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 June 30, 2005

                                       OR

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

      For the transition period from _______________ to _______________

                         Commission File Number: 0-27653


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

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

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

                                 (212) 247-0049
--------------------------------------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes  |X| No |_|

Indicate  by check mark  whether  the  Registrant  is an  accelerated  filer (as
defined in rule 12b-2 of the Exchange Act)

Yes |_|  No |X|

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

Common Stock:  Outstanding as of: August 11, 2005:  25,786,783 shares


<PAGE>

                                PACIFIC CMA, INC.

                               INDEX TO FORM 10-Q

                                                                        PAGE NO.

PART I.   FINANCIAL INFORMATION............................................    3

ITEM 1.   FINANCIAL STATEMENTS.............................................    3

          Condensed  Consolidated  Balance  Sheets  as of June 30,  2005
          (Unaudited) and December 31, 2004 (Audited)......................    3

          Condensed Consolidated  Statements of Operations for the Three
          and Six Months Ended June 30, 2005 and 2004 (Unaudited)..........    4

          Condensed  Consolidated  Statements  of Cash Flows for the Six
          Months Ended June 30, 2005 and 2004 (Unaudited)..................    5

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

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL................   14

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.......   35

ITEM 4.   CONTROLS AND PROCEDURES..........................................   35

PART II.  OTHER INFORMATION................................................   36

ITEM 1.   LEGAL PROCEEDINGS................................................   36

ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS......   36

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES..................................   36

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............   37

ITEM 5.   OTHER INFORMATION................................................   37

ITEM 6.   EXHIBITS.........................................................   37

SIGNATURES.................................................................   38


                                       2
<PAGE>

                                PACIFIC CMA, INC.


PART I.   FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                          PACIFIC CMA, INC.
                                CONDENSED CONSOLIDATED BALANCE SHEETS
                                 JUNE 30, 2005 AND DECEMBER 31, 2004

ASSETS

                                                                         (UNAUDITED)
                                                                             2005           2004
                                                                         --------------  --------------
<S>                                                                      <C>             <C>
    CURRENT ASSETS
        Cash and cash equivalents                                        $  1,483,970    $  1,538,146
        Restricted cash                                                     6,293,312       5,088,088
        Accounts and notes receivable, net of allowance for doubtful
          accounts;
          2005 - $301,306; 2004 - $295,144                                 16,085,348      13,480,831
        Other receivables                                                   2,493,330       2,876,398
        Deposits and prepaid expenses                                         435,838         447,809
        Current portion of loan receivable                                     17,600          17,600
        Deferred income taxes                                                  57,476          57,476
                                                                         ------------    ------------
               Total current assets                                        26,866,874      23,506,348
                                                                         ------------    ------------
    PROPERTY AND EQUIPMENT, net of accumulated depreciation; 2005 -
       $812,564; 2004 - $735,309                                              760,477         619,753
                                                                         ------------    ------------
    OTHER ASSETS
        Goodwill                                                            2,740,508       2,740,508
        Intangible assets, net of accumulated amortization; 2005 -
          $1,817,565; 2004 - $1,528,894                                     1,069,143       1,357,814
        Deferred tax asset                                                  1,366,952         952,319
        Deferred financing costs on Series A Preferred Stock                  667,981         786,693
        Investment deposit                                                    583,669       1,037,001
        Equity investment in affiliates                                     1,079,403         258,912
        Other                                                                  29,704          30,994
                                                                         ------------    ------------
                                                                            7,537,360       7,164,241
                                                                         ------------    ------------
                                                                         $ 35,164,711    $ 31,290,342
                                                                         ============    ============
LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES
        Notes payable - bank                                             $  8,112,195    $  6,679,406
        Current maturities of capital lease obligations                        68,790          62,537
        Accounts payable                                                   10,740,105       9,357,362
        Accrued expenses and other                                            881,787         908,930
        Payable - minority shareholder                                        148,270          79,409
        Income taxes payable                                                  310,201         157,741
                                                                         ------------    ------------
               Total current liabilities                                   20,261,348      17,245,385
                                                                         ------------    ------------
    CAPITAL LEASE OBLIGATIONS                                                  88,972          64,373
                                                                         ------------    ------------
    SERIES A PREFERRED STOCK, net of discount; 2005 - $653,937; 2004 -
      $771,401                                                              4,346,063       4,228,599
                                                                         ------------    ------------
    MINORITY INTEREST                                                         107,468          92,248
                                                                         ------------    ------------
    STOCKHOLDERS' EQUITY
        Common stock                                                        5,330,244       5,113,412
        Warrants outstanding                                                1,073,653       1,073,653
        Additional paid-in capital                                          1,953,384       1,953,384
        Retained earnings                                                   3,141,267       2,760,947
        Accumulated other comprehensive income                                 17,071          24,174
        Unearned compensation cost                                         (1,154,759)     (1,265,833)
                                                                         ------------    ------------
               Total stockholders' equity                                  10,360,860       9,659,737
                                                                         ------------    ------------
                                                                         $ 35,164,711    $ 31,290,342
                                                                         ============    ============
</TABLE>


                                                  3
<PAGE>

<TABLE>
<CAPTION>
                                           PACIFIC CMA, INC.
                            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                              (UNAUDITED)


                                                THREE MONTHS ENDED               SIX MONTHS ENDED
                                                      JUNE 30                          JUNE 30
                                           ----------------------------    ----------------------------
                                               2005            2004            2005            2004
                                           ----------------------------    ----------------------------
<S>                                        <C>             <C>             <C>             <C>
FREIGHT FORWARDING INCOME                  $ 29,053,425    $ 21,563,487    $ 54,657,970    $ 38,018,000
                                           ------------    ------------    ------------    ------------
OPERATING EXPENSES
    Cost of forwarding                      (24,612,421)    (17,923,509)    (46,120,548)    (31,715,123)
    General and administrative               (3,691,909)     (3,012,790)     (7,253,804)     (5,597,834)
    Depreciation and amortization              (226,938)       (190,792)       (449,464)       (370,401)
    Stock-based compensation cost               (55,537)       (119,973)       (156,639)       (286,396)
                                           ------------    ------------    ------------    ------------
                                            (28,586,805)    (21,247,064)    (53,980,455)    (37,969,754)
                                           ------------    ------------    ------------    ------------
OPERATING INCOME                                466,620         316,423         677,515          48,246
                                           ------------    ------------    ------------    ------------
OTHER INCOME (EXPENSE)
    Interest and other income                    41,684          53,953          76,825         149,602
    Interest expense                           (113,212)        (72,940)       (227,564)       (162,661)
    Preferred stock dividend and
      amortization of deferred financing
      costs                                    (135,654)       (211,867)       (272,809)       (211,867)
    Amortization of preferred stock
      discount                                  (58,732)        (62,979)       (117,464)        (62,979)
    Equity in loss of affiliates                (14,555)        (19,340)        (26,356)        (19,340)
                                           ------------    ------------    ------------    ------------
                                               (280,469)       (313,173)       (567,368)       (307,245)
                                           ------------    ------------    ------------    ------------
INCOME (LOSS) BEFORE INCOME TAXES               186,151           3,250         110,147        (258,999)

BENEFIT FOR INCOME TAXES                       (141,251)        (56,589)       (285,394)       (195,541)
                                           ------------    ------------    ------------    ------------
INCOME (LOSS) BEFORE MINORITY INTEREST          327,402          59,839         395,541         (63,458)

MINORITY INTEREST                                (9,510)             --         (15,221)             --
                                           ------------    ------------    ------------    ------------
NET INCOME (LOSS)                          $    317,892    $     59,839    $    380,320    $    (63,458)
                                           ============    ============    ============    ============

BASIC EARNINGS PER SHARE                   $       0.01    $       0.00    $       0.02    $       0.00

DILUTED EARNINGS PER SHARE                 $       0.01    $       0.00    $       0.02    $       0.00
</TABLE>


                                                   4
<PAGE>

<TABLE>
<CAPTION>

                                         PACIFIC CMA, INC.
                          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              SIX MONTHS ENDED JUNE 30, 2005 AND 2004
                                            (UNAUDITED)


