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, 2006

                                       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 a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and "large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
One)

Large accelerated filer |_|   Accelerated filer |_|    Non-accelerated filer |X|

Indicate by check mark whether the registrant is a shell company (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 10, 2006: 28,188,073 shares

<PAGE>

                                PACIFIC CMA, INC.

                               INDEX TO FORM 10-Q

                                                                        Page No.
                                                                        --------

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

      Condensed Consolidated Balance Sheets as of September 30, 2006
      (Unaudited) and December 31, 2005 (Restated)............................1

      Condensed Consolidated Statements of Operations for the Three
      and Nine Months Ended September 30, 2006 and 2005 Restated
      (Unaudited).............................................................3

      Condensed Consolidated Statements of Cash Flows for the Nine
      Months Ended September 30, 2006 and 2005 Restated
      (Unaudited).............................................................4

      Notes to Condensed Consolidated Financial Statements
      (Unaudited).............................................................6

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations.............................................22

Item 3. Quantitative and Qualitative Disclosures About Market
        Risk..................................................................39

Item 4. Controls and Procedures...............................................39

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.....................................................41

Item 1A. Risk Factors.........................................................41

Item 4. Submission ofMatters to a Vote of Security Holders....................41

Item 5. Other Information.....................................................41

Item 6. Exhibits..............................................................42

SIGNATURES                                                                    43

<PAGE>

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                                Pacific CMA, Inc.
                      Condensed Consolidated Balance Sheets
                    September 30, 2006 and December 31, 2005

Assets

<TABLE>
<CAPTION>
                                                                          2006          2005
                                                                       -----------   -----------
                                                                       (Unaudited)   (Restated)
<S>                                                                    <C>           <C>
    Current Assets
        Cash and cash equivalents                                      $ 3,239,587   $ 2,018,093
        Restricted cash                                                  5,340,644     5,761,246
        Accounts and notes receivable, net of allowance for doubtful
          accounts 2006 - $295,751; 2005 - $334,014                     22,750,534    17,386,360
        Refundable income taxes                                                 --        12,897
        Other receivables                                                1,260,177     2,476,626
        Deposits and prepaid expenses                                    1,804,741       666,976
        Deferred income taxes                                               58,479        58,479
                                                                       -----------   -----------
               Total current assets                                     34,454,162    28,380,677
                                                                       -----------   -----------

    Property and Equipment

        Net of accumulated depreciation; 2006 - $1,244,432; 2005 -
          $967,296                                                         915,835       800,596
                                                                       -----------   -----------

    Other Assets
        Goodwill                                                         3,762,129     3,240,807
        Intangible assets, net of accumulated amortization
          2006 - $2,574,053; 2005 - $2,118,718                             577,527       982,216
        Deferred income tax                                              1,357,821     1,212,913
        Deferred financing costs on convertible and non-convertible
          notes                                                            435,336       502,480
        Investment deposit                                                 850,000       100,000
        Equity investment in affiliates                                  1,150,551     1,051,628
                                                                       -----------   -----------
                                                                         8,133,364     7,090,044
                                                                       -----------   -----------

               Total Assets                                            $43,503,361   $36,271,317
                                                                       ===========   ===========

Liabilities and Stockholders' Equity

    Current Liabilities
        Notes payable - bank and non-convertible notes                 $ 6,895,984   $ 4,989,166
        Current maturities of capital lease obligations                     63,164        60,465
        Accounts payable                                                15,827,201    11,560,890
        Accrued expenses                                                 1,672,626     1,301,316
        Payable-minority shareholder                                       118,965       150,120
        Short-term loan payable                                            317,166       315,325
        Income taxes payable                                                99,250       106,003
                                                                       -----------   -----------
               Total current liabilities                                24,994,356    18,483,285

    Capital Lease Obligations                                               67,438        58,969

    Convertible Note, net                                                3,488,711     3,504,912
                                                                       -----------   -----------

               Total Liabilities                                        28,550,505    22,047,166
                                                                       -----------   -----------

    Series A Preferred Stock, net                                        1,544,599     1,325,933

    Minority Interest                                                      209,836       178,789
</TABLE>


                                       1
<PAGE>

                                Pacific CMA, Inc.
                      Condensed Consolidated Balance Sheets
                    September 30, 2006 and December 31, 2005

<TABLE>
<CAPTION>
<S>                                                                    <C>             <C>
Stockholders' Equity
    Common stock, no par value; authorized - 100,000,000 shares and
      issued - 2006 - 28,188,073 shares and 2005 - 26,412,437 shares      4,722,289       5,477,953
    Treasury common stock, at cost, 2006 - 41,800 shares; 2005 -
      32,900 shares                                                         (32,623)        (24,827)
    Warrants outstanding                                                  1,610,679       1,551,403
    Additional paid-in capital                                            6,409,494       5,161,850
    Retained earnings                                                       460,327       1,560,839
    Accumulated other comprehensive income                                   28,255          35,897
    Unearned compensation cost                                                   --      (1,043,686)
                                                                       ------------    ------------
           Total stockholders' equity                                    13,198,421      12,719,429
                                                                       ------------    ------------

           Total stockholders' equity and liabilities                  $ 43,503,361    $ 36,271,317
                                                                       ============    ============
</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
                                              2006            2005             2006             2005
                                         -------------    -------------    -------------    -------------
                                                           (restated)                        (restated)

<S>                                      <C>              <C>              <C>              <C>
Freight Forwarding Income                $  45,055,638    $  33,945,901    $ 112,815,905    $  88,603,871
                                         ----------------------------------------------------------------

Operating Expenses
    Cost of forwarding                      39,033,203       28,927,102       96,984,176       75,047,650
    General and administrative               4,852,464        3,961,562       14,078,375       11,215,366
    Depreciation and amortization              269,955          242,570          774,082          692,034
    Stock-based compensation cost               94,159           55,537          153,850          212,176
                                         ----------------------------------------------------------------
                                            44,249,781       33,186,771      111,990,483       87,167,226
                                         ----------------------------------------------------------------

Operating Income                               805,857          759,130          825,422        1,436,645
                                         ----------------------------------------------------------------

Other Income (Expense)
    Interest and other income                  102,302           43,578          309,306          120,403
    Interest expense                          (226,206)        (157,314)        (615,358)        (384,878)
    Minimum borrowing note and
      revolving note amortization of
      deferred financing costs                 (26,677)         (28,461)         (67,143)         (28,461)
    Amortization of minimum borrowing
      note and revolving note discount         (18,400)         (27,642)         (43,075)         (27,642)
    Equity in profit (loss) of
      affiliates                                 6,989          (31,216)          (7,539)         (57,572)
                                         ----------------------------------------------------------------
                                              (161,992)        (201,055)        (423,809)        (378,150)
                                         ----------------------------------------------------------------

Income  Before Income Taxes                    643,865          558,075          401,613        1,058,495

Provision for Income Taxes/(Benefits)          124,597          118,752         (116,401)         (10,534)
                                         ----------------------------------------------------------------

Income Before Minority Interest                519,268          439,323          518,014        1,069,029

Minority Interest                              (26,445)          (7,367)         (24,535)         (22,588)
                                         ----------------------------------------------------------------

Net Income                                     492,823          431,956          493,479        1,046,441

Accretion of Series A Preferred
   Stock, net to redemption value and
   dividends                                  (616,425)        (484,552)      (1,593,991)        (874,825)
                                         ----------------------------------------------------------------

Net income (loss) attributable to
   common shareholders                   $    (123,602)   $     (52,596)   $  (1,100,512)   $     171,616
                                         ================================================================

Basic Earnings (loss) Per Share
   attributable to common stockholders   $       (0.01)   $        0.00    $       (0.04)   $        0.01

Diluted Earnings (loss) Per Share
   attributable to common stockholders   $       (0.01)   $        0.00    $       (0.04)   $        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, 2006 and 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                          2006           2005
                                                                       -----------    -----------
                                                                                      (restated)
<S>                                                                    <C>            <C>
Operating Activities
    Net income                                                         $   493,479    $ 1,046,441
    Items not requiring (providing) cash
       Amortization of convertible and non-convertible note discount        43,075         27,641
       Amortization of convertible and non-convertible note deferred
          financial costs                                                   67,143         28,460
       Depreciation and amortization                                       318,716        252,803
       Amortization of intangibles                                         455,366        439,232
       Gain on sale of property and equipment                              (16,492)        (7,111)
       Minority interest in income of subsidiaries                          24,535         22,588
       Common stock issued for services and employee compensation          153,850         10,000
       Share of loss of affiliates                                           7,539        212,176
       Provision for doubtful accounts                                      18,122         57,572
       Deferred income taxes                                              (153,770)      (259,610)
    Changes in
       Accounts receivable                                              (5,382,296)    (2,495,088)
       Accounts payable                                                  4,266,311        963,701
       Accrued expenses                                                    371,310        (26,300)
       Income taxes refundable/payable                                       6,144        187,793
       Other assets and liabilities                                        115,176        253,804
                                                                       --------------------------
           Net cash provided by operating activities                       788,208        714,102
                                                                       --------------------------

Investing Activities
    Collection of loans receivable                                              --          1,950
    Purchase of property and equipment                                    (391,433)      (327,207)
    Capital injection from minority interest                                37,968             --
    Acquisition of subsidiary                                             (624,560)      (536,030)
    Acquisition of associates                                             (106,463)            --
    Proceeds from sale of property and equipment                            16,492         15,618
    Deposit refund from potential equity investment                             --         40,000
    Deposit paid for potential acquisition                                (750,000)            --
                                                                       --------------------------
           Net cash used in investing activities                        (1,817,996)      (805,669)
                                                                       --------------------------

