UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB


(MARK ONE)

[X]   Quarterly report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 For the quarterly period ended September 30, 2004

                                                            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 Small Business Issuer as Specified in Its Charter)

                Delaware                                       84-1435073
     (State or Other Jurisdiction of                        (I.R.S. Employer
     Incorporation or Organization)                         Identification No.)

        1350 Avenue of the Americas, Suite 3100, New York, New York 10019
                    (Address of Principal Executive Offices)

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

Check  whether  the Issuer:  (1) has filed all  reports  required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 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
    ---     ---


The  number  of shares  outstanding  of the  Registrant's  Common  Stock,  as of
September 30, 2004, was 26,049,215 shares.

Transitional Small Business Disclosure Format (Check One):      Yes [ ] No [X]

<PAGE>


                                PACIFIC CMA, INC.

                              INDEX TO FORM 10-QSB


PART I.     FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

      Consolidated Balance Sheets as of September 30, 2004 (Unaudited)
        and December 31, 2003 (Audited)

      Consolidated Unaudited Statements of Operations for the Nine Months
        and Three Months Ended September 30, 2004 and 2003

      Consolidated Unaudited Statements of Cash Flows for the Nine Months
        Ended September 30, 2004 and 2003

      Notes to Consolidated Unaudited Financial Statements

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

ITEM 3.     CONTROLS AND PROCEDURES


PART II.    OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

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

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

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

ITEM 5.     OTHER INFORMATION

ITEM 6.     EXHIBITS


SIGNATURES

                                     PART I
                              FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS

See Notes to Condensed Consolidated Financial Statements                      2

<PAGE>

                                PACIFIC CMA, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 2004 AND DECEMBER 31, 2003
ASSETS

<TABLE>
<CAPTION>
                                                                               2004             2003
                                                                          --------------------------------
                                                                           (UNAUDITED)

    CURRENT ASSETS
<S>                                                                       <C>               <C>
        Cash and cash equivalents                                         $    2,042,178    $      912,240
        Restricted cash                                                        5,578,122         5,786,064
        Accounts receivable, net of allowance for doubtful accounts of
          $266,150 and $156,617, respectively                                 13,173,130         7,360,859
        Refundable income taxes                                                  272,256           147,092
        Other receivables                                                      2,734,911         1,413,401
        Deposits, prepayments and other assets                                 1,354,633           742,081
                                                                          --------------    --------------
               Total current assets                                           25,155,230        16,361,737
                                                                          --------------    --------------

    PROPERTY AND EQUIPMENT, net of accumulated depreciation of $885,889
       and $758,765                                                              549,603           241,186
                                                                          --------------    --------------

    OTHER ASSETS
        Goodwill                                                               2,740,508         2,683,768
        Intangible assets, net of accumulated amortization of
          $1,384,559 and $953,333                                              1,502,149         1,906,667
        Investment deposits                                                    1,076,154           900,900
        Equity investment in affiliate                                           208,100                --
        Other                                                                    449,080           293,022
                                                                          --------------    --------------
                                                                               5,975,991         5,784,357
                                                                          --------------    --------------

                                                                              31,680,824    $   22,387,280
                                                                          ==============    ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES
        Notes payable - bank                                                   6,039,230    $    6,008,594
        Current maturities of long-term debt                                      66,755            26,851
        Accounts payable                                                      10,797,199         7,319,281
        Accrued expenses and other                                               645,536           618,852
        Short-term loans payable                                                  52,338           537,510
                                                                          --------------    --------------
               Total current liabilities                                      17,601,058        14,511,088
                                                                          --------------    --------------

    LONG-TERM DEBT                                                               146,224            21,592
                                                                          --------------    --------------

    SERIES A PREFERRED STOCK (net of discount $830,134)                        4,169,866                --
                                                                          --------------    --------------

    MINORITY INTEREST                                                            114,791                --
                                                                          --------------    --------------

    STOCKHOLDERS' EQUITY
        Common stock                                                           6,581,059         6,195,492
        Warrants outstanding                                                   1,073,653
        Additional paid-in capital                                             1,953,384         1,786,718
        Retained earnings                                                      2,565,203         2,433,420
        Accumulated other comprehensive income                                   (10,141)           11,440
        Unearned compensation cost                                            (2,514,273)       (2,572,470)
                                                                          --------------    --------------
               Total stockholders' equity                                      9,648,885         7,854,600
                                                                          --------------    --------------