                                                                            2005           2004
                                                                        -----------    -----------
<S>                                                                     <C>            <C>
OPERATING ACTIVITIES
    Net income (loss)                                                   $   380,320    $   (63,458)
    Items not requiring (providing) cash
       Amortization of preferred stock discount                             117,464         62,979
       Preferred stock dividend and amortization of deferred
          financing costs                                                   272,809        146,296
       Depreciation and amortization                                        160,793         83,511
       Amortization of intangibles                                          288,671        286,890
       Gain on sale of property and equipment                                (7,229)        (6,701)
       Minority interest in income of subsidiaries                           15,221             --
       Common stock issued for services and employee compensation           156,639        286,396
       Share of loss of affiliates                                           26,356         19,340
       Provision for doubtful accounts                                       10,000         33,779
       Deferred income taxes                                               (414,633)        (7,195)
    Changes in
       Accounts receivable                                               (2,614,517)    (1,536,346)
       Accounts payable                                                   1,382,743        350,042
       Accrued expenses                                                     (27,143)      (107,898)
       Income taxes refundable/payable                                      152,460       (257,745)
       Other assets and liabilities                                         392,608     (1,603,835)
                                                                        -----------    -----------
           Net cash provided by (used in) operating activities              292,562     (2,313,945)
                                                                        -----------    -----------

INVESTING ACTIVITIES
    Collection of loans receivable                                            1,290          1,300
    Purchase of property and equipment                                     (243,257)      (186,737)
    Acquisition of subsidiary                                                    --         (7,300)
    Equity investment in Shanghai Air Cargo                                      --       (246,493)
    Proceeds from sale of property and equipment                             15,552         10,962
    Deposit refund from potential equity investment                          40,000             --
    Deposit paid for potential acquisition                                 (433,669)      (175,254)
                                                                        -----------    -----------
           Net cash used in investing activities                           (620,084)      (603,522)
                                                                        -----------    -----------
FINANCING ACTIVITIES
    Net change in restricted cash                                        (1,205,224)        55,490
    Net change in notes payable - bank                                    1,432,789     (1,031,626)
    Principal payments under capital lease obligation                       (35,944)       (20,657)
    Proceeds from short-term debt                                            71,170             --
    Principal payments on short-term debt                                        --       (372,558)
    Issuance of common stock, net of issuance costs                              --         (3,000)
    Proceeds from issuance of Series A Preferred Stock and detachable
      stock warrants                                                             --      5,000,000
    Proceeds from exercise of stock option                                   19,600             --
    Advances - director, net                                                     --         (6,643)
                                                                        -----------    -----------
           Net cash provided by financing activities                        282,391      3,621,006
                                                                        -----------    -----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                            (45,131)       703,539

FOREIGN CURRENCY EXCHANGE DIFFERENCE                                         (9,045)       (23,178)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                            1,538,146        912,240
                                                                        -----------    -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                $ 1,483,970    $ 1,592,601
                                                                        ===========    ===========
SUPPLEMENTAL CASH FLOW INFORMATION
    Cash paid for interest                                              $   227,564    $   162,661
    Cash paid for income taxes                                               25,900         69,633
    Cash refunded for income taxes                                           45,203             --
    Capital lease obligation incurred for equipment                          66,795        116,258
</TABLE>


                                                5
<PAGE>

                                PACIFIC CMA, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2005 AND 2004
                                   (UNAUDITED)


NOTE 1:  BASIS OF PRESENTATION

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

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

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


    PRINCIPLES OF CONSOLIDATION

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


NOTE 2:  INVESTMENT DEPOSIT

      Investment  deposits  are  cash  deposits  paid to  potential  acquisition
      targets.  As of June  30,  2005,  the  Company  deposited  $433,669  which
      represents  70% of the  purchase  price for a 51% equity  interest  in WCL
      Global  Logistics   Limited.   ("WCL"),   a  limited   liability   company
      incorporated in Hong Kong. WCL is engaged in providing air and sea freight
      services in Hong Kong. This  acquisition was completed  subsequent to June
      30, 2005.

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


                                       6
<PAGE>

<TABLE>
<CAPTION>
                                               PACIFIC CMA, INC.
                              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                             JUNE 30, 2005 AND 2004
                                                  (UNAUDITED)

NOTE 3:  EARNINGS PER SHARE

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

                                                           THREE MONTHS ENDED JUNE 30
                                                 2005                                     2004
                               ---------------------------------------   --------------------------------------
                                                            PER-SHARE                                PER-SHARE
                                 INCOME         SHARES       AMOUNT         INCOME       SHARES        AMOUNT
---------------------------------------------------------------------------------------------------------------
<S>                            <C>           <C>           <C>           <C>           <C>          <C>
NET INCOME                     $   317,894                               $    59,839

BASIC EPS
  Income available to
    common stockholders            317,894    25,293,611   $      0.01        59,839   25,825,590   $      0.00
  Stock options and warrants                      14,452   ===========                    224,106   ===========
                                             -----------                               ----------

DILUTED EPS
  Income available to common
    stockholders and assumed
    conversions                $   317,894    25,308,063   $      0.01   $    59,839   26,049,696   $      0.00
                               ===========   ===========   ===========   ===========   ==========   ===========
</TABLE>

      Common stock  equivalents  related to warrants and  convertible  preferred
      stock of 2,785,788 and  3,472,222,  respectively,  are not included in the
      calculation of diluted  earnings per share for the three months ended June
      30, 2005 because they have an anti-dilutive effect.

      Common stock  equivalents  related to warrants and  convertible  preferred
      stock of 2,685,788 and  3,472,222,  respectively,  are not included in the
      calculation of diluted  earnings per share for the three months ended June
      30, 2004 because they have an anti-dilutive effect.


                                       7
<PAGE>

<TABLE>
<CAPTION>
                                               PACIFIC CMA, INC.
                              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                             JUNE 30, 2005 AND 2004
                                                  (UNAUDITED)


                                                           SIX MONTHS ENDED JUNE 30
                                                 2005                                    2004
                               ---------------------------------------   --------------------------------------
                                                            PER-SHARE                                PER-SHARE
                                 INCOME         SHARES        AMOUNT         LOSS        SHARES       AMOUNT
---------------------------------------------------------------------------------------------------------------
<S>                            <C>           <C>           <C>           <C>           <C>          <C>
NET INCOME (LOSS)              $   380,320                               $   (63,458)

BASIC EPS
 Income (loss) available to
  common stockholders              380,320    25,293,634   $      0.02       (63,458)  25,753,887   $      0.00
 Stock options and warrants                       11,573   ===========                         --   ===========
                                             -----------                               ----------

DILUTED EPS
 Income (loss) available to
  common stockholders and
  assumed conversions          $   380,320    25,305,207   $      0.02   $   (63,458)  25,753,887   $      0.00
                               ===========   ===========   ===========   ===========   ==========   ===========
</TABLE>

      Common stock  equivalents  related to warrants and  convertible  preferred
      stock of 2,785,788 and  3,472,222,  respectively,  are not included in the
      calculation  of diluted  earnings  per share for the six months ended June
      30, 2005 because they have an anti-dilutive effect.

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

NOTE 4:  COMMON STOCK AND PREFERRED STOCK

      As of June 30, 2005, the Company's  authorized  capital stock is comprised
      of  100,000,000  shares of common stock,  $0.001 par value and  10,000,000
      shares of  preferred  stock,  $0.001 par value.  As of the same date,  the
      Company's issued and outstanding  capital stock is comprised of 25,586,783
      shares of common stock and 5,000 shares of preferred stock.