Financing Activities
    Net change in restricted cash                                          420,603     (1,214,867)
    Net change in notes payable - bank                                   2,023,018       (376,807)
    Principal payment in business bank loan                                   --       (2,500,000)
    Injection under capital lease obligation                                58,064           --
    Principal payments under capital lease obligation                      (46,439)       (57,499)
    Proceeds from other loan                                                  --          184,995
    Proceeds from short-term debt                                             --           71,065
    Principal payments on short-term debt                                  (29,314)            --
    Principal payments of non-convertible note                            (116,201)        (3,338)
    Repurchase of common stock                                              (7,796)            --
    Proceeds from convertible and non-convertible note net of
      financing cost                                                            --      5,577,488
    Proceeds from exercise of stock option                                      --         19,600
                                                                       --------------------------
           Net cash provided by financing activities                     2,301,935      1,700,637
                                                                       --------------------------

Increase  in Cash and Cash Equivalents                                   1,272,147      1,609,070

Foreign Currency Exchange Difference                                       (50,653)        (8,762)

Cash and Cash Equivalents, Beginning of Period                           2,018,093      1,538,146
                                                                       --------------------------

Cash and Cash Equivalents, End of Period                               $ 3,239,587    $ 3,138,454
                                                                       ==========================
</TABLE>


                                       4
<PAGE>

                                Pacific CMA, Inc.
                 Condensed Consolidated Statements of Cash Flows
                  Nine Months Ended September 30, 2006 and 2005
                                   (Unaudited)

Supplemental Cash Flow Information
    Cash paid for interest                                   $615,358   $384,878
    Cash paid for income taxes                                 38,709     44,390
    Cash refunded for income taxes                                 --     45,203
    Capital lease obligation incurred for equipment                --     66,795

See Notes to Condensed Consolidated Financial Statements


                                       5
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (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, 2006 and for the nine and three months ended September 30,
      2006 and 2005 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,
      2005 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, 2006 and 2005, and cash flows for the nine months
      ended September 30, 2006 and 2005 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 as restated and the related notes
      thereto for the year ended December 31, 2005 included in the Company's
      Form 10-K/A filed on August 25, 2006.

      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.

      Cash Equivalents

      The Company considers all liquid investments with original maturities of
      three months or less to be cash equivalents. At September 30, 2006, cash
      equivalents consisted primarily of money market accounts with brokers and
      certificates of deposit. At September 30, 2006, the Company's cash
      accounts in the United States of America exceeded federally insured limits
      by approximately $1,855,024.

      Restricted Cash

      Restricted cash consists of fixed deposits, collateral deposits and
      certificates of deposit held by banks providing collateral for overdraft,
      trust receipts, letters of credit and support bank guarantees provided to
      certain vendors of the Company. At September 30, 2006, the restricted cash
      held for these facilities amounted to $4,354,586. The restricted cash also
      includes cash held in lockbox account for financing the loan arrangement
      of Secured Convertible Note and Secured Non-Convertible Revolving Note
      with details discussed in Note 7. As of September 30, 2006, the cash held
      in the lockbox account amounted to $986,058 under the compensating balance
      arrangement.


                                       6
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

      Registration Rights Agreements

      The Company has adopted EITF 05-4, The Effect of Liquidated Damages Clause
      on a Freestanding Financial Instrument Subject to Issue No. 00-19, View C
      to account for its registration rights agreements. The Company has entered
      into registration rights agreements in association with the issuance of
      preferred stock, debt and warrants. View C of EITF 05-4 takes the position
      that the registration rights should be accounted for separately from the
      financial instrument as the payoff of the financial instruments is not
      dependent on the payoff of the registration rights agreement, and
      according to DIG K-1, registration rights agreements and the financial
      instruments do not meet the combining criteria as they relate to different
      risks. The Financial Accounting Standards Board (Board) has postponed
      further discussion on EITF 05-4. Since the Board has not reached a
      consensus, the Company's accounting for the registration rights may change
      when the Board reaches a consensus.

Note 2: Restatement of Financial Statements

      We have restated our consolidated financial statements as of and for the
      years ended December 31, 2005 and 2004 and as of and for the three and
      nine months ended September 30, 2005. The restatement for December 31,
      2005 and 2004 was reported in our amended 10-K/A filed on August 25, 2006
      with the SEC. The determination of the restatements was made as a result
      of a correction of the Company's application of SFAS No. 150, Accounting
      for Certain Financial Instruments with Characteristics of both Liabilities
      and Equity (SFAS 150), in accounting for the Company's Series A Preferred
      Stock. The Company originally accounted for its Series A Convertible
      Preferred Stock as a liability; however, since the preferred stock is
      convertible, the redemption feature is conditional and the Series A
      Preferred Stock should not be accounted for under SFAS 150. The Company
      has reviewed EITF D-98, Classification and Measurement of Redeemable
      Securities, and determined that the Series A Preferred Stock should be
      accounted for as temporary equity. This reclassification also resulted in
      the offering costs related with the Series A Preferred Stock to be
      reclassified from other assets and netted with the balance that the Series
      A Preferred Stock was recorded. As a result of this reclassification, the
      Company also reversed the expenses recorded to other income (expense) and
      recorded these charges directly to retained earnings. In addition, the
      Company has modified its presentation of earnings (loss) per share
      attributable to common stockholders to present the impact of the deemed
      dividend and beneficial conversion feature related to the preferred stock.
      Finally, the Company reversed the tax accounting for the beneficial
      conversion feature and deemed divided that had been recorded related to
      the Series A Preferred Stock.

      The Company has elected to accrete the discount related to the preferred
      stock over the period from the date of issuance to through the Series A
      Preferred Stock's redemption date using the interest method. The impact of
      the restatement on the consolidated statements of operations for the three
      and nine months ended September 30, 2006 is shown in the accompanying
      tables.


                                       7
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

The following table presents the effect of the Restatement on the consolidated
statement of operations

<TABLE>
<CAPTION>
                                                            Three Months Ended September 30, 2005
                                                          As Previously
                                                             Reported      Adjustments  As Restated
                                                          -------------    -----------  ------------
<S>                                                        <C>             <C>          <C>
 Freight Forwarding Income                                 $ 33,945,901                 $ 33,945,901
                                                           ------------                 ------------

 Operating Expenses
     Cost of forwarding                                     (28,927,102)                 (28,927,102)
     General and administrative                              (3,961,562)                  (3,961,562)
     Depreciation and amortization                             (242,570)                    (242,570)
     Stock-based compensation cost                              (55,537)                     (55,537)
                                                           ------------                 ------------
                                                            (33,186,771)                 (33,186,771)
                                                           ------------                 ------------

 Operating Income                                               759,130                      759,130
                                                           ------------                 ------------

 Other Income (Expense)
     Interest and other income                                   43,578                       43,578
     Interest expense                                          (157,314)                    (157,314)
     Preferred stock dividend and amortization of
       deferred financing costs                                (165,275)    165,275               --

     Amortization of preferred stock discount                  (319,277)    319,277               --

     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 loss of affiliates                               (31,216)                     (31,216)
                                                           ------------                 ------------
                                                               (685,607)                    (201,055)
                                                           ------------                 ------------

 Income Before Income Taxes                                      73,523                      558,075

 Provision for Income Taxes (Benefits)                          (75,069)    193,821          118,752
                                                           ------------                 ------------

 Income Before Minority Interest                                148,592                      439,323

 Minority Interest                                               (7,367)                      (7,367)
                                                           ------------                 ------------

 Net Income                                                $    141,225                      431,956
                                                           ============

 Accretion of Series A Preferred Stock, net to
    redemption value                                                       (484,552)        (484,552)
                                                                                        ------------

 Net income attributable to common shareholders                                         $    (52,596)
                                                                                        ============

 Earnings Per Share attributable to common stockholders

    - Basic                                                $       0.01                 $       0.00

    - Diluted                                              $       0.01                 $       0.00

Weighted average number of shares outstanding during the
    period

    - Basic                                                  25,761,160                   25,761,160

    - Diluted                                                25,763,499                   25,763,499
</TABLE>


                                       8
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

The following table presents the effect of the Restatement on the consolidated
statement of operations

<TABLE>
<CAPTION>
                                                            Nine Months Ended September 30, 2005
                                                          As Previously
                                                             Reported      Adjustments  As Restated
                                                          -------------    -----------  ------------
<S>                                                        <C>             <C>          <C>
Freight Forwarding Income                                $ 88,603,871                   $ 88,603,871
                                                         ------------                   ------------
Operating Expenses
    Cost of forwarding                                    (75,047,650)                   (75,047,650)
    General and administrative                            (11,215,366)                   (11,215,366)
    Depreciation and amortization                            (692,034)                      (692,034)
    Stock-based compensation cost                            (212,176)                      (212,176)
                                                         ------------                   ------------
                                                          (87,167,226)                   (87,167,226)
                                                         ------------                   ------------

Operating Income                                            1,436,645                      1,436,645
                                                         ------------                   ------------

Other Income (Expense)
    Interest and other income                                 120,403                        120,403
    Interest expense                                         (384,878)                      (384,878)
    Preferred stock dividend and amortization of
      deferred financing costs                               (438,084)    438,084                 --

    Amortization of preferred stock discount                 (436,741)    436,741                 --
    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 loss of affiliates                              (57,572)                       (57,572)
                                                         ------------                   ------------
                                                           (1,252,975)                      (378,150)
                                                         ------------                   ------------
                                                                                           1,058,495

Income Before Income Taxes                                    183,670

Benefit for Income Taxes                                     (360,464)    349,930            (10,534)
                                                         ------------                   ------------


Income Before Minority Interest                               544,134                      1,069,029

Minority Interest                                             (22,588)                       (22,588)
                                                         ------------                   ------------


Net Income                                               $    521,546                      1,046,441
                                                         ============

Accretion of Series A Preferred Stock, net to
   redemption value                                                      (874,825)          (874,825)
                                                                                        ------------

Net income attributable to common shareholders                                          $    171,616
                                                                                        ============


Earnings Per Share attributable to common stockholders

   - Basic                                               $       0.02                   $       0.01

   - Diluted                                             $       0.02                   $       0.01

Weighted average number of shares outstanding during
   the period

   - Basic                                                 25,450,550                     25,450,550

   - Diluted                                               25,485,699                     25,485,699
</TABLE>


                                       9
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

Note 3: Investment Deposit

      At September 30, 2006, the Company had deposited $100,000 with a potential
      acquisition target in the United States. The Company has a signed letter
      of intent with the target. The estimated purchase price is $1,000,000 to
      $1,500,000.

