFS Subordinated Promissory Notes was adjusted to $5,100 due to a revised working capital adjustment of $900.

On December 1, 2023, in connection with the Purchase Agreement Amendment among Janel Group and the ELFS Sellers, the Company extended the ELFS Subordinated Promissory Notes maturity bytwo years and restored the working capital adjustment (as defined in the Purchase Agreement) by $900 which increased the principal amount of the ELFS Subordinated Promissory Notes to $6,000. The Company evaluated the accounting treatment related to the amendment and determined the agreements are substantially different. Therefore, the Company extinguished the original subordinated promissory notes and recorded the amended subordinated promissory notes at fair value of $4,654. As a result, the Company recorded a debt discount of approximately $921 and a $21 gain on extinguishment.

As of September 30, 2025, the gross amount outstanding under the ELFS Subordinated Promissory Notes was $2,940 of which $1,174 was included in the current portion of subordinated promissory notes and $1,766 was included in the long-term portion of subordinated promissory notes.

As of September 30, 2024, the amount outstanding under the ELFS Subordinated Promissory Notes was $3,918, of which $1,173 was included in the current portion of subordinated promissory notes and $2,745 was included in the long-term portion of subordinated promissory notes.

(C)

Airschott Subordinated Promissory Note

Janel Group is the obligor on a floating rate (Prime Rate plus 2%) subordinated promissory note in the amount of $1,200 (the "Airschott Subordinated Promissory Note") issued to a former owner of Airschott, in connection with the business combination whereby Janel Group acquired Airschott. The note was payable intwelve consecutive quarterly payments, commencing July 2024, of $100 together with accrued interest on the outstanding principal balance.

As of September 30, 2024, the amount outstanding under the Airschott Subordinated Promissory Note was $1,100, of which $400 was included in the current portion of subordinated promissory notes and $700 was included in the long-term portion of subordinated promissory notes. As of September 30, 2025, the note was fully repaid.

The table below sets forth the total long-term portion of subordinated promissory notes (in thousands):

STOCKHOLDERS’ EQUITY

(in thousands, except share per share data)

Janel is authorized to issue 4,500,000 shares of common stock, par value $0.001. In addition, the Company is authorized to issue 100,000 shares of preferred stock, par value $0.001. 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 of Directors may fix the number of shares constituting each series and increase or decrease the number of shares of any series.

(A)

Preferred Stock

Series C Cumulative Preferred Stock

The dividend rate of the Series C Stock as of September 30, 2025 and 2024 was 7% and 6%, respectively. In the event of liquidation, holders of Series C Stock shall be paid an amount equal to the original issuance price, plus any accrued dividends thereon. Shares of Series C Stock may be redeemed by the Company at any time upon notice and payment of the original issuance price, plus any accrued dividends thereon. The liquidation value of Series C Stock was $7,333 and $7,957 as of September 30, 2025 and September 30, 2024, respectively.

For the fiscal year ended September 30, 2025 and 2024, the Company declared dividends on Series C Stock of $384 and $328, respectively. At September 30, 2025 and 2024, the Company had accrued dividends of $1,649 and $2,271, respectively.

(B)

Equity Incentive Plan

On May 12, 2017, the Company adopted the 2017 Equity Incentive Plan (the “2017 Plan”) pursuant to which (i) incentive stock options, (ii) non-statutory stock options, (iii) restricted stock awards and (iv) stock appreciation rights with respect to shares of the Company’s common stock may be granted to directors, officers, employees of and consultants to the Company. On September 21, 2021, the Board of Directors of the Company adopted the Amended and Restated 2017 Janel Corporation Equity Incentive Plan (the “Amended Plan”) pursuant to which non-statutory stock options, restricted stock awards and stock appreciation rights of the Company’s Common Stock, par value $0.001 per share (“Common Stock”), may be granted to employees, directors and consultants to the Company and its subsidiaries.

The Amended Plan increases the number of shares of Common Stock that may be issued pursuant to the Amended Plan from 100,000 to 200,000 shares of Common Stock of the Company and adopts certain other non-substantive amendments.

Participants and all terms of any grant under the Amended Plan are in the discretion of the Company’s Compensation Committee.

STOCK-BASED COMPENSATION

(in thousands, except share per share data)

On October 30, 2013, the Board of Directors of the Company adopted the Company’s 2013 Non-Qualified Stock Option Plan (the “2013 Option Plan”) providing for options to purchase up to 100,000 shares of Common Stock for issuance to directors, officers, employees of and consultants to the Company and its subsidiaries.

