Back to GetFilings.com
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended: MARCH 31, 2005
|_| TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NO. 333-60608
JANEL WORLD TRADE, LTD.
(Exact name of registrant as specified in its charter)
NEVADA 86-1005291
(State of incorporation) (I.R.S. Employer Identification Number)
150-14 132ND AVENUE, JAMAICA, NY 11434
(Address of principal executive offices) (Zip Code)
(718) 527-3800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days. Yes |X| No |_|
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12-2 of the Exchange Act). Yes |_| No |X|
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 16,843,000
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
(a) Janel's unaudited, interim financial statements for its second fiscal
quarter (the three and six months ended March 31, 2005) have been set forth
below. Management's discussion and analysis of the company's financial condition
and the results of operations for the first quarter will be found at Item 2,
following the financial statements.
2
JANEL WORLD TRADE LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
================================================================================
MARCH 31, SEPTEMBER 30,
2005 2004
---------- ----------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 796,391 $1,287,507
Accounts receivable, net of allowance for doubtful
accounts of $25,498 at March 31, 2005 and
$31,413 at September 30, 2004 4,041,792 5,280,435
Marketable securities 52,303 46,137
Loans receivable - officers 162,250 160,989
- other 27,839 26,153
Prepaid expenses and sundry current assets 97,193 67,524
---------- ----------
TOTAL CURRENT ASSETS 5,177,768 6,868,745
PROPERTY AND EQUIPMENT, NET 246,028 111,816
SECURITY DEPOSITS 49,818 49,928
---------- ----------
TOTAL ASSETS $5,473,614 $7,030,489
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable - bank $ -- $ 800,000
Accounts payable 2,490,171 3,164,933
Accrued expenses and taxes payable 31,119 153,720
Current portion of long-term debt 8,393 8,393
---------- ----------
TOTAL CURRENT LIABILITIES 2,529,683 4,127,046
---------- ----------
OTHER LIABILITIES:
Long-term debt 17,766 21,962
Deferred compensation 78,568 78,568
---------- ----------
TOTAL OTHER LIABILITIES 96,334 100,530
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value
225,000,000 shares authorized
16,843,000 shares issued and outstanding
at March 31, 2005 and September 30, 2004 16,843 16,843
Additional paid-in capital 248,863 248,863
Retained earnings 2,581,891 2,537,207
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 2,847,597 2,802,913
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,473,614 $7,030,459
========== ==========
================================================================================
See accountants' review report
3
JANEL WORLD TRADE LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
================================================================================
SIX MONTHS ENDED MARCH 31, THREE MONTHS ENDED MARCH 31,
---------------------------- ----------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
REVENUES $ 29,973,687 $ 33,052,346 $ 14,950,685 $ 16,883,556
------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Forwarding expenses 26,704,540 29,747,504 13,349,546 15,232,168
Selling, general and administrative 3,187,593 3,140,558 1,651,103 1,590,552
------------ ------------ ------------ ------------
TOTAL COSTS AND EXPENSES 29,892,133 32,888,062 15,000,649 16,822,720
------------ ------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS 81,554 164,284 (49,964) 60,836
------------ ------------ ------------ ------------
OTHER ITEMS:
Interest and dividend income 8,969 7,484 4,586 3,566
Interest expense (19,876) (22,287) (8,998) (11,851)
------------ ------------ ------------ ------------
TOTAL OTHER ITEMS (10,907) (14,803) (4,412) (8,285)
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE
INCOME TAXES (CREDITS) 70,647 149,481 (54,376) 52,551
------------ ------------ ------------ ------------
Income taxes (credits) 30,400 65,500 (23,400) 23,000
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 40,247 $ 83,981 $ (30,976) $ 29,551
============ ============ ============ ============
OTHER COMPREHENSIVE INCOME
NET OF TAX:
Unrealized gain (loss) from available
for sale securities $ 4,437 $ 4,922 $ 115 $ 928
============ ============ ============ ============
Basic and diluted earnings per share $ .00239 $ .00499 $ (.00184) $ .00175
============ ============ ============ ============
Weighted number of shares outstanding 16,843,000 16,843,000 16,843,000 16,843,000
============ ============ ============ ============