      At March 31, 2006, the Company entered into a Stock Purchase Agreement
      with HTL Logistics Limited, a Cayman Island corporation ("HTL"), pursuant
      to which the Company had agreed to acquire seventy percent (70%) of the
      outstanding shares of capital stock of HTL. The Company deposited $750,000
      with HTL to be applied to the purchase price at the closing of the
      transaction. On November 8, 2006, both parties decided to cancel this
      transaction and HTL agreed to return the deposit.

Note 4: 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,
                                                2006                                       2005
                                                          Per-Share                                  Per-Share
                                 Loss          Shares      Amount           Income        Shares      Amount
                              ----------    ----------   -----------      ----------    ----------   ----------
                                                                          (Restated)                 (Restated)
<S>                           <C>           <C>          <C>              <C>           <C>          <C>
Net Income (loss)
  attributable to
  common stockholders         $ (123,602)                                 $  (52,596)

 Basic EPS
  Income (loss)
     attributable to
     common stockholders      $ (123,602)   27,716,471   $      (0.01)    $  (52,596)   25,761,160   $   0.00
                                                         ============                                ========
   Stock options and
     warrants                                       --                                      14,452
                                            ----------                                  ----------

 Diluted EPS
     Income (loss)
     attributable to common
     stockholders and
     assumed conversions      $ (123,602)   27,716,471   $      (0.01)    $  (52,596)   25,763,499   $  0.00
                                            -------------------------                   ----------
</TABLE>


                                       10
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

Note 4: Earnings Per Share (Continued)

      Common stock equivalents related to warrants, convertible preferred stock
      and convertible note of 4,735,788 and 3,693,182, and 4,499,459 shares,
      respectively, are not included in the calculation of dilutive earnings per
      share for the three months ended September 30, 2006 because they have an
      anti-dilutive effect.

      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 dilutive earnings per share for the three months ended
      September 30, 2005 because they have an anti-dilutive effect.

<TABLE>
<CAPTION>
                                                          Nine Months Ended September 30,
                                                2006                                       2005
                                                          Per-Share                                  Per-Share
                                 Loss          Shares      Amount           Income        Shares      Amount
                              ----------    ----------   -----------      ----------    ----------   ----------
                                                                          (Restated)                 (Restated)
<S>                           <C>           <C>          <C>              <C>           <C>          <C>

Net Income (loss)
     attributable to
     common stockholders      $(1,100,512)                                $  171,616

Basic EPS
  Income (loss) attributable                27,238,656
    to common stockholders    $(1,100,512)               $      (0.04)    $  171,616    25,450,550   $    0.01
                                                         ============                                =========
  Stock options and warrants                         --                                     11,573
                                            -----------                                -----------

Diluted EPS
  Income (loss) attributable                27,238,656
    to common stockholders
    and assumed conversions   $(1,100,512)               $      (0.04)    $  171,616   $25,485,699   $    0.01
                                            -------------------------                  -----------------------
</TABLE>

      Common stock equivalents related to warrants, convertible preferred stock
      and convertible note of 4,735,788 and 3,693,182, and 4,499,459 shares,
      respectively, are not included in the calculation of dilutive earnings per
      share for the nine months ended September 30, 2006 because they have an
      anti-dilutive effect.

      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 dilutive earnings per share for the nine months ended
      September 30, 2005 because they have an anti-dilutive effect.


                                       11
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

Note 5: Common Stock and Preferred Stock

      As of September 30, 2006, the Company's authorized capital stock was
      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.

      Preferred Stock

      Series A Preferred Stock has 10,000,000 shares authorized and 3,250 shares
      issued and outstanding as of September 30, 2006. The Series A Preferred
      Stock has a stated value of $1,000 per share. The Series A Preferred Stock
      is convertible into shares of common stock at an average conversion price
      of $0.88 for each share of common stock and requires 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 between April 2008 and May 2008. This preferred stock is
      non-voting.


                                       12
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

Note 5: Common Stock and Preferred Stock (Continued)

      One of the institutional investors converted shares of the Series A
      Preferred Stock into shares of common stock at a conversion price of $0.88
      per share on the following dates:

      Date of conversion                                 Number of Series A
                                                       Preferred Stock converted
         August 16, 2005                                                     250
         November 10, 2005                                                   300
         January 25, 2006                                                    300
         March 30, 2006                                                      300
         July 5, 2006                                                        300
         September 5, 2006                                                   300
                                                                           -----
               Total converted                                             1,750
                                                                           =====

       The outstanding Series A Preferred Stock is redeemable in 2008. The
       redeemable amounts and unamortized discounts are as follows:

                                             September 30,      December 31,
                                                 2006               2005
                                           ----------------    ----------------
                                                                  (Restated)
         Redeemable amount                 $      3,250,000    $      4,450,000
         Unamortized discount                    (1,705,401)         (3,124,067)
                                           ----------------    ----------------
               Carrying value              $      1,544,599    $      1,325,933
                                           ================    ================

      Future amortization of the deferred financing costs, preferred stock
      discount and beneficial conversion is as follows:

                 October 1, 2006 to December 31, 2006               $    224,713
                 2007                                                  1,048,420
                 2008                                                    432,268


                                       13
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

Note 5: Common Stock and Preferred Stock (Continued)

      Stock Based Compensation

      The Company has a 2000 Stock Plan ("Plan") to issue stock options and
      grants pursuant to various agreements with employees, service providers,
      business associates and others that will have an important business
      relationship with the Company or its affiliates. The maximum number of
      shares of the Company's common stock available for issuance under the Plan
      is 2,200,000 shares. As of September 30, 2006, the number of shares
      available for future grants under the Plan was 919,127 shares. During the
      nine months ended September 30, 2006, 106,315 shares of common stock was
      granted to 5 employees, and the Company recognized the stock-based
      compensation cost of $49,115. The value of the stock grants was based on
      the market price of the Company's common stock on the grant date.

      From time to time, the Company has issued other restricted stock grants
      that are being recognized as compensation expense ratably over the vesting
      period. As of September 30, 2006 there were 900,000 shares of common stock
      that had been granted that are not vested with unearned compensation cost
      of $938,951. Compensation expense recognized as expenses during the three
      and the nine months ended September 30, 2006 was $84,026 and $153,850,
      respectively.

      The Company, effective January 1, 2006, adopted Statement of Financial
      Accounting Standards No. 123R (FAS 123R), "Share-Based Payments" using the
      modified prospective application method for transition. Accordingly, prior
      year amounts have not been restated. The transition did not have a
      material effect on earnings for the three and nine months ended September
      30, 2006.

      Previously, the unearned compensation related to restricted stock grants
      was recorded as a contra equity account. Under the provisions of FAS 123R,
      paragraph 74, this unearned compensation is no reflected in stockholders'
      equity. Unearned compensation as of January 1, 2006 was against the common
      stock. This reclassification is reflected in the balances of common stock
      as of September 30, 2006.

      Certain other disclosures required under FAS 123R and SAB107 have not been
      made as they are not material.

      Treasury Stock

      Based on a resolution of the Board of Directors in October 2005, the
      Company authorized the repurchase of shares of its outstanding Common
      Stock, in an aggregate amount not to exceed $500,000. As of September 30,
      2006, 41,800 shares of common stock totaling $32,623 have been repurchased
      and reflected at cost as a reduction from stockholders' equity.


                                       14
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

Note 6: Notes Payable - Bank and Secured Non-Convertible Revolving Note

      Short-term borrowings and weighted average interest rates at September 30,
      2006 and December 31, 2005, were:

                                   September 30, 2006        December 31, 2005
                                   Weighted                 Weighted
                                   Average                  Average
                                   Interest                 Interest
                                     Rate      Amount         Rate      Amount
                                     ----      ------         ----      ------

Bank Overdraft and Trust Receipts    7.57%   $6,137,605       7.26%   $4,872,965

Non-Convertible Note (see Note 7)      --            --       8.25%      116,201
                                     -------------------------------------------
                                     7.57%   $6,137,605       7.29%   $4,989,166
                                     -------------------------------------------

      The Company has certain banking facilities to finance its working capital.
      The amounts available under these facilities totaled $9,266,409 at
      September 30, 2006. The facilities accrue interest at rates varying with
      the Hong Kong Interbank Offered Rate (HIBOR). As of September 30, 2006,
      these rates ranged between 4.05% - 9%. The facilities require annual
      renewals and are collateralized by personal guarantees of two directors.
      and restricted cash of $5,340,643. As of September 30, 2006 and December
      31, 2005, amounts outstanding against these facilities were $6,137,605 and
      $4,872,965, respectively.


                                       15
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

Note 7: Convertible and Non-Convertible 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 $0.001 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.

      Effective May 2, 2006, the Company completed the restructuring of its
      outstanding $7.5 million credit facility (the "Laurus Credit Facility")
      with Laurus. The conversion feature of the Laurus Credit Facility has been
      limited to the conversion of the secured convertible note (the
      "Convertible Note") in the maximum principal amount of $4 million, which
      is convertible into shares of the Common Stock at fixed conversion rate of
      $0.88 per share with respect to the first $3,750,000 and $1.05 per share
      with respect to the remaining $250,000. The Company issued an additional
      warrant to Laurus providing Laurus the right to purchase up to additional
      350,000 shares of Common Stock at an exercise price of $0.88 per share.

      As of September 30, 2006, the outstanding balance of the Convertible and
      non-convertible Notes, net of discount, is $3,488,711 and the unamortized
      discount is $511,289.


                                       16
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

Note 8: Related Party Transactions

      As of September 30, 2006 and December 31, 2005, the Company had a payable
      to a minority shareholder of a subsidiary of $118,965 and $150,120
      respectively. The payable accrues interest at 3% per annum, is unsecured
      and has no fixed payment terms.