On September 21, 2021, the Board of Directors of the Company adopted the Amended and Restated 2017 Janel Corporation Equity Incentive Plan (the “Amended and Restated Plan”), which amended and restated the prior 2017 plan, as previously amended, and pursuant to which non-statutory stock options, restricted stock awards and stock appreciation rights with respect to up to 200,000 shares of the Company’s Common Stock may be granted to directors, officers, employees of and consultants to the Company and its subsidiaries. The Amended and Restated Plan increased the number of shares of Common Stock that may be issued pursuant to the Amended and Restated Plan from 100,000 to 200,000 shares of Common Stock of the Company and adopts certain other non-substantive amendments. Participants and all terms of any grant under the Amended and Restated Plan are in the discretion of the Company’s Compensation Committee.

Total stock-based compensation for the fiscal year ended September 30, 2025 and 2024 amounted to $490 and $321, respectively, and was included in selling, general and administrative expense in the Company’s statements of operations.

Stock Options

The Company uses the Black-Scholes option pricing model to estimate the fair value of our share-based awards. In applying this model, we use the following assumptions:

●

Risk-free interest rate - We determine the risk-free interest rate by using a weighted average assumption equivalent to the expected term based on the U.S. Treasury constant maturity rate.

●

Expected term - We estimate the expected term of our options on the average of the vesting date and term of the option.

●

Expected volatility - We estimate expected volatility using daily historical trading data of our common stock.

●

Dividend yield - We have never paid dividends on our common stock and currently have no plans to do so; therefore, no dividend yield is applied.

The fair values of our employee option awards were estimated using the assumptions below, which yielded the following weighted average grant date fair values for the periods presented:

Options for Employees

The aggregate intrinsic value in the above table was calculated as the difference between the closing price of the Company’s Common Stock at September 30, 2025 of $36.01 per share and the exercise price of the stock options that had strike prices below such closing price.

As of September 30, 2025, there wasno unrecognized compensation expense related to the unvested employee stock options which is expected to be recognized over the next year.

Liability classified share-based awards

During the fiscal year ended September 30, 2025 and 2024, there wereno options granted and there were 35,607 and 0 options exercised respectively with respect to Indco’s common stock.

The liability classified awards were measured at fair value at each reporting date until the final measurement date, which was the date of completion of services required to earn the option. The accrued compensation cost related to these options was approximately $0 and $350 as of September 30, 2025 and September 30, 2024, respectively, and is included in other liabilities in the consolidated financial statement. The compensation cost related to these options was approximately $0 and $16 for the fiscal years ended September 30, 2025 and September 30, 2024, respectively, and is included in other liabilities in the consolidated financial statement. The cost associated with the options issued on each grant date was recognized ratably over the period of service required to earn each tranche of options.

Upon vesting, the options were accounted for as a liability in accordance with ASC 480-10-25-8 and were measured in accordance with ASC 480-10-35 at every reporting period until the options are settled.

As a result of previous option exercise and stock repurchase activity, the mandatorily redeemable non-controlling interest percentage was 0.0% as of September 30, 2025 and 9.8% as of September 30, 2024.

Changes in the fair value of the vested options are recognized in earnings in the consolidated financial statements.

The options were classified as liabilities, and the underlying shares of Indco’s common stock also contained put options which resulted in their classification as a mandatorily redeemable security. While their redemption did not occur on a fixed date, there was an unconditional obligation for the Company to repurchase the shares upon death.

As of September 30, 2025, there wasno unrecognized compensation expense related to the unvested Indco stock options.

INCOME PER COMMON SHARE

The following table provides a reconciliation of the basic and diluted income per share (“EPS”) computations for the fiscal years ended September 30, 2025 and 2024 (in thousands, except share and per share data):

The computation for the diluted number of shares excludes unexercised stock options that are anti-dilutive. There were 22,500 anti-dilutive shares for the fiscal year ended September 30, 2025 and 10,000 anti-dilutive shares for the fiscal years ended September 30, 2024.

Potentially diluted securities as of September 30, 2025 and 2024 are as follows:

INCOME TAXES

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

The provisions of income taxes are summarized as follows (in thousands):

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows (in thousands):

As of September 30, 2025, the Company hadno accrued interest or penalties related to uncertain tax positions andno amounts have been recognized in the Company’s statement of operations. Income tax returns for tax years from 2020 through 2024 remain subject to examination by the taxing jurisdictions.