    PREFERRED STOCK

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

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


                                       8
<PAGE>

                                PACIFIC CMA, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2005 AND 2004
                                   (UNAUDITED)


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

      As the Series A Preferred Stock is mandatorily redeemable, it was recorded
      in accordance  with FASB Statement 150,  Accounting for Certain  Financial
      Instruments  With  Characteristics  of Both  Liabilities  and Equity.  The
      relative  fair value of the Series A  Preferred  Stock was  recorded  as a
      long-term  liability  and the  dividends  paid and accrued are included in
      interest  expense.  Additionally,  the Series A Preferred Stock was issued
      with a beneficial  conversion  feature.  In accordance with EITF 98-5, the
      intrinsic  value of the  beneficial  conversion  option  of  $166,666  was
      recorded as additional  finance charges under the caption "Preferred stock
      dividend and  amortization  of deferred  financing  costs" and credited to
      additional  paid-in capital for the year ended December 31, 2004.  Lastly,
      in accordance  with APB Opinion 14,  Accounting for  Convertible  Debt and
      Debt Issued With Stock Purchase Warrants, the Series A Preferred Stock and
      detachable stock warrants were recorded at their relative fair values with
      the value of the warrants recorded as additional paid-in capital. The fair
      value of the warrants was determined  based on an  independent  valuation.
      Effectively,  the Series A Preferred  Stock was  recorded at a discount of
      $939,713.  This  discount  will be amortized  ratably over the term of the
      Series A Preferred  Stock.  For the quarter and the six months  ended June
      30,  2005,  the Company  recognized  $58,732 and  $117,464,  respectively,
      related to the amortization of the Series A Preferred Stock discount.

    2000 STOCK PLAN

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

NOTE 5:  PLEDGE OF ASSETS

      As of June  30,  2005  and  December  31,  2004,  the  Group  had  pledged
      restricted cash deposits of $6,293,312 and $5,088,088, respectively.


                                       9
<PAGE>

                                PACIFIC CMA, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2005 AND 2004
                                   (UNAUDITED)

NOTE 6:  NOTES PAYABLE - BANK

      The Company has a $2,500,000  line of credit that accrues  interest at the
      bank's prime rate plus 0.75% (7% at June 30, 2005) and matures in November
      2005. The line is  collateralized  by a $1,000,000  certificate of deposit
      held by the Bank,  substantially  all the assets of Airgate and a personal
      guarantee of two directors of the Company.  This certificate of deposit is
      recorded as  restricted  cash.  The note requires the Company meet certain
      debt to equity ratios and other financial  covenants.  As of June 30, 2005
      and  December  31,  2004,  there  was  $2,500,000  borrowed  against  this
      facility.  This line of credit was  subsequently  terminated and repaid in
      full with the proceeds received from the Company's new financing on August
      4, 2005.

      On August 4, 2005,  the  Company  completed a  financing  transaction  and
      issued  to  an  institutional  investor,  a  Secured  Convertible  Minimum
      Borrowing Note for $4,000,000 and a Secured  Revolving  Note,  which notes
      are in the aggregate  principal  amount of $7,500,000.  The maximum amount
      available  under the notes is  limited to the  lesser of  $7,500,000  or a
      collateral  calculation based on "Eligible Accounts Receivable" as defined
      in the  agreement.  The notes accrue  interest at the greater of 6% or the
      prime rate plus 1%. The Company is subject to interest rate  reductions if
      it achieves certain financial goals. The notes mature on July 29, 2008 and
      contain a conversion  feature whereby the notes can be converted to common
      stock.  The  conversion  price of the first  $3,750,000 is  convertible at
      $0.88 per share and the  balance  is  convertible  at $1.05.  Lastly,  the
      Company  also  issued  warrants to the holder of the notes that allows the
      holder to purchase  1,500,000  shares of common  stock at $1.00 per share.
      The warrants expire on July 29, 2012.

      The Company has certain  other  banking  facilities to finance its working
      capital. The facilities available totaled  approximately  $9,010,000.  The
      facilities  accrue  interest at rates  varying with the prime rate in Hong
      Kong, Hong Kong Interbank Offered Rate (HIBOR), or the cost of funds rate.
      As of June  30,  2005,  these  rates  ranged  between  3.25% - 7.25 %. The
      facilities  require  annual  renewals and are  collateralized  by personal
      guarantees  of  two  directors  and  restricted   cash  of   approximately
      $4,952,000. As of June 30, 2005 and December 31, 2004, amounts outstanding
      against these facilities were $5,612,195 and $4,179,406, respectively.

NOTE 7:  RELATED PARTY TRANSACTIONS

      As of June 30, 2005 and December 31, 2004,  the Company had a payable to a
      minority   shareholder   of  a   subsidiary   of  $148,270   and  $79,409,
      respectively.  The payable accrues  interest at 3% per annum, is unsecured
      and has no fixed payment terms.


                                       10
<PAGE>

                                PACIFIC CMA, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2005 AND 2004
                                   (UNAUDITED)

NOTE 8:  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 filed for
      the year ended December 31, 2004.

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

<TABLE>
<CAPTION>
                               AIR FORWARDING               SEA FORWARDING                   TOTAL
                            2005           2004          2005          2004           2005          2004
                        ------------  -------------   -----------  -----------   -------------   ------------
<S>                     <C>           <C>             <C>          <C>           <C>             <C>
Revenue                 $ 18,318,712  $  14,007,874   $10,734,713  $ 7,555,613   $  29,053,425   $21,563,487
Cost of forwarding       (15,103,215)   (11,368,629)   (9,509,206)  (6,554,880)    (24,612,421)   (17,923,509)
Depreciation and
   amortization             (139,822)      (124,094)      (49,519)     (44,069)       (189,341)     (168,163)
Interest expense             (47,671)       (30,102)       (9,940)      (6,610)        (57,611)      (36,712)
Other segment
   expenses
   attributable to
   segment                  (875,788)      (740,541)     (509,750)    (391,094)    (1,385,538)    (1,131,635)
                        ------------  -------------   -----------  -----------   -------------   ------------
Segment income          $  2,152,216  $   1,744,508   $   656,298  $   558,960       2,808,514     2,303,468
                        ============  =============   ===========  ===========

Net other
   unallocated
   expenses                                                                         (2,481,112)    (2,243,629)
Minority interest                                                                       (9,510)            --
                                                                                 -------------   ------------
Net income                                                                       $     317,892   $     59,839
                                                                                 =============   ============


Goodwill                $  2,069,566  $   2,069,566   $   670,942  $   670,942   $   2,740,508   $  2,740,508
Intangible assets            804,110      1,237,704       265,033      408,781       1,069,143      1,646,485
Other assets              21,600,696     16,891,780     9,754,364    5,440,531      31,355,060     22,332,311
                        ------------  -------------   -----------  -----------   -------------   ------------
       Total assets     $ 24,474,372  $  20,199,050   $10,690,339  $ 6,520,254   $  35,164,711   $ 26,719,304
                        ============  =============   ===========  ===========   =============   ============
</TABLE>


                                                      11
<PAGE>

<TABLE>
<CAPTION>
                                              PACIFIC CMA, INC.
                             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                            JUNE 30, 2005 AND 2004
                                                 (UNAUDITED)

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

                               AIR FORWARDING              SEA FORWARDING                    TOTAL
                            2005          2004            2005        2004           2005          2004
                        ------------  -------------   -----------  -----------   -------------   ------------
<S>                     <C>           <C>             <C>          <C>           <C>             <C>

Revenue                 $ 34,037,613  $  24,570,705   $20,620,357  $13,447,295   $  54,657,970   $ 38,018,000
Cost of forwarding       (27,967,252)   (20,016,847)  (18,153,296) (11,698,276)    (46,120,548)   (31,715,123)
Depreciation and
   amortization             (275,941)      (245,433)      (98,558)     (87,348)       (374,499)      (332,781)
Interest expense             (95,852)       (67,641)      (18,374)     (13,372)       (114,226)       (81,013)
Other segment
   expenses
   attributable to
   segment                (1,836,129)    (1,431,618)   (1,045,143)    (748,039)     (2,881,272)    (2,179,657)
                        ------------  -------------   -----------  -----------   -------------   ------------
Segment income          $  3,862,439  $   2,809,166   $ 1,304,986  $   900,260       5,167,425      3,709,426
                        ============  =============   ===========  ===========   =============   ============
Net other
   unallocated
   expenses                                                                         (4,771,884)    (3,772,884)
Minority interest                                                                      (15,221)            --
                                                                                 -------------   ------------
Net income (loss)                                                                $     380,320   $    (63,458)
                                                                                 =============   ============