================================================================================
See accountants' review report
4
JANEL WORLD TRADE, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
================================================================================
SIX MONTHS ENDED MARCH 31,
--------------------------
2005 2004
----------- -----------
OPERATING ACTIVITIES:
Net income $ 40,247 $ 83,981
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 40,465 25,688
Changes in operating assets and liabilities:
Accounts receivable 1,238,643 (243,538)
Prepaid expenses and sundry current assets (29,669) (1,970)
Security deposits 110 936
Accounts payable and accrued expenses (797,363) 583,669
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 492,433 448,766
----------- -----------
INVESTING ACTIVITIES:
Acquisition of property and equipment, net (174,677) (18,685)
Purchase of marketable securities (1,729) (353)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (176,406) (19,038)
----------- -----------
FINANCING ACTIVITIES:
Repayment of (increase in ) loans receivable (2,947) 4,587
Repayment of long-term debt, net (4,196) (3,158)
Repayment of (increase in) bank borrowings (800,000) 200,000
----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (807,143) 201,429
----------- -----------
INCREASE (DECREASE) IN CASH (491,116) 631,157
CASH - BEGINNING OF PERIOD 1,287,507 1,060,406
----------- -----------
CASH - END OF PERIOD $ 796,391 $ 1,691,563
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for:
Interest $ 19,876 $ 22,287
=========== ===========
Income taxes $ 173,594 $ 125,777
=========== ===========
Non-cash investing activities:
Unrealized gain on marketable securities $ 4,437 $ 4,922
=========== ===========
================================================================================
See accountants' review report
5
JANEL WORLD TRADE, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
(Unaudited)
================================================================================
1 BASIS OF PRESENTATION
The attached consolidated financial statements have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission. As
a result, certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The Company believes
that the disclosures made are adequate to make the information presented
not misleading. The consolidated financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented. These
consolidated financial statements should be read in conjunction with the
audited consolidated financial statements and related notes included in
the Company's Form 10-K as filed with the Securities and Exchange
Commission on or about December 28, 2004.
2 GENERAL COMMENTS
During the quarter ended March 31, 2005 the Company reduced, retroactive
to the date of acquisition, additional paid-in capital and increased
retained earnings by $250,000. This classification relates to the original
accounting for the acquisition of Wine Systems Design, Inc. where a value
was attributed to the shares issued in connection with the acquisition.
This value was attributed to goodwill and was subsequently written off.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FORWARD LOOKING STATEMENTS
The statements contained in all parts of this document that are not
historical facts are, or may be deemed to be, "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Such forward-looking statements include,
but are not limited to, those relating to the following: the effect and benefits
of the company's reverse merger transaction; Janel's plans to reduce costs
(including the scope, timing, impact and effects thereof); potential annualized
cost savings; plans for direct entry into the trucking and warehouse
distribution business (including the scope, timing, impact and effects thereof);
the company's ability to improve its cost structure; plans for opening
additional domestic and foreign branch offices (including the scope, timing,
impact and effects thereof); the sensitivity of demand for the company's
services to domestic and global economic and political conditions; expected
growth; future operating expenses; future margins; fluctuations in currency
valuations; fluctuations in interest rates; future acquisitions and any effects,
benefits, results, terms or other aspects of such acquisitions; ability to
continue growth and implement growth and business strategy; the ability of
expected sources of liquidity to support working capital and capital expenditure
requirements; future expectations and outlook and any other statements regarding
future growth, cash needs, operations, business plans and financial results and
any other statements that are not historical facts.
