UNITED STATES
                       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 September 30, 2005

                                       OR

|_|   Transition  report  pursuant  to  Section  13 or 15(d)  of the  Securities
      Exchange Act of 1934

        For the transition period from _______________ to _______________

                         Commission File Number: 0-27653


                                PACIFIC CMA, INC.
          ------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

         Delaware                                                84-1475073
--------------------------------------------------------------------------------
(State or Other Jurisdiction of                              (I.R.S. Employer
 Incorporation or Organization)                              Identification No.)

c/o Airgate International Corp., 153-04, Rockaway Blvd., Jamaica, New York 11434
--------------------------------------------------------------------------------
                    (Address of Principal Executive Offices)
                                   (Zip Code)

                                 (212) 247-0049
--------------------------------------------------------------------------------
              (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 Securities Exchange Act of 1934 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 12b-2 of the Exchange Act) Yes |_| No |X|

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.

Common Stock Outstanding as of: November 1, 2005:    26,173,680 shares


<PAGE>

                                PACIFIC CMA, INC.

                               INDEX TO FORM 10-Q

                                                                        PAGE NO.

PART I   FINANCIAL INFORMATION ................................................2

ITEM 1   FINANCIAL STATEMENTS .................................................2

         Condensed Consolidated Balance Sheets as of September 30, 2005
         (Unaudited) and December 31, 2004  ...................................2

         Condensed Consolidated  Statements of Operations for the Three
         and Nine Months Ended September 30, 2005 and 2004  (Unaudited) .......3

         Condensed  Consolidated  Statements of Cash Flows for the Nine
         Months Ended September 30, 2005 and 2004 (Unaudited) .................4

         Notes to Condensed Consolidated Financial Statements (Unaudited) .....5

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ...................15

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ..........37

ITEM 4.  CONTROLS AND PROCEDURES .............................................37

PART II. OTHER INFORMATION ...................................................38

ITEM 1.  LEGAL PROCEEDINGS ...................................................38

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS .........38

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES .....................................42

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .................42

ITEM 5.  OTHER INFORMATION ...................................................42

ITEM 6.  EXHIBITS ............................................................42

SIGNATURES ...................................................................43


                                       2
<PAGE>

                               PACIFIC CMA, INC.

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

         Condensed Consolidated Balance Sheets as of September 30, 2005
                   (Unaudited) and December 31, 2004 (Audited)





                                Pacific CMA, Inc.

                      Condensed Consolidated Balance Sheets
                    September 30, 2005 and December 31, 2004

Assets
<TABLE>
                                                                           (Unaudited)
                                                                               2005            2004
                                                                           ------------    ------------
    Current Assets
<S>                                                                        <C>             <C>
        Cash and cash equivalents                                          $  3,138,453    $  1,538,146
        Restricted cash                                                       6,302,954       5,088,088
        Accounts and notes receivable, net of allowance for doubtful
          accounts; 2005 - $296,357; 2004 - $295,144                         16,537,395      13,480,831
        Other receivables                                                     2,708,246       2,876,398
        Deposits and prepaid expenses                                           452,084         447,809
        Current portion of loan receivable                                       17,600          17,600
        Deferred income taxes                                                    57,476          57,476
                                                                           ------------    ------------
               Total current assets                                          29,214,208      23,506,348
                                                                           ------------    ------------
    Property and Equipment, net of accumulated depreciation; 2005 -
       $893,386; 2004 - $735,309                                                799,326         619,753
                                                                           ------------    ------------
    Other Assets
        Goodwill                                                              3,148,669       2,740,508
        Intangible assets, net of accumulated amortization; 2005 -
          $1,968,126; 2004 - $1,528,894                                       1,117,797       1,357,814
        Deferred tax asset                                                      463,360         952,319
        Deferred financing costs on Series A preferred stock                    576,040         786,693
        Deferred financing costs on minimum borrowing and revolving note        518,279            --
        Investment deposit                                                      150,000       1,037,001
        Equity investment in affiliates                                       1,048,187         258,912
        Other                                                                    29,044          30,994
                                                                           ------------    ------------
                                                                              7,051,376       7,164,241
                                                                           ------------    ------------

                                                                           $ 37,064,910    $ 31,290,342
                                                                           ============    ============
Liabilities and Stockholders' Equity

    Current Liabilities
        Notes payable - bank                                               $  3,802,599    $  6,679,406
        Current maturities of capital lease obligations                          62,312          62,537
        Accounts payable                                                     11,077,233       9,357,362
        Accrued expenses and other                                            1,118,181         908,930
        Payable-minority shareholder                                            148,052          79,409
        Revolving Notes, net of discount; 2005 - $151,042; 2004 - $0          1,827,620            --
        Income taxes payable                                                    431,074         157,741
                                                                           ------------    ------------
               Total current liabilities                                     18,467,071      17,245,385
                                                                           ------------    ------------

    Capital Lease Obligations                                                    73,894          64,373
                                                                           ------------    ------------

    Minimum Borrowing Note, net of discount; 2005 - $352,327; 2004 - $0       3,647,673            --
                                                                           ------------    ------------

    Series A Preferred Stock, net of discount; 2005 - $2,993,751;
       2004 - $771,401                                                        1,756,249       4,228,599
                                                                           ------------    ------------

    Minority Interest                                                           163,502          92,248
                                                                           ------------    ------------
    Stockholders' Equity
        Common stock                                                          5,406,570       5,113,412
        Warrants outstanding                                                  1,551,403       1,073,653
        Additional paid-in capital                                            3,798,555       1,953,384
        Retained earnings                                                     3,282,493       2,760,947
        Accumulated other comprehensive income                                   16,723          24,174
        Unearned compensation cost                                           (1,099,223)     (1,265,833)
                                                                           ------------    ------------
               Total stockholders' equity                                    12,956,521       9,659,737
                                                                           ------------    ------------

                                                                           $ 37,064,910    $ 31,290,342
                                                                           ============    ============
</TABLE>

See Notes to Condensed Consolidated Financial Statements                       2

<PAGE>

                                Pacific CMA, Inc.
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                           Three Months Ended              Nine Months Ended
                                              September 30                    September 30
                                         2005            2004            2005            2004
                                     ------------------------------------------------------------
<S>                                  <C>             <C>             <C>             <C>
Freight Forwarding Income            $ 33,945,901    $ 29,850,668    $ 88,603,871    $ 67,868,669
                                     ------------    ------------    ------------    ------------
Operating Expenses
    Cost of forwarding                (28,927,102)    (25,755,408)    (75,047,650)    (57,470,531)
    General and administrative         (3,961,562)     (3,418,383)    (11,215,366)     (9,016,218)
    Depreciation and amortization        (242,570)       (200,013)       (692,034)       (570,414)
    Stock-based compensation cost         (55,537)       (111,148)       (212,176)       (397,543)
                                     ------------    ------------    ------------    ------------

                                      (33,186,771)    (29,484,952)    (87,167,226)    (67,454,706)
                                     ------------    ------------    ------------    ------------

Operating Income                          759,130         365,716       1,436,645         413,963
                                     ------------    ------------    ------------    ------------
Other Income (Expense)
    Interest and other income              43,578          26,275         120,403         175,876
    Interest expense                     (157,314)        (71,766)       (384,878)       (234,427)
    Preferred stock dividend and
      amortization of deferred
      financing costs                    (165,275)       (172,587)       (438,084)       (384,454)
    Amortization of preferred
      stock discount                     (319,277)        (46,601)       (436,741)       (109,580)
    Minimum borrowing note and
      revolving note amortization
      of deferred financing costs         (28,461)           --           (28,461)           --
    Amortization  of minimum
      borrowing note and revolving
      note discount                       (27,642)           --           (27,642)           --
    Equity in income (loss) of
      affiliates                          (31,216)         17,440         (57,572)         (1,900)
                                     ------------    ------------    ------------    ------------
                                         (685,607)       (247,239)     (1,252,975)       (554,485)
                                     ------------    ------------    ------------    ------------

Income (Loss) Before Income Taxes          73,523         118,477         183,670        (140,522)

Benefit for Income Taxes                  (75,069)        (80,111)       (360,464)       (275,652)
                                     ------------    ------------    ------------    ------------

Income Before Minority Interest           148,592         198,588         544,134         135,130

Minority Interest                          (7,367)         (3,347)        (22,588)         (3,347)
                                     ------------    ------------    ------------    ------------


Net Income                           $    141,225    $    195,241    $    521,546    $    131,783
                                     ============    ============    ============    ============

Basic Earnings Per Share             $       0.01    $       0.01    $       0.02    $       0.01

Diluted Earnings Per Share           $       0.01    $       0.01    $       0.02    $       0.01
</TABLE>



See Notes to Condensed Consolidated Financial Statements                       3
<PAGE>


                                Pacific CMA, Inc.
                 Condensed Consolidated Statements of Cash Flows
                  Nine Months Ended September 30, 2005 and 2004
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                         2005           2004
                                                                     --------------------------
Operating Activities
<S>                                                                  <C>            <C>
   Net income                                                        $   521,546    $   131,783
   Items not requiring (providing) cash
       Amortization of preferred stock discount                          436,741        109,580
       Preferred stock dividend and amortization of deferred             243,335
       financing costs                                                   438,084
       Amortization of minimum borrowing note discount                    19,347           --
       Amortization of revolving note discount                             8,295           --
       Amortization of minimum borrowing note and revolving note
       deferred financing costs                                           28,461           --
       Depreciation and amortization                                     252,803        139,189
       Amortization of intangibles                                       439,231        431,225
       Gain on sale of property and equipment                             (7,111)        (6,701)
       Minority interest in income of subsidiaries                        22,588          3,347
       Common stock issued for services and employee compensation        212,176        397,543
       Share of loss of affiliates                                        57,572          1,900
       Provision for doubtful accounts                                    10,000         33,779
       Deferred income taxes                                            (609,540)      (205,258)
   Changes in
       Accounts receivable                                            (2,495,088)    (5,474,982)
       Accounts payable                                                  963,701      3,292,248
       Accrued expenses                                                  (26,300)        16,679
       Income taxes refundable/payable                                   253,804       (125,165)
       Other assets and liabilities                                      187,793     (1,857,252)
                                                                     -----------    -----------
           Net cash provided by (used in) operating activities           714,103     (2,868,750)
                                                                     -----------    -----------
Investing Activities
   Collection of loans receivable                                          1,950          1,960
   Purchase of property and equipment                                   (327,207)      (291,585)
   Acquisition of subsidiary                                            (536,030)        45,246
   Equity investment in Shanghai Air Cargo                                  --         (246,493)
   Proceeds from sale of property and equipment                           15,618         10,962
   Deposit refund from potential equity investment                        40,000           --
   Deposit paid for potential acquisition                                   --         (175,254)
                                                                     -----------    -----------
           Net cash used in investing activities                        (805,669)      (655,164)
                                                                     -----------    -----------
Financing Activities
   Net change in restricted cash                                      (1,214,867)       207,942
   Net change in notes payable - bank                                   (376,807)        30,636
   Principal payments under capital lease obligation                     (57,499)       (36,086)
   Principal payments on short-term debt                              (2,500,000)      (510,879)
   Proceeds from short-term debt                                          71,065           --
   Proceeds from other loan                                              184,995           --
   Issuance of common stock, net of issuance costs                          --           (3,000)
   Proceeds from issuance of Series A Preferred Stock and
   detachable stock warrants                                                --        5,000,000
   Proceeds from exercise of stock option                                 19,600           --
   Proceeds from minimum borrowing note and revolving note, net of
   financing cost                                                      5,577,488           --
   Principal payments of revolving note                                   (3,338)          --
   Advances - director, net                                                 --          (11,582)
                                                                     -----------    -----------
           Net cash provided by financing activities                   1,700,637      4,677,031
                                                                     -----------    -----------

Increase (Decrease) in Cash and Cash Equivalents                       1,609,071      1,153,117

Foreign Currency Exchange Difference                                      (8,764)       (23,179)

Cash and Cash Equivalents, Beginning of Period                         1,538,146        912,240
                                                                     -----------    -----------


Cash and Cash Equivalents, End of Period                             $ 3,138,453    $ 2,042,178
                                                                     ===========    ===========

Supplemental Cash Flow Information
   Cash paid for interest                                            $   384,878    $   234,427
   Cash paid for income taxes                                             44,390         69,663
   Cash refunded for income taxes                                         45,203         14,970
   Capital lease obligation incurred for equipment                        66,795        130,939
</TABLE>

See Notes to Condensed Consolidated Financial Statements                       4


<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2005 and 2004
                                   (Unaudited)


Note 1: Basis of Presentation

        The accompanying condensed consolidated financial statements of Pacific
        CMA, Inc. (the "Company") and its subsidiaries (the "Group") as of
        September 30, 2005 and for the nine and three months ended September 30,
        2005 and 2004 have been prepared in accordance with accounting
        principles generally accepted in the United States of America for
        interim financial information and with the instructions to Form 10-Q and
        Article 10 of Regulation S-X of the Securities Exchange Act of 1934.
        Accordingly, they do not include all of the information and footnotes
        required by accounting principles generally accepted in the United
        States of America for complete financial statements. The accompanying
        condensed consolidated financial statements reflect all adjustments that
        are in the opinion of the Company's management, necessary to fairly
        present the financial position, results of operations and cash flows of
        the Company. Those adjustments consist only of normal recurring
        adjustments.

        The condensed consolidated balance sheet of the Company as of December
        31, 2004 has been derived from the audited consolidated balance sheet of
        the Company as of that date.

        The condensed consolidated statements of operations for the nine months
        ended September 30, 2005 and 2004, and cash flows for the nine months
        ended September 30, 2005 and 2004 are not necessarily indicative of the
        results that may be expected for the entire year. These condensed
        consolidated financial statements should be read in conjunction with the
        consolidated financial statements and the related notes thereto for the
        year ended December 31, 2004 included in the Company's Form 10-K filed
        on March 31, 2005.


Principles of Consolidation

        The condensed consolidated financial statements include the financial
        statements of the Company and its subsidiaries. All significant
        intercompany balances and transactions have been eliminated in
        consolidation.



Note 2: Investment Deposit

        At September 30, 2005, the Company has on deposit $150,000 with a
        potential acquisition target in the United States. The Company has
        signed a letter of intent with the target. The estimated purchase price
        is $1,000,000 to $1,500,000.