                                                                              31,680,824    $   22,387,280
                                                                          ==============    ==============
</TABLE>


See Notes to Condensed Consolidated Financial Statements                      3

<PAGE>

                                PACIFIC CMA, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                 (UNAUDITED)                        (UNAUDITED)
                                             THREE MONTHS ENDED                  NINE MONTHS ENDED
                                                 SEPTEMBER 30                       SEPTEMBER 30
                                           2004               2003              2004             2003
                                      --------------------------------------------------------------------

<S>                                   <C>               <C>               <C>               <C>
FREIGHT FORWARDING INCOME             $   29,850,668    $   19,550,380    $   67,868,669    $   50,538,581

OPERATING EXPENSES
    Cost of forwarding                   (25,755,408)      (16,777,218)      (57,470,531)      (42,780,914)
    General and administrative            (3,418,383)       (2,435,239)       (9,016,218)       (6,990,033)
    Depreciation and amortization           (200,013)         (191,252)         (570,414)         (577,988)
    Stock-based compensation cost           (111,148)          (58,134)         (397,543)          (93,447)
                                      --------------    --------------    --------------    --------------
                                         (29,484,952)      (19,461,843)      (67,454,706)      (50,442,382)
                                      --------------    --------------    --------------    --------------

OPERATING INCOME                             365,716            88,537           413,963            96,199
                                      --------------    --------------    --------------    --------------

OTHER INCOME (EXPENSE)
    Interest and other income                 26,275            57,806           175,876           143,949
    Interest expense                         (71,766)          (47,782)         (234,427)         (130,743)
    Preferred stock dividend and
      amortization of issuance cost         (172,587)               --          (384,454)               --
    Amortization of preferred
      stock discount                         (46,601)               --          (109,580)               --
    Equity in income (loss) of
      affiliate                               17,440                --            (1,900)               --
                                      --------------    --------------    --------------    --------------
                                            (247,239)           10,024          (554,485)           13,206
                                      --------------    --------------    --------------    --------------

INCOME (LOSS) BEFORE INCOME TAXES            118,477            98,561          (140,522)          109,405

BENEFIT FOR INCOME TAXES                     (80,111)          (17,583)         (275,652)         (102,559)
                                      --------------    --------------    --------------    --------------

INCOME BEFORE MINORITY INTEREST              198,588           116,144           135,130           211,964

MINORITY INTEREST                             (3,347)               --            (3,347)               --
                                      --------------    --------------    --------------    --------------
NET INCOME                            $      195,241    $      116,144    $      131,783    $      211,964
                                      ==============    ==============    ==============    ==============

BASIC EARNINGS PER SHARE              $         0.01    $         0.01    $         0.01    $         0.01

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


See Notes to Condensed Consolidated Financial Statements                      4

<PAGE>

                                PACIFIC CMA, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                          (UNAUDITED)      (UNAUDITED)
                                                                              2004             2003
                                                                        --------------------------------

    OPERATING ACTIVITIES
<S>                                                                     <C>               <C>
    Net income                                                          $      131,783    $      211,964
    Items not requiring (providing) cash
       Amortization of preferred stock discount                                109,580                --
       Depreciation and amortization                                           570,414           577,988
       (Gain) loss on sale of property and equipment                            (6,701)           11,021
       Minority interest in income of subsidiary                                 3,347                --
       Preferred stock dividend                                                 76,667                --
       Provision for doubtful accounts                                          33,779                --
       Stock based compensation cost                                           397,543            93,447
       Share of loss from equity investee                                        1,900                --
       Other                                                                   166,668                --
    Changes in
       Accounts receivable                                                  (5,474,982)       (1,030,151)
       Accounts payable                                                      3,292,248           818,185
       Accrued expenses                                                         16,679          (216,637)
       Deposits, prepayments and other                                      (1,857,252)       (1,542,043)
       Deferred income taxes                                                  (205,258)         (193,050)
       Income taxes refundable/payable                                        (125,165)           28,701
                                                                        --------------    --------------
           Net cash used in operating activities                            (2,868,750)       (1,240,575)
                                                                        --------------    --------------

INVESTING ACTIVITIES
    Acquisition of subsidiary                                                   45,246                --
    Equity investment in Shanghai Air Cargo                                   (246,493)               --
    Investment deposit                                                        (175,254)               --
    Loans receivable                                                             1,960           238,950
    Purchase of property and equipment                                        (291,585)          (47,495)
    Proceeds from sale of subsidiary                                                --           265,385
    Proceeds from sale of property and equipment                                10,962            10,897
                                                                        --------------    --------------
           Net cash provided by (used in) investing activities                (655,164)          467,737
                                                                        --------------    --------------