When used in this document, the words "anticipate," "estimate," "expect,"
"may," "plans," "project," and similar expressions are intended to be among the
statements that identify forward-looking statements. Janel's results may differ
significantly from the results discussed in the forward-looking statements. Such
statements involve risks and uncertainties, including, but not limited to, those
relating to costs, delays and difficulties related to the company's dependence
on its ability to attract and retain skilled managers and other personnel; the
intense competition within the freight industry; the uncertainty of the
company's ability to manage and continue its growth and implement its business
strategy; the company's dependence on the availability of cargo space to serve
its customers; effects of regulation; its vulnerability to general economic
conditions and dependence on its principal customers; accuracy of accounting and
other estimates; risk of international operations; risks relating to
acquisitions; the company's future financial and operating results, cash needs
and demand for its services; and the company's ability to maintain and comply
with permits and licenses; as well as other risk factors described in Janel's
Annual Report on Form 10-K filed with the SEC on December 28, 2004. 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 three months ended March 31, 2005, as compared to the results of
operations for the three months ended March 31, 2004, and for the six months
ended March 31, 2005, as compared to the six months ended March 31, 2004. The
discussion and analysis then addresses the liquidity and financial condition of
the company, and other matters.
7
RESULTS OF OPERATIONS
Janel operates its business as a single segment 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.
THREE MONTHS ENDED MARCH 31, 2005 COMPARED TO THREE MONTHS ENDED MARCH 31, 2004
REVENUE. Total revenue for the second quarter of fiscal 2005 was
$14,950,685, as compared to $16,883,556 for the same period of fiscal 2004, a
year-over-year decrease of $1,932,871, or 11.4%. The lower level of revenue
resulted from Janel's elimination of nine low margin customer accounts, which
accounted for $3,340,703 of revenue during the second quarter of fiscal 2004.
The elimination of the low margin customer accounts was partially offset by
increased business activity attributable to both new customer accounts and
increased shipping activity by existing customers.
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. As a general rule, revenue received by the company for
shipments via ocean freight are marked up at a lower percentage versus their
related forwarding expense 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.
For the second quarter of fiscal 2005, forwarding expense decreased by
$1,882,622, or 12.4%, to $13,349,546, as compared to $15,232,168 for the second
quarter of fiscal 2004. The percentage decrease was slightly higher than the
decrease in total revenue year over year, yielding a decrease in the measure of
forwarding expense as a percentage of total revenue to 89.3% from 90.2% for the
second fiscal quarter of 2004. The percentage decrease is the result of (1)
elimination of low margin customer accounts; (2) improving supply-chain
management and inventory planning processes which reduced the frequency of
time-critical shipments, resulting in more economical ocean freight rather than
higher-cost airfreight; and (3) expansion of Janel's export business, which is
conducted predominantly via ocean freight.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense in second quarter of fiscal 2005 increased by $60,551
(3.8%) to $1,651,103, or 11.04% of total revenue, as compared to $1,590,552, or
9.42% of total revenue, in the second quarter of fiscal 2004. The year-over-year
dollar increase in SG&A resulted from an increase of $24,553 in accounting,
legal and investor relations expenses, the hiring of three additional
salespeople, and related expenses in the second quarter of fiscal 2005 as
compared to the second quarter of fiscal 2004.
8
INCOME (LOSS) BEFORE TAXES. Janel's results for the second quarter of
fiscal 2005 declined from income before taxes of $52,551 in the second quarter
of fiscal 2004, to a loss of $(54,376) in the second quarter of fiscal 2005. The
principal reason for the loss was the significant reduction in year-over-year
revenue, combined with an increase in SG&A expense as a percentage of total
revenue, which were sufficient to overcome the decrease of 12.4% in forwarding
expense during the period.
INCOME TAXES. The effective income tax rate in both the 2005 and 2004
periods reflects the U.S. federal statutory rate and applicable state income
taxes.
NET INCOME (LOSS). Net loss for the second quarter of fiscal 2005 was
$(30,976), or $(0.00184) per diluted share, as compared to net income of
$29,551, or $0.00175 per diluted share, in the second quarter of fiscal 2004.
SIX MONTHS ENDED MARCH 31, 2005 COMPARED TO SIX MONTHS ENDED MARCH 31, 2004
REVENUE. Total revenue for the six months ended March 31, 2005 was
$29,973,687, as compared to $33,052,346 for the same period of fiscal 2004, a
year-over-year decrease of $3,078,659, or 9.31%. The lower level of revenue
resulted from Janel's elimination of nine low margin customer accounts, which
accounted for $527,192 or 1.8%, of revenue during the six months ended March 31,
2005, as compared to $5,412,039, or 16.8%, of revenue during the six months
ended March 31, 2004. The elimination of the low margin customer accounts was
partially offset by increased business activity attributable to both new
customer accounts and increased shipping activity by existing customers.