                                                                               5
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2005 and 2004
                                   (Unaudited)


Note 3: Earnings Per Share

        The following is a reconciliation of the numerator and denominator of
basic and diluted earnings per share:

<TABLE>
<CAPTION>
                                                 Three Months Ended September 30
                                             2005                               2004
                                                       Per-Share                          Per-Share
                                 Income     Shares      Amount      Income     Shares       Amount
----------------------------------------------------------------------------------------------------
<S>                              <C>       <C>          <C>         <C>       <C>          <C>
Net Income                    $  141,225                         $  195,241

Basic EPS
  Income available to
    common stockholders          141,225   25,761,160   $ 0.01      195,241   25,825,590   $   0.01
                                                                              ==========   ========
  Stock options and
    warrants                                    2,339                            198,127
                                           ----------                         ----------

Diluted EPS
  Income available to

    common stockholders
    and assumed conversions   $  141,225   25,763,499   $ 0.01   $  195,241   26,023,717   $   0.01
                              ==========   ==========   ======   ==========   ==========   ========
</TABLE>


        Common stock equivalents related to warrants and convertible preferred
        stock of 4,335,788 and 5,397,727, respectively, are not included in the
        calculation of diluted earnings per share for the three months ended
        September 30, 2005 because they have an anti-dilutive effect.

        Common stock equivalents related to stock options, warrants and
        convertible preferred stock of 200,000; 2,885,788 and 3,472,222,
        respectively, are not included in the calculation of diluted earnings
        per share for the three months ended September 30, 2004 because they
        have an anti-dilutive effect.



                                                                               6
<PAGE>


                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2005 and 2004
                                   (Unaudited)


Note 3:  Earnings Per Share (Continued)



<TABLE>
<CAPTION>
                                                          Nine Months Ended September 30
                                               2005                                       2004
                                                          Per-Share                                  Per-Share
                                 Income       Shares        Amount         Income        Shares       Amount
-------------------------------------------------------------------------------------------------------------
<S>                              <C>        <C>          <C>                 <C>        <C>          <C>
Net Income (loss)            $   521,546                                 $   131,783

Basic EPS
  Income (loss) available
    to common stockholders       521,546    25,450,550   $        0.02       131,783    25,777,962   $   0.01
                                                         =============                               ========
  Stock options and
    warrants                                    35,149                                     244,367
                                            ----------                                 -----------

Diluted EPS
  Income available to
    common stockholders
    and assumed
    conversions              $   521,546   $25,485,699   $        0.02   $   131,783    26,022,329   $   0.01
                             ===========   ===========   =============   ===========   ===========   ========
</TABLE>


        Common stock equivalents related to warrants and convertible preferred
        stock of 1,815,833 and 5,397,727, respectively, are not included in the
        calculation of diluted earnings per share for the nine months ended
        September 30, 2005 because they have an anti-dilutive effect.

        Common stock equivalents related to stock options, warrants and
        convertible preferred stock of 200,000, 2,885,788 and 3,472,222,
        respectively, are not included in the calculation of diluted earnings
        per share for the nine months ended September 30, 2004 because they have
        an anti-dilutive effect.



Note 4:  Common Stock and Preferred Stock

        As of September 30, 2005, the Company's authorized capital stock is
        comprised of 100,000,000 shares of common stock, $0.001 par value and
        10,000,000 shares of preferred stock, $0.001 par value. As of the same
        date, the Company's issued and outstanding capital stock is comprised of
        25,973,681 shares of common stock and 4,750 shares of preferred stock.


                                                                               7
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2005 and 2004
                                   (Unaudited)


    Preferred Stock

       On April 14, 2004, the Company sold to two institutional investors
       $3,000,000 of its Series A Preferred Stock and issued warrants to
       purchase 937,500 shares of common stock, at per share exercise prices of
       $1.76 for 468,750 shares and $2.00 for 468,750 shares. These warrants
       expire seven years from date of issuance.

       On May 6, 2004, the Company sold to an institutional investor $2,000,000
       of its Series A Preferred Stock and issued warrants to purchase an
       additional 625,000 shares of common stock at per share exercise prices
       of $1.76 for 312,500 shares and $2.00 for 312,500 shares. These warrants
       expire seven years from issuance.

       The Series A Preferred Stock has 10,000,000 shares authorized and 5,000
       shares issued with a stated value of $1,000 per share. The Series A
       Preferred Stock is convertible into shares of Common Stock at a
       conversion price of $1.44 per share (subject to certain adjustments) and
       pays a cumulative annual dividend equal to six (6%) percent of the
       stated value, which at the option of the Company, subject to certain
       conditions, may be paid in shares of Common Stock. The Series A
       Preferred Stock is mandatory redeemable four years from issuance. This
       preferred stock is non-voting.

       On August 4, 2005, the Company completed a financing transaction
       described in note 7 "Revolving Note and Minimum Borrowing Note". The
       Notes contain a conversion feature whereby the Notes can be converted to
       common stock. The conversion price of the first $3,750,000 is convertible
       at $0.88 per share and the balance is convertible at $1.05.
        Pursuant to the Certificate of Designation of Preferences Rights and
       Limitations of Series A Convertible Preferred Stock of the Company
       executed April 12, 2004, and the Common Stock Purchase Warrants issued to
       the purchasers of the Company's Series A Convertible Preferred Stock, the
       Set Price of the Series A Convertible Preferred Stock and the exercise
       price of the Purchases Warrants, has been adjusted to $0.88 per share
       accordingly. In accordance with EITF 00-27 and EITF 05-8, the intrinsic
       value of the additional beneficial conversion option of $2,659,091 was
       recorded as unamortized discount on the preferred stock and as additional
       stockholders' equity (warrants outstanding) of $1,595,455 and deferred
       income taxes of $1,063,636 on the date of conversion price resetting. The
       additional unamortized discount is amortized to expense using the
       effective interest method over the remaining life of the Series A
       Preferred Stock and the deferred tax liability is included in tax expense
       as the interest expense is recognized. As a result, $230,670 was expensed
       as amortization from the additional beneficial conversion for Series A
       Preferred Stock during the third quarter of 2005.

       On Aug 16, 2005, one of the institutional investor converted 250 shares
       of the Series A Preferred Stock into shares of Common Stock at a
       conversion price of $0.88 per share.

                                                                               9

<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2005 and 2004
                                   (Unaudited)

Preferred Stock (Continued)

        As the Series A Preferred Stock is mandatorily redeemable, it was
        recorded in accordance with Statement 150, Accounting for Certain
        Financial Instruments With Characteristics of Both Liabilities and
        Equity. The relative fair value of the Series A Preferred Stock was
        recorded as a long-term liability and the dividends paid and accrued
        are included in interest expense. Additionally, the Series A
        Preferred Stock was issued with a beneficial conversion feature. In
        accordance with EITF 98-5, the intrinsic value of the beneficial
        conversion option of $166,666 was recorded as additional finance
        charges under the caption "Preferred Stock dividend and amortization
        of deferred financing costs" and credited to additional paid-in
        capital year ended December 31, 2004. Lastly, in accordance with
        Opinion 14, Accounting for Convertible Debt and Debt Issued With
        Stock Purchase Warrants, the Series A Preferred Stock and detachable
        stock warrants were recorded at their relative fair values with the
        value of the warrants recorded as additional paid-in capital. The
        fair value of the warrants was determined based on an independent
        valuation. Effectively, the Series A Preferred Stock was recorded at
        an original discount of $939,713. This discount will be amortized
        ratably over the term of the Series A Preferred Stock. For the
        quarter and the nine months ended September 30, 2005, the Company
        recognized $88,607 and $206,071 respectively related to the
        amortization of the Series A Preferred Stock original discount.


2000 Stock Plan

        In June 2005, stock options of 200,000 shares were exercised to
        purchase the Company's common stock at an exercise price of $0.098.
        The proceeds of $19,600 received by the Company from exercises of
        stock options were credited to common stock.


Note 5: Pledge of Assets

        As of September 30, 2005 and December 31, 2004, the Group had pledged
        restricted cash deposits of $6,302,954 and $5,088,088, respectively.

Note 6: Notes Payable - Bank

        The Company has a $2,500,000 line of credit that accrues interest at the
        bank's prime rate plus 0.75% . The line is collateralized by a
        $1,000,000 certificate of deposit held by the Bank, substantially all
        the assets of Airgate and a personal guarantee of two directors of the
        Company. This certificate of deposit is recorded as restricted cash. The
        note requires the Company meet certain debt to equity ratios and other
        financial covenants. On August 4, 2005, this line of credit was
        terminated and repaid in full with the proceeds received from the
        Company's new financing..

        The Company has certain other banking facilities to finance its working
        capital. The facilities available totaled approximately $9,010,000. The
        facilities accrue interest at rates varying with the prime rate in Hong
        Kong, Hong Kong Interbank Offered Rate (HIBOR), or the cost of funds
        rate. As of September 30, 2005, these rates ranged between 3.35% - 8%.
        The facilities require annual renewals and are collateralized by
        personal guarantees of two directors and restricted cash of
        approximately $4,962,000. As of September 30, 2005 and December 31,
        2004, amounts outstanding against these facilities were $3,802,599 and
        $4,179,406, respectively.

                                                                               9
<PAGE>

Note 7: Revolving Notes and Minimum Borrowing Notes

        Effective August 4, 2005, the Company completed a financing transaction
        with Laurus Master Fund, Ltd. ("Laurus") pursuant to the terms of a
        Security Agreement (the "Security Agreement"), dated as of July 29,2005,
        by and among the Company, certain of the Company's United States
        subsidiaries (the "Subsidiaries"), and Laurus (the "Financing").
        Pursuant to the Security Agreement, the Company issued and sold to
        Laurus (i) a Secured Convertible Minimum Borrowing Note (the "Minimum
        Borrowing Note") in the principal amount of $4 million, which is
        convertible into shares of the Company's common stock, par value $.001
        per share (the "Common Stock"), and (ii) a Secured Revolving Note (the
        "Revolving Note," and, together with the Minimum Borrowing Note, the
        "Notes"), which Notes are in the aggregate principal amount of $7.5
        million. The Revolving Note also is convertible into shares of Common
        Stock. The Company also issued to Laurus a warrant (the "Warrant") to
        purchase, at any time prior to July 29, 2012, up to 1,500,000 shares of
        Common Stock at a purchase price of $1.00 per share, subject to
        adjustments. The issuance of the Notes and the Warrant were completed in
        a private placement pursuant to an exemption from registration under
        Section 4(2) of the Securities Act of 1933, as amended.

        The Notes are due on July 29, 2008 The interest rate on the Notes is
        equal to the greater of (i) six percent (6%), and (ii) the prime rate
        plus one percent (1)%. The interest rate may be adjusted downward
        depending on (i) whether the Company has registered the shares of Common
        Stock underlying the Minimum Borrowing Note, and the Warrant, and (ii)
        the price of the Common Stock.

        Amounts outstanding under the Minimum Borrowing Note and the Revolving
        Note will either be paid in cash at maturity or at Laurus' option, by
        converting such amounts into shares of the Common Stock from time to
        time.

        The maximum amount available under the Revolving Note and the Minimum
        Borrowing Note is equal to the lesser of (i) $7.5 million less any
        reserves required by Laurus; or (ii) 90% of the Eligible Accounts (as
        defined in the Security Agreement) less any reserves required by Laurus.
        If at any time the amount outstanding under the Revolving Note is equal
        to or greater than $500,000 and the amount outstanding under the Minimum
        Borrowing Note is less than $4 million, then the outstanding amount of
        the Revolving Note will be segregated until aggregate segregated amounts
        under the Revolving Note equals $4 million, at which time a new Minimum
        Borrowing Note in the same form of the initial Minimum Borrowing Note
        will be issued and the Revolving Note reduced correspondingly.

        The initial fixed conversion price of the Notes is $0.88 per share with
        respect to the first $3,750,000 of aggregate principal amount converted
        and $1.05 per share for any additional amount of principal converted and
        is subject to certain anti-dilution adjustments.

        As of September 30, 2005, the outstanding balance and the Revolving
        Notes and Minimum Borrowing Notes, net of discount, is $1,827,620 and
        $3,647,673 respectively.


                                                                              10

<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2005 and 2004
                                   (Unaudited)

Note 8:  Related Party Transactions

        As of September 30, 2005 and December 31, 2004, the Company had a
        payable to a minority shareholder of a subsidiary of $148,052 and
        $79,409, respectively. The payable accrues interest at 3% per annum, is
        unsecured and has no fixed payment terms.



Note 9: Segments of the Business


Business Segments

        The Company operates mainly in two business segments. Those segments are
        air forwarding and sea forwarding services. The accounting policies
        adopted by the Company for segment reporting are described in the
        summary of significant accounting policies in the Company's Form 10-K
        filed for the year ended December 31, 2004.