FINANCING ACTIVITIES
    Net change in restricted cash                                              207,942          (392,759)
    Net change in notes payable - bank                                          30,636         1,835,944
    Installments paid on acquisition of subsidiary                                  --          (600,000)
    Principal payments under capital lease obligation                          (36,086)          (40,251)
    Payment of short-term debt                                                (510,879)         (103,190)
    Proceeds from short-term debt                                                   --           320,513
    Stock issuance costs                                                        (3,000)               --
    Proceeds from issuance of Series A Preferred Stock and detachable        5,000,000                --
      stock warrants
    Advances to a director, net                                                (11,582)          (12,285)
                                                                        --------------    --------------
           Net cash provided by financing activities                         4,677,031         1,007,972
                                                                        --------------    --------------

INCREASE IN CASH AND CASH EQUIVALENTS                                        1,153,117           235,134

FOREIGN CURRENCY EXCHANGE DIFFERENCE                                           (23,179)               --

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                 912,240           441,657
                                                                        --------------    --------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                     2,042,178           676,791
                                                                        ==============    ==============
</TABLE>


See Notes to Condensed Consolidated Financial Statements                      5

<PAGE>

                                PACIFIC CMA, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2004 AND 2003


NOTE 1:     BASIS OF PRESENTATION

            The  accompanying   unaudited   condensed   consolidated   financial
            statements of Pacific CMA, Inc. (the "Company") and its subsidiaries
            (the  "Group") as of  September  30, 2004 and for the nine and three
            months  ended  September  30,  2004 and 2003 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-QSB 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 unaudited 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, 2003 has been  derived  from the audited  consolidated
            balance sheet of the Company as of that date.

            The condensed  consolidated  statements  of operations  for the nine
            months  ended  September  30, 2004 and 2003,  and cash flows for the
            nine months ended  September  30, 2004 and 2003 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, 2003 included
            in the Company's Form 10-KSB filed on March 30, 2004.


      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.


                                       3
<PAGE>

                                PACIFIC CMA, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2004 AND 2003


NOTE 2:  EARNINGS PER SHARE

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

<TABLE>
<CAPTION>
                                                                   (UNAUDITED)
                                                         THREE MONTHS ENDED SEPTEMBER 30
                                                 2004                                             2003
                                                              PER-SHARE                                         PER-SHARE
                                LOSS            SHARES          AMOUNT           INCOME           SHARES          AMOUNT
-----------------------------------------------------------------------------------------------------------------------------
<S>                       <C>               <C>             <C>              <C>              <C>              <C>
NET INCOME                $      195,241                                     $      116,144

BASIC EPS
  Income available to
    common stockholders          195,241       25,825,590   $         0.01          116,144       22,434,134   $         0.01
                          ==============   ==============   ==============   ==============   ==============   ==============
  Stock options and
    warrants                                      198,127                                            177,652
                          --------------   --------------   --------------   --------------   --------------   --------------

DILUTED EPS
  Income available to
    common stockholders
    and assumed
    conversions           $      195,241       26,023,717   $         0.01   $      116,144       22,611,786   $         0.01
                          ==============   ==============   ==============   ==============   ==============   ==============
</TABLE>


      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 dilutive earnings per
      share because they have an anti-dilutive effect.

<TABLE>
<CAPTION>
                                                                   (UNAUDITED)
                                                          NINE MONTHS ENDED SEPTEMBER 30
                                                 2004                                             2003
                                                              PER-SHARE                                         PER-SHARE
                                LOSS            SHARES          AMOUNT           INCOME           SHARES          AMOUNT
-----------------------------------------------------------------------------------------------------------------------------
<S>                       <C>               <C>             <C>              <C>              <C>              <C>

NET INCOME                $      131,783                                     $      211,964               --   $           --

BASIC EPS
  Income available to
    common stockholders          131,783       25,777,962   $         0.01          211,964       22,433,823             0.01
                                                                                              ==============   ==============
  Stock options and
    warrants                                      244,367                                            177,652
                                                                                              --------------   --------------

DILUTED EPS
  Income available to
    common stockholders
    and assumed
    conversions           $      131,783   $   26,022,329   $         0.01   $      211,964       22,611,475   $         0.01
                          ==============   ==============   ==============   ==============   ==============   ==============
</TABLE>


      Commonstock 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 dilutive  earnings per share because they
      have an anti-dilutive effect.