FORWARDING EXPENSE. For the six months ended March 31, 2005, forwarding
expense was $26,704,540, as compared to $29,747,504 for the same period of
fiscal 2004, a year-over-year decrease of $3,042,964, or 10.2%. The percentage
decrease was slightly higher than the decrease in total revenue for the six
months ended March 31, 2005 as compared to 2004, resulting in forwarding expense
as a percentage of total revenue decreasing slightly to 89.1% from 90.0% during
the six months ended March 31, 2004. The percentage decrease is the result of
(1) elimination of low margin customer accounts; (2) improving supply-chain
management and inventory planning processes which reduced the frequency of
time-critical shipments, resulting in more economical ocean freight rather than
higher-cost airfreight; and (3) expansion of Janel's export business, which is
conducted predominantly via ocean freight.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. For the six-month periods
ended March 31, 2005 and 2004, selling, general and administrative expenses
were$3,187,593 and $3,140,558, respectively. This represents a year-over-year
increase of $47,035, or 1.5%. The year-over-year dollar increase in SG&A
resulted from an increase of $20,685 in accounting, legal and investor relations
expenses, the hiring of three additional salespeople, and related expenses, in
the second quarter of fiscal 2005, as compared to the second quarter of fiscal
2004.
INCOME (LOSS) BEFORE TAXES. Janel's income before taxes fell 52.7% to
$70,647 for the six months ended March 31, 2005 as compared to $149,481 for the
six months ended March 31, 2004. Janel's pre tax profit margin on net revenue
(total revenue less forwarding expense) decreased by 231 basis points from 4.51%
for the six months ended March 31, 2004 to 2.2% in the six months ended March
31, 2005. The reason for the decreased pre tax profit margin was principally a
result of the $47,035 increase in SG&A expense during that period.
9
INCOME TAXES. The effective income tax rate in both the 2005 and 2004
periods reflects the U.S. federal statutory rate and applicable state income
taxes.
NET INCOME. Net income for the six months ended March 31, 2005, was
$40,247, or $0.00239 per diluted share, down 52.1%, as compared to $83,981, or
$0.00499 per diluted share, for the six months ended March 31, 2004. Janel's net
profit margin (net income as a percentage of net revenue) decreased by 131 basis
points, from 2.54% in the six months ended March 31, 2004 to 1.23% in the six
months ended March 31, 2005, principally as a result of the $47,035 increase in
SG&A expense during that period.
LIQUIDITY AND CAPITAL RESOURCES
Janel's ability to meet its liquidity requirements, which include
satisfying its debt obligations and funding working capital, day-to-day
operating expenses and capital expenditures depends upon its future performance,
and is subject to general economic conditions and other factors, some of which
are beyond its control.
During the six months ended March 31, 2005, Janel's net incremental requirements
for working capital have been minimal, aided by an increase in net income and a
significant decrease in both accounts receivable and accounts payable, resulting
from the elimination of low margin business and reduced import business related
to the decline in the value of the U.S. Dollar. Janel's past cash flow
performance is generally indicative of future cash flow performance.
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 has been increased to
$3,000,000. At March 31, 2005, Janel had $3,000,000 of available borrowing under
its line of credit, bearing interest at prime plus one-half of one percent
(0.5%) 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 from operations and availability under its expanded
line of credit are sufficient to meet its current working capital and operating
needs.
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.
10
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.
Management has been engaged in reviewing the profitability of various
customer accounts with a view toward eliminating accounts which are only
marginally profitable, and focusing on accounts that are more profitable, with a
view to increasing its overall profit margin. Based upon the results for the six
months ended March 31, 2005, and its current expectations for the remainder of
fiscal 2005, Janel currently projects that gross revenues for its fiscal year
ending September 30, 2005, exclusive of any potential acquisition activity or
other extraordinary events, will fall in the range of approximately $65 - $72
million, as compared to approximately $69 million reported in fiscal 2004.