Note 9: Segment 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/A filed for
      the year ended December 31, 2005.

      The following table summarized the Company's operations for the three
      months ended September 30, 2006 and 2005 analyzed into air and sea
      forwarding services:

<TABLE>
<CAPTION>
                                   Air Forwarding                  Sea Forwarding                     Total
                                2006            2005            2006            2005            2006           2005
                            ------------    ------------    ------------    ------------    ------------    ------------
                                             (Restated)                      (Restated)                      (Restated)
<S>                         <C>             <C>             <C>             <C>             <C>             <C>
      Revenue               $ 26,771,763    $ 19,458,025    $ 18,283,875    $ 14,487,876    $ 45,055,638    $ 33,945,901
      Cost of forwarding     (23,109,357)    (15,982,684)    (15,923,846)    (12,944,419)    (39,033,203)    (28,927,103)
      Depreciation and
         amortization           (159,284)       (139,531)       (110,671)        (52,031)       (269,955)       (191,562)
      Interest income                 16              --              11              --              27              --
      Interest expense           (74,549)        (41,353)           (637)         (4,917)        (75,186)        (46,270)
      Other segment
         expenses
         attributable to
         segment              (1,678,278)       (831,042)       (879,549)       (667,586)     (2,557,827)     (1,498,628)
                            --------------------------------------------------------------------------------------------

      Segment income        $  1,750,311    $  2,463,415    $  1,369,183    $    818,923       3,119,494       3,282,338
                            ============================================================

      Net other
         unallocated
         expenses                                                                             (2,600,226)     (2,843,014)

      Minority interest                                                                          (26,445)         (7,367)
                                                                                            ----------------------------

      Net income                                                                            $    492,823    $    431,957
                                                                                            ============================

      Goodwill              $  2,863,366    $  2,420,584    $    898,763    $    728,084    $  3,762,129    $  3,148,668
      Intangible assets          454,851         861,682         122,676         256,115         577,527       1,117,797
      Other assets            25,474,758      21,054,590      13,688,947      10,530,505      39,163,705      31,585,095
                            --------------------------------------------------------------------------------------------

             Total assets   $ 28,792,975    $ 24,336,856    $ 14,710,386    $ 11,514,704    $ 43,503,361    $ 35,851,560
                            --------------------------------------------------------------------------------------------
</TABLE>


                                       17
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

Note 10: Segment of the Business (Continued)

      Business Segments (Continued)

      The following table summarized the Company's operations for the nine
      months ended September 30, 2006 and 2005 analyzed into air and sea
      forwarding services:

<TABLE>
<CAPTION>
                                    Air Forwarding                   Sea Forwarding                        Total
                                2006             2005             2006             2005             2006             2005
                            -------------    -------------    -------------    -------------    -------------    -------------
                                              (Restated)                         (Restated)                        (Restated)
<S>                         <C>              <C>              <C>              <C>              <C>              <C>
      Revenue               $  70,543,346    $  53,495,638    $  42,272,559    $  35,108,233    $ 112,815,905    $  88,603,871
      Cost of forwarding      (60,232,867)     (43,949,936)     (36,751,309)     (31,097,715)     (96,984,176)     (75,047,651)
      Depreciation and
         amortization            (465,862)        (415,472)        (308,220)        (150,589)        (774,082)        (566,061)
      Interest income                   7             --                 15             --                 22             --
      Interest expense           (198,538)        (137,205)          (1,416)         (23,291)        (199,954)        (160,496)
      Other segment
         expenses
         attributable to
         segment               (4,897,259)      (2,667,171)      (2,604,401)      (1,712,729)      (7,501,660)      (4,379,900)
                            --------------------------------------------------------------------------------------------------

      Segment income        $   4,748,827    $   6,325,854    $   2,607,228    $   2,123,909        7,356,055        8,449,763
                            ================================================================

      Net other
         unallocated
         expenses                                                                                  (6,838,041)      (7,380,734)

      Minority interest                                                                               (24,535)         (22,588)
                                                                                                ------------------------------

      Net income                                                                                $     493,479    $   1,046,441
                                                                                                ==============================

      Goodwill              $   2,863,366    $   2,420,584    $     898,763    $     728,084    $   3,762,129    $   3,148,668
      Intangible assets           454,851          861,682          122,676          256,115          577,527        1,117,797
      Other assets             25,474,758       21,054,590       13,688,947       10,530,505       39,163,705       31,585,095
                            --------------------------------------------------------------------------------------------------

             Total assets   $  28,792,975    $  24,336,856    $  14,710,386    $  11,514,704    $  43,503,361    $  35,851,560
                            --------------------------------------------------------------------------------------------------
</TABLE>

      Geographical Segments

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

<TABLE>
<CAPTION>
                               Three Months Ended            Nine Months Ended
                                  September 30,                September 30,
                              2006           2005           2006           2005
                          ------------   ------------   ------------   ------------
<S>                       <C>            <C>            <C>            <C>
      Revenue
          * IATA Area 1   $  4,354,106   $  5,177,152   $ 13,222,562   $ 14,140,077
          * IATA Area 2      8,330,136      9,222,784     20,397,887     21,882,617
          * IATA Area 3     32,371,396     19,545,965     79,195,456     52,581,177
                          ---------------------------------------------------------

             Total        $ 45,055,638   $ 33,945,901   $112,815,905   $ 88,603,871
                          ---------------------------------------------------------
</TABLE>


                                       18
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

Note 11: Segment of the Business (Continued)

      Geographical Segments (Continued)

<TABLE>
<CAPTION>
                                As of September 30, 2006                     As of September 30, 2005
                                      Other Assets                                 Other Assets
                          Trade        (Including         Total         Trade       (Including        Total
                       Receivables      Goodwill)        Assets       Receivables    Goodwill)        Assets
                       ------------   ------------    ------------   ------------   ------------   ------------
                                                                                     (Restated)     (Restated)
<S>                    <C>            <C>             <C>            <C>            <C>            <C>
      Assets
        *IATA Area 1   $ 11,094,224   $  9,073,543    $ 20,167,767   $  9,091,098   $  7,876,169   $ 16,967,267
        *IATA Area 2      3,975,986        (31,583)      3,944,403      2,680,394           --        2,680,394
        *IATA Area 3      7,680,324     11,710,867      19,391,191      4,765,903     11,437,996     16,203,899
                       ------------   ------------    ------------   ------------   ------------   ------------

             Total     $ 22,750,534   $ 20,752,827    $ 43,503,361   $ 16,537,395   $ 19,314,165   $ 35,851,560
                       ------------   ------------    ------------   ------------   ------------   ------------
</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 12: Concentrations

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

                                  Three Months Ended          Nine Months Ended
                                     September 30                September 30
      Major Customer             2006           2005         2006           2005
      --------------             ----           ----         ----           ----

           A                      10%            14%           9%            11%


                                       19
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

Note 13: 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"), Careship International Transportation
      Ltd. ("Careship International") and Careship Aviation Limited ("Careship
      Aviation") for 35%, 40%, 46.92% and 20%, respectively. Shanghai Air Cargo
      began operations in April 2004 and the interest in Vantage Point, Careship
      International and Careship Aviation was acquired by the Company in October
      2004, January 2005 and July 2006, respectively. Financial results of
      operations of the affiliates during the three and nine months ended
      September 30, 2006 are summarized below:

<TABLE>
<CAPTION>
                                     Three months ended                                    Nine months ended
                                     September 30, 2006                                   September 30, 2006
                     Shanghai      Vantage      Careship       Careship   Shanghai Air   Vantage       Careship      Careship
                    Air Cargo       Point     International    Aviation      Cargo        Point      International   Aviation
                    ----------   ----------   -------------  ----------   ------------  ----------   -------------  ----------
<S>                 <C>          <C>           <C>           <C>           <C>          <C>           <C>           <C>
Net Sales           $  504,488   $  265,193    $  144,743    $       --    $1,191,330   $  642,236    $  270,973    $       --
Cost of Sales          393,400      262,151       118,433            --       921,536      591,877       207,560            --
Gross Profit           111,088        3,042        26,310            --       269,794       50,360        63,413            --
Net Income (Loss)       61,320      (43,732)       (2,006)       (2,349)      116,278      (86,351)      (24,821)       (2,349)
Equity in Income
    (Loss) of
    Affiliates          21,462           --       (14,003)         (470)       40,697           --       (11,646)         (470)
</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 $535,558 and the balance of $256,895 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 $13,062 and $39,187 for the
      three and nine months ended September 30, 2006 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.


                                       20
<PAGE>

                                Pacific CMA, Inc.
              Notes to Condensed Consolidated Financial Statements
                           September 30, 2006 and 2005
                                   (Unaudited)

Note 14: Business Acquisitions

      On February 28, 2006, the Company acquired the balance of 49% of the
      outstanding stock of WCL Global Logistics Ltd. ("WCL") for $597,945 and in
      turn WCL became a wholly owned subsidiary of the Company. WCL is a
      non-asset based logistics services company based in Hong Kong. It also has
      a branch office in Guangzhou, PRC, which handles both air and ocean
      shipments all over the World. Goodwill and intangible assets of $514,586
      and $50,646, respectively, were recognized in this transaction.

      On July 1, 2006, the Company acquired the balance of 11% of the
      outstanding stock of AIO Global Logistics Limited ("AIO") for $11,315. AIO
      is a non-asset based logistics services company based in Hong Kong.
      Goodwill of $6,735 was recognized in this transaction.

      The above transactions were recorded using the purchase method of
      accounting. The results of operations are included in the consolidated
      financial statement since the date of acquisition. Assets and liabilities
      were recorded based on fair values. The purchase price in excess of net
      identified tangible and intangible assets acquired is accounted in
      accordance to FASB Statement No. 141. The Company will finalize the
      purchase accounting for these transactions during the fourth quarter of
      2006.


                                       21
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition 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
including, but not limited to, its Annual Report on Form 10-K and its amended
Annual Report on Form 10-K/A. 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.

