[JANEL LETTERHEAD]
March 21, 2017
Via EDGAR
Jim Allegretto, CPA
Senior Assistant Chief Accountant
Office of Consumer Products
Division of Corporation Finance
Securities and Exchange Commission
Mail Stop 3561
100 F Street, N.E
Washington, DC 20549
| Re: | Janel Corporation (the “Company”) |
Form 10-K for Fiscal Year Ended September 30, 2016, filed December 22, 2016
File No. 333-60608
Dear Mr. Allegretto:
I am writing in response to your letter of February 9, 2016 regarding the above file number. Below are responses to the comments raised.
Form 10-K for the Fiscal Year Ended September 30, 2016
Consolidated Balance Sheet, page F-2
| 1. | We again acknowledge that as currently provided, our preferred stock should have been recorded outside of permanent equity. While we now understand that this determination is not in compliance with ASC 480-10-S99-3A, at the time of issuance we intended the Series C Preferred Stock to be considered equity. When we issued shares of our Series C Preferred Stock, we provided all of the terms to our lender and the lender confirmed that it viewed the Series C Preferred Stock as equity for financial covenant calculation purposes. Accordingly, the Company is not in violation of its financial covenants. |
As a result of the Staff’s comment, we approached the holders of our Series C Preferred Stock and they have consented to an amendment of the terms of our Series C Preferred Stock to delete the mandatory redemption right, which we will file with the Secretary of State of Nevada as soon as possible. Once the amendment is filed, the Series C Preferred Stock would be considered permanent equity in accordance with ASC 480-10-S99-3A. We believe that amending our past filings to show the Preferred Stock outside of permanent equity, only to be followed shortly by filings which consider the Preferred Stock as permanent equity, would be confusing and misleading to investors.
We further acknowledge that the dividends paid or accrued on our redeemable preferred stock should be charged against additional paid-in capital. However, the misclassification of this amount has no impact on the results of operations or stockholders’ equity, other than a reclassification between equity accounts. We will correct this classification in future filings.
Jim Allegretto
Division of Corporation Finance
Securities and Exchange Commission
March 21, 2017
Page 2
Note 2. Acquisitions, page F-10
| 2. | We acknowledge the Staff’s comment and that the proper disclosure should have been pro forma net income, and not income before income taxes, in accordance with ASC 270-10—S99-1(b)(4). As erroneously presented, we disclosed the following pro forma information: |
| (Unaudited) | ||||||||
| Pro Forma Results | ||||||||
| Year ended September 30 | ||||||||
| 2016 | 2015 | |||||||
| Revenues | $ | 78,217,844 | $ | 108,586,742 | ||||
| Income before income taxes | $ | 1,563,460 | $ | 2,260,497 | ||||
| Fully diluted earnings per share | $ | 2.50 | $ | 3.82 | ||||
The correct presentation should have been as follows:
| (Unaudited) | ||||||||
| Pro Forma Results | ||||||||
| Year ended September 30 | ||||||||
| 2016 | 2015 | |||||||
| Revenues | $ | 78,217,844 | $ | 108,586,742 | ||||
| Net income | $ | 945,960 | $ | 1,367,497 | ||||
| Basic earnings per share | $ | 1.65 | $ | 2.28 | ||||
| Fully diluted earnings per share | $ | 1.51 | $ | 2.31 | ||||
Considering this is unaudited pro forma information with no effect on the primary financial statements as presented, we respectfully suggest that any future presentation of this pro forma information be corrected in future filings.
The Company acknowledges that it is responsible for the adequacy and accuracy of the disclosure in its filing, notwithstanding any review, comments, action or absence of action by the staff.
Jim Allegretto
Division of Corporation Finance
Securities and Exchange Commission
March 21, 2017
Page 3
Should you require any further information or have additional comments, please contact me at (516) 593-1390 ext. 4008.
| Very truly yours, | ||
| JANEL CORPORATION | ||
| /s/ Carlos Pla | ||
| Carlos Pla | ||
| Chief Financial Officer |
| cc: | Brendan J. Killackey |
Chief Executive Officer