        The following table summarized the Company's operations for the three
        months ended September 30, 2005 and 2004 analyzed into air and sea
        forwarding services:

<TABLE>
<CAPTION>
                              Air Forwarding                  Sea Forwarding                       Total
                          2005            2004            2005              2004            2005           2004
                      ----------------------------------------------------------------------------------------------
<S>                   <C>             <C>             <C>               <C>             <C>             <C>
Revenue               $ 19,458,025    $ 17,684,483    $ 14,487,876      $ 12,166,185    $ 33,945,901    $ 29,850,668
Cost of forwarding     (15,982,683)    (15,271,525)    (12,944,419)      (28,927,102)    (25,755,408)
Depreciation and
   amortization           (139,531)       (126,202)        (52,031)          (47,597)       (191,562)       (173,799)
Interest expense           (41,353)        (28,022)         (4,917)           (8,350)        (46,270)        (36,372)
Other segment
   expenses
   attributable to
   segment                (831,043)       (618,523)       (667,586)         (636,105)     (1,498,629)     (1,254,628)
                      ------------    ------------    ------------      ------------    ------------    ------------

Segment income        $  2,463,415    $  1,640,211    $    818,923      $    990,250    $  3,282,338    $  2,630,461
                      ============    ============    ============      ============    ============    ============

Net other
   unallocated
   expenses                                                                               (3,133,745)     (2,431,873)

Minority interest                                                                             (7,368)         (3,347)
                                                                                        ------------    ------------

Net income                                                                              $    141,225    $    195,241
                                                                                        ============    ============

Goodwill              $  2,420,584    $  1,720,019    $    728,085      $  1,020,489    $  3,148,669    $  2,740,508
Intangible assets          861,682         935,241         256,115           566,908       1,117,797       1,502,149
Other assets            21,787,165      20,063,451      11,011,279         7,374,716      32,798,444      27,438,167
                      ------------    ------------    ------------      ------------    ------------    ------------

       Total assets   $ 25,069,431    $ 22,718,711    $ 11,995,479      $  8,962,113    $ 37,064,910    $ 31,680,824
                      ============    ============    ============      ============    ============    ============
</TABLE>


                                                                              11
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2005 and 2004
                                   (Unaudited)




        The following table summarized the Company's operations for the nine
        months ended September 30, 2005 and 2004 analyzed into air and sea
        forwarding services:

<TABLE>
<CAPTION>
                             Air Forwarding                   Sea Forwarding                     Total
                           2005           2004            2005            2004           2005             2004
                      ---------------------------------------------------------------------------------------------
<S>                   <C>             <C>             <C>             <C>             <C>             <C>
Revenue               $ 53,495,638    $ 42,255,188    $ 35,108,233    $ 25,613,481    $ 88,603,871    $ 67,868,669
Cost of forwarding     (43,949,935)    (35,288,372)    (31,097,715)    (22,182,159)    (75,047,650)    (57,470,531)
Depreciation and
   amortization           (415,472)       (371,635)       (150,589)       (134,945)       (566,061)       (506,580)
Interest expense          (137,205)       (104,133)        (23,291)        (21,723)       (160,496)       (125,856)
Other segment
   expenses
   attributable to
   segment              (2,667,172)     (2,040,877)     (1,712,729)     (1,384,154)     (4,379,901)
                                                      ------------    ------------    ------------    ------------

Segment income        $  6,325,854    $  4,450,171    $  2,123,909    $  1,890,500    $  8,449,763    $  6,340,671
                      ============    ============    ============    ============    ============    ============
Net other
   unallocated
   expenses                                                                             (7,905,629)     (6,205,541)

Minority interest                                                                          (22,588)         (3,347)
                                                                                      ------------    ------------

Net income (loss)                                                                     $    521,546    $    131,783
                                                                                      ============    ============

Goodwill              $  2,420,584    $  1,720,019    $    728,085    $  1,020,489    $  3,148,669    $  2,740,508
Intangible assets          861,682         935,241         256,115         566,908       1,117,797       1,502,149
Other assets            21,787,165      20,063,451      11,011,279       7,374,716      32,798,444      27,438,167
                      ------------    ------------    ------------    ------------    ------------    ------------

       Total assets   $ 25,069,431    $ 22,718,711    $ 11,995,479    $  8,962,113    $ 37,064,910    $ 31,680,824
                      ============    ============    ============    ============    ============    ============
</TABLE>


Geographical Segments

      The table below summarized the Group's revenue analyzed into geographical
locations:

                        Three Months Ended          Nine Months Ended
                            September 30                September 30
                        2005          2004          2005          2004
                    -----------------------------------------------------
Revenue
    * IATA Area 1   $ 5,177,152   $ 5,472,086   $14,140,077   $10,366,288
    * IATA Area 2     9,222,784     8,187,565    21,882,617    17,447,185
    * IATA Area 3    19,545,965    16,191,017    52,581,177    40,055,196
                    -----------   -----------   -----------   -----------


       Total        $33,945,901   $29,850,668   $88,603,871   $67,868,669
                    ===========   ===========   ===========   ===========

                                                                              12

<PAGE>


                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2005 and 2004
                                   (Unaudited)


<TABLE>
<CAPTION>
                                 As of September 30, 2005         As of September 30, 2004
                                       Other Assets                    Other Assets
                    Trade      (Including       Total        Trade       (Including        Total
                  Receivables   Goodwill)      Assets      Receivables    Goodwill)       Assets
                 ---------------------------------------------------------------------------------
Assets
<S>          <C> <C>           <C>                     <C>               <C>           <C>
  *IATA Area 1   $ 9,091,098   $ 9,089,519   $18,180,617   $ 8,042,880   $ 9,869,891   $17,912,771
  *IATA Area 2     2,680,394          --       2,680,394     1,208,813          --       1,208,813
  *IATA Area 3     4,765,903    11,437,996    16,203,899     3,921,437     8,637,803    12,559,240
                 -----------   -----------   -----------   -----------   -----------   -----------

       Total     $16,537,395   $20,527,515   $37,064,910   $13,173,130   $18,507,694   $31,680,824
                               ===========   ===========   ===========   ===========   ===========
</TABLE>


        *  IATA Area 1 comprises all of the North and South American Continent
           and adjacent islands, Greenland, Bermuda, West Indies and the islands
           of the Caribbean Sea, the Hawaiian Islands (including Midway and
           Palamyra).

        *  IATA Area 2 comprises all of Europe (including the European part of
           the Russian Federation) and the adjacent islands, Iceland, the
           Azores, all of Africa and the adjacent islands, Ascension Island,
           that part of Asia lying west of and including Iran.

        *  IATA Area 3 comprises all of Asia and the adjacent islands, except
           that portion included in IATA Area 2, all of the East Indies,
           Australia, New Zealand and the adjacent islands, the islands of the
           Pacific Ocean, except those included in IATA Area 1.



Note 10: Concentrations

        The Company had sales to a major customer (defined as a customer that
        sales to that customer represented 10% or more of total sales). Sales to
        this customer as a percentage of total sales is as follows:

                            Three Months Ended            Nine Months Ended
                                September 30                September 30
          Major Customer   2005           2004          2005          2004
        ------------------------------------------------------------------------

          A                 14%            15%           11%           14%


                                                                              13

<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2005 and 2004
                                   (Unaudited)


Note 11: Equity Investment in Affiliates

        Equity investment in affiliates relates to ownership of Shanghai Air
        Cargo Ground Handling Services Ltd. ("Shanghai Air Cargo"), Vantage
        Point Services Limited ("Vantage Point") and Careship International
        Transportation Ltd. ("Careship International") for 35%, 40% and 46.92%,
        respectively. Shanghai Air Cargo began operations in April 2004 and the
        interest in Vantage Point and Careship International was acquired by the
        Company in October 2004 and January 2005, respectively. Financial
        results of operations of the affiliates during the quarter and nine
        months ended September 30, 2005 are summarized below:


<TABLE>
<CAPTION>
                            Three months ended                  Nine months ended
                            September 30, 2005                  September 30, 2005
                  Shanghai Air  Vantage    Careship     Shanghai Air  Vantage    Careship
                     Cargo       Point   International     Cargo       Point  International
                  ------------------------------------------------------------------------
<S>               <C>         <C>          <C>          <C>         <C>          <C>
Net Sales         $ 335,953   $ 127,006    $  68,968    $ 971,520   $ 500,339    $ 343,464
Cost of Sales       253,917     115,707       63,920      737,991     433,928      129,803
Gross Profit         82,040      11,298        5,048      233,529      66,410      213,661
Net Income
     (Loss)          15,059     (28,810)     (18,737)      45,495     (50,461)     (10,228)
Equity in
  Income (Loss)
  of Affiliates       5,271     (11,524)      (8,792)      15,923     (20,184)      (4,799)
</TABLE>

        The Company invested $846,847 in its 46.92% interest in Careship
        International which amount was $792,453 in excess of the underlying
        equity in net assets of the investee. This excess was allocated to an
        intangible asset of $662,991 and the balance of $129,462 to goodwill.
        The intangible asset related to an exclusive right to do business
        granted to Careship International by the government of the Peoples
        Republic of China for a term of ten years. The intangible is being
        amortized over the term of the exclusive right. The amortization expense
        is reflected in the equity in income (loss) of affiliates and amounted
        to $16,171 and $48,512 for the quarter and nine months ended September
        30, 2005 respectively. The goodwill is not amortized under Statement No.
        142 but rather the investment is analyzed for impairment under the
        requirements of Opinion No. 18.


                                                                              14
<PAGE>

ITEM 2.  MANAGEMENT'S   DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITIONS AND
         RESULTS OF OPERATIONS

Special Note of Caution Regarding Forward-Looking Statements

Certain  statements  in  this  report,  including  statements  in the  following
discussion,  which are not statements of historical  fact, are what are known as
"forward-looking  statements," which are basically  statements about the future.
For that reason,  these statements involve risk and uncertainty since no one can
accurately  predict  the  future.  Words such as  "plans,"  "intends,"  "hopes,"
"seeks,"   "anticipates,"   "expects,"   and  the  like,   often  identify  such
forward-looking  statements, but are not the only indication that a statement is
a forward-looking  statement. Such forward-looking statements include statements
concerning  our plans and  objectives  with  respect to the  present  and future
operations  of the Company,  and  statements,  which  express or imply that such
present and future operations will, or may, produce revenues, income or profits.
Numerous  factors and future events could cause the Company to change such plans
and  objectives,  or fail to  successfully  implement such plans or achieve such
objectives,  or cause  such  present  and future  operations  to fail to produce
revenues, income or profits. Therefore, the reader is advised that the following
discussion  should be considered  in light of the  discussion of risks and other
factors contained in this report on Form 10-Q and in the Company's other filings
with the SEC. No  statements  contained in the  following  discussion  should be
construed as a guarantee or assurance of future performance or future results.

These forward-looking  statements are based largely on our current expectations,
assumptions,  plans, estimates, judgments and projections about our business and
our industry,  and they involve  inherent risks and  uncertainties.  Although we
believe  that  these  forward-looking   statements  are  based  upon  reasonable
estimates,  judgments  and  assumptions,  we can  give  no  assurance  that  our
expectations will in fact occur or that our estimates,  judgments or assumptions
will be correct,  and we caution that actual  results may differ  materially and
adversely  from  those  in  the  forward-looking   statements.   Forward-looking
statements  involve known and unknown risks,  uncertainties,  contingencies  and
other factors that could cause our or our industry's  actual  results,  level of
activity,  performance or achievement to differ  materially from those discussed
in or implied by any  forward-looking  statements made by or on behalf of us and
could cause our financial  condition,  results of operations or cash flows to be
materially  adversely  affected.  Accordingly,  investors  and  all  others  are
cautioned not to place undue reliance on such forward-looking statements.


                                       15
<PAGE>

Potential  risks,  uncertainties,  and  other  factors  which  could  cause  the
Company's  financial  performance or results of operations to differ  materially
from current  expectations or such  forward-looking  statements include, but are
not limited to:

o     International  economic and political risks,  over which we have little or
      no control;

o     Political  uncertainty  in Hong Kong and  China  making  it  difficult  to
      develop any long range planning;

o     Relations between the United States and China remaining stable;

o     The  Chinese   government   could  change  its  policies   toward  private
      enterprises or expropriate private enterprises;

o     The lack of adequate remedies and impartiality  under China's legal system
      may adversely impact our ability to do business and enforce our agreements
      with third parties;

o     Fluctuations in exchange rates;

o     Our dependence on third parties for equipment and services;

o     Competition from our own cargo agents;

o     Having  seasonal  business  that  causes  fluctuations  in our  results of
      operations and financial condition;

o     A lack of ongoing contractual relationships with our customers;

o     Taking on  significant  credit  risks in the  operation of our business as
      East Coast U.S. freight  forwarders  expect us to offer thirty days credit
      from the time of cargo delivery;

o     Our inventory of shipping space is subject to the significant risk that we
      may not be able to  "fill"  the space  while  having  contracted  for that
      space, and

o     Our  insurance  may not be  sufficient  to cover  losses or damages to the
      freight we ship or for  consequential  damages for a shipment of hazardous
      materials.

Many of these factors are beyond our control,  and you should read carefully the
factors described in "Risk Factors" in our filings (including our Forms 10-K and
registration  statements)  with the  Securities  and Exchange  Commission  for a
description of some, but not all, risks, uncertainties and contingencies.  These
forward-looking statements speak only as of the date of this document. We do not
undertake  any  obligation  to  update or  revise  any of these  forward-looking
statements to reflect events or  circumstances  occurring after the date of this
document  or  to  reflect  the   occurrence   of   unanticipated   events.   Any
forward-looking statements are not guarantees of future performance.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management's  discussion  and  analysis of  financial  condition  and results of
operations  are  based  upon  our  consolidated   financial  statements.   These
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America. These principles require management to
make  certain  estimates,  judgments  and  assumptions  that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent  assets and  liabilities.  On an  on-going  basis,  we  evaluate  our
estimates,  based on historical  experience,  and various other assumptions that
are believed to be reasonable under the circumstances, the results of which form
the  basis  for  making  judgments  about the  carrying  values  of  assets  and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.


                                       16
<PAGE>

The following critical accounting policies rely upon assumptions,  judgments and
estimates  and  were  used  in the  preparation  of our  consolidated  financial
statements:

RECOGNITION OF COST OF FORWARDING

The  billing of cost of  forwarding  is usually  delayed.  As a result,  we must
estimate the cost of purchased transportation and services, and accrue an amount
on a load-by-load basis in a manner that is consistent with revenue recognition.
Such  estimate  is based on past  trends,  and on the  judgment  of  management.
Historically,  upon  completion  of the payment  cycle  (receipt  and payment of
transportation  bills),  the  actual  aggregate  transportation  costs  are  not
materially different than the accrual.  However, in any case in which the actual
cost varies  significantly  from the accrual, a revision to the accrual would be
required.

ACCOUNTING FOR INCOME TAXES

In preparing our consolidated financial statements,  we are required to estimate
our income  taxes in each of the  jurisdictions  where we operate.  This process
involves  estimating  actual  current  tax  exposure,  together  with  assessing
temporary  differences  resulting from differing  treatment of items for tax and
accounting  purposes.  These  differences  result in  deferred  tax  assets  and
liabilities,  which are included in our consolidated balance sheet. We must then
assess the likelihood that our deferred tax assets will be recovered from future
taxable  income,  and to the extent that we believe that recovery is not likely,
we must establish a valuation allowance.  To the extent we establish a valuation
allowance,  we  must  include  an  expense  within  the  tax  provision  of  the
consolidated  statement  of income in each  period  in which  the  allowance  is
increased.

Significant  judgment is required in determining the provision for income taxes,
deferred tax assets and liabilities,  and any valuation  allowance,  against our
deferred  tax  assets.  In the event  that  actual  results  differ  from  these
estimates or the estimates are adjusted in future  periods,  then we may need to
establish an additional valuation  allowance,  which could materially impact our
financial  position and results of  operations.  Based on our current  financial
projections,  we currently believe that we will realize 100% of our deferred tax
assets.