Goodwill                $  2,069,566  $   2,069,566   $   670,942  $   670,942   $   2,740,508   $  2,740,508
Intangible assets            804,110      1,237,704       265,033      408,781       1,069,143      1,646,485
Other assets              21,600,696     16,891,780     9,754,364    5,440,531      31,355,060     22,332,311
                        ------------  -------------   -----------  -----------   -------------   ------------
       Total assets     $ 24,474,372  $  20,199,050   $10,690,339  $ 6,520,254   $  35,164,711   $ 26,719,304
                        ============  =============   ===========  ===========   =============   ============
</TABLE>

    GEOGRAPHICAL SEGMENTS

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

                            THREE MONTHS ENDED             SIX MONTHS ENDED
                                  JUNE 30                      JUNE 30
                        ---------------------------   ------------------------
                            2005           2004           2005         2004
                        ------------  -------------   -----------  -----------

Revenue
    * IATA Area 1       $  4,873,672  $   3,138,043   $ 8,962,925  $ 4,894,202
    * IATA Area 2          6,502,169      5,321,800    12,659,833    9,259,620
    * IATA Area 3         17,677,584     13,103,644    33,035,212   23,864,178
                        ------------  -------------   -----------  -----------
       Total            $ 29,053,425  $  21,563,487   $54,657,970  $38,018,000
                        ============  =============   ===========  ===========


                                       12
<PAGE>

<TABLE>
<CAPTION>
                                              PACIFIC CMA, INC.
                             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                            JUNE 30, 2005 AND 2004
                                                 (UNAUDITED)


                                      AS OF JUNE 30,                             AS OF JUNE 30,
                                           2005                                       2004
                                       OTHER ASSETS                               OTHER ASSETS
                            TRADE      (INCLUDING         TOTAL       TRADE       (INCLUDING        TOTAL
                         RECEIVABLES    GOODWILL)        ASSETS    RECEIVABLES      GOODWILL)       ASSETS
                        ------------  -------------   -----------  -----------   -------------   ------------
<S>                     <C>           <C>             <C>          <C>           <C>             <C>
Assets
  *IATA Area 1          $  8,861,427  $   8,281,920   $17,143,347  $ 5,759,541   $   9,785,128   $ 15,544,669
  *IATA Area 2             2,730,131             --     2,730,131      551,047              --        551,047
  *IATA Area 3             4,493,790     10,797,443    15,291,233    2,595,532       8,028,056     10,623,588
                        ------------  -------------   -----------  -----------   -------------   ------------
       Total            $ 16,085,348  $  19,079,363   $35,164,711  $ 8,906,120   $  17,813,184   $ 26,719,304
                        ============  =============   ===========  ===========   =============   ============
</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 9:  CONCENTRATIONS

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

                             THREE MONTHS ENDED           SIX MONTHS ENDED
                                 JUNE 30                      JUNE 30
                        ---------------------------   ------------------------
MAJOR CUSTOMER              2005           2004          2005          2004
------------------------------------------------------------------------------

A                                 --%            13%           --%          13%


                                       13
<PAGE>

                                PACIFIC CMA, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2005 AND 2004
                                   (UNAUDITED)


NOTE 10: EQUITY INVESTMENT IN AFFILIATES

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

<TABLE>
<CAPTION>
                                       THREE MONTHS ENDED                     SIX MONTHS ENDED
                                         JUNE 30, 2005                          JUNE 30, 2005
                        -----------------------------------------  ------------------------------------------
                        SHANGHAI AIR     VANTAGE        CARESHIP   SHANGHAI AIR     VANTAGE        CARESHIP
                            CARGO         POINT      INTERNATIONAL    CARGO          POINT      INTERNATIONAL
                        ------------  -------------   -----------  -----------   -------------   ------------
<S>                     <C>           <C>            <C>           <C>           <C>            <C>
Net Sales               $    333,529  $     106,206   $    61,798  $   635,567   $     373,333   $    274,496
Cost of Sales                258,308         68,170        54,630      484,078         318,221         65,883
Gross Profit                  75,221         38,036         7,168      151,489          55,112        208,613
Net Income (Loss)             13,851            753        (7,530)      30,436         (21,651)         8,509
Equity in Income
  (Loss) of
  Affiliates                   4,847            302        (3,533)      10,652          (8,660)         3,993
</TABLE>


      The  Company  invested   $846,847  in  its  46.92%  interest  in  Careship
      International which amount was $792,453 in excess of the underlying equity
      in net assets of the investee.  This excess was allocated to an intangible
      asset of $662,991 and the balance of $129,462 to goodwill.  The intangible
      asset  related to an  exclusive  right to do business  granted to Careship
      International  by the  government  of the Peoples  Republic of China for a
      term of ten years.  The intangible is being amortized over the term of the
      exclusive right.  The  amortization  expense is reflected in the equity in
      income  (loss) of  affiliates  and amounted to $16,171 and $32,341 for the
      quarter and six months ended June 30, 2005  respectively.  The goodwill is
      not amortized  under FASB  Statement No. 142 but rather the  investment is
      analyzed for impairment under the requirements of APB Opinion No. 18.

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

Special Note of Caution Regarding Forward-Looking Statements

Certain  statements  in  this  report,  including  statements  in the  following
discussion,  which are not statements of historical  fact, are what are known as
"forward-looking  statements," which are basically  statements about the future.
For that reason,  these statements involve risk and uncertainty since no one can
accurately  predict  the  future.  Words such as  "plans,"  "intends,"  "hopes,"
"seeks,"   "anticipates,"   "expects,"   and  the  like,   often  identify  such
forward-looking  statements, but are not the only indication that a statement is
a forward-looking  statement. Such forward-looking statements include statements
concerning  our plans and  objectives  with  respect to the  present  and future


                                       14
<PAGE>

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

o     Relations between the United States and China remaining stable;

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

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

o     Fluctuations in exchange rates;

o     Our dependence on third parties for equipment and services;

o     Competition from our own cargo agents;

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

o     A lack of ongoing contractual  relationships with our customers;

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

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

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


                                       15
<PAGE>

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

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

RECOGNITION OF COST OF FORWARDING

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

ACCOUNTING FOR INCOME TAXES

In preparing our 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


                                       16
<PAGE>

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 June 30,
2005,  goodwill totaled  approximately  $2.74 million,  other intangible  assets
amounted to approximately  $1.07 million and our long-lived  assets,  consisting
primarily of net property, plant and equipment, totaled $760,477

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


                                       17
<PAGE>

<TABLE>
<CAPTION>

DATE OF ACQUISITION      NAME OF COMPANY         GOODWILL              INTANGIBLE ASSETS     INTANGIBLE
                         ACQUIRED                (RECORDED AT THE      (CUSTOMER             ASSETS
                                                 TIME OF               RELATIONSHIPS)        (BUSINESS
                                                 ACQUISITION)                                LICENSE)
----------------------------------------------------------------------------------------------------------
<S>                     <C>                      <C>                    <C>                 <C>
April 30, 2002          Airgate Int'l Corp.         $2.68 million         $2.86 million                 $-
April 30, 2004          Paradigm Int'l Inc.               $20,248               $26,708                 $-
April 1, 2004           Shanghai Air Cargo                $36,493                    $-                 $-
                        Ground Handling
                        Services Ltd.
January 1, 2005         Careship                         $245,485                    $-           $662,991
                        International
                        Transportation Ltd.
</TABLE>

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

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

The intangible  customer  relationship assets and business license are amortized
over periods of 5 and 10.25 years, respectively.  Goodwill is not amortized, but
rather is tested  annually for  impairment in  accordance  with SFAS No. 142. An
equity  investment in an investee  including any goodwill  therein is tested for
impairment under APB Opinion No. 18.

