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

Results of Operations

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

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

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

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

Selling, General and Administrative Expense. Selling, general and administrative expense increased $1,912,371, or 25%, 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 11.35% as compared to 10.17% as a percentage of revenue in fiscal 2007. The year-over-year dollar increase in SG&A resulted from a general increase in most categories of SG&A expenses in fiscal 2008, including the addition of up to ten persons principally in operational capacities as compared to fiscal 2007, primarily related to the company's asset acquisition transactions with Order Logistics, Inc. in October 2007, and with Ferrara International Logistics, Inc. in July 2008.

Income (Loss) Before Taxes. Loss before taxes in fiscal 2008 was $(2,372,427), which represented a year-to-year decrease of $(2,979,106), or (491.1)%, as compared to income before taxes of $606,679 in fiscal 2007. The principal reasons for the 2008 loss were 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 asset acquisition transaction with Order Logistics, Inc. in October 2007.

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

Net Income (Loss). For fiscal 2008, Janel reported a net loss of $(1,645,427), a decrease of $(1,968,406), or (609.5)%, 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 thenegative effect on net income resulting from the payment in fiscal 2006 of stock-based compensation in the amount of $452,360.

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

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

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

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

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

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

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

Liquidity and Capital Resources

Janel's ability to meet its liquidity requirements, which include satisfying its debt obligations, funding working capital, day-to-day operating expenses and capital expenditures depends upon its future performance, which is subject to general economic conditions and other factors, some of which are beyond its control. During the 12 months ended September 30, 2008, Janel's net working capital (total current assets less total current liabilities) decreased by $1,634,365, primarily as a result of an aggregate increase in notes payable of $1,275,000 and an increase in the current portion of long-term debt of $782,513. In addition, during fiscal 2008, the company's long term debt increased to $2,110,237 from $2,550.

For the 12 months ended September 30, 2008, Janel's primary source of cash from operating activities was a substantial aggregate increase in accounts payable and accrued expenses of $321,568, more than offset by the increase in its accounts receivable of $758,247. During fiscal 2008, the company largely financed its two acquisitions through the use of net cash and through borrowings under its existing credit lines and the issuance of notes and restricted equity. The purchase price for Order Logistics was $3,888,429 and for Ferrara International Logistics $2,077,070.

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

In March 2004, Janel increased its line of credit with a bank from $1,500,000 to $2,000,000. In January 2005, Janel entered into agreements providing for a transfer of its line of credit to another bank on identical terms, except that the available line of credit increased to $3,000,000. In July 2005, Janel decreased its line of credit from $3,000,000 to $1,500,000 because its cash flow is adequate for financing its receivables, and it obtained a reduced interest rate. In addition to a $1,500,000 line of credit, as of September 20, 2008, Janel had increased year-over-year its available borrowing under a term note of $1,700,000, bearing interest at prime plus three-quarters of one percent (0.75%) per annum, collateralized by substantially all the assets of Janel and personal guarantees by certain shareholders of the company. Management believes that anticipated cash flow before other items and availability under its expanded line of credit are sufficient to meet its current working capital and operating needs. However, the company is also proceeding with its comprehensive growth strategy for fiscal 2006 and beyond, which encompasses a number of potential elements, as detailed below under "Current Outlook." To successfully execute various of these growth strategy elements in the coming months, the company will need to secure additional capital funding estimated at up to $10,000,000 during that period. There is no assurance either that such additional capital as necessary to execute the company's business plan and intended growth strategy will be available or, if available, will be extended to the company at mutually acceptable terms.

Current Outlook

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

Based upon the results for the fiscal year ended September 30, 2008, and its current operations, Janel conservatively projects that gross revenue from its currently existing accounts and businesses for its fiscal year ending September 30, 2009 will grow by approximately 7-10% to approximately $88-$91 million.

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

Contractual Obligations and Commitments

The following table presents, as of September 30, 2008, the company's
significant fixed and determinable contractual obligations, by payment date.
Further discussion of the nature of the obligations is included in Notes 8 and
12 to the Consolidated Financial Statements:

Years Ended September 30,
                                       2009          2010          2011          2012          2013
Long term debt due as follows (1):   $ 786,000     $ 382,000     $ 824,000     $ 257,000     $ 243,000

Operating lease obligations (2)      $ 397,000     $ 223,000     $ 162,000     $ 111,000     $  20,000

(2) Leases represent future minimum lease payments under non-cancellable operating leases (primarily the rental of premises). In accordance with accounting principles generally accepted in the United States, the company's operating leases are not recorded in its balance sheet.

Critical Accounting Policies and Estimates

Management's Discussion and Analysis of Financial Condition and Results of Operations discusses the company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Since future events and their effects cannot be determined with absolute certainty, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and such difference may be material to the financial statements. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities that are not readily apparent from other sources, primarily allowance for doubtful accounts, accruals for transportation and other direct costs, and accruals for cargo insurance. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances. We reevaluate these significant factors as facts and circumstances change. Historically, actual results have not differed significantly from our estimates. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements included in this Annual Report on Form 10-K for the fiscal year ended September 30, 2008.

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 . . .