VALUING LONG-LIVED ASSETS, INTANGIBLES AND GOODWILL

We assess the impairment of identifiable long-lived assets, purchased intangible
assets and goodwill  whenever events or changes in  circumstances  indicate that
the carrying  amount may be impaired.  Factors that we consider when  evaluating
for possible impairment include the following:

o     Significant under-performance relative to expected historical or projected
      future operating results;

o     Significant changes in the manner of our use of the acquired assets or the
      strategy for our overall business; and

o     Significant negative economic trends.

When determining whether the carrying value of long-lived assets and goodwill is
impaired  based  upon the  existence  of one or more of the  above  factors,  we
determine the  existence of  impairment by comparison of the carrying  amount of
the asset to expected  future cash flows to be generated  by the asset.  If such


                                       17
<PAGE>

assets are  considered  impaired,  the  impairment  is measured as the amount by
which  the  carrying  value of the  assets  exceeds  their  fair  values.  As of
September  30,  2005,  goodwill  totaled  approximately  $3.15  million,   other
intangible  assets  amounted to  approximately  $1.12 million and our long-lived
assets,  consisting  primarily of net  property,  plant and  equipment,  totaled
$799,326.

As required by SFAS No. 142,  "Goodwill and Other Intangible  Assets",  goodwill
and other intangible assets with indefinite lives are no longer  amortized,  but
rather are to be tested at least  annually for  impairment.  This  pronouncement
also requires that intangible assets with definite lives be amortized over their
respective  lives to their estimated  residual value and reviewed for impairment
in accordance  with SFAS No. 144,  "Accounting for the Impairment or Disposal of
Long-Lived  Assets".  During the period from 2002 to 2005, we acquired companies
and  recorded  goodwill  and  intangibles  associated  with  these  acquisitions
summarized as follows:

<TABLE>
<CAPTION>
                                                  Goodwill               Intangible assets   Intangible assets
                         Name of Company         (recorded at the       (customer           (business license)
Date of Acquisition      Acquired                 time of acquisition)   relationships)
--------------------------------------------------------------------------------------------------------------
<S>                      <C>                      <C>                    <C>                 <C>
April 30, 2002           Airgate Int'l Corp.      $      2.68 million    $    2.86 million   $              --
April 1, 2004            Shanghai Air Cargo       $            36,493    $              --   $              --
                         Ground Handling
                         Services Ltd.
April 30, 2004           Paradigm Int'l Inc.      $            20,248    $          26,708   $              --
January 1, 2005          Careship                 $           245,485    $              --   $         662,991
                         International
                         Transportation Ltd.
July 1, 2005             WCL Global Logistics     $           408,160    $         199,214   $              --
                         Ltd
</TABLE>

The  acquisitions of Airgate  International  Corporation  ("Airgate"),  Paradigm
International  Inc.  ("Paradigm")  and WCL Global  Logistics  Ltd.  ("WCL") were
recorded  using the purchase  method of accounting  in accordance  with SFAS No.
141. We allocated the purchase price to the assets, liabilities, intangibles and
goodwill  acquired,  based on the fair  value  at the date of  acquisition.  The
results of  operations of each company  since the date of  acquisition,  and its
financial condition as of each balance sheet date are reflected in our condensed
consolidated  financial statements.  All significant  inter-company balances and
transactions have been eliminated in consolidation.

The acquisition of Shanghai Air Cargo Ground Handling Services Ltd. and Careship
International  Transportation  Ltd.  were  recorded  under the equity  method of
accounting  in  accordance  with APB  Opinion  No.  18,  "The  Equity  Method of
Accounting for  Investments in Common Stock".  As such the financial  statements
will show one line item on the balance  sheet,  Equity  investment in affiliates
and one line item on the income statement,  Equity income in affiliates.  Again,
the purchase  price was allocated to the assets,  liabilities,  intangibles  and
goodwill acquired, based on the fair value at the date of acquisition.

The  intangible  customer  relationship  assets of  Airgate,  and  Paradigm  are
amortized  over a period of 5 years while WCL is 8 years.  The business  license
under Careship  International  Transportation Ltd are amortized over a period of
10.25 years.  Goodwill acquired in business  combinations is not amortized,  but
rather is tested  annually for  impairment in  accordance  with SFAS No. 142. An
equity  investment in an investee  including any goodwill  therein is tested for
impairment under APB Opinion No. 18.


                                       18
<PAGE>

OVERVIEW

The  Company  does not carry on any  business  activities  by  itself.  Instead,
through its subsidiaries it provides supply chain management solutions, contract
logistics services and international freight forwarding services.

The Company's wholly owned subsidiary, AGI Logistics (HK) Ltd. ("AGI"), operates
an integrated  logistics and freight forwarding  business which is based in Hong
Kong. The principal services provided by AGI are air freight  forwarding,  ocean
freight  forwarding,  and warehousing  which  primarily  handles the delivery of
goods from South China and Hong Kong to overseas countries,  mainly the Far East
region and the United  States.  In the Far East  region,  Mainland  China is the
target market for AGI to expand.

The business of AGI was first established in August 1998 and now consists of its
own operations,  as well as those of its  subsidiaries.  On January 1, 2001, its
Hong Kong incorporated  subsidiaries included Sparkle Shipping,  Godown, Wharf &
Transp. Co., Ltd. ("Sparkle"),  Shenzhen Careship  International  Transportation
Ltd. ("SZ  Careship"),  formerly known as Guangzhou  Huasheng  Int'l  Forwarding
Ltd.,  and  AGI  Logistics   (Shenzhen)  Ltd.  ("AGI   (Shenzhen)")   which  was
incorporated in The People's  Republic of China ("the PRC").  AGI (Shenzhen) and
Sparkle  were  disposed  of by AGI  Group  on May 11,  2001 and  April 2,  2002,
respectively,  in  conjunction  with the decision by AGI to  concentrate  on the
international  freight forwarding  business.  The business activities of Sparkle
were concentrated on local feeder voyages and trucking operations in the Jujiang
Delta Area of Mainland  China.  In order to maintain its  competitive  position,
management  determined it would need to purchase its own boats and trucks.  As a
result,  Sparkle's business  operations  diverged from the AGI's non-asset based
strategic plan and AGI decided to dispose of it, in order to  concentrate  AGI's
resources  as well  as  investments  on the  operations  of AGI and SZ  Careship
intending to improve the tonnage performance in Hong Kong, South China, U.S. and
Europe.

On April 30, 2002, the Company completed the acquisition of Airgate, a privately
held New York based freight forwarder that was established in 1995. Airgate is a
non-asset based logistics  services company which primarily  handles the air and
ocean import  shipments from the Far East and Southwest Asia to the U.S. Pacific
CMA  International,  LLC, a Colorado  limited  liability  company that is wholly
owned by the Company, acquired 81% of the issued and outstanding common stock of
Airgate.  On July  29,  2005,  Pacific  CMA  International,  LLC  increased  its
ownership from 81% to 99.11% in a pro rata rights  offering of Airgate's  common
stock. In the offering,  Airgate offered 2,025 newly issued shares of its common
stock, at a price of $100 per share.  Pacific CMA  International,  LLC purchased
its  pro-rata  number of shares and the  minority  interest did not purchase any
shares.  As a  result,  Pacific  CMA  International,  LLC  ownership  percentage
increased.

In April 2004,  Shanghai Air Cargo Ground Handling Services Ltd.  ("Shanghai Air
Cargo"), that is 35% owned by the Company, commenced its operation. Shanghai Air
Cargo  is  located  in  Pudong  International  Airport,  Shanghai,  PRC,  and is
responsible for the ground handling of air cargo in the airport.


                                       19
<PAGE>

On  April  30,  2004,  the  Company   completed  the   acquisition  of  Paradigm
International  Inc.  ("Paradigm").  Paradigm  is  a  non-asset  based  logistics
services  company based in Miami,  Florida.  It primarily  handles air and ocean
shipments in Latin America.

At July 1,  2004,  the  Company  acquired  60% of the  outstanding  stock of AGI
Freight Singapore Pte Ltd. ("AGI Singapore"). AGI Singapore is a non-asset based
logistics services company based in Singapore,  which handles both air and ocean
shipments all over the world.

In October 2004, the Company  acquired 40% of the  outstanding  stock of Vantage
Point  Services  Limited  ("Vantage  Point").  Vantage Point is also a non-asset
based logistics  services company based in Hong Kong, which handles both air and
ocean shipments all over the world.

At January 1, 2005,  the Company  acquired  46.92% of the  outstanding  stock of
Careship International Transportation Ltd. ("Careship International").  Careship
International   is  located  in   Shenzhen   PRC  and  is  approved  to  operate
international  freight forwarding  business by the Ministry of Foreign Trade and
Economic Cooperation of the People's Republic of China.

At July 1, 2005, the Company acquired 51% of the outstanding stock of WCL Global
Logistics Ltd.  ("WCL").  WCL is a non-asset  based logistics  services  company
based in Hong Kong,  which  handles  both air and ocean  shipments  all over the
world.

The following  discussion,  concerning the results of operations,  liquidity and
capital  resources of Pacific CMA, is based solely upon the business  operations
that are carried on by the  Company's  subsidiaries  from January 1 to September
30, 2005 and the same period of 2004.

The following is a list of significant  new  developments  occurring  during the
nine months ended September 30, 2005:

o     Appointment  of Mr.  Kenneth  Chik and Mr. Yu Chung  Leung as  independent
      members of the Board of Directors;

o     Our operation team for the European  Market is  strengthened by hiring new
      personnel in Hong Kong;

o     Acquisition  of  46.92%  of  the  outstanding  common  stock  of  Careship
      International  Transportation  Ltd to hasten our entry  into the  Mainland
      China Market;

o     Acquisition of 51% of the outstanding common stock of WCL Global Logistics
      Ltd to strengthen our sales and customer base;

o     Increased ownership percentage of Airgate from 81% to 99.11%; and

o     Completed a financing transaction with Laurus Master Fund, Ltd ("Laurus"),
      pursuant to which we obtained a $7.5 million credit facility.


                                       20
<PAGE>

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 2004

OVERALL RESULTS

Freight forwarders are compensated on a transactional  basis for the movement of
goods and  provision  of related  services to their  customers.  Therefore,  our
revenue is derived  from our freight  forwarding  services  based upon the rates
that we charge our  customers  for the movement of their  freight from origin to
destination.  The carrier's contract is with us, not with our customers.  We are
responsible  for  the  payment  of the  carrier's  charges  and  we are  legally
responsible for the shipment of the goods. We are responsible for any claims for
damage to the goods while in transit.  In most cases,  we receive  reimbursement
from the carriers  for any claims.  Since many  shippers do not carry  insurance
sufficient  to  cover  all  losses,   we  also  carry  insurance  to  cover  any
non-reimbursed  claims for goods lost or destroyed in the event of a total loss.
Gross  revenue  represents  the total  dollar  value of  services we sell to our
customers. Our costs of transportation, products and handling include the direct
cost of transportation, including tracking, rail, ocean, air and other costs. We
commit to pay for space with shippers prior to receiving  committed  orders from
our  customers.  We act  principally  as a  service  provider  to add  value and
expertise in the  procurement and execution of these services for our customers.
Therefore,   our  gross  profits  (gross  revenues  less  the  direct  costs  of
transportation, products, and handling) are indicative of our ability to source,
add value and resell services and products that are provided by third parties.

Total  revenue  for  the  three  months  ended   September  30,  2005  increased
approximately  14% as compared  with the three months ended  September 30, 2004,
from  $29,850,668  in 2004 to  $33,945,901  in 2005. The increase in revenue was
primarily  the  result of the  organic  growth  of AGI,  Shenzhen  Careship  and
Airgate, in addition to the inclusion of the results of WCL Global Logistics Ltd
(WCL) after the acquisition in July 2005.

Revenue  derived from the operations of AGI increased  approximately  25% during
the  third  quarter  of 2005 as  compared  with the  same  period  of 2004.  The
significant organic growth of AGI was the result of the following factors:

o     An  increase  in the  routed  freight  traffic  from the  existing  agency
      partners;

o     Improvements in the agency network which enabled AGI to secure new freight
      business;

o     The establishment of three additional branch offices in Chongqing, Tianjin
      and Futian, PRC in the Mainland China by Shenzhen Careship  Transportation
      Limited,  a subsidiary of AGI,  during 2004.  All of the operations of our
      former Yantian  office were combined with the nearby Futian office.  Their
      close  proximity  within  the  Shenzhen  province  made  that  combination
      warranted; and

o     The  inclusion of the results of WCL Global  Logistics Ltd (WCL) after the
      acquisition on July 1, 2005

The revenue of Airgate  represented  approximately  60% of our total revenue for
the third quarter of 2005. Airgate focuses its operations on the import of goods
from the Far East and deconsolidation of cargo.


                                       21
<PAGE>

Revenue derived from the operation of Airgate slightly  decreased  approximately
1% during the third  quarter of 2005 when compared with the same period of 2004.
The  decrease is the result of the  decrease in textile  import from the Peoples
Republic  of China  (PRC)  due to the  re-imposition  of  quotas  by U.S and the
European Union.

Total  revenue  derived  from  Paradigm   International  Inc.,  Paradigm  Global
Logistics  and AGI  Freight  Singapore  Pte Ltd.  for the third  quarter of 2005
amounted to approximately $3.64 million, which represents approximately 10.7% of
total revenue of the Company.

When compared with 2004, the cost of forwarding during the third quarter of 2005
increased  approximately  12%, from  $25,755,408 in 2004 to $28,927,102 in 2005.
The increase in costs was primarily the result of the organic  growth of AGI and
Airgate, the acquisitions in Singapore,  and Miami as well as our new operations
in Los Angeles during late of 2004.

Gross  profit  margin for the three  months  ended  September  30, 2005 and 2004
increased  from 13.72% in 2004 to 14.78% in 2005.  The  increase  was due to the
growth of Shenzhen Careship which  concentrates on export shipment from PRC with
higher  profit  margin.  It was also due the new business  generated by some new
salesmen of AGI Freight Singapore Pte Ltd.

Overall gross profit (revenue minus cost of forwarding) for the third quarter of
2005 increased by  approximately  23%, from $4,095,260 in 2004, to $5,018,799 in
2005 as a result of the increase in trade volume.