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     Challenges posed by competing in a changing international environment;

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;


                                       22
<PAGE>

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,
10-K/A and registration statements) with the Securities and Exchange Commission
(the "SEC") 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.

RESTATEMENT

      We have restated our consolidated financial statements as of and for the
years ended December 31, 2005 and 2004 and as of and for the nine months ended
September 30, 2005. The determination of the restatements was made as a result
of a correction of the Company's application of SFAS No. 150, Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity (SFAS 150), in accounting for the Company's Series A Preferred Stock. The
Company originally accounted for its Series A Convertible Preferred Stock as a
liability; however, since the preferred stock is convertible, the redemption
feature is conditional and the Series A Preferred Stock should not be accounted
for under SFAS 150. The Company has reviewed EITF D-98, Classification and
Measurement of Redeemable Securities, and determined that the Series A Preferred
Stock should be accounted for as temporary equity. This reclassification also
resulted in the offering costs related with the Series A Preferred Stock to be
reclassified from other assets and netted with the balance that the Series A
Preferred Stock was recorded. As a result of this reclassification, the Company
also reversed the expenses recorded to other income (expense) and recorded these
charges directly to retained earnings. In addition, the Company has modified its
presentation of earnings (loss) per share attributable to common stockholders to
present the impact of the deemed dividend and beneficial conversion feature
related to the preferred stock. Finally, the Company reversed the tax accounting
for the beneficial conversion feature and deemed divided that had been recorded
related to the Series A Preferred Stock.

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.

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.


                                       23
<PAGE>

ACCOUNTING FOR INCOME TAXES

In preparing our condensed 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 condensed 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 condensed consolidated statements of operations 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
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, 2006, goodwill totaled $3,762,128, other intangible assets
amounted to $577,528 and our long-lived assets, consisting primarily of net
property, plant and equipment, totaled $915,835.

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".

ACCOUNTS AND NOTES RECEIVABLES AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Accounts receivable are stated at the amount billed to customers. The Company
provides an allowance for doubtful accounts, which is based upon a review of
outstanding receivables, historical collection information and existing economic
conditions. Accounts receivable are ordinarily due 30 days after the issuance of
the invoice. Accounts past due more than 120 days are considered delinquent.
Delinquent receivables are written off based on individual credit evaluation and
specific circumstances of the customer.


                                       24
<PAGE>

Notes receivable are stated at their outstanding principal amount, net of an
allowance for uncollectible notes. The Company provides an allowance for
uncollectible notes, which is based upon a review of outstanding receivables,
historical collection information and existing economic conditions. Outstanding
notes accrue interest based on the terms of the respective note agreements. A
note receivable is considered delinquent when the debtor has missed three or
more payments. At that time, the note is placed on non-accrual status and
interest accrual ceases and does not resume until the note is no longer
classified as delinquent. Delinquent notes are written off based on individual
credit evaluation and specific circumstances of the borrower.

OVERVIEW

The Company does not carry on any business activities by itself. Instead,
through its subsidiaries and associated companies, it provides supply chain
management solutions, contract logistics services and international freight
forwarding services. The Company's current business was formed from a base of
two freight forwarders, AGI Logistics (HK) Ltd. ("AGI") and Airgate
International Corp. ("Airgate") which were acquired in 2000 and 2002,
respectively and the business is managed from our principal support group
offices in New York and Hong Kong.

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 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 and associated companies.
At September 30, 2006, AGI wholly-owned subsidiaries included Shenzhen Careship
International Transportation Ltd. ("HK Careship"), AGI China Limited and WCL
Global Logistics Limited ("WCL") which were acquired by AGI in 2000, 2002 and
2006, respectively, while the majority owned subsidiary included AIO Global
Logistics Limited (62%). AGI also has equity investments in affiliates: Shanghai
Air Cargo Ground Handling Services Ltd ("Shanghai Air Cargo"), Vantage Point
Services Limited ("Vantage Point"), Careship International Transportation Ltd.
("Careship International") and Careship Aviation Limited ("Careship Aviation")
of 35%, 40%, 46.92% and 20% of their total equity, respectively.

During 2006, AGI entered into the following acquisition transactions:

On February 28, 2006, AGI acquired the remaining 49% of the outstanding stock of
WCL and as a result, WCL became a wholly-owned subsidiary of AGI. WCL is a
non-asset based logistics services company based in Hong Kong. It also has a
branch office in Guangzhou, PRC, which handles both air and ocean shipments all
over the world.


                                       25
<PAGE>

On October 24, 2005, the Company formed a new entity in Hong Kong, AIO Global
Logistics Ltd ("AIO"), to acquire certain assets of All In One Global Logistics
Ltd ("All In One"). On July 1, 2006, the Company acquired additional 11% of the
outstanding stock of AIO, and as a result, the Company holds 62% of the
outstanding shares of AIO. The shareholders of All In One hold the other 38%.
The principle activities of AIO are providing warehouse management and freight
forwarding services in Hong Kong.

On July 1, 2006, the Company invested $20,000 representing 20% of the
outstanding stock of Careship Aviation Limited. Careship Aviation is a joint
venture project with independent third parties to provide non-asset based
logistics services in Shanghai PRC and Hong Kong. Careship Aviation does not
carry out business during the third quarter of 2006. It is expected to start its
operations on December 2006.

On July 1, 2006, the Company invested $15,300 representing 51% of the
outstanding stock of SDA Forwarding Co Limited ("SDA"). Like Careship Aviation,
SDA has not comment business during third quarter of 2006. It is expect its
business will start at end of November 2006. SDA is a joint venture company with
independent third parties which based in Hong Kong and concentrated on South
East Asia's freight forwarding.

Paradigm Global Logistics expanded it Los Angeles facility. The enlarged and
newly upgraded space covers 14,000 square feet (a more than five-fold increase)
and includes 16 security cameras and 10 loading docks. The Company closed and
consolidated the Atlanta and Miami offices into the new expanded Los Angeles
operation

The following discussion, concerning the results of operations, liquidity and
capital resources of the Company, is based solely upon the business operations
that are carried on by the Company's subsidiaries for the three and nine months
ended September 30, 2006 and the same period of 2005.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 2005

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
unreimbursed 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.


                                       26
<PAGE>

Total revenue for the three months ended September 30, 2006 increased
approximately 33% compared with the three months ended September 30, 2005, from
$33,945,901 in 2005 to $45,055,638 in 2006. 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 after its
acquisition in July 2005.

Revenue derived from the operations of AGI increased approximately 33% during
the three months ended September 30, 2006 as compared with 2005. 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;

The revenue of Airgate represented approximately 59% of our total revenue for
the three months ended September 30, 2006. Airgate focuses its operations on the
import of goods from the Far East and deconsolidation of cargo. Revenue derived
from the operations of Airgate increased approximately 31% for the three months
ended September 30, 2006 when compared with the same period of 2005. The
increase is the result of the effort of Airgate's staff.

Total revenue derived from Paradigm and AGI Singapore for the three months ended
September 30, 2006 amounted to approximately $5.48 million, which represents
approximately 12% of total revenue of the Pacific CMA

When compared with 2005, the cost of forwarding for the three months ended
September 30, 2006 increased approximately 35%, from $28,927,102 in 2005 to
$39,033,203 in 2006. The increase in costs was primarily the result of the
organic growth of the Company and the acquisition of WCL in July 2005 and July
2006.

Gross profit margin for the three months ended September 30, 2006 decreased,
from approximately 14.78% in 2005 to 13.37% in 2006 and gross profit (revenue
minus cost of forwarding) for the three months ended September 30, 2005
increased 20%, from $5,018,799 in 2005, to $6,022,435 in 2006.

Net income for the three months ended September 30, 2006 increased approximately
14%, from $431,956 in 2005, to $492,823 in 2006. The increase in net income was
mainly due to the increases in operating income.

Net loss attributable to common shareholders for the three months ended
September 30, 2006 increased approximately 135%, from a net loss of $52,596 in
2005 to a net loss of $123,602 in 2006. The decrease in net income (loss)
attributable to common shareholders was mainly due to the significant increases
in amortization of the Preferred Stock deferred financing cost, debt discount
and beneficial conversion. Details of expense fluctuations will be discussed in
the section "Accretion of Series A Preferred Stock, Net To Redemption Value".


                                       27
<PAGE>

BUSINESS SEGMENT OPERATING RESULTS

The results of operations for each segment are as follows:

AIRFREIGHT OPERATIONS: Revenue from airfreight operations increased
approximately 38%, from $19,458,025 in the third quarter of 2005 to $26,771,763
in the same period of 2006. Airfreight revenue for foreign operations (that
includes AGI Group and AGI Singapore) was $11,887,204, while airfreight revenue
for domestic operations (that includes Airgate and Paradigm) was $18,870,765,
and offsetting inter-company transactions totaled $3,986,206. The volume of
airfreight improved in 2006 compared with 2005. The increase was primarily due
to (i) an increase in routing orders from Asia to the United States as a result
of new customers and agents in India, Japan and Turkey who joined the Pacific
CMA during 2005 and 2006, (ii) the maturing of businesses for HK Careship,
Paradigm Global Logistics and AGI Singapore; and (iii) WCL and AIO joining the
Company in July 2005 and November 2005 respectively.

Costs for the airfreight forwarding operations increased approximately 45%, from
$15,982,683 in the third quarter of 2005 to $23,109,357 in the same period of
2006. Airfreight cost attributable to foreign operations was $10,242,220, while
airfreight cost attributable to domestic operations was $16,853,343, and
offsetting inter-company costs were $3,986,206. The airfreight cost increase in
2006 was due to the collection of airline surcharges for security, advance cargo
manifest and fuel. Also, due to the increase in fuel surcharge that cannot be
totally passed on to customers, gross profit margin decreased from approximately
17.86% in 2005 to approximately 13.68 % in 2006. Despite the decreased in gross
profit margin, overall gross profits increased approximately 5% to $3,662,406.