OVERVIEW

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

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


                                       18
<PAGE>

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

On April 30, 2002, the Company completed the acquisition of Airgate, a privately
held New York based freight forwarder that was established in 1995. Airgate is a
non-asset based logistics  services company which primarily  handles the air and
ocean import  shipments from the Far East and Southwest Asia to the U.S. Pacific
CMA  International,  LLC, a Colorado  limited  liability  company that is wholly
owned by the Company, acquired 81% of the issued and outstanding common stock of
Airgate.

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

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

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

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

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


                                       19
<PAGE>

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

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

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

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

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

o     Held our annual  meeting of  stockholders.  All directors  then in office,
      except for Mr Kim E. Petersen,  were re-elected to our Board of Directors.

RESULTS OF OPERATIONS

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

OVERALL RESULTS

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

Total revenue for the three months ended June 30, 2005  increased  approximately
35% as compared with the three months ended June 30, 2004,  from  $21,563,487 in
2004 to $29,053,425 in 2005. The increase in revenue was primarily the result of
the organic  growth of AGI and  Airgate,  in addition  to the  inclusion  of the
results of the acquisition in Singapore (AGI Singapore) and Miami (Paradigm), as
well as our new operation in Los Angeles during 2004.


                                       20
<PAGE>

Revenue  derived from the operations of AGI increased  approximately  57% during
the  second  quarter  of 2005 as  compared  with the same  period  of 2004.  The
significant organic growth of AGI was the result of the following factors:

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

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

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

o     Expiration of textile quota in PRC, increase export from Mainland China.

The revenue of Airgate  represented  approximately  61% of our total revenue for
the second  quarter of 2005.  Airgate  focuses its  operations  on the import of
goods  from the Far East and  deconsolidation  of  cargo.  In order to enter new
markets in the Midwest, Airgate established a subsidiary in Chicago, Illinois in
June 2002.

Revenue derived from the operation of Airgate increased approximately 10% during
the  second  quarter of 2005 when  compared  with the same  period of 2004.  The
increase is the result of the effort of Airgate staff and its Chicago  operation
maturing.

Total  revenue  derived  from  Paradigm   International  Inc.,  Paradigm  Global
Logistics  and AGI Freight  Singapore  Pte Ltd.  for the second  quarter of 2005
amounted to approximately $2.75 million, which represents  approximately 9.5% of
total revenue of the Company.

When compared with 2004,  the cost of  forwarding  during the second  quarter of
2005  increased  approximately  37%, from  $17,923,509 in 2004 to $24,612,421 in
2005.  The increase in costs was primarily  the result of the organic  growth of
AGI  and  Airgate,  the  acquisition  in  Singapore,  Miami  as  well as our new
operations in Los Angeles during late of 2004.

Gross profit margin for the three months ended June 30, 2005 and 2004  decreased
slightly  from 16.88% in 2004 and 15.29% in 2005.  The decrease was due to (i) a
disproportionate  increase of airfreight  export to non-US  markets which have a
higher cost of forwarding and lower profit margin, and (ii) the pricing strategy
of  airlines  has been  changed,  as they did not offer the  discounts  as usual
during the slack season in the second  quarter  because of higher fuel costs and
tight flight schedules due to the reinstatement of the textile quota for exports
from Mainland China by the US and European  Union on July 1, 2005,  which caused
air export  sales to the U.S.  and Europe to  increase  sharply  before June 30,
2005.

Despite the  reduction in gross profit  margin,  overall  gross profit  (revenue
minus  cost  of  forwarding)  for  the  second  quarter  of  2005  increased  by
approximately 22%, from $3,639,978 in 2004, to $4,441,004 in 2005 as a result of
increase in trade volume.


                                       21
<PAGE>

Net income for the second quarter of 2005 increased approximately 431%, from net
income of $59,839 in 2004,  to $317,892 in 2005.  The increase in net income was
due to an organic growth of the Company. Details of expense fluctuations will be
discussed in the sections  "Operating  expenses" and "Non  Operating  Income and
Expenses" respectively.

BUSINESS SEGMENT OPERATING RESULTS

The results of operations for each segment are as follows:

AIRFREIGHT   OPERATIONS:    Revenue   from   airfreight   operations   increased
approximately 31%, from $14,007,874 in the second quarter of 2004 to $18,318,712
in the same period of 2005.  Airfreight  revenue for  foreign  operations  (that
includes AGI Group and AGI Singapore) was $7,771,102,  while airfreight  revenue
for domestic  operations  (that includes  Airgate and Paradigm) was $12,917,052,
offsetting  inter-company   transactions  totaled  $2,369,442.  The  volumes  of
airfreight  were  improved in the second  quarter of 2005 compared with the same
period in 2004.  The  increase was  primarily  due to (i) an increase in routing
orders  from  Asia to  Europe as a result  of new  customers  and  agents in the
Netherlands,  Germany, United Kingdom and France who joined the Group during the
fourth  quarter  of 2004,  (ii) The  operation  of Airgate  International  Corp.
(Chicago),   which  was  established  in  June  2002,  is  maturing;  (iii)  the
acquisition of Paradigm on April 30, 2004 and its  additional  operations in Los
Angeles, California that commenced in July 2004; and (iv) the acquisition of AGI
Singapore in the third quarter of 2004.

Costs for the airfreight forwarding operations increased approximately 49%, from
$11,368,629  in the second  quarter of 2004 to $15,103,215 in the same period of
2005.  Airfreight cost attributable to foreign operations was $6,397,484,  while
airfreight  cost  attributable  to  domestic  operations  was  $11,073,067,  and
offsetting  inter-company costs totaled $2,367,336.  Airfreight cost increase in
2005 was due to the organic  growth of the Company.  Gross profit margin for the
second  quarter  of  2005  as  compared  with  2004   decreased   slightly  from
approximately  18.84%  in 2004 to 17.55% in 2005.  The  decrease  was due to the
disproportionate  increase of airfreight  exports to non-US markets which have a
higher cost of forwarding  and lower profit  margin.  Additionally,  the pricing
strategy of airlines  changed with no discounts  offered during the slack season
in the second  quarter.  Despite the reduction in gross profit  margin,  overall
gross profits increased  approximately 22% to $3,215,497 as a result of increase
in trade volume.

Total segment  overhead  attributable to the airfreight  operation  increased by
approximately  19%, from $894,737 in the second quarter of 2004 to $1,063,281 in
the same  period  of 2005,  as a result of more  resources  being  allocated  to
airfreight  operations.  Details regarding the increase in overhead expenses are
discussed below under the section "Operating expenses" and "Non Operating Income
and Expenses".

Overall net segment income for the  airfreight  operation for the second quarter
of 2005 increased by approximately  23% from $1,744,508 in 2004 to $2,152,216 in
2005.  The increase in net income was mainly the result of the organic growth of
AGI  and  Airgate  as  well  as  the  inclusion  of  operating  results  of  new
subsidiaries during 2004.


                                       22
<PAGE>

SEA  FREIGHT   OPERATION:   Revenue  from  sea  freight   operations   increased
approximately  42% to $10,734,713 in the second quarter of 2005 from  $7,555,613
in the same period of 2004.  Sea freight  revenue  for  foreign  operations  was
$3,909,758,  while sea freight  revenue for domestic  operations was $6,985,669,
and offsetting  inter-company  transactions  totaled  $160,714.  The increase in
revenue for the second  quarter of 2005,  when  compared with the same period of
2004,  was due to (i) the  contribution  from the new branch offices of Shenzhen
Careship in China;  (ii) the  increase in quantity of freight  consolidation  by
Airgate  Chicago;  and  (iii)  our new  European  agent  introducing  additional
customers  into our  network,  which led to greater  revenues  from the European
market since the fourth quarter of 2004.

Costs for the sea freight forwarding operation increased approximately 45%, from
$6,554,880  in the second  quarter of 2004 to  $9,509,206  in the same period of
2005. Sea freight costs attributable to foreign operations was $3,279,227, while
costs  attributable  to  domestic  operations  was  $6,392,799,  and  offsetting
inter-company  costs  totaled  $162,820.  The gross  profit  margin was slightly
decreased from approximately  13.24% in 2004 to 11.42% in 2005 due to our market
penetration  strategy in Shanghai  and Chicago.  Despite the  reduction in gross
profit margin, overall gross profits increased  approximately 22%, to $1,225,507
as a result of increase in trade volume.