PROFIT SHARING AND 401(K) PLANS

The Company maintains a qualified retirement plan commonly referred to as a 401(k) Plan covering substantially all full-time employees under each segment.

The Janel Corporation 401(k) plan allows for employee salary deferrals including Roth 401(k) deferrals, employer matching contributions, employer profit sharing contributions and employee rollovers. The Janel Corporation 401(k) plan provides for participant contributions of up to 50% of annual compensation (not to exceed the IRS limit), as defined by the plan. The Company contributes an amount equal to 50% of the participant’s first 6% of contributions.

The combined expenses charged to operations for contributions made to the plans for the benefit of the employees for the years ended September 30, 2025 and 2024 were $621 and $549, respectively.

The administrative expense charged to operations for the years ended September 30, 2025 and 2024 aggregated $60 and $76, respectively.

BUSINESS SEGMENT INFORMATION

As discussed above in Note 1, the Company operates inthree reportable segments: Logistics, Life Sciences and Manufacturing.

The Company’s Chief Executive Officer regularly reviews financial information at the reporting segment level in order to make decisions about resources to be allocated to the segments and to assess their performance.

The following tables presents selected financial information about the Company’s reportable segments and Corporate for the purpose of reconciling to the consolidated totals for the fiscal years ended September 30, 2025 and 2024:

Goodwill and intangible assets are recorded at the Corporate level and are included in identifiable assets.

LEASES

The Company has operating leases for office and warehouse space in all districts where it conducts business. As of September 30, 2025, the remaining terms of the Company’s operating leases were betweenone month and 101 months and certain lease agreements contain provisions for future rent increases. Payments due under the lease contracts include the minimum lease payments that the Company is obligated to make under the non-cancelable initial terms of the leases as the renewal terms are at the Company’s option and the Company is not reasonably certain to exercise those renewal options at lease commencement.

The components of lease cost for the years ended September 30, 2025 and 2024 are as follows:

Rent expense for the year ended September 30, 2025 and 2024 was $2,856 and $2,870, respectively.

Operating lease right of use assets, current portion of operating lease liabilities and long-term operating lease liabilities reported in the consolidated balance sheets for operating leases as of September 30, 2025 were $7,760, $2,114 and $6,310, respectively.

Operating lease right of use assets, current portion of operating lease liabilities and long-term operating lease liabilities reported in the consolidated balance sheets for operating leases as of September 30, 2024 were $8,621, $2,419 and $6,585, respectively.

During the twelve months ended September 30, 2025 and 2024, the Company entered into new operating leases and recorded an additional $591 and $313, respectively in operating lease right of use assets and $615 and $313 corresponding lease liabilities.

As of September 30, 2025 and 2024, the weighted-average remaining lease term and the weighted-average discount rate related to the Company’s operating leases were 4.5 years and 6.13% and 5.3 years and 5.72%, respectively.

Cash paid for amounts included in the measurement of operating lease obligations were $2,242 and $2,395 for the twelve months ended September 30, 2025 and 2024, respectively.

Future minimum lease payments under non-cancelable operating leases as of September 30, 2025 are as follows (in thousands):

RUBICON INVESTMENT

(in thousands, except per share data)

As of each of September 30, 2024 and September 30, 2025, the Company owned 1,108,000 shares, or approximately 46.6%, of the common stock of Rubicon. Rubicon is an advanced materials provider specializing in monocrystalline sapphire for applications in optical and industrial systems. The purpose of our investment in Rubicon was for Janel to acquire a significant ownership interest in Rubicon, together with representation on Rubicon’s Board, in an attempt to (i) restructure the Rubicon business to achieve profitability and (ii) assist Rubicon in utilizing its net operating loss carry-forward assets. Refer to Note 20 – Subsequent Events for additional information regarding the investment.

The Company revalued the investment in Rubicon's securities on September 30, 2025 and 2024 and recorded a gain (loss) of $3,113 and $(55), respectively within other income (loss), net of dividends on the Company's consolidated. Below is reconciliation for the changes to the investment in Rubicon for the year ended September 30, 2025 and 2024.