The Operating Income increased approximately 108% while Net income for the third
quarter of 2005 decreased  approximately 28%, from $195,241 in 2004, to $141,225
in 2005. The decrease in net income was due to an increase in interest  expenses
and the expense for Preferred Stock  beneficial  conversion.  Details of expense
fluctuations  will be discussed in the sections  "Operating  expenses"  and "Non
Operating Income and Expenses" respectively.

BUSINESS SEGMENT OPERATING RESULTS

The results of operations for each segment are as follows:

AIRFREIGHT   OPERATIONS:    Revenue   from   airfreight   operations   increased
approximately  10%, from $17,684,483 in the third quarter of 2004 to $19,458,025
in the same period of 2005.  Airfreight  revenue for  foreign  operations  (that
includes AGI Group and AGI Singapore) was $8,935,379,  while airfreight  revenue
for domestic  operations  (that includes  Airgate and Paradigm) was $12,943,203,
and  offsetting  inter-company  transactions  totaled  $2,420,557 The volumes of
airfreight  improved  in 2005  compared  with 2004.  The  increase in volume was
primarily  due to (i) an  increase  in routing  orders  from Asia to Europe as a
result of new customers and agents in the Netherlands,  Germany,  United Kingdom
and  France who joined  the Group  during the fourth  quarter of 2004,  (ii) The
operation of Airgate  International  Corp.  (Chicago),  which was established in
June 2002, is becoming more and more mature;  (iii) the  acquisition of Paradigm
on April 30, 2004 and its additional operations in Los Angeles,  California that
commenced  in July 2004;  (iv) the  acquisition  of AGI  Singapore  in the third
quarter of 2004;  and (v) the  acquisition  of WCL Global  Logistics Ltd in Hong
Kong.


                                       22
<PAGE>

Costs for the airfreight forwarding operations increased  approximately 5%, from
$15,271,525  in the third quarter of 2004 to  $15,982,683  in the same period of
2005.  Airfreight cost attributable to foreign operations was $7,642,644,  while
airfreight  cost  attributable  to  domestic  operations  was  $10,761,355,  and
offsetting  inter-company costs totaled $2,421,316.  Airfreight cost increase in
2005 was due to the organic  growth of the Company.  Gross profit margin for the
third  quarter of 2005 as compared with 2004 was  increased  from  approximately
13.64% in 2004 to 17.86% in 2005. The increases  were due to the  improvement of
gross margin for Non-US  airfreight  shipment and the new business  generated by
newly hired marketing staffs of AGI Singapore.  Overall gross profits  increased
approximately 44% to $3,475,343 as a result of the increase in trade volume.

Total segment  overhead  attributable to the airfreight  operation  increased by
approximately  31%,  from $772,747 in the third quarter of 2004 to $1,011,927 in
the same  period  of 2005,  as a result of more  resources  being  allocated  to
airfreight  operations.  Details regarding the increase in overhead expenses are
discussed below under the section "Operating expenses" and "Non Operating Income
and Expenses".

Overall net segment income for the airfreight operation for the third quarter of
2005  increased by  approximately  50% from  $1,640,211 in 2004 to $2,463,415 in
2005.  The increase in net income was mainly the result of the organic growth of
AGI  and  Airgate  as  well  as  the  inclusion  of  operating  results  of  new
subsidiaries during 2004 and 2005.

SEA  FREIGHT   OPERATION:   Revenue  from  sea  freight   operations   increased
approximately  19% to $14,487,876 in the third quarter of 2005 from  $12,166,185
in the same period of 2004.  Sea freight  revenue  for  foreign  operations  was
$4,163,063,  while sea freight revenue for domestic  operations was $10,471,022,
and offsetting  inter-company  transactions  totaled  $146,209.  The increase in
revenue for the third  quarter of 2005,  when  compared  with the same period of
2004,  was due to (i) the  contribution  from the new branch offices of Shenzhen
Careship in China;  (ii) the  increase in quantity of freight  consolidation  by
Airgate  Chicago;  and (iii) our new agent in Europe  introduced  more customers
into our network,  which led to more revenue from the European  market since the
fourth quarter of 2004.

Costs for the sea freight forwarding operation increased approximately 23%, from
$10,483,883  in the third quarter of 2004 to  $12,944,419  in the same period of
2005. Sea freight costs  attributable  to foreign  operations  were  $3,424,588,
while costs attributable to domestic operations were $9,665,283,  and offsetting
inter-company costs totaled $145,452. The gross profit margin was decreased from
approximately  13.83% in 2004 to 10.65%  in 2005 due to our  market  penetration
strategy in Shanghai and Chicago and the adverse  effect from the  re-imposition
of the garment quota in July 2005. Overall gross profits decreased approximately
8%, to $1,543,457 as a result of reduce in gross profit margin.

Total  segment  overhead  attributable  to the sea freight  operation  increased
approximately  5%, from $692,052 in the third quarter of 2004 to $724,534 in the
same period of 2005.  Overall net income for the sea freight  operation  for the
third  quarter of 2005  decreased  approximately  17%,  from $990,250 in 2004 to
$818,923  in 2005.  The  decrease  in net  income  was  mainly the result of the
lowering of gross profit margin.


                                       23
<PAGE>

OPERATING EXPENSES

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses increased approximately 15.9%, to $3,961,562
in the third quarter of 2005 from  $3,418,383 in the same period of 2004.  There
was a significant increase in salaries and allowance in this quarter:-

Salaries and allowance:  Salaries and allowance increased approximately 11% from
$1,542,503 in 2004 to  $1,707,514  in 2005.  This increase was the result of the
addition  of  approximately  90 staff  persons  during the twelve  months  ended
September 30, 2005 which were needed to keep pace with our growth.

STOCK-BASED COMPENSATION COST

Stock-based  compensation cost decreased  approximately 50% from $111,148 in the
third  quarter of 2004 to $55,537 in the same  period of 2005.  The  decrease in
compensation  cost was primarily due to the  cancellation of 850,000 and 200,000
restricted  shares  that  were  previously  granted  to a key  employee  and  an
independent  sales  representative  respectively  in the fourth quarter of 2004.
Details of the stock grant and cancellation are as follows:

On or about November 7, 2003, we entered into four service agreements with three
employees  and an  independent  sales  representative.  Under  the  terms of the
agreements,  as amended in March 2004, we granted these  employees and the sales
representative   an  aggregate  of  1,950,000   shares  of  our  common   stock.
Compensation  cost is  measured  at the grant date based on the  estimated  fair
value of the securities.  It is recognized as an expense over the service period
required under the service  agreements with those parties.  The unearned portion
of the compensation  cost related to employees is recorded in equity as unearned
compensation  cost, while the unearned  portion of compensation  cost related to
the independent sales  representative is recorded as a prepaid asset. The shares
are restricted as they have not been registered with the Securities and Exchange
Commission (the "SEC" or the  "Commission").  The agreements with the employees,
as  amended,  require  two of them to  continue  to provide  services to us from
January 1, 2004 through December 31, 2013 and one of them to provide services to
us from January 1, 2004 through  December 31, 2008. The agreement with the sales
representative  requires  him to  provide  services  to us from  January 1, 2004
through  December 31, 2005.  However,  in December  2004,  one of the  employees
resigned and, by mutual  agreement,  she  surrendered  her 850,000  shares.  The
independent  sales  representative  agreed to  surrender  his 200,000  shares in
exchange  for $50,000 in cash,  payable  during his two year  service  agreement
expiring  at  December  2005.  The  surrenders  occurred in 2004 and the 200,000
shares are to be physically cancelled,  while the 850,000 shares were physically
cancelled in early 2005. All  calculations of the issued and outstanding  shares
of our  common  stock  contained  in this  Form  10-Q do not give  effect to the
cancellation of the 200,000 shares.  The service agreement related  compensation
costs were reversed during the fourth quarter of 2004.


                                       24
<PAGE>

In March 2004, we granted an employee 100,000 shares of common stock. The shares
were  registered  with the SEC by filing a Form S-8  Registration  Statement  on
March 29, 2004. The employee  continued to provide  services to the Company from
January 1, 2004 through  December 31, 2005. On September 11, 2004, this employee
resigned  as a  director  but  agreed  to  continue  to  act  as an  independent
consultant for British market development.  Compensation cost is measured at the
grant  date  based  on the  estimated  fair  value  on the  date of  grant.  The
compensation  cost is  recognized  as expense over the service  period  required
under the agreement.  The unearned portion of the compensation  cost is recorded
in equity as unearned compensation. Accordingly, $20,625 was recorded as expense
in the third quarter of 2005.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization  increased  approximately 21% from $200,013 in the
third  quarter of 2004 to $242,570 in the same period of 2005.  The increase was
mainly due to  additional  computer  hardware  and  software  purchased  for the
implementation  of a new logistics  system and office  renovation at Airgate and
the establishment of three additional  branch offices in Chongqing,  Tianjin and
Futian  in  Mainland  China  by  Shenzhen   Careship   Transportation   Limited.
Amortization arises from an intangible  customer  relationship asset recorded in
conjunction  with the  acquisition  of Airgate on April 30,  2002.  The  Company
recorded  this  asset  at the  cost  of  $2,860,000  and is  amortizing  it on a
straight-line basis over a period of five years. In each of the third quarter of
2005 and 2004, the amortization expense attributable to this asset was $143,000.

With the  acquisition  of Paradigm on April 30, 2004,  we recorded an intangible
customer  relationship  asset  of  $26,708.  As with  Airgate,  the  cost of the
intangible  customer  relationship  asset is being  amortized on a straight-line
basis  over a period of five  years.  In each of the third  quarter  of 2005 and
2004, the amortization expenses attributable to this asset was $1,335.

With the acquisition of 46.92% of ownership of Careship International on January
1, 2005, the Company  recorded an intangible  asset of $662,991.  The intangible
asset  represents  the value of the  license  to operate  international  freight
forwarding  business in Mainland  China.  The  Company  obtained an  independent
valuation  of  the  license.  The  independent  valuator  reported  a  value  of
approximately  $1,400,000 for the license.  The cost of the intangible  asset of
the business license is being amortized on a straight-line basis over its useful
life of 10.25  years.  In the third  quarter of 2005,  $16,170  was  expensed as
amortization  and in  accordance  with  the  Equity  Method  of  Accounting  for
Investments  in Common  Stock,  the amount was included in the income  statement
in the  line item, Equity in Income of Affiliates.

At July 1, 2005, the Company acquired 51% of the outstanding stock of WCL Global
Logistics  Ltd.  With this  transaction,  we  recorded  an  intangible  customer
relationship  asset of $199,214.  The intangible  asset is being  amortized on a
straight-line  basis over a period of eight years and amortization of $6,225 was
expensed during the third quarter of 2005.


                                       25
<PAGE>

NON OPERATING INCOME AND EXPENSES

INTEREST AND OTHER INCOME

Interest and other income increased from $26,275 in the third quarter of 2004 to
$43,578  in the same  period  of 2005.  This  was due to  various  miscellaneous
handling  charges  received  from third parties  being  reclassified  from other
income to revenue in 2005 as compared with 2004.

INTEREST EXPENSE

Interest expense increased to $157,314 in the third quarter of 2005 from $71,766
in the same period of 2004. The increase in interest expense is primarily due to
an increase in  short-term  working  capital  financing and the rise in interest
rates during the 2005. Moreover,  the Company completed a financing  transaction
with Laurus Master Fund Ltd. on August 4, 2005.  Interest  expenses  $72,528 was
incurred  during  the  third  quarter  of 2005  with  respect  to the  financing
transactions.

PREFERRED STOCK DIVIDEND AND AMORTIZATION OF DEFERRED FINANCING COST

During  April and May 2004,  the  Company  sold to two  institutional  investors
$5,000,000  stated amount of its Series A Preferred Stock and issued warrants to
purchase  1,562,500  shares of common  stock at an  exercise  price of $1.76 and
781,250 shares at $2.00 per share.  Such Series A Preferred  Stock has mandatory
redemption  requirements  and was  recorded  in  accordance  with SFAS No.  150,
"Accounting  for Certain  Financial  Instruments  With  Characteristics  of Both
Liabilities  and Equity".  The dividends paid and accrued are charged to expense
in the  statements of  operations.  In accordance  with EITF 98-5, the intrinsic
value of the beneficial conversion option of $166,666 was recorded as additional
expense and credited as additional  equity in warrants  outstanding in 2004. The
deferred financing cost related to the placement of the Series A Preferred Stock
is amortized over its term to maturity,  which is four years. A total of $90,483
was expensed  during the third quarter of 2005.  Dividends  amounting to $74,792
were paid in shares of common stock in the third quarter of 2005.

AMORTIZATION OF PREFERRED STOCK DISCOUNT

In accordance with APB Opinion 14 "Accounting  for Convertible  Debt" and "Debts
Issued  with Stock  Purchase  Warrants",  the Series A  Preferred  Stock and the
detachable  stock  warrants were recorded at their relative fair values with the
value of the warrants recorded as additional equity in warrants outstanding. The
fair value of the warrants was  determined  based on an  independent  valuation.
Effectively,  the  Series A  Preferred  Stock  was  recorded  at a  discount  of
$939,713.  This  discount  is  amortized  ratably  over the term of the Series A
Preferred Stock.

Moreover,  on August 4, 2005, the Company completed a financing  transaction and
issued  and sold to  Laurus  Master  Fund,  Ltd.  ("Laurus"),  an  institutional
investor,  a Secured  Convertible  Minimum  Borrowing  Note for $4,000,000 and a
Secured  Revolving Note,  which Notes are in the aggregate  principal  amount of
$7,500,000.  The  maximum  amount  available  under the Notes is  limited to the


                                       26
<PAGE>

lesser of $7,500,000  or a collateral  calculation  based on "Eligible  Accounts
Receivable"  as defined  in the  agreement.  The Notes  accrue  interest  at the
greater of 6% or the prime rate plus 1%. The Company is subject to interest rate
reductions if it achieves certain  financial goals. The Notes mature on July 29,
2008 and contain a  conversion  feature  whereby the Notes can be  converted  to
common stock.  The  conversion  price of the first  $3,750,000 is convertible at
$0.88 per share and the balance is  convertible  at $1.05.  Lastly,  the Company
also  issued  warrants  to the  holder of the Notes  that  allows  the holder to
purchase  1,500,000  shares of common  stock at $1.00 per  share.  The  warrants
expire on July 29, 2012.