Total  segment  overhead  attributable  to the sea freight  operation  increased
approximately  29%, from  $441,773 in the second  quarter of 2004 to $569,209 in
the same period of 2005.  Overall net income for the sea freight  operation  for
the second quarter of 2005 increased approximately 17%, from $558,960 in 2004 to
$656,298  in 2005.  The  increase  in net  income  was  mainly the result of the
organic growth of AGI and Airgate as well as the inclusion of operating  results
of new subsidiaries during 2004.

OPERATING EXPENSES

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses increased approximately 22.5%, to $3,691,909
in the second quarter of 2005 from $3,012,790 in the same period of 2004.  There
was a significant increase in salaries and allowance in this quarter.

Salaries and allowance:  Salaries and allowance increased approximately 29% from
$1,217,179 in 2004 to  $1,567,877  in 2005.  This increase was the result of the
addition of  approximately  90 staff persons during the twelve months ended June
30, 2005 which were needed to keep pace with our growth.

STOCK-BASED COMPENSATION COST

Stock-based  compensation cost decreased  approximately 54% from $119,973 in the
second  quarter of 2004 to $55,537 in the same period of 2005.  The  decrease in
compensation  cost was primarily due to the  cancellation of 850,000 and 200,000
restricted  shares  that  were  previously  granted  to a key  employee  and  an
independent  sales  representative  respectively  in the fourth quarter of 2004.
Details of the stock grant and cancellation are as follows:


                                       23
<PAGE>

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

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

DEPRECIATION AND AMORTIZATION

Depreciation and amortization  increased  approximately 19% from $190,792 in the
second  quarter of 2004 to $226,938 in the same period of 2005. The increase was
mainly due to  additional  computer  hardware  and  software  purchased  for the
implementation  of a new logistics  system, office  renovation at Airgate and
the establishment of three additional  branch offices in Chongqing,  Tianjin and
Futian  in  Mainland  China  by  Shenzhen   Careship   Transportation   Limited.

Amortization arises from an intangible  customer  relationship asset recorded in
conjunction  with the  acquisition  of Airgate on April 30, 2002 and Paradigm on
April 30,  2004.  During the six months  ended 2005,  the  amortization  expense
attributable  to this asset was  $144,335,  an increase of $445 as compared with
the same periof of 2004.


                                       24
<PAGE>

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

NON OPERATING INCOME AND EXPENSES

INTEREST AND OTHER INCOME

Interest and other income  decreased  from $53,953 in the second quarter of 2004
to $41,684  in the same  period of 2005.  This was due to various  miscellaneous
handling  charges  received  from third parties  being  reclassified  from other
income to revenue in second  quarter of 2005 as compared with the same period of
2004.

INTEREST EXPENSE

Interest  expense  increased  to  $113,212  in the  second  quarter of 2005 from
$72,940  in the same  period  of 2004.  The  increase  in  interest  expense  is
primarily due to an increase in  short-term  working  capital  financing and the
rise in interest  rates during the second quarter of 2005 when compared with the
same period of 2004.

PREFERRED STOCK DIVIDEND AND AMORTIZATION OF DEFERRED FINANCING COST

During  April and May 2004,  the  Company  sold to two  institutional  investors
$5,000,000  stated amount of its Series A Preferred Stock and issued warrants to
purchase  1,562,500  shares  of  common  stock of  which  781,250  warrants  are
exercisable at $1.76 per share and the other 781,250 warrants are exercisable at
$2.00  per  share.  Such  Series A  Preferred  Stock  has  mandatory  redemption
requirements  and was recorded in accordance with SFAS No. 150,  "Accounting for
Certain  Financial  Instruments  With  Characteristics  of Both  Liabilities and
Equity". The dividends paid and accrued are charged to expense in the statements
of  operations.  In  accordance  with  EITF  98-5,  the  intrinsic  value of the
beneficial  conversion option of $166,666 was recorded as additional expense and
credited as  additional  equity in warrants  outstanding  in 2004.  The deferred
financing  cost  related to the  placement  of the Series A  Preferred  Stock is
amortized over its term to maturity, which is four years. A total of $59,821 was
expensed during the second quarter of 2005.  Dividends amounting to $75,833 were
paid in shares of common stock in the second quarter of 2005.


                                       25
<PAGE>

AMORTIZATION OF PREFERRED STOCK DISCOUNT

In accordance with APB Opinion 14 "Accounting  for Convertible  Debt" and "Debts
Issued  with Stock  Purchase  Warrants",  the Series A  Preferred  Stock and the
detachable  stock  warrants were recorded at their relative fair values with the
value of the warrants recorded as additional equity in warrants outstanding. The
fair value of the warrants was  determined  based on an  independent  valuation.
Effectively,  the  Series A  Preferred  Stock  was  recorded  at a  discount  of
$939,713.  This  discount  is  amortized  ratably  over the term of the Series A
Preferred Stock. As a result,  $58,732 was expensed during the second quarter of
2005.

SIX MONTHS ENDED JUNE 30, 2005 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2004

OVERALL RESULTS

Total revenue for the six months ended June 30, 2005 increased 44% compared with
the period ended June 30, 2004, from $38,018,000 in 2004 to $54,657,970 in 2005.
The increase in revenue was  primarily  the result of the organic  growth of AGI
and Airgate,  in addition to the inclusion of the results of the  acquisition in
Singapore (AGI Singapore) and Miami (Paradigm),  as well as our new operation in
Los Angeles during 2004.

Revenue  derived from the operations of AGI increased  approximately  71% during
the first half of 2005 as compared with the same period of 2004. The significant
organic growth of AGI was the result of the following  factors:

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

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

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

o     Expiration of textile quota in PRC, increase export from Mainland China.

The revenue of Airgate  represented  approximately  62% of our total revenue for
the first half of 2005.  Airgate  focuses its  operations on the import of goods
from the Far East and deconsolidation of cargo. In order to enter new markets in
the Midwest, Airgate established a subsidiary in Chicago, Illinois in June 2002.

Revenue derived from the operation of Airgate increased approximately 15% during
the first half of 2005 as compared with that of 2004. The increase is the result
of the effort of Airgate staff and its Chicago operation maturing.


                                       26
<PAGE>

Total  revenue  derived  from  Paradigm   International  Inc.,  Paradigm  Global
Logistics and AGI Freight Singapore Pte Ltd. for the first half of 2005 amounted
to approximately $4.96 million, which represents approximately 9.1% of the total
revenue of the Company.

As  compared  with  2004,  the  cost of  forwarding  during  first  half of 2005
increased 45%, from $31,715,123 in 2004 to $46,120,548 in 2005. This increase in
costs was  primarily  the result of the organic  growth of AGI and Airgate,  the
acquisition  in Singapore,  Miami,  Florida as well as our new operations in Los
Angeles, California during late of 2004.

Gross profit margin for the six months ended June 30, 2005 and 2004 was slightly
decreased from approximately 16.58% in 2004 and 15.62% in 2005. The decrease was
due to (i) a disproportionate  increase of airfreight export to non-U.S. markets
which have a higher cost of forwarding and lower profit margin, (ii) the pricing
strategy  of  airlines  changed,  as they did not offer the  discounts  as usual
during the slack season in the second  quarter  because of higher fuel costs and
tight flight schedules due to the reinstatement of the textile quota for exports
from Mainland China by the U.S. and European Union on July 1, 2005, which caused
air export sales to U.S. and Europe to increase sharply before June 30, 2005.

Despite the  reduction in gross profit  margin,  overall  gross profit  (revenue
minus cost of  forwarding)  for the first  half of 2005  increased  35.5%,  from
$6,302,877  in 2004,  to  $8,537,422  in 2005 as a result of  increase  in trade
volume.