Total segment overhead attributable to the airfreight operation increased by
approximately 89%, from $1,011,927 in the third quarter of 2005 to $1,912,095 in
the same period of 2006, as a result of greater resources being allocated to
airfreight operations. Details regarding the increase in overhead expenses are
discussed below in "- Non Operating Income and Expenses".

Overall, net segment income for the airfreight operation decreased by
approximately 29% from $2,463,415 in the third quarter of 2005 to $1,750,311 in
the same period of 2006. The decrease in net income was mainly due to the
significant increases in fuel charge; also, some clients have been shifted to
seafreight forwarding.

SEA FREIGHT OPERATION: Revenue from sea freight operations increased
approximately 26% to $18,283,875 in the third quarter of 2006 from $14,487,876
in the same period of 2005. Sea freight revenue for foreign operations was
$6,489,655, while sea freight revenue for domestic operations was $12,096,682,
and offsetting inter-company transactions were $302,462. The increase in revenue
was due to the contribution from the new branch offices of Shenzhen Careship in
China and the increase in quantity of freight consolidation by Airgate Chicago.

The increase in revenue for 2006 from 2005 was due to revenues derived from new
customers in European countries. In addition, our agents in India, Japan and
Turkey introduced more customers into our network, which led to greater revenue
from the Shanghai market in the third quarter of 2006. There was also an
increment in the quantity of freight consolidation in Chicago.

Costs for the sea freight forwarding operation increased approximately 23%, from
$12,944,419 in the third quarter of 2005 to $15,923,846 in the same period of
2006. Sea freight costs attributable to foreign operations were $5,411,194,
while costs attributable to domestic operations were $10,815,114, and
inter-company costs were $302,462. The gross profit margin increased from
approximately 10.65% in 2005 to approximately 12.91% in 2006. As a result of
increased revenues, overall gross profits increased approximately 53%, to
$2,360,029.


                                       28
<PAGE>

Total segment overhead attributable to the sea freight operation increased
approximately 37%, from $724,534 in the third quarter of 2005 to $990,846 in the
same period of 2006. Overall net income for the sea freight operation increased
approximately 67%, from $818,923 in the third quarter of 2005 to $1,369,183 in
the same period of 2006. The increase in net income was mainly the result of the
organic growth of AGI and Airgate.

OPERATING EXPENSES

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses increased approximately 23%, to $4,862,596
in the third quarter of 2006 from $3,961,562 in 2005. There was a significant
incremental increase in expenses for the following items in this quarter:
commission, overseas traveling, rent and rates, as well as salaries and
allowance. As the Company has been continuously growing and in order to cope
with the growth in 2006, our staff planning needs called for the hiring of
additional staff throughout our offices in the fourth quarter of 2005 and
thereafter.

Commission: Expenses related to commission increased approximately 27%, from
$609,816 in 2005 to $774,629 in 2006. The increase in commission was due to the
growth of revenue and expanding of business.

Overseas traveling: Expenses related to overseas traveling increased
approximately 30%, from $76,541 in 2005 to $99,617 in 2006. The increase in
travel expenses was due to costs attributable to an increased number of trips to
Mainland China, Japan, South East Asia and European countries to promote our
freight business.

Salaries and allowance: Salaries and allowance increased approximately 26% from
$1,707,514 in 2005 to $2,147,041 in 2006. This increase was the result of the
addition of approximately 45 staff persons during the first quarter of 2006 in
order to keep pace with our growth.

STOCK-BASED COMPENSATION COST

Stock-based compensation cost increased approximately 51% from $55,537 in the
third quarter of 2005 to $84,026 in the same period of 2006. The increase in
compensation cost was primarily due to a common stock grant to five employees in
the third quarter of 2006 and being fully amortized in that period.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization increased approximately 11% from $242,570 in the
third of 2005 to $269,955 in the same period of 2006. The increase was mainly
attributable to purchases of additional computer hardware and software for the
enhancement of new logistics system at AGI Logistics Hong Kong Ltd.

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 on July 1, 2005 (51%) and February 28, 2006 (49%). These
intangible assets are amortized on a straight-line basis over a period of five
to eight years. During the three months ended September 30, 2006 and 2005, the
amortization expense attributable to this asset was $152,139 and $150,561,
respectively, an increase of $1,578.


                                       29
<PAGE>

CONVERTIBLE NOTE AND NON-CONVERTIBLE NOTE AMORTIZATION OF DEFERRED FINANCING
COST The deferred financing costs related to Convertible Note and
Non-Convertible Note is amortized over their term to maturity, which is three
years. A total of $26,677 and $28,461 was expensed during the third quarter of
2006 and 2005, respectively. . AMORTIZATION OF CONVERTIBLE NOTE AND
NON-CONVERTIBLE NOTE DISCOUNT This discount is amortized ratably over the term
of the Convertible Note and Non-Convertible Note which is three years. During
the third quarter of 2006 and 2005, $18,400 and $27,642, respectively, of this
discount was amortized into expense.

ACCRETION OF SERIES A PREFERRED STOCK, NET TO REDEMPTION VALUE AND DIVIDENDS

Accretion of Series A Preferred Stock and Dividends was $616,425 and $484,552
for the three months ended September 30, 2006 and 2005, respectively. The
increase is primarily related to the conversion of 600 shares of preferred stock
into common stock during the three months ended September 30, 2006. The
remaining discount related to those shares was expensed as of the date of
conversion.

NINE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 2005

OVERALL RESULTS

Total revenue for the nine months ended September 30, 2006 increased
approximately 27% compared with the nine months ended September 30, 2005, from
$88,603,871 in 2005 to $112,815,905 in 2006. 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 after the
acquisition in July 2005.

Revenue derived from the operations of AGI increased approximately 32% during
the nine months ended September 30, 2006 as compared with 2005. 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 inclusion of the results of WCL after the acquisition on July 1, 2005
      and July 1, 2006.

The revenue of Airgate represented approximately 57% of our total revenue for
the nine months ended September 30, 2006. Airgate focuses its operations on the
import of goods from the Far East and deconsolidation of cargo. Revenue derived
from the operations of Airgate increased approximately 18% for the nine months
ended September 30, 2006 when compared with the same period of 2005. The
increase is the result of the effort of Airgate's staff.


                                       30
<PAGE>

Total revenue derived from Paradigm and AGI Singapore for the nine months ended
September 30, 2006 amounted to approximately $13.97 million, which represents
approximately 12% of total revenue of the Pacific CMA.

When compared with 2005, the cost of forwarding for the nine months ended
September 30, 2006 increased approximately 29%, from $75,047,650 in 2005 to
$96,984,176 in 2006. The increase in costs was primarily the result of the
organic growth of the Company and the acquisition of WCL in July 2005 and July
2006.

Gross profit margin for the nine months ended September 30, 2006 decreased from
approximately 15.30% in 2005 to 14.03% in 2006 and gross profit (revenue minus
cost of forwarding) for the nine months ended September 30, 2006 increased 17%,
from $13,556,221 in 2005, to $15,831,729 in 2006.

Net income for the nine months ended September 30, 2006 decreased approximately
53%, from $1,046,441 in 2005 to $493,479 in 2006. The decrease in net income was
mainly due to the significant increases in general and administrative expenses.
Details of expense fluctuations will be discussed in the sections "Operating
expenses".

Net income (loss) attributable to common shareholders for the nine months ended
September 30, 2006 decreased approximately 541%, from net income of $171,616 in
2005 to net loss of $1,100,512 in 2006. The decrease in net income (loss)
attributable to common shareholders was mainly due to the significant increases
in amortization of the Convertible and Non-convertible Note discount and their
deferred financing costs.

BUSINESS SEGMENT OPERATING RESULTS

The results of operations for each segment are as follows:

AIRFREIGHT OPERATIONS: Revenue from airfreight operations increased
approximately 32%, from $53,495,638 for the nine months ended September 30, 2005
to $70,543,346 in the same period of 2006. Airfreight revenue for foreign
operations (that includes AGI Group and AGI Singapore) was $32,190,190, while
airfreight revenue for domestic operations (that includes Airgate and Paradigm)
was $45,774,405, and offsetting inter-company transactions totaled $7,421,249.
The volume of airfreight improved in 2006 compared with 2005. The increase was
primarily due to (i) an increase in routing orders from Asia to the United
States as a result of new customers and agents in India, Japan and Turkey who
joined the Pacific CMA during 2005 and 2006, (ii) the maturing of businesses for
HK Careship, Paradigm Global Logistics and AGI Singapore; and (iii) WCL and AIO
joining the Company in July 2005 and November 2005, respectively.

Costs for the airfreight forwarding operations increased approximately 37%, from
$43,949,935 for the nine months ended September 30, 2005 to $60,232,867 in the
same period of 2006. Airfreight cost attributable to foreign operations was
$27,675,114, while airfreight cost attributable to domestic operations was
$39,979,002, and offsetting inter-company costs were $7,421,249. The airfreight
cost increase in 2006 was due to the collection of airline surcharges for
security, advance cargo manifest and fuel. Also, due to the fuel surcharge
increase that cannot be totally passed on to customers, gross profit margin
decreased from approximately 17.83% in 2005 to approximately 14.62% in 2006.
Despite the decrease in gross profit margin, overall gross profits increased
approximately 8% to $10,310,479.


                                       31
<PAGE>

Total segment overhead attributable to the airfreight operation increased by
approximately 73%, from $3,219,848 for the nine months ended September 30, 2005
to $5,561,659 in the same period of 2006, as a result of greater resources being
allocated to airfreight operations. Details regarding the increase in overhead
expenses are discussed below in "- Non Operating Income and Expenses".

Overall, net segment income for the airfreight operation decreased by
approximately 25% from $6,325,854 for the nine months ended September 30, 2005
to $4,748,827 in the same period of 2006. The decrease in net income was due to
the increase in fuel surcharge that cannot be totally passed on to customers.