Based  upon the  above  financing  transaction  executed  on  August 4, 2005 and
pursuant to the Certificate of Designation of Preferences Rights and Limitations
of Series A Convertible  Preferred Stock of the Company executed April 12, 2004,
and the Common Stock Purchase Warrants issued to the purchasers of the Company's
Series A Convertible  Preferred Stock, the Set Price of the Series A Convertible
Preferred  Stock and the  exercise  price of the  Purchases  Warrants,  has been
adjusted to $0.88 per share.  In accordance  with EITF 00-27 and EIFT 05-8,  the
intrinsic value of the additional beneficial conversion option of $2,659,091 was
recorded as  unamortized  debt  discount  and  $1,595,455  and  $1,063,636  were
credited as additional  equity in warrants  outstanding and the related deferred
tax liability  respectively on the date of the conversion price  resetting.  The
additional  unamortized  discount is  amortized to expense  using the  effective
interest  method over the  remaining  life of Series A  Preferred  Stock and the
deferred tax  liability  is amortized to tax expense as the interest  expense is
recognized.  As a result,  a total of  $319,277  was  expensed  as  amortization
discount on Series A Preferred Stock during the third quarter of 2005.

On August 16, 2005, one of the  institutional  investor  converted 250 shares of
the Series A Preferred  Stock into shares of Common Stock at a conversion  price
of $0.88 per share. As a result, the Company has written off a pro-rata share of
the  unamortized  debt  discount for  warrants,  unamortized  debt  discount for
additional beneficial conversion and unamortized deferred financing costs on the
Series  A  Preferred   Stock  to  expense  of  $31,216,   $131,979  and  $31,888
respectively on the date of conversion.

MINIMUM  BORROWING NOTE AND REVOLVING NOTE  AMORTIZATION  OF DEFERRED  FINANCING
COST

The  relative  fair value of the  deferred  finance  costs  attributable  to the
detachable  stock  warrants of $53,261 was debited to the  additional  equity in
warrants  outstanding  and credited  against the deferred  financing  cost.  The
deferred  financing  costs related to Minimum  Borrowing Note and Revolving Note
are  amortized  over its term to  maturity,  which  is three  years.  A total of
$28,461 was expensed during the third quarter of 2005.

AMORTIZATION OF MINIMUM BORROWING NOTE AND REVOLVING NOTE DISCOUNT

In accordance with APB Opinion 14 "Accounting  for Convertible  Debt" and "Debts
Issued with Stock Purchase Warrants", the Minimum Borrowing Note, Revolving Note
and the  detachable  stock  warrants were recorded at their relative fair values
with the  value of the  warrants  recorded  as  additional  equity  in  warrants


                                       27
<PAGE>

outstanding.  The fair value of the warrants was determined based on an internal
valuation by the Company using Black Scholes Option Pricing Model with an amount
of $531,011 being record. Effectively,  the Minimum Borrowing Note and Revolving
Note were  recorded at a discount of $371,675  and $159,336  respectively.  This
discount is amortized  ratably over the term of the Minimum  Borrowing  Note and
Revolving Note which is three years.  During the third quarter of 2005,  $27,642
of this discount was amortized into expense.

NINE MONTHS ENDED  SEPTEMBER 30, 2005 COMPARED WITH NINE MONTHS ENDED  SEPTEMBER
30, 2004

OVERALL RESULTS

Total  revenue for the nine  months  ended  September  30,  2005  increased  31%
compared with the period ended September 30, 2004,  from  $67,868,669 in 2004 to
$88,603,871  in 2005.  The increase in revenue was  primarily  the result of the
organic  growth of AGI and Airgate,  in addition to the inclusion of the results
of the acquisition in Singapore (AGI Singapore) and Miami (Paradigm), as well as
our new operation in Los Angeles during 2004.

Revenue  derived from the operations of AGI increased  approximately  50% during
the first nine  months of 2005 as  compared  with the same  period of 2004.  The
significant organic growth of AGI was the result of the following factors:

o     An increase in routed freight traffic from existing agency partners;

o     Improvements in the agency network which enabled AGI to secure new freight
      business;

o     The establishment of three additional branch offices in Chongqing, Tianjin
      and Futian, PRC in the Mainland China by Shenzhen Careship  Transportation
      Limited,  a subsidiary of AGI,  during 2004.  All of the operations of our
      former Yantian  office were combined with the nearby Futian office.  Their
      close  proximity  within  the  Shenzhen  province  made  that  combination
      warranted; and

The revenue of Airgate  represented  approximately  61% of our total revenue for
the first nine months of 2005.  Airgate  focuses its operations on the import of
goods  from the Far East and  deconsolidation  of  cargo.

Revenue derived from the operation of Airgate increased  approximately 8% during
the first nine months of 2005 as compared with that of 2004. The increase is the
result of the effort of Airgate staff and its Chicago operation maturing.

Total  revenue  derived  from  Paradigm   International  Inc.,  Paradigm  Global
Logistics  and AGI Freight  Singapore Pte Ltd. for the first nine months of 2005
amounted to approximately $8.60 million, which represents  approximately 9.7% of
total revenue of the Company.

As compared with 2004,  the cost of forwarding  during first nine months of 2005
increased 31%, from $57,470,531 in 2004 to $75,047,650 in 2005. This increase in
costs was  primarily  the result of the organic  growth of AGI and Airgate,  the
acquisition in Hong Kong, Singapore,  Miami as well as our new operations in Los
Angeles during late of 2004.


                                       28
<PAGE>

Gross  profit  margin for the nine  months  ended  September  30,  2005 and 2004
remained stable, at 15.32% in 2004 and 15.30% in 2005.

Overall  gross  profit  (revenue  minus cost of  forwarding)  for the first nine
months of 2005 increased 30.1%, from $10,398,138 in 2004, to $13,556,221 in 2005
as a result of the increase in trade volume.

Net income for the first nine months of 2005 increased  approximately  296% from
$131,783 in 2004, to $521,546 in 2005.  The increase in net income was due to an
organic growth of the Company. Details of expense fluctuations will be discussed
in the "Operating expenses" and "Non-operating expenses" respectively.

BUSINESS SEGMENT OPERATING RESULTS

The results of operations for each segment are as follows:

AIRFREIGHT   OPERATIONS:    Revenue   from   airfreight   operations   increased
approximately  27%, from $42,255,188 in first nine months of 2004 to $53,495,638
in the same period of 2005.  Airfreight  revenue for  foreign  operations  (that
includes AGI Group and AGI Singapore) was $23,186,242,  while airfreight revenue
for domestic  operations  (that includes  Airgate and Paradigm) was $36,910,012,
and offsetting  inter-company  transactions  totaled  $6,600,616.  The volume of
airfreight  improved in 2005 compared with 2004.  The increase was primarily due
to (i) an  increase  in  routing  orders  from Asia to Europe as a result of new
customers and agents in The Netherlands,  Germany, United Kingdom and France who
joined the Group  during  the fourth  quarter  of 2004;  (ii) the  operation  of
Airgate  International Corp.  (Chicago),  which was established in June 2002, is
becoming more and more mature;  (iii) the  acquisition  of Paradigm on April 30,
2004 and its additional operations in Los Angeles,  California that commenced in
July 2004; (iv) AGI Singapore joined the Group in the third quarter of 2004; and
(v) the acquisition of WCL Global Logistics Ltd in Hong Kong.

Costs for the airfreight  forwarding  operations during the first nine months of
2005  increased  approximately  25%, from  $35,288,372 in 2004 to $43,949,935 in
2005. Airfreight cost attributable to foreign operations was $19,286,583,  while
airfreight cost attributable to domestic operations $31,263,968,  and offsetting
inter-company costs totaled $6,600,616. Airfreight cost increase in 2005 was due
to the organic  growth of the Company.  Gross  profit  margin for the first nine
months of 2005 as compared with 2004 increased from approximately 16.48% in 2004
to  approximately  17.84% in 2005.  The increase was due to the  improvement  of
profit margins for  airfreight  export to non-US market during the third quarter
of 2005 and the  introduction  of new  customers  by the newly  hired  marketing
staffs of AGI  Singapore.  As a result of the increase in trade volume,  overall
gross profits increased approximately 37% to $9,545,703.

Total  segment  overhead  attributable  to the  airfreight  operation  increased
approximately  28%,  from  $2,516,645  in the  first  nine  months  of  2004  to
$3,219,849  in the same  period  of 2005,  as a result of more  resources  being
allocated to airfreight  operations.  Details regarding the increase in overhead
expenses are  discussed  below under the section  "Operating  Expenses" and "Non
Operating Income and Expenses."


                                       29
<PAGE>

Overall  net  segment  income for the  airfreight  operation  for the first nine
months of 2005 increased approximately 42% from $4,450,171 in 2004 to $6,325,854
in 2005. The increase in net segment income was mainly the result of the organic
growth of AGI and Airgate as well as the  inclusion of operating  results of new
subsidiaries during 2004.

SEA  FREIGHT   OPERATION:   Revenue  from  sea  freight   operations   increased
approximately  37%  to  $35,108,233  in the  first  nine  months  of  2005  from
$25,613,481  in the same  period  of  2004.  Sea  freight  revenue  for  foreign
operations  $11,622,115,  while sea freight revenue for domestic  operations was
$23,947,476,  and offsetting  inter-company  transactions totaled $461,358.  The
increase in revenue for the first nine months of 2005,  when  compared  with the
same period of 2004, was due to (i) the contribution from the new branch offices
of  Shenzhen  Careship  in China;  (ii) the  increase  in  quantity  of  freight
consolidation by Airgate Chicago;  and (iii) our new agent in Europe  introduced
more  customers  into our  network,  that  generated  greater  revenue  from the
European market since the fourth quarter of 2004.

Costs for the sea freight forwarding operation increased approximately 40%, from
$22,182,159  in the first nine months of 2004 to  $31,097,715 in the same period
of 2005. Sea freight costs  attributable  to foreign  operations was $9,631,629,
while costs attributable to domestic operations was $21,927,444,  and offsetting
inter-company  costs totaled  $461,358.  Gross profit margin slightly  decreased
from  approximately  from  13.39% in 2004 to  11.42%  in 2005 due to our  market
penetration  strategy in Shanghai  and Chicago.  Despite the  reduction in gross
profit  margin,  overall  gross  profits  increased  by  approximately  17%,  to
$4,010,518 as a result of increase in trade volume.

Total  segment  overhead  attributable  to the sea freight  operation  increased
approximately 22%, from $1,540,822 in first nine months of 2004 to $1,886,609 in
the same  period of 2005.  Overall  net  income  for the sea  freight  operation
increased  12%, from  $1,890,500 in first nine months of 2004 to $2,123,909  for
the same  period in 2005.  The  increase  in net  segment  income was mainly the
result of the  organic  growth of AGI and  Airgate as well as the  inclusion  of
operating results of new subsidiaries during 2004.

OPERATING EXPENSES

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative  expenses increased by 24.4%, to $11,215,366 in first
nine months of 2005 from  $9,016,218  in the same period of 2004.  The following
are the factors that caused the increase in expenses:

Sales commission: Sales commission increased approximately 18.8% from $1,592,749
in the first nine months of 2004 to $1,892,522  in the same period of 2005.  The
increase was a result of the increase in freight  forwarding  revenue during the
first nine months of 2005.

Salaries and allowance:  Salaries and allowance  increased 27.8% from $3,859,754
for the period nine months ended  September 30, 2004 to $4,931,984 in 2004. This
increase was the result of the addition of approximately 90 staff persons during
the nine months ended September 30, 2005 which were needed to keep pace with our
growth.


                                       30
<PAGE>

STOCK-BASED COMPENSATION COST

Stock-based compensation cost: During the period from November 2003 to September
2005, the Company issued a total of 2,105,000 shares of its common stock to five
employees,  an independent sales  representative and a business advisor.  During
the  nine  months  ended  September  30,  2005,  stock-based  compensation  cost
decreased  approximately 47%, from $397,543 for the first nine months of 2004 to
$212,176 in the same period of 2005.

The decrease in  compensation  cost was  primarily  due to the  cancellation  of
850,000 and 200,000  restricted  shares  that were  previously  granted to a key
employee and an independent sales  representative,  respectively,  in the fourth
quarter of 2004.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization  increased  approximately 21% from $570,414 in the
first nine months of 2004 to $692,034 in the same period of 2005.  The  increase
was mainly due to additional  computer  hardware and software  purchased for the
implementation of a new logistics  system,  office renovation at Airgate and the
establishment  of three  additional  branch  offices in  Chongqing,  Tianjin and
Futian in Mainland China by Shenzhen Careship Transportation Limited.

Amortization  arises from intangible  customer  relationship  assets recorded in
conjunction  with the  acquisitions  of Airgate on April 30,  2002,  Paradigm on
April 30, 2004 and WCL Global  Logistics Ltd on July 1, 2005.  These  intangible
assets are  amortized  on a  straight-line  basis over a period of five to eight
years. During the nine months ended September 30, 2005, the amortization expense
attributable to this asset was $439,231,  an increase of $8,008 as compared with
the same period of 2004.
..
NON OPERATING INCOME AND EXPENSES

INTEREST AND OTHER INCOME

Interest and other income  decreased  from $175,876 in first nine months of 2004
to $120,403 in the same  period of 2005.  This was due to various  miscellaneous
handling charges received from third parties being reallocated to revenue in the
first nine months of 2005 as compared with the same period of 2004.

INTEREST EXPENSE

Interest  expense  increased  to  $384,878 in the first nine months of 2005 from
$234,427 in the same period of 2004. The increase in interest expense was due to
an increase in  short-term  working  capital  financing and the rise in interest
rates during the first nine months of 2005 when compared with the same period of
2004. It was also due to the interest paid for the  financing  transaction  with
Laurus Master Fund Ltd in the third quarter of 2005.


                                       31
<PAGE>

PREFERRED STOCK DIVIDEND AND AMORTIZATION OF DEFERRED FINANCING COST

The Series A Preferred  Stock and detachable  stock warrants issued during April
and May 2004 was recorded in accordance  with  Statement  150,  "Accounting  for
Certain  Financial  Instruments  With  Characteristics  of Both  Liabilities and
Equity" and EITF 98-5.  Accordingly,  $209,405 of deferred  financing  costs and
$228,679 of Preferred Stock Dividends were expensed during the nine months ended
September 30, 2005.