Net income for the first half of 2005 increased approximately 699% from net loss
of $63,458 in 2004,  to net income of  $380,320  in 2005.  The  increase  in net
income  was  due  to an  organic  growth  of the  Company.  Details  of  expense
fluctuations  will be discussed in the "Operating  expenses" and  "Non-operating
expenses" respectively.

BUSINESS SEGMENT OPERATING RESULTS

The results of operations for each segment are as follows:

AIRFREIGHT   OPERATIONS:    Revenue   from   airfreight   operations   increased
approximately  39%, from $24,570,705 in first half of 2004 to $34,037,613 in the
same period of 2005.  Airfreight  revenue for foreign  operations (that includes
AGI Group and AGI  Singapore)  was  $14,250,862,  while  airfreight  revenue for
domestic  operations (that includes  Airgate and Paradigm) was $23,966,807,  and
offsetting  inter-company   transactions  totaled  $4,180,056.  The  volumes  of
airfreight  were improved in 2005 compared with 2004. The increase was primarily
due to (i) an increase in routing  orders from Asia to Europe as a result of new
agents and customers in The Netherlands,  Germany, United Kingdom and France who
joined the Group  during  the fourth  quarter  of 2004;  (ii) The  operation  of
Airgate  International Corp.  (Chicago),  which was established in June 2002, is
becoming more and more mature;  (iii) the  acquisition  of Paradigm on April 30,
2004 and its additional operations in Los Angeles,  California that commenced in
July 2004; and (iv) AGI Singapore joined the Group in the third quarter of 2004.


                                       27
<PAGE>

Costs for the  airfreight  forwarding  operations  during the first half of 2005
increased  approximately  40%, from  $20,016,847 in 2004 to $27,967,252 in 2005.
Airfreight  cost  attributable  to foreign  operations  was  $11,643,939,  while
airfreight cost attributable to domestic operations $20,502,612,  and offsetting
inter-company costs totaled $4,179,299. Airfreight cost increase in 2005 was due
to the organic growth of the Company.  Gross profit margin for the first half of
2005 as compared with 2004 was slightly decreased from  approximately  18.53% in
2004  to   approximately   17.83%  in  2005.   The   decrease  was  due  to  the
disproportionate  increase of airfreight export to non-U.S. markets which have a
higher cost of forwarding  and lower profit  margin and the pricing  strategy of
airlines changed with no discounts offered during the slack season in the second
quarter. In spite of the reduction in gross profit margin, overall gross profits
increased  approximately  33% to  $6,070,361  as a result of  increase  in trade
volume.

Total  segment  overhead  attributable  to the  airfreight  operation  increased
approximately  27%,  from  $1,744,692 in the first half of 2004 to $2,207,922 in
the same  period  of 2005,  as a result of more  resources  being  allocated  to
airfreight  operations.  Details regarding the increase in overhead expenses are
discussed below under the section "Operating Expenses" and "Non Operating Income
and Expenses."

Overall net segment  income for the  airfreight  operation for the first half of
2005 increased  approximately 37% from $2,809,166 in 2004 to $3,862,439 in 2005.
The increase in net segment  income was mainly the result of the organic  growth
of AGI  and  Airgate  as well  as the  inclusion  of  operating  results  of new
subsidiaries during 2004.

SEA  FREIGHT   OPERATION:   Revenue  from  sea  freight   operations   increased
approximately  53% to $20,620,357 in the first half of 2005 from  $13,447,295 in
the same  period  of 2004.  Sea  freight  revenue  for  foreign  operations  was
$7,459,052,  while sea freight revenue for domestic  operations was $13,476,454,
and offsetting  inter-company  transactions  totaled  $315,149.  The increase in
revenue for the first half of 2005,  when compared with the same period of 2004,
was due to (i) the contribution from the new branch offices of Shenzhen Careship
in China;  (ii) the  increase in quantity  of freight  consolidation  by Airgate
Chicago; and (iii) our new European agent introducing  additional customers into
our network,  which resulted in greater  revenues from the European market since
the fourth quarter of 2004.

Costs for the sea freight forwarding operation increased approximately 55%, from
$11,698,276 in the first half of 2004 to $18,153,296 in the same period of 2005.
Sea freight costs attributable to foreign operations was $6,207,041, while costs
attributable   to  domestic   operations   was   $12,262,161,   and   offsetting
inter-company  costs totaled  $315,906.  Gross profit margin decreased  slightly
from  approximately  from  13.01% in 2004 to  11.96%  in 2005 due to our  market
penetration  strategy in Shanghai  and Chicago.  Despite the  reduction in gross
profit  margin,  overall  gross  profits  increased  by  approximately  41%,  to
$2,467,061 as a result of an increase in trade volume.

Total  segment  overhead  attributable  to the sea freight  operation  increased
approximately 37%, from $848,759 in first half of 2004 to $1,162,075 in the same
period of 2005. Overall net income for the sea freight operation  increased 45%,
from  $900,260  in first  quarter of 2004 to  $1,304,986  for the same period in
2005.  The  increase in net segment  income was mainly the result of the organic
growth of AGI and Airgate as well as the  inclusion of operating  results of new
subsidiaries during 2004.


                                       28
<PAGE>

OPERATING EXPENSES

GENERAL AND ADMINISTRATIVE EXPENSES

General and  administrative  expenses increased by 29.6%, to $7,253,804 in first
half of 2005 from  $5,597,834 in the same period of 2004.  The following are the
factors that caused the increase in expenses:

Sales commission: Sales commission increased approximately 24.7% from $1,028,424
in the first half of 2004 to $1,282,707 in the same period of 2005. The increase
was a result of increase in freight  forwarding revenue during the first half of
2005.

Salaries and allowance:  Salaries and allowance  increased 39.2% from $3,224,270
for the period  six  months  ended June 30,  2004 to  $2,317,251  in 2004.  This
increase was the result of the addition of approximately 90 staff persons during
the  twelve  months  ended  June 30,  2005 that was needed to keep pace with our
growth.

STOCK-BASED COMPENSATION COST

Stock-based  compensation  cost:  During the period from  November  2003 to June
2005, the Company issued a total of 2,105,000 shares of its common stock to five
employees,  an independent sales  representative and a business advisor.  During
the six months  ended June 30, 2005,  stock-based  compensation  cost  decreased
approximately  45%,  from $286,396 for the first half of 2004 to $156,639 in the
same period of 2005.
The decrease in  compensation  cost was  primarily  due to the  cancellation  of
850,000 and 200,000  restricted  shares  that were  previously  granted to a key
employee and an  independent  sales  representative  respectively  in the fourth
quarter of 2004.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization  increased  approximately 21% from $370,401 in the
first half of 2004 to  $449,464  in the same period of 2005.  The  increase  was
mainly due to  additional  computer  hardware  and  software  purchased  for the
implementation of a new logistics  system,  office renovation at Airgate and the
establishment  of three  additional  branch  offices in  Chongqing,  Tianjin and
Futian in Mainland China by Shenzhen Careship Transportation Limited.

Amortization  arises  primarily from  intangible  customer  relationship  assets
recorded in conjunction  with the  acquisitions of Airgate on April 30, 2002 and
Paradigm  on  April  30,  2004.  These  intangible  assets  are  amortized  on a
straight-line  basis over a period of 5 years.  During the six months ended June
30, 2005, the amortization expense  attributable to this asset was $288,671,  an
increase of $1,781 as compared with the same period of 2004.


                                       29
<PAGE>

NON OPERATING INCOME AND EXPENSES

INTEREST AND OTHER INCOME

Interest  and other  income  decreased  from  $149,602  in first half of 2004 to
$76,825  in the same  period  of 2005.  This  was due to  various  miscellaneous
handling charges received from third parties being reallocated to revenue in the
first half of 2005 as compared with the same period of 2004.

INTEREST EXPENSE

Interest  expense  increased to $227,564 in the first half of 2005 from $211,867
in the same period of 2004. The increase in interest expense is primarily due to
an increase in  short-term  working  capital  financing and the rise in interest
rates during the first half of 2005 when compared with the same period of 2004.