SEA FREIGHT OPERATION: Revenue from sea freight operations increased
approximately 20% to $42,272,559 for the nine months ended September 30, 2006
from $35,108,233 in the same period of 2005. Sea freight revenue for foreign
operations was $14,257,949, while sea freight revenue for domestic operations
was $29,020,733, and offsetting inter-company transactions were $1,006,123. The
increase in revenue was due to the contribution from the new branch offices of
Shenzhen Careship in China and the increase in quantity of freight consolidation
by Airgate Chicago.

The increase in revenue for 2006 from 2005 was due to revenues derived from new
customers in European countries. In addition, our agents in India, Japan and
Turkey introduced more customers into our network, that led to greater revenue
from the Shanghai market in the first three quarters of 2006. There was also an
increment in the quantity of freight consolidation in Chicago.

Costs for the sea freight forwarding operation increased approximately 18%, from
$31,097,715 for the nine months ended September 30, 2005 to $36,751,309 in the
same period of 2006. Sea freight costs attributable to foreign operations were
$11,663,271, while costs attributable to domestic operations were $26,094,161,
and inter-company costs were $1,006,123. The gross profit margin was quite
constant, approximately 11.96% in 2005 and approximately 13.06% in 2006. As a
result of increased revenues, overall gross profits increased approximately 38%,
to $5,521,250.

Total segment overhead attributable to the sea freight operation increased
approximately 54%, from $1,886,609 for the nine months ended September 30, 2005
to $2,914,037 in the same period of 2006. Overall net income for the sea freight
operation increased approximately 23%, from $2,123,909 for the nine months ended
September 30, 2005 to $2,607,228 in the same period of 2006. The increase in net
income was mainly the result of the organic growth of AGI and Airgate.

OPERATING EXPENSES

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses increased approximately 26%, to $14,078,375
for the nine months ended September 30, 2006 from $11,215,366 in 2005. There was
a significant incremental increase in expenses for the following items in the
first three quarters of 2006: consultancy fees, overseas traveling, and salaries
and allowances. As the Company has been continuously growing and in order to
cope with the growth in 2006, our staff planning needs called for the hiring of
additional staff throughout our offices starting from the fourth quarter of
2005.

Consultancy fees: Expenses related to consultancy fees increased approximately
43%, from $233,064 in 2005 to $333,683 in 2006. The increase in consultancy fees
was due to the Company seeking more consulting advice relating to freight
shipments and assistance in developing our expanding network of agents and
offices.


                                       32
<PAGE>

Overseas traveling: Expenses related to overseas traveling increased
approximately 60%, from $224,749 in 2005 to $359,579 in 2006. The increase in
travel expenses was due to costs attributable to an increased number of trips to
Mainland China, Japan, South East Asia and European countries to promote our
freight business.

Salaries and allowance: Salaries and allowance increased approximately 29% from
$4,931,984 in 2005 to $6,366,627 in 2006. This increase was the result of the
addition of approximately 53 staff persons during the nine months ending
September 30, 2006 needed to keep pace with our growth.

STOCK-BASED COMPENSATION COST

Stock-based compensation cost decreased approximately 28% from $212,179 for the
nine months ended September 30, 2005 to $153,850 in the same period of 2006. The
decrease in compensation cost was primarily due to part of the stock based
compensation cost in the first quarter of 2005 being fully amortized in the year
2005.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization increased approximately 12% from $692,034 for the
nine months ended September 30, 2005 to $774,082 in the same period of 2006. The
increase was mainly attributable to purchases of additional computer hardware
and software for the enhancement of a new logistics system at AGI Logistics Hong
Kong Ltd.

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 on July 1, 2005 (51%) and February 28, 2006 (49%). 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, 2006 and 2005, the
amortization expense attributable to this asset was $455,366 and 439,232,
respectively, an increase of $16,134.

NON OPERATING INCOME AND EXPENSES

INTEREST AND OTHER INCOME

Interest and other income increased from $120,403 for the nine months ended
September 30, 2005 to $309,306 in the same period of 2006. This increase is
mainly due to the rising interest rates and the increase in the amount of bank
pledge deposits securing additional banking facilities.

INTEREST EXPENSE

Interest expense increased from $384,878 for the nine months ended September 30,
2005 to $615,358 in the same period of 2006. The increase in interest expense is
primarily due to an increase in short-term working capital financing and the
increases in interest rates during the first half of 2006 as compared to the
first half of 2005.


                                       33
<PAGE>

CONVERTIBLE NOTE AND NON-CONVERTIBLE NOTE AMORTIZATION OF DEFERRED FINANCING
COST

The deferred financing costs related to Convertible Note and Non-Convertible
Note is amortized over their term to maturity, which is three years. A total of
$67,143 and $28,461 was expensed for the nine months ended September 30, 2006
and 2005, respectively. The increase in expense was the result of the notes
being outstanding for the full nine months in 2006 vs. only five months in 2005.

AMORTIZATION OF CONVERTIBLE NOTE AND NON-CONVERTIBLE NOTE DISCOUNT

This discount is amortized ratably over the term of the Minimum Borrowing Note
and Revolving Note, which is three years. For the nine months ended September
30, 2006 and 2005, $43,164 and $27,642, respectively, of the discount was
amortized into expense. The increase in expense was the result of the notes
being outstanding for the full nine months in 2006 vs. only five months in 2005.

ACCRETION OF SERIES A PREFERRED STOCK, NET TO REDEMPTION VALUE AND DIVIDENDS

Accretion of Series A Preferred Stock and Dividends was $1,593,911 and $874,825
for the nine months ended September 30, 2006 and 2005, respectively. The
increase is primarily related to the conversion of 1,200 shares of preferred
stock into common stock during the nine months ended September 30, 2006. The
remaining discount related to those shares was expensed as of the date of
conversion.

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 on 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.


                                       34
<PAGE>

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

Additional risks and uncertainties include, but are not limited to, the
following:

o     Governmental deregulation efforts, regulations governing the Company's
      products and/or the international trade and tariff environment adversely
      affecting our ability to provide services to customers;

o     Competitive marketplace conditions impeding the ability of the Company to
      pass future cost increases to customers;

o     Dependence of the Company on international trade resulting from favorable
      worldwide economic conditions;

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 trend of the increasing price of oil has led airlines to charge
      additional fuel surcharges passed onto shippers and consignees, increasing
      the Company's shipping costs, that, in turn, results in a reduction in our
      customers' shipping incentive and increasing our rate of order
      cancellation; and

o     The World Health Organization received reports of the deadly H5N1 Avian
      influenza virus in various countries with some cases being reported of
      human infection with the H5N1 Avian influenza virus. As the deadly H5N1
      virus can be carried by migratory birds and could spread globally, the
      Company's operations could be adversely effected by Avian influenza if a
      human outbreak occurs.

LIQUIDITY AND CAPITAL RESOURCES

We generated approximately $788,208 and $714,103 of cash from operating
activities for the nine months ended September 30, 2006 and 2005, respectively.
This increase in cash from operations was mainly attributable to the decrease in
other receivables and the increase in accounts payable.

Net cash used in investing activities was $1,817,996 and $805,669 for the nine
months ended September 30, 2006 and 2005, respectively. We used $391,433 to
acquire plant and equipment to improve our office facilities, and at the same
time, we received $16,492 from the sales of property and equipment. We used
$624,560 and $106,463 for the acquisition of subsidiaries and associates,
respectively. We also paid $750,000 as a deposit for a business acquisition.

Net cash provided by financing activities was $2,301,935 and $1,700,637 for the
nine months ended September 30, 2006 and 2005, respectively. We made principal
payment under capital lease obligations, short term debt and non-convertible
note of $46,439, $29,314 and $116,201, respectively. Restricted cash deposits
that was pledged to the banks was decreased by $420,603. Note payable to the
banks increased by $2,023,018 during the nine months ended September 30, 2006,
and we used $7,796 for the repurchase of our common stock.


                                       35
<PAGE>

Working capital was $9,459,806 (inclusive of restricted cash of approximately
$5.3 million) and $10,747,137 (inclusive of restricted cash of approximately
$6.3 million) as of September 30, 2006 and December 31, 2005 respectively. The
decrease in workings capital is due to $597,945 was used for acquisition of 49%
of common stock of WCL Global Logistics Limited, $11,315 was used for investment
of 11% of outstanding common stock of AIO Global Logistics Limited, $15,300 was
used for investment of 51% of common stock of SDA Forwarding Co, Limited and
$750,000 was used as investment deposit of HTL. 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, 2006. 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.

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 through a major marketing campaign through the Indian
subcontinent, including India, Sri Lanka and Bangladesh. 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 COMMITMENTS

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

<TABLE>
<CAPTION>
                                                                 Payments Due by Period
                                                -------------------------------------------------------
Contractual Obligations            Total        Less than 1      1-3 years    4 - 5 years    Thereafter
                                                    year
                                     $               $               $             $             $
<S>                              <C>             <C>             <C>            <C>               <C>
Capital lease Obligations          130,602          63,164          67,438           --           --
Operating Leases                 3,392,275       1,343,154       1,735,998      313,123           --
Cargo Space Commitments          2,480,585       2,480,585              --           --           --
Series A Preferred Stock and     3,176,956         197,708       2,979,248           --           --
Cumulative Dividends
</TABLE>

We have capital lease obligations of $130,602 as of September 30, 2006, of which
$63,164 is repayable within one year, and $67,438 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
$3,392,275 as of September 30, 2006. As of September 30, 2006, the current
portion of these commitments of $1,343,154 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, 2006, the amount outstanding for such commitments to be entered
into in 2006 was approximately $2.5 million.