AMORTIZATION OF PREFERRED STOCK DISCOUNT

In accordance with APB Opinion 14 "Accounting  for Convertible  Debt" and "Debts
Issued  With Stock  Purchase  Warrants",  the Series A  Preferred  Stock and the
detachable  stock  warrants were recorded at their relative fair values with the
value of the warrants recorded in additional equity in warrants outstanding. The
Series A Preferred Stock was recorded at a discount of $2,993,751. This discount
is amortized ratably over the term of the Series A Preferred Stock. $436,741 was
expensed during the nine months ended September 30, 2005.

RISK FACTORS AFFECTING COMPANY OPERATIONS

The Company's ability to provide service to its customers is highly dependent on
good  working  relationships  with a  variety  of  entities  such  as  airlines,
steamship carriers and governmental agencies.

Unlike other U.S. logistics companies, the Company bears a significant amount of
inventory risk. We pay for the guarantees we put up to the carriers,  even if we
do not have any  customer  cargo to fill the  space.  We are not able to ask our
clients to make these guarantees and, accordingly, we assume all of the risks.

The Company has freight  forwarders  liability  insurance that covers it against
claims  from  clients.  We  take  responsibility  for  the  cargo,  and  we  are
responsible  for its safe delivery.  Therefore,  we can be held  responsible and
incur losses if anything goes wrong.

Changes  in  governmental   deregulation  efforts,   regulations  governing  the
Company's products,  and/or the international trade and tariff environment could
all affect the Company's business in unpredictable ways.

Management  believes  the  Company's  business  has not  been  significantly  or
adversely  affected  by  inflation  in the past.  Historically,  the Company has
generally been successful in passing cost increases to its customers by means of
price increases.  However,  competitive market place conditions could impede the
Company's  ability to pass on future cost increases to customers and could erode
the Company's operating margins.

The  Company  continues  to  assess  and  improve  financial  controls,  and has
negotiated  successfully  with its banks to get  credit  facilities  for  future
financial needs.


                                       32
<PAGE>

Additional risks and uncertainties include:

o     Dependence  of the  Company  on  retention  and  addition  of  significant
      customers.

o     The  ability to recruit  and retain  skilled  employees  in a tight  labor
      market.

o     The ability of the Company to develop and implement information systems to
      keep pace  with the  increasing  complexity  and  growth of the  Company's
      business

o     The  reimposition  of  textile  quotas  by the US and  European  Union for
      exports  from  Mainland  China  from July 2005 may  effect  our  operation
      results.

LIQUIDITY AND CAPITAL RESOURCES

We provided $714,103 of cash from operating activities for the nine months ended
September 30, 2005 and used cash of $2,868,750 in operating  activities  for the
nine months ended  September 30, 2004.  This increase in the  generation of cash
was mainly  attributable  to (i)  increase  in the net income for the first nine
months of 2005, when compared with the same period of 2004, and (ii) increase in
amount provided by other receivables.

Net cash used in  investing  activities  was  $805,669 and $655,164 for the nine
months ended  September  30, 2005 and 2004,  respectively.  We used  $327,207 to
acquire  plant and  equipment to improve our office  facilities  and  additional
computer hardware and software are purchase to implement a new logistics system.
We received  payment of a loan  receivable in the amount of $1,950,  and $15,618
from the disposal of property and equipment.  We also received  $40,000 from the
refund of the deposit for a potential  equity  investment  and paid $536,030 for
the acquisition of a subsidiary in Hong Kong.

Net cash provided by financing  activities was $1,700,637 and $4,677,031 for the
nine months ended September 30, 2005 and 2004,  respectively.  We made principal
payments  under capital  lease  obligations  of $57,499.  In order to extend our
banking  facilities,  an  additional  $1,214,867  was  pledged  to the  banks as
restricted  cash  deposits.  Notes  payable to the banks  decreased  by $376,807
during the nine months ended  September  30, 2005,  and we received the proceeds
from  short-term  debt and  exercise  of stock  options of $71,065  and  $19,600
respectively.

Working capital was  $10,747,137  (inclusive of restricted cash of $6.3 million)
and  $6,260,963  (inclusive of restricted  cash of $5.1 million) as of September
30, 2005 and December 31, 2004 respectively.  We believe that we will be able to
rely on cash flow from  operations  for short-term  liquidity,  and also believe
that we have  adequate  liquidity  to satisfy our material  commitments  for the
twelve months  following  September 30, 2005. We also believe that we can obtain
additional  liquidity through further negotiation of short-term loans from banks
to satisfy our short-term funding needs, if any.


                                       33
<PAGE>

We intend to continue our expansion  plans  through a mixture of organic  growth
and  acquisitions.  Future  acquisitions  will focus on companies  that serve as
freight  forwarders in key markets or offer services (such as customs brokerage)
that  complement  our existing  services.  We intend to achieve  organic  growth
through the establishment of new branch offices in Latin America, joint ventures
in the PRC and a major  marketing  campaign  in the  European  market  with  new
customers and agents in The Netherlands,  Germany, United Kingdom and France who
joined the Group  during the fourth  quarter of 2004.  In order to achieve  this
goal,  we will be  required to raise a certain  amount of capital.  To a certain
extent,  these  activities will have a significant  impact on both liquidity and
capital resources.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENT

We have entered into various contractual obligations, which may be summarized as
follows:

<TABLE>
<CAPTION>
                                                             PAYMENTS DUE BY PERIOD
                                            -------------------------------------------------------
                                            LESS THAN 1
CONTRACTUAL OBLIGATIONS          TOTAL         YEAR          1-3 YEARS    4 - 5 YEARS    THEREAFTER
--------------------------     ---------    -----------      ---------    -----------    ----------
                               $            $               $              $             $
<S>                            <C>          <C>              <C>          <C>            <C>
                                 136,206         62,312         73,894
Capital lease Obligations                                                          --            --

Operating Leases               1,641,875        769,852        770,725        101,298            --

Cargo Space Commitments        6,082,051      6,082,051             --             --            --

Material Employment              124,750        124,750             --             --            --
Agreements
</TABLE>

We have capital lease obligations of $136,206 as of September 30, 2005, of which
$62,312 is repayable within one year, and $73,894 is repayable after one year.

We  also  entered  into  various  lease  commitments  for  office  premises  and
warehouses in the United States,  Hong Kong,  Mainland China and Singapore.  The
total outstanding lease  commitments under  non-cancelable  operating leases are
$1,641,875  as of September  30, 2005.  As of  September  30, 2005,  the current
portion of these commitments of $769,852 is payable within one year.

We have entered into written agreements with various sea and airfreight carriers
committing to take up a guaranteed  minimum  amount of cargo space each year. As
of September 30, 2005, the amount outstanding for such commitments to be entered
in 2005 was approximately $6.1 million.

In connection with the  acquisition of Airgate,  we also entered into three-year
employment  agreements,  dated April 30, 2002,  with Mr. Turner and Mr. Zambuto,
respectively,  as  described  in a  Current  Report on Form 8-K filed on May 14,
2002.  Under  these  agreements,  we agreed  to pay each of them an annual  base
salary of  $249,500  per annum  commencing  January 1,  2003,  and for each year
thereafter during the term of their employment agreements.


                                       34
<PAGE>

As of September  30, 2005,  our  commercial  commitments  may be  summarized  as
follows:

<TABLE>
<CAPTION>

                                          TOTAL AMOUNTS
OTHER COMMERCIAL COMMITMENTS              COMMITTED             AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
----------------------------------------------------------------------------------------------------------
<S>                                       <C>                   <C>                                 <C>
                                                                LESS THAN 1 YEAR                 1-3 YEARS

Overdraft                                 $   2,020,087         $      2,020,087                        --

Invoice Trust Receipt                         1,782,512                1,782,512                        --

Guarantees by bank                              741,860                  741,860                        --

Revolving Notes, net of discount of           1,827,620                1,827,620                        --
$151,042

Minimum Borrowing Notes, net of               3,647,673                       --                 3,647,673
discount of $352,327

Payable - minority shareholder                  311,554                  311,554                        --
</TABLE>

As of September 30, 2005, to finance our working capital,  our available banking
facilities were approximately  $9,010,000 obtained from creditworthy  commercial
banks in Hong Kong. As of that date, the total amount of bank credit  facilities
utilized was $4,544,865.  This was made up of (i) $2,020,087 of overdrafts; (ii)
$1,782,512 of invoice trust receipts and (iii)  $741,860 of bank  guarantees for
granting credit facilities to a subsidiary for airfreight payment.  Moreover, we
have a  borrowing  facility  with  Laurus  Master  Fund Ltd,  subject to certain
requirements,  the total available amount of the line of credit is $7.5 million.
As of September 30, 2005, the total amount  outstanding  for the line of credit,
net of discount is $5,475,293, which is comprised of $1,827,620 on the revolving
note and $3,647,673 on the minimum borrowing note.

While the banks are not obligated to advance any further funds to us, we believe
that absent any significant downtrend in business,  these sources of credit will
continue to be available to us.

OUTLOOK

As a result of the global economic growth,  we believe the following factors may
have a positive  impact on our future  results of  operation  and our  financial
conditions: Closer Economic Partnership

The Closer Economic Partnership Arrangement ("CEPA") that was signed on June 29,
2003,  originally  focused on  stimulating  and enhancing  Hong Kong's  economic
recovery.  In  theory,  CEPA  significantly  lowers the  barriers  for Hong Kong
enterprises to tap the Mainland China market.

Under the  CEPA,  Hong  Kong  companies  are  permitted  to set up wholly  owned
enterprises  in  Mainland  China  to  provide  logistics  services  and  related
consultancy  services for ordinary road freight, and to engage in the management
and operation of logistics services through electronic means. It permits freight
forwarding  agents to operate in Mainland  China on a wholly  owned basis a full


                                       35
<PAGE>

two years ahead of China's WTO entrance  timetable,  and will permit such agents
to enjoy  national  treatment  in  respect  of the  minimum  registered  capital
requirement.  In addition, it eliminates the import tariffs to Mainland China on
a host of goods made in Hong Kong,  allowing  most Hong Kong  companies  to sell
high value-added products across the border. In terms of economic benefits,  the
CEPA has good potential to open up many new business  opportunities  in Mainland
China for Hong Kong.  Although it is difficult to quantify the potential benefit
we may realize from CEPA, through our Hong Kong-based AGI Logistics (HK) Ltd and
Shenzhen Careship  Transportation Limited, we believe we can enjoy "first mover"
advantage, that is, we believe that our Hong Kong-based subsidiaries can benefit
from CEPA because we have  experience in doing  business in, and we believe that
we are knowledgeable in the PRC regulations and business  practices.  We believe
that our  existing  offices  in Hong Kong and  Mainland  China can also  respond
quicker than other U.S. freight forwarders to ongoing developments in China.

Outsourcing of non-core activities

Companies are increasingly outsourcing freight forwarding, warehousing and other
supply  chain  activities  so that  they  may  focus on  their  respective  core
competencies.  Companies are  increasingly  turning to freight  forwarders,  and
logistics and supply chain management providers, to manage their purchase orders
and assure timely delivery of products at a lower cost and at greater efficiency
than if the function was undertaken directly.

Globalization of trade

As barriers to international  trade are gradually reduced,  international  trade
will similarly increase.  In addition,  companies are increasingly  sourcing for
supplies and raw materials from the most  competitive  suppliers  throughout the
world.  This form of sourcing would generally also lead to increased  volumes of
trade.

Increased need for time-definite delivery

The demand for just-in-time and other time definite  delivery has increased as a
result  of  the  globalization  of  manufacturing,   greater  implementation  of
demand-driven supply chains, the shortening of product cycles and the increasing
value of individual shipments.

As the number of global supply chain management providers  decreases,  companies
also are decreasing the number of freight forwarders and supply chain management
providers with which they interact,  for which these providers have the criteria
that are familiar with their requirements,  processes and procedures,  and which
can develop long term  partnership  relationship.  As such,  freight  forwarders
which are  globally  integrated  and are able to  provide a full  complement  of
services,  including  pick-up  and  delivery,  shipment  via air,  sea and land,
warehousing and distribution and customs brokerage,  are well positioned to gain
from this decrease in providers.


                                       36
<PAGE>

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk in the  ordinary  course of its  business.
These  risks are  primarily  related to  foreign  exchange  risk and  changes in
short-term  interest rates.  The potential  impact of the Company's  exposure to
these risks is presented below:

FOREIGN EXCHANGE RISK

The Company conducts  business in many different  countries and currencies.  The
Company's  business  often results in revenue  billings  issued in a country and
currency,  which differs from that where the expenses related to the service are
incurred. This brings a market risk to the Company's earnings.  Foreign exchange
rates  sensitivity  analysis can be quantified  by estimating  the impact on the
Company's  earnings as a result of hypothetical  change in the value of the U.S.
Dollar, the Company's functional  currency,  relative to the other currencies in
which the Company transacts business.  As one of the major subsidiaries uses the
Hong Kong Dollar  (HKD),  which has been linked to the U.S.  Dollar at a rate of
HKD7.80 to  USD1.00,  as its  functional  currency,  there has been no  material
change in the Company's  foreign  exchange risk  exposure.  However,  if HKD was
unlinked  to the US  Dollar,  an  average  10%  weakening  of the  U.S.  Dollar,
throughout  the period ended  September  30, 2005,  would have had the effect of
raising operating income approximately $157,000. An average 10% strengthening of
the U.S.  Dollar,  for the same  period  would have had the  effect of  reducing
operating  income by  approximately  $128,000.  The Company  currently  does not
utilize any derivate  financial  instruments or hedging  transactions  to manage
foreign currency risk.

INTEREST RATE RISK

The Company does not currently utilize derivative financial instruments to hedge
against  changes in interest  rates. At September 30, 2005, the Company had cash
and  cash  equivalents  and  restricted  cash of  $9.4  million  and  short-term
borrowings of $5.6 million, all subject to variable short-term interest rates. A
hypothetical  change in the  interest  rate of 10% would  have an  insignificant
impact  on the  Company's  earnings.  In  management's  view,  there has been no
material change in Company's market risk exposure between September 30, 2005 and
September 30, 2004.