FAIR VALUE MEASUREMENTS

ASC Topic 820 established a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy under ASC Topic 820 are described below:

Level 1:

Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 2:

Inputs to the valuation methodology are quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3:

Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Recurring Fair Value Measurements

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis based on the three-level valuation hierarchy (in thousands):

Investment in Rubicon at fair value

As of each of September 30, 2025 and September 30, 2024, the Company held 46.6% of the total issued and outstanding shares of Rubicon and reported its investment under the fair value method pursuant to ASC 323. Management determined that it was appropriate to carry its investment in Rubicon at fair value because the investment was traded on the NASDAQ stock exchange through January 2, 2023, began trading on the OTCQB Capital Market on January 3, 2023 and had daily trading activity, the combination of which provide a better indicator of value. The investment in Rubicon is re-measured at the end of each quarter based on the trading price and any change in the value is reported on the income statement as an unrealized gain or loss on marketable securities in other income (expense). Refer to Note 16 to Consolidated Financial Statements for a reconciliation of changes to the investment in Rubicon for the years ended September 30, 2025 and 2024. Refer to Note 20 – Subsequent Events for additional information regarding the investment.

Contingent earnout liabilities

For the period ending September 30, 2025, these liabilities relate to the estimated fair value of earnout payments to former IBSC, ELFS, ViraQuest, Airschott, and Interlog owners. For the period ending September 30, 2024, these liabilities relate to the estimated fair value of earnout payments to former IBSC, ELFS, ViraQuest and Airschott, owners. The current and non-current portions of the fair value of the contingent earnout liability at September 30, 2025 were $2,592 and $1,150, respectively. The current and non-current portions of the fair value of the contingent earnout liability at September 30, 2024 were $1,262 and $2,119, respectively.

The following table sets forth a summary of the changes in the fair value of the Company’s contingent earnout liabilities, which are measured at fair value on a recurring basis utilizing Level 1 and Level 3 assumptions in their valuation (in thousands):

The Company determined the fair value of the Level 3 contingent earnout liability using forecasted results through the expected earnout periods. The principal inputs to the approach include expectations of the specific business’s revenues in fiscal years 2026 through 2027 using an appropriate discount rate. Given the use of significant inputs that are not observable in the market, the contingent earnout liability is classified within Level 3 of the fair value hierarchy.

COMMITMENTS AND CONTINGENCIES

Employment Agreements

The Company has various employment agreements, including employment agreements with the previous owners of Airschott, Biosensis, and Interlog.

RISKS AND UNCERTAINTIES

(A)

Currency Risks

The nature of Janel’s operations requires it to deal with currencies other than the U.S. Dollar. As a result, the Company is exposed to the inherent risks of international currency markets and governmental interference. A number of countries where Janel maintains agent relationships have currency control regulations. The Company attempts to compensate for these exposures by accelerating international currency settlements among those 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 collectability and performs ongoing credit evaluations of its customers’ financial condition. We have continued to experience heightened customer credit risk as a result of the negative impact to customers’ financial condition, the imposition of tariffs in the U.S., employment levels and consumer confidence arising from economic disruptions, and we expect that our risk in this area will remain high as long as the disruptions persist.

(C)

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 business, results of operations, financial condition, or cash flows.

(D)

Concentration of Customers

No customer accounts for 10% or more of consolidated sales for the years ended September 30, 2025 and 2024. No customer accounted for 10% or more of consolidated accounts receivable at September 30, 2025 and 2024.

(E)

Auto Insurance

In the ordinary course of our Logistics business, we are a defendant in several legal proceedings arising out of the conduct of our Logistics business. These proceedings include third party claims for property damage or bodily injury incurred in connection with our services. Although there can be no assurance as to the ultimate disposition of these proceedings, we do not believe, based upon the information available at this time, that these property damage or bodily injury claims, in the aggregate, will have a material impact on our consolidated financial statements. Within our Logistics segment, ELFS, maintains auto liability for commercial trucking claims of up to $8,000 per occurrence, and general liability with of up to $8,000 per occurrence.

SUBSEQUENT EVENTS

On October 14, 2025, Janel Corporation and Rubicon closed the transfer (the “Contribution”) of all of the issued and outstanding membership interests in Janel Group LLC (“Janel Group”), a New York limited liability company and a wholly owned subsidiary of Janel Corporation, pursuant to the Contribution Agreement dated as of August 20, 2025 between the Company and Rubicon. Pursuant to the Contribution Agreement, in exchange for the membership interests of Janel Group, the Company received 7,000,000 newly issued shares of Rubicon’s common stock. In connection with the closing of the Contribution, the Company commenced a tender offer to purchase 426,000 shares of Rubicon common stock at $4.75 per share in cash, which expired on November 12, 2025. The shares of Rubicon common stock were transferred to Janel Corporation on November 17, 2025. After the tender offer, Janel Corporation owns approximately 91.0% of Rubicon’s common stock outstanding.