Janel is continuing to implement its business plan and strategy to
increase revenue and profitability through its fiscal year ending September 30,
2005 and beyond. The company's strategy, some of which has been implemented,
includes plans to: open additional branch offices both domestically and in
Southeast Asia; increase profit margins by avoiding low margin business;
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 (in
January 2005, Janel engaged a sales team which, based on past performance, is
expected to produce additional revenue of approximately $2.5 million in fiscal
2005); increase its focus on growing revenues 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 reduction of current and prospective overhead and operating expenses,
particularly with regard to the efficient integration of any additional offices
or acquisitions.
Certain elements of the company's growth strategy, principally proposals
for acquisition, are contingent upon the availability of adequate financing at
terms acceptable to the company. The company is continuing in its efforts to
secure long-term financing, but has to date been unable to complete any such
financing transactions at terms it deems acceptable, and cannot presently
anticipate when or if financing on acceptable terms will become available.
Therefore, the implementation of significant aspects of the company's strategic
growth plan may be deferred beyond the originally anticipated timing.
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 which 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 which 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 our Annual Report on Form 10-K for the fiscal year ended September 30, 2004.
11
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
Revenues include airfreight revenues, ocean freight revenues and custom
brokerage and other services. Since arranging international shipments is a
complex task, each movement of freight may require more than one service.
Airfreight revenues include the charges to the Company for carrying the
shipments when the Company acts as a freight consolidator. Ocean freight
revenues include the charges to the Company for carrying the shipments when the
Company acts as a non-vessel operating common carrier (NVOCC). In each case the
Company is acting as an indirect carrier. When acting as an indirect carrier,
the Company will issue a House Airway Bill (HAWB) or a House Ocean Bill of
Lading (HOBL) to customers as the contract of carriage. In turn, when the
freight is physically tendered to a direct carrier, the Company receives a
contract of carriage known as a Master Airway Bill for airfreight shipments and
a Master Ocean Bill of Lading for ocean shipments. At this point the risk of
loss passes to the carrier, however, in order to claim for any such loss, the
customer is first obligated to pay the freight charges.
Based upon the terms in the contract of carriage, revenues related to
shipments where the company issues an HAWB or an HOBL are recognized at the time
the freight is tendered to the direct carrier at origin. Costs related to the
shipments are also recognized at the same time. Custom brokerage revenues
include all charges to the company for clearing the shipment through customs and
are recognized upon completion of the services rendered.
ESTIMATES
While judgments and estimates are a necessary component of any system of
accounting, the company's use of estimates is limited primarily to the following
areas that in the aggregate are not a major component of the company's
consolidated statements of income:
12
a. accounts receivable valuation;
b. the useful lives of long-term assets;
c. the accrual of costs related to ancillary services the company
provides; and
d. accrual of tax expense on an interim basis.
Management believes that the methods utilized in all of these areas are
non-aggressive in approach and consistent in application. Management believes
that there are limited, if any, alternative accounting principles or methods
which could be applied to the company's transactions. While the use of estimates
means that actual future results may be different from those contemplated by the
estimates, the company believes that alternative principles and methods used for
making such estimates would not produce materially different results than those
reported.
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES.
We maintain a system of disclosure controls and procedures that is
designed to provide reasonable assurance that information, which is required to
be disclosed by the Company in the reports that it files or submits under the
Securities and Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of the Securities and Exchange Commission, and is accumulated and communicated
to management in a timely manner. Our Chief Executive Officer and Chief
Financial Officer have evaluated this system of disclosure controls and
procedures as of the end of the period covered by this quarterly report, and
believe that the system is effective. There have been no changes in our internal
control over financial reporting during the most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of shareholders during the
second fiscal quarter ended March 31, 2005.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits required by item 601 of Regulation S-K.
Exhibit
Number Description of Exhibit
------ ----------------------
31 Rule 13(a)-14(a)/15(d)-14(a) Certifications.
32 Section 1350 Certification.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
quarter for which this report is filed
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
May 20, 2005
JANEL WORLD TRADE, LTD.
By: /s/ James N. Jannello
---------------------------------------
Chief Executive Officer
14