ITEM 4.  CONTROLS AND PROCEDURES

The  Registrant's  Chief Executive  Officer and Chief Financial  Officer,  after
evaluating  the  effectiveness  of  the  Registrant's  disclosure  controls  and
procedures  (as defined in Rules  13a-15(e) and 15d-15(e)  under the  Securities
Exchange Act of 1934, as amended) as of September 30, 2005, have concluded that,
as of September 30, 2005 (the "Evaluation  Date"),  the Registrant's  disclosure
controls  and  procedures  were  effective  to  ensure  the  timely  collection,
evaluation,  and disclosure of information relating to the Registrant that would
potentially be subject to disclosure under the Securities  Exchange Act of 1934,
as amended, and the rules and regulations promulgated under that Act. There were
no significant changes in the Registrant's internal controls or in other factors
that  could  significantly  affect  the  internal  controls  subsequent  to  the
Evaluation Date.


                                       37
<PAGE>

                                     PART II

                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

There are no material legal proceedings pending against the Company. However the
Company  wishes to report that in the matter of Grant Peck and Dean  Sessions v.
Pacific  CMA,  Inc.,  Messrs.  Peck and  Sessions  currently  each  own  128,438
restricted shares in Pacific CMA, Inc. (the "Shares"). This action was commenced
by  Messrs.  Peck and  Sessions  for  declaratory  judgment  seeking a  judicial
determination  of their right to sell the Shares  pursuant to the  exemption set
forth in Section  4(1) of the  Securities  Act of 1933,  as amended (the "Act").
They contend they are neither issuers nor dealers under Section 4(1) of the Act.
They  further  contend  that they are not  underwriters  within  the  meaning of
Section 4(1) because they have held their shares for more than 7 years.  Messrs.
Peck and Sessions have amended their Complaint to include a claim for damages as
a result of the  Company's  refusal to honor their  alleged right to sell their
shares.

The Company is vigorously  defending this action. This action is in the pretrial
discovery stages. It is the Company's  position,  inter alia, that Messrs.  Peck
and Sessions used a reverse merger transaction involving the Company, originally
a "blank check company," in order to circumvent the registration requirements of
the Act and to conceal from investors the control over the Company's  issued and
outstanding  common stock eligible to be in the public float or owned by Messrs.
Peck  and  Sessions.  As a result  of the  unique  creation  of the  issued  and
outstanding shares under common ownership of Messrs.  Peck and Sessions,  all of
the outstanding shares of the Company's common stock prior to the reverse merger
remain "underwriters'" shares under the Act. The Company believes that for it to
allow these shares to be treated under SEC Rule 144, such treatment  would cause
the Company to violate the federal securities laws.


ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On August 4, 2005,  the Company  completed a financing  transaction  with Laurus
Master Fund Ltd.  ("Laurus") and received from Laurus $5,982,000,  less $324,500
due to Laurus for legal fees, transaction costs and expenses.

The financing was pursuant to, including among others,  the following  documents
and instruments, dated as of July 29, 2005.

o     Security  Agreement  among  Laurus,  the  Company  and its  United  States
      subsidiaries  granting  Laurus a first priority  security  interest on the
      Company's  assets,  including  the capital  stock of the  subsidiaries  to
      secure the Company's  performance of notes issued by the Company to Laurus
      (described below).

o     A Secured  Convertible  Minimum Borrowing Note (the "Min Secured Note") in
      the principal amount of $4,000,000.

o     A Secured Revolving Note (the "Revolving Note") that, when aggregated with
      the Min Secured Note, provides for a maximum borrowing of $7,500,000.

o     A Warrant  issued to Laurus  (the  "Laurus  Warrant")  to  purchase  up to
      1,500,000  shares of the  Company's  Common Stock at an exercise  price of
      $1.00 per share for a seven-year period, expiring on July 29, 2012.

o     A Registration Rights Agreement between the Company and Laurus.


                                       38
<PAGE>

Laurus loaned an aggregate of $5,982,000 to the Company.  The debt was evidenced
by two separate  notes.  The Revolving Note in the maximum amount of $3,500,000,
and $4,000,000 under the Min Secured Note.  Laurus,  at its option,  may convert
the  outstanding  principal  amount  of each of the  Revolving  Note and the Min
Secured Note and any accrued  interest and fees owing  thereon at any time prior
to maturity into shares of the Company's  Common Stock, at a conversion price of
$0.88 per share,  as to the first  $3,750,000  advanced to the Company under the
Min Secured Note and at $1.05 per share as to the remaining balance of that note
and the outstanding balance under the Revolving Note. The Company also issued to
Laurus a warrant to purchase an aggregate of 1,500,000 shares of Common Stock at
an exercise price of $1.00 per share. Laurus' ability to convert the Min Secured
Note,  any  subsequent  minimum  borrowing  note, or the  Revolving  Note and to
exercise the Warrant is limited by the terms of such  instruments  to the extent
that such exercise or conversion would result in Laurus beneficially owning more
than 4.99% of the Company's then outstanding shares of Common Stock.

In the event that  Laurus  converts a portion of the "1st"  Secured  Convertible
Minimum  Borrowing  Note and the  outstanding  principal  balance of the Secured
Revolving Note exceeds $500,000,  then, to the extent  available,  an equivalent
portion of the outstanding principal balance of the Secured Revolving Note shall
be segregated for issuance pursuant to an additional Secured Convertible Minimum
Borrowing  Note which will not be issued until the  segregated  amount equals $4
million and the "1st" Secured  Convertible Minimum Borrowing Note has been fully
converted.  If the  Revolving  Note is paid down or  transferred  to another Min
Secured  Note,  the Company has the right to  re-borrow  funds under the Secured
Note, subject to certain borrowing parameters and ultimately Laurus' discretion,
as set forth in the Security Agreement.

The Min Secured Note and Revolving Note are hereafter  collectively  referred to
as the "Notes."

Set forth  below is only a summary of the  Security  Agreement,  the Notes,  the
Laurus  Warrant and the  Registration  Rights  Agreement and is qualified by the
relevant documents,  filed as exhibits to the Company's Report on Form 8-K filed
with the  Commission on August 4, 2005.  Copies of said  documents are available
from the Company on written request.

Note Maturity Date:        July 29, 2008.

Note Interest Rate:        Greater  of (a) 6% and (b) the  prime  rate,  plus 1%
                           (subject to reduction in certain circumstances, based
                           upon  increases  in the market  price (as defined) of
                           the   Company's   Common   Stock  in  excess  of  the
                           Conversion Price).

Funds Availability Under
 the Notes:                Maximum available is the lesser of $7,500,000, or 90%
                           of  Eligible  Accounts  (as  defined),   less  Laurus
                           required reserves.

Conversion Price
  of Notes:                At Laurus' option,  the first $3,750,000 of principal
                           amount is convertible at the price of $0.88 per share
                           and any funds in excess of  $3,750,000  in  principal
                           amount are convertible at a price of $1.05 per share.
                           Both conversion prices are subject to adjustments.


                                       39
<PAGE>

Adjustments to
 Conversion Price:         The Note conversion  prices are subject to adjustment
                           for  reclassifications,  stock splits,  combinations,
                           dividends and for certain future  issuances  pursuant
                           to the following:

                           Formula Definitions

                           A = The total amount of shares  convertible  pursuant
                               to the Notes.

                           B = Actual shares sold in a subsequent offering.

                           C = The Conversion Price per share.

                           D = Offering Price in the subsequent offering.

                           Method of Calculation

                                   A + B
                           ---------------------
                           (A+B) + [(C-D) x B)/C]

Redemption/Prepayment:     The Company may elect to redeem the Min Secured  Note
                           by paying 120% of the outstanding  principal  amount,
                           unpaid  interest  and all  other  sums due  under the
                           Notes.  The Company may elect to prepay the Revolving
                           Note at any time by the  payment  of the  outstanding
                           principal amount,  unpaid interest and all other sums
                           due  under the  Revolving  Note,  plus an  additional
                           penalty of $200,000 if redeemed  within twelve months
                           of funding, $150,000 if redeemed during the period of
                           time from  twelve  months and  twenty-four  months of
                           funding;  and $100,000 if redeemed  during the period
                           of time from twenty-four  months of funding until the
                           Maturity Date.

Events of Default:         Include but are not limited to (i) the failure of the
                           Company  to  pay  its  obligations  to  Laurus;  (ii)
                           material   breaches   of,  or  false  or   misleading
                           representations  or warranties by the Company in, its
                           Agreements  with  Laurus;  (iii) the  failure  of the
                           Company to pay its  obligations  to third  parties in
                           excess of  $250,000;  (iv)  attachments  or levies in
                           excess of  $100,000;  (v)  changes  in the  Company's
                           condition  or  affairs  reasonably  likely to, or its
                           subsidiaries,  have a material  adverse effect on the
                           Company  or  its   subsidiaries;   (vi)   bankruptcy,
                           insolvency,  liquidations or reorganization events by
                           or against the Company or its subsidiaries; and (vii)
                           a "Change of Control" (as defined).

Change of Control:         Includes,  but is not  limited  to, (i) any person or
                           group of persons (other than certain defined persons)
                           beneficially   owning   35%  or  more  of  the   then
                           outstanding  voting  equity  of the  Company;  (ii) a
                           change of a majority  of the  current  members of the
                           Board of  Directors  of the  Company;  or  (iii)  the
                           Company   or  any  of   its   subsidiaries   merging,
                           consolidating  or  selling  substantially  all of its
                           assets.


                                       40
<PAGE>

Default Penalties:         One (1%) percent per month additional interest and at
                           Laurus'  option,  a  default  payment  of 120% of the
                           principal  outstanding amount of the Notes,  together
                           with unpaid interest and all other sums due under the
                           Notes.

Damages for Failure to
 Meet Registration
 Deadlines or the
 Delisting of the Company's
 Common Stock:             If (i) the Registration Statement covering the shares
                           of our common stock issuable on conversion of the Min
                           Secured Note is not declared effective by on or about
                           November  2, 2005 or (ii) sales of our  common  stock
                           cannot be made pursuant to the Registration Statement
                           for  more  than  (a)  30  days  in a  year  or (b) 20
                           consecutive  calendar  days;  or (iii) the  Company's
                           common  stock is delisted or  suspended  from trading
                           for  five  consecutive  trading  days  (with a 30-day
                           "cure" period), then the Company shall pay Laurus for
                           each such day a sum of money  equal to  one-thirtieth
                           (1/30th) of the original  principal amount of the Min
                           Secured Note, multiplied by 0.01.

                           Similar  deadlines  are  applicable to the shares (1)
                           underlying  additional  Min  Secured  Notes,  (2) the
                           Warrants,  and (3) issuable upon  adjustments  to the
                           Conversion  Price of the Notes or the exercise  price
                           of the Warrants.

Maximum Number of Shares:  No  issuances  of Common  Stock that would  cause the
                           holder  to own more than  4.99% of our  total  common
                           stock at any given  time,  or  19.99%  of our  common
                           stock if certain stockholder  approvals have not been
                           obtained.

Right of First Refusal:    Right of first refusal for certain future  financings
                           of the Company.

The Laurus Warrant allows Laurus to purchase at any time prior to July 29, 2012,
up to  1,500,000  shares of our common  stock at an exercise  price of $1.00 per
share.  The Laurus Warrant is subject to adjustment in certain  events,  such as
dividends,  subdivisions  and  combinations  of shares of our capital  stock and
similar events.

The number of shares of our common  stock  issuable on exercise of the Notes and
the number of shares of our common stock  issuable  upon  exercise of the Laurus
Warrants,  are to be combined to calculate  the maximum  number of shares of our
common stock  issuable to Laurus to  determine  the  foregoing  4.99% and 19.99%
limitations discussed above.

Our  Capital  Stock For a complete  description  of our capital  stock,  see our
Annual  Report on Form 10-K for the year ended  December 31, 2004, as filed with
the Commission on March 31, 2004.


                                       41
<PAGE>

Preferred  Stock.  Pursuant to our  Certificate of  Incorporation,  our Board of
Directors  is  authorized,  subject to any  limitations  prescribed  by law,  to
provide for the issuance of shares of up to 10,000,000 shares of preferred stock
from time to time in one or more series and to establish the number of shares to
be included in each such series and to fix the designation,  powers, preferences
and relative, participating,  optional and other special rights of the shares of
each such series and any qualifications, limitations or restrictions thereof.

There is currently one series of preferred stock issued and outstanding:  Series
A Preferred  Stock,  with 10,000 shares being  authorized and 4,750 shares being
issued and  outstanding,  excluding 250 shares of Series A Preferred  Stock that
were converted into 284,091 shares of Common Stock on or about August 16, 2005.

We are authorized to issue up to 100,000,000  shares of Common Stock,  $.001 par
value per share,  26,173,680 of which are issued and  outstanding as of November
1, 2005.

Among the features of our Series A Preferred  Stock is the right to convert said
shares into shares of the  Company's  Common Stock,  initially,  at a conversion
price of $1.44 per share. As a result of the Company's  transaction with Laurus,
that  conversion   price  was  reduced  to  $0.88  per  share  pursuant  to  the
anti-diluting provisions of our Series A Preferred Stock.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

         Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable.

ITEM 5.  OTHER INFORMATION

         NOT APPLICABLE.

ITEM 6.  EXHIBITS

         (a)      Exhibits (filed herewith)

                  31.1     Certification of the Chief Executive Officer pursuant
                           to  Section  302 of the  Sarbanes-Oxley  Act of  2002
                           (Rule 13a-14(a)).

                  31.2     Certification of the Chief Financial Officer pursuant
                           To  Section  302 of the  Sarbanes-Oxley  Act of  2002
                           (Rule 13a-14(a)).

                  32.1     Certification of the Chief Executive Officer pursuant
                           to 18 U.S.C.  Section  1350,  as adopted  pursuant to
                           Section 906 of the  Sarbanes-Oxley  Act of 2002 (Rule
                           13a-14(b)).

                  32.2     Certification of the Chief Financial Officer pursuant
                           to 18 U.S.C.  Section  1350,  as adopted  pursuant to
                           Section 906 of the  Sarbanes-Oxley  Act of 2002 (Rule
                           13a-14(b)).


                                       42
<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  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.


                                    PACIFIC CMA, INC.


Date:  November 14, 2005            By: /s/ Alfred Lam
                                       -----------------------------------------
                                       Name:  Alfred Lam
                                       Title: Chairman of the Board of Directors
                                             (Principal Executive Officer)


Date:  November 14, 2005            By: /s/ Bill Stangland
                                       -----------------------------------------
                                       Name:  Bill Stangland
                                       Title: Chief Financial Officer
                                             (Principal Financial and Accounting
                                              Officer)


                                       43