PREFERRED STOCK DIVIDEND AND AMORTIZATION OF DEFERRED FINANCING COST

The Series A Preferred  Stock and detachable  stock warrants issued during April
and May 2004 was recorded in  accordance  with  Statement  150  "Accounting  for
Certain  Financial  Instruments  With  Characteristics  of Both  Liabilities and
Equity" and EITF 98-5.  According,  a total of $272,809 was expensed  during the
six months ended June 30, 2005.

AMORTIZATION OF PREFERRED STOCK DISCOUNT

In accordance with APB Opinion 14 "Accounting  for Convertible  Debt" and "Debts
Issued  With Stock  Purchase  Warrants",  the Series A  Preferred  Stock and the
detachable  stock  warrants were recorded at their relative fair values with the
value of the warrants recorded in additional equity in warrants outstanding. The
fair value of the warrants was  determined  based on an  independent  valuation.
Effectively,  the  Series A  Preferred  Stock  was  recorded  at a  discount  of
$939,713.  This  discount  is  amortized  ratably  over the term of the Series A
Preferred Stock. As a result,  $117,464 was expensed during the six months ended
June 30, 2005.

RISK FACTORS AFFECTING COMPANY OPERATIONS

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

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


                                       30
<PAGE>

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

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

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

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

Additional risks and uncertainties include:

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  reinstatement of the textile quota by the U.S. and European Union for
      exports  from  Mainland  China on July 1, 2005 may  effect  our  operating
      results.

LIQUIDITY AND CAPITAL RESOURCES

We provided  $292,562 and used in $2,313,945 of cash from  operating  activities
for the six months ended June 30, 2005 and 2004, respectively. This increase was
mainly  attributable  to (i)  increase  in the net  income for the first half of
2005,  when  compared  with the net loss for the same  period of 2004,  and (ii)
increase in amount provided by the collection of other receivables.


                                       31
<PAGE>

Net cash used in  investing  activities  was  $620,084  and $603,522 for the six
months ended June 30, 2005 and 2004,  respectively.  We used $243,257 to acquire
plant and  equipment  to improve our office  facilities  and  purchase  computer
hardware and software to implement a new logistics  system.  We received payment
of a loan  receivable in the amount of $1,290,  and $15,552 from the disposal of
property and  equipment.  We also  received a $40,000  refund of a deposit for a
potential  equity  investment  and paid  $433,669  as a deposit  for a potential
acquisition in Hong Kong.

Net cash provided by financing  activities  was $282,391 and  $3,621,006 for the
six  months  ended  June 30,  2005 and  2004,  respectively.  We made  principal
payments  under capital  lease  obligations  of $35,944.  In order to extend our
banking  facilities,  an  additional  $1,205,224  was  pledged  to the  banks as
restricted  cash  deposits.  Notes payable to the banks  increased by $1,432,789
during the six months  ended June 30, 2005,  and we received  the proceeds  from
short-term   debt  and   exercise  of  stock   option  of  $71,170  and  $19,600
respectively.

Working  capital was $6,605,526  (inclusive of restricted  cash of $6.3 million)
and  $6,260,963  (inclusive of  restricted  cash of $5.1 million) as of June 30,
2005 and December 31, 2004 respectively. We believe that we will be able to rely
on our 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  June 30, 2005. We also believe that we can obtain  additional
liquidity through further  negotiation of short-term loans from banks to satisfy
our short-term funding needs, if any.

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 in the European  market with
new agents and customers in The Netherlands,  Germany, United Kingdom and France
who joined the Group during the fourth quarter of 2004. In order to achieve this
goal,  we will be  required to raise a certain  amount of capital.  To a certain
extent,  these  activities will have a significant  impact on both liquidity and
capital resources.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

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

<TABLE>
<CAPTION>
                                                          PAYMENTS DUE BY PERIOD
                                      --------------------------------------------------------
<S>                     <C>           <C>             <C>          <C>           <C>
CONTRACTUAL OBLIGATIONS     TOTAL      LESS THAN 1     1-3 YEARS   4 - 5 YEARS    THEREAFTER
                                          YEAR
                              $            $               $            $             $


Capital lease
  Obligations                157,762         68,790        88,972           --              --

Operating Leases           1,790,320        767,810     1,000,895       21,615              --

Cargo Space Commitments    2,563,387      2,563,387            --           --              --

Material Employment
Agreements                   249,500        249,500            --           --              --
</TABLE>


                                       32
<PAGE>

We have capital  lease  obligations  of $157,762 as of June 30,  2005,  of which
$68,790 is repayable within one year, and $88,972 is repayable after one year.

We  also  entered  into  various  lease  commitments  for  office  premises  and
warehouses in the United States,  Hong Kong,  Mainland China and Singapore.  The
total outstanding lease  commitments under  non-cancelable  operating leases are
$1,790,320  as of June 30,  2005.  As of June 30, 2005,  the current  portion of
these commitments of $767,810 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 June 30, 2005, the amount outstanding for such commitments to be entered into
in 2005 was approximately $2.6 million.

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

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


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

Line of credit          $  2,500,000  $   2,500,000                $        --

Overdraft                  3,599,753      3,599,753                         --

Invoice Trust Receipt      2,012,442      2,012,442                         --

Guarantees by bank           728,990        728,990                         --

Payable - minority
shareholder                  148,270        148,270                         --

As of June 30,  2005,  to finance our working  capital,  our  available  banking
facilities were approximately  $9,010,000 obtained from creditworthy  commercial
banks in Hong Kong and  $2,500,000  from a bank in the U.S. As of that date, the
total amount of bank credit facilities utilized was $8,112,195. This was made up
of (i) $3,599,753 of overdrafts;  (ii)  $2,012,442 of invoice trust receipts and
(iii)  $2,500,000  line of  credit.  In  addition,  there  is  $728,990  of bank
guarantees  for  granting  credit  facilities  to a  subsidiary  for  airfreight
payment. While these banks are not obligated to advance any further funds to us,
we believe that absent any significant  downtrend in business,  these sources of
credit will continue to be available to us.

OUTLOOK

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

Closer Economic Partnership

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


                                       33
<PAGE>

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.  In addition, it eliminates the import tariffs to Mainland China on
a host of goods made in Hong Kong,  allowing  most Hong Kong  companies  to sell
high value-added products across the border. In terms of economic benefits,  the
CEPA has good potential to open up many new business  opportunities  in Mainland
China for Hong Kong.  Although it is difficult to quantify the potential benefit
we may realize from CEPA,  through our Hong  Kong-based  AGI Logistics (HK) Ltd,
Shenzhen Careship  Transportation  Limited, as well 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.

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


                                       34
<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 June 30, 2005,  would have had the effect of raising
operating income  approximately  $110,000.  An average 10%  strengthening of the
U.S. Dollar, for the same period would have had the effect of reducing operating
income by approximately  $90,000. 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 June 30, 2005, the Company had cash and
cash  equivalents and restricted cash of $7.8 million and short-term  borrowings
of  $8.1  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 June 30, 2004 and June
30, 2005.

ITEM 4.  CONTROLS AND PROCEDURES

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


                                       35
<PAGE>

                                     PART II

                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

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

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

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

         Not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

         Not applicable.


                                       36
<PAGE>

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

Registrant held its annual meeting of stockholders on June 13, 2005. The results
of that meeting were reported on in the  Registrant's  Form 8-K/A filed with the
Securities and Exchange Commission (the "SEC") on June 21, 2005, amending a Form
8-K filed by the Registrant with the SEC on June 15, 2005.

ITEM 5.  OTHER INFORMATION

         None

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)).


                                       37
<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:  August 12, 2005                By:  /s/Alfred Lam
                                        ----------------------------------------
                                       Name:  Alfred Lam
                                       Title: Chairman of the Board of Directors
                                             (Principal Executive Officer)


Date:  August 12, 2005                By:  /s/Bill Stangland
                                        ----------------------------------------
                                       Name:  Bill Stangland
                                       Title: Chief Financial Officer
                                             (Principal Financial and Accounting
                                              Officer)



                                       38