                                       36
<PAGE>

As of September 30, 2006, our commercial commitments may be summarized as
follows:

<TABLE>
<CAPTION>
Other Commercial            Total Amounts   Amount of Commitment Expiration Per Period
Commitments                  Committed
--------------------------------------------------------------------------------------
                                                   Less than 1 year         1-3 years
<S>                           <C>                        <C>                <C>
Overdraft                     $2,914,991                 $2,914,991                --
Invoice Trust Receipt          3,337,492                  3,337,492                --
Guarantees by bank             1,137,138                  1,137,138                --
Convertible Notes, net         3,624,620                                    3,624,620
of discounts of $375,380
Payable - minority               118,965                    118,965                --
shareholder
</TABLE>

As of September 30, 2006, to finance our working capital, our available banking
facilities were approximately $7,112,975 obtained from creditworthy commercial
banks in Hong Kong. As of that date, the total amount of bank credit facilities
utilized was $6,137,605. This was made up of (i) $2,914,991 of overdrafts; (ii)
$3,337,492 of invoice trust receipts. Moreover, we have a borrowing facility
with Laurus, subject to certain requirements. The total available amount of the
credit facility is $7,500,000. As of September 30, 2006, the total amount
outstanding for the credit facility, net of discount is $3,624,621, which is the
convertible note.

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

We have updated our research on the effects of CPEA since it became operational,
and certain of the following information was extracted from the Trade and
Industry Department, The Government of HKSAR Press Release "The CEPA benefits
Hong Kong economy" on January 5, 2006.

The Closer Economic Partnership Arrangement ("CEPA") that was signed on June 29,
2003, originally focused on stimulating and enhancing Hong Kong's economic
recovery. After that, Six Annexes to CEPA Main Text, Supplement to CEPA (CEPA
II) and Supplement II to CEPA (CEPA III) were subsequently signed on September
23, 2003, October 27, 2004 and October 18, 2005 respectively. In theory, CEPA
significantly lowers the barriers for Hong Kong enterprises to tap the Mainland
China market. Now in its third year of operation, CEPA fostered closer economic
co-operation between the Mainland and Hong Kong and contributed to the long-term
economic development in both places.

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
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.

CEPA III, signed in October 2005, just came into effect on January 1, 2006,
provides tariff-free access for all products of Hong Kong origin (except
prohibited articles) imported into the Mainland upon applications by local
manufacturers and upon CEPA rules of origin being met and agreed upon. On trade
in services, taking the three phases of CEPA together, the Mainland has agreed
to provide preferential treatment to Hong Kong service suppliers in 27 service
areas. Twenty three liberalization measures spread across 10 service areas,
including distribution and transport, became effective on January 1, 2006 under
CEPA III.


                                       37
<PAGE>

In reviewing its operation in the past two years, CEPA has been implemented
smoothly since its inception. More than 10,000 applications for Certificate of
Origin under CEPA (CO(CEPA)), with a total export value exceeding HK$3.5 billion
(approximately US$449 million) have been issued. The products concerned range
from textiles and clothing and foods to pharmaceutical, plastics and plastics
products. The amount of CO (CEPA) issued and the value of CEPA exports in 2005
both recorded more than a 100% increase compared with 2004 after a wide range of
products including food and beverages were granted zero-tariff preference under
CEPA II.

Through our Hong Kong-based AGI Logistics (HK) Ltd, Shenzhen Careship
Transportation Ltd, WCL Global Logistics Ltd, AIO Global Logistics Ltd as well
as Pacific CMA Ltd (formerly known as AGI China Ltd), 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.

Companies are decreasing the number of freight forwarders and supply chain
management providers with which they interact so that they might work providers
who are more familiar with their requirements, processes and procedures, and who
can function as long-term partners. As such, freight forwarders that 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 shift.


                                       38
<PAGE>

Item 3 Quantitative And Qualitative Disclosure 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
rate 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
HKD 7.80 to USD 1.00, 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, 2006, would have had the effect of
raising operating income approximately $90,000. An average 10% strengthening of
the U.S. Dollar, for the same period would have had the effect of reducing
operating income by approximately $110,000. The Company currently does not
utilize any the derivative 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, 2006, the Company had cash
and cash equivalents and restricted cash of $8.6 million and short-term
borrowings of $6.9 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, 2006.

Item 4 Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief
Financial Officer, conducted an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
of the Exchange Act), as of the end of the period covered by this quarterly
report.

Our management, including our Chief Executive Officer and Chief Financial
Officer, does not expect that our disclosure controls and procedures will
prevent all errors and all fraud. A control system, no matter how well designed
and operated, can provide only reasonable, not absolute, assurance that the
control system's objectives will be met. Further, the design of a control system
must reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues, errors, and instances of fraud, if
any, have been or will be detected. The inherent limitations include, among
other things, the realities that judgments in decision-making can be faulty, and
that breakdowns can occur because of simple error or mistake. Controls and
procedures also can be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management or employee override of the
controls and procedures. The design of any system of controls and procedures is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions. Over time, controls and


                                       39
<PAGE>

procedures may become inadequate because of changes in conditions or
deterioration in the degree of compliance with policies or procedures. Because
of the inherent limitations in a cost-effective control system, misstatements
due to error or fraud may occur and not be detected. If and when management
learns that any control or procedure is not being properly implemented, (a) it
immediately reviews our controls and procedures to determine whether they are
appropriate to accomplish the control objective and, if necessary, modifies and
improves our controls and procedures to assure compliance with our control
objectives, (b) it takes immediate action to cause our controls and procedures
to be strictly adhered to, (c) it immediately informs all relevant managers of
the requirement to adhere to such controls, as well as all relevant personnel
throughout our organization, and (d) it implements in our training program
specific emphasis on such controls and procedures to assure compliance with such
controls and procedures. The development, modification, improvement,
implementation and evaluation of our systems of controls and procedures is a
continuous project that requires changes and modifications to them to remedy
deficiencies, to improve training, and to improve implementation in order to
assure the achievement of our overall control objectives.

BKD, LLP ("BKD"), our former independent auditors, advised our management and
Audit Committee that during the course of their audit of our financial
statements as of and at December 31, 2005, that they noted material weaknesses
in our internal controls as follows: insufficient review of allowance for
doubtful accounts; lack of documented second review and approval of journal
entries; and our former Chief Financial Officer not being sufficiently active.

Based upon the evaluation of our disclosure controls and procedures, our Chief
Executive Officer and our new Chief Financial Officer have concluded that,
subject to the limitations noted above, our disclosure controls and procedures
as of September 30, 2006 were effective to ensure that material information
relating to us and our consolidated subsidiaries is made known to them by others
within those entities to allow timely decisions regarding required disclosures.

After discussing advice with our new auditors, we recognized the need for
additional documentation of second reviews and in some cases, enhanced
procedures. Since then, we have been correcting the material weaknesses in
internal control. Corrective measures include regular credit review of
outstanding receivables, increase manpower on debts collections, separation of
duties and improve documentation second review and approval of journal entries.
Moreover, we replaced our former chief financial officer during the quarter
ended June 30, 2006. Our new Chief Financial Officer, John Mazarella, has
reviewed all the accounts receivable of our Operating Divisions as of September
30, 2006 and has indicated to senior management what accounts may need further
discussion, and has reviewed the procedures with the heads of our Operating
Divisions to insure that adequate provisions have been provided.

This will be a continuing process and will lead to increased controls where
necessary. In addition, he has reviewed all expense and journal entries and will
report to the Audit Committee any corrective action needed, if appropriate.
Changes and additional controls will be considered on an ongoing basis as we
anticipate our new Chief Financial Officer will be most pro-active.


                                       40
<PAGE>

                                     PART II

                                OTHER INFORMATION

Item 1. Legal Proceedings

Reference is made to our Annual Report on Form 10-K for our fiscal year ended
December 31, 2005 (the "Annual Report"), Part I, Item 3: "Legal Proceedings."

Item 1A. Risk Factors

Threatened AMEX Delisting.

      In September of 2006, the staff of the American Stock Exchange ("AMEX")
informed the Company that they had made a "preliminary" determination to seek
delisting of the Company's common stock based on assertions that, in late 2003,
the Company had manipulated the market price of its common stock to procure AMEX
listing. The AMEX staff even asserted that if the Company were to prove itself
not complicit in the alleged acts, the AMEX staff would still seek a delisting.
The Company denies all of such assertions and will use all available resources
to thwart the commencement of such a proceeding and, if commenced, to defend any
such action. There can be no assurances that the Company will prevail. If the
Company's common stock is delisted from the AMEX, Company lenders may accelerate
the repayment of indebtedness, impose penalties upon the Company and commence
lawsuits against the Company. The defense of the Company to any such actions
will be costly, drawing funds from the Company's business operations, and will
also draw management's time and attention away from the day-to-day business
operations of the Company. Although the Company believes it has the financial
resources to pay its creditors and defend itself in such actions this belief may
not be accurate. Additionally, the Company's operations may adversely be
affected with personnel and the Company's finances being strained.

Item 4. Submission of Matters to a Vote of Security Holders

      On August 22, 2006, the Company held a special meeting of stockholders.
See the Company's Schedule 14A filed with the SEC on July 27, 2006 and Report on
Form 8-K filed with the SEC on August 24, 2006.

Item 5. Other Information

      In April 20, 2006, the Company had entered into a Stock Purchase Agreement
with HTL Logistics Limited, a Cayman Island corporation ("HTL"), to acquire a
majority of outstanding shares of capital stock of HTL with an option to
purchase the remaining shares of its capital stock.

      The Stock Purchase Agreement initially provided for the closing of the
proposed acquisition on or before July 1, 2006, and was later extended to
October 31, 2006. Completion of the agreement by the Company was contingent on
the Company obtaining equity financing, and satisfactory completion of due
diligence, among other things. The Company did not secure the equity financing,
was seeking debt financing, but its due diligence inquiries of HTL did not lead
to satisfactory results and on November 8, 2006, the parties elected to let the
October 31, 2006 extension date pass without further action. The loss of this
acquisition is not expected to have a material effect on the Company.


                                       41
<PAGE>

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, 2006               By: /s/ Alfred Lam
                                          --------------------------------------
                                      Name: Alfred Lam
                                      Title: Chairman of the Board of Directors
                                             (Principal Executive Officer)

Date: November 14, 2006               By: /s/ John Marzarella
                                          --------------------------------------
                                      Name: John Mazarella
                                      Title: Chief Financial Officer
                                             (Principal Financial and Accounting
                                             Officer)


                                       43