                                       4
<PAGE>

                                PACIFIC CMA, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2004 AND 2003


NOTE 3:  COMMON STOCK AND PREFERRED STOCK

      As of September 30, 2004, the Company's authorized capital stock 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  comprised of 26,049,215
      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  stated  amount of its  Series A  Preferred  Stock  and  issued
      warrants to purchase 937,500 shares of common stock, at per share exercise
      prices of $1.76 for  468,750  shares and $2.00 for 468,750  shares.  These
      warrants expire seven years from date of issuance.

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

      The Series A Preferred  Stock has a stated  value of $1,000 per share,  is
      convertible into shares of Common Stock at a conversion price of $1.44 per
      share and pays an annual  dividend equal to six (6%) percent of the stated
      value of the Series A Preferred Stock outstanding,  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.

      As the Series A Preferred Stock is mandatorily redeemable, it was recorded
      in  accordance  with  Statement  150,  Accounting  for  Certain  Financial
      Instruments  With  Characteristics  of Both  Liabilities  and Equity.  The
      relative  fair value of the Series A  Preferred  Stock was  recorded  as a
      long-term  liability  and the  dividends  paid and accrued are included in
      interest  expense.  Additionally,  the Series A Preferred Stock was issued
      with a beneficial  conversion  feature.  In accordance with EITF 98-5, the
      intrinsic  value of the  beneficial  conversion  option  of  $166,667  was
      recorded as additional  finance charges under the caption "Preferred Stock
      dividend and  amortization  of issuance  cost" and credited to  additional
      paid-in capital for the quarter and nine-month period ending September 30,
      2004.  Lastly,  in accordance with Opinion 14,  Accounting for Convertible
      Debt and Debt Issued With Stock Purchase Warrants,  the Series A Preferred
      Stock and  detachable  stock warrants were recorded at their relative fair
      values  with the value of the  warrants  recorded  as  additional  paid-in
      capital.  The  fair  value  of the  warrants  was  determined  based on an
      independent  valuation.  Effectively,  the  Series A  Preferred  Stock was
      recorded  at 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 nine months ending September 30, 2004, the Company  recognized $46,601
      and $109,580  reprehensively  related to the  amortization of the Series A
      Preferred Stock discount.


                                       5
<PAGE>

                                PACIFIC CMA, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2004 AND 2003



OTHER STOCK GRANTS

      In March 2004,  the Company  entered into a service  agreement  with a key
      employee.  Under the terms of the  agreement,  the Company  granted to the
      employee  100,000 shares of common stock.  The shares were registered with
      the SEC by filing Form S-8 on March 29, 2004.  The agreement  requires the
      employee to continue to provide  services to the Company  from  January 1,
      2004 through December 31, 2008. Compensation cost is measured at the grant
      date based on the  estimated  fair  value of the  restricted  shares.  The
      compensation  cost is  recognized  as  expense  over  the  service  period
      required under the agreements.  The unearned  portion of the  compensation
      cost is recorded in equity as unearned  compensation  cost. The Company is
      holding  the stock  certificates  pending  the  completion  of the service
      period.

      Also in March 2004,  the Company issued 50,000 shares of common stock to a
      business  advisor.  In May 2004, the Company issued 5,000 shares of common
      stock to an employee.  The Company recorded an expense of $64,100 which is
      the estimated fair value of the stock on the grant date.



NOTE 4:  PLEDGE OF ASSETS

      As of September 30, 2004, the Group had pledged  restricted  cash deposits
      of $5,578,122



NOTE 5:  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%  (5.50% at  September  30,  2004).  The line
      expired  on  October  31,   2004  and  was   subsequently   renewed   with
      substantially  the same terms.  The new note expires in November 2005. The
      line is collateralized by a $1,500,000  certificate of deposit held by the
      Bank,  substantially all the assets of Airgate and a personal guarantee of
      a director  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  September  30,  2004 and
      December 31, 2003, there was $2,500,000 borrowed against this facility.

      The Company has certain  other  banking  facilities to finance its working
      capital. The facilities available totaled approximately  $10,920,000.  The
      facilities  accrue  interest at rates  varying with the prime rate in Hong
      Kong, Hong Kong Interbank Offered Rate (HIBOR), or the cost of funds rate.
      As of September 30, 2004,  these rates ranged between 1.1825% - 6.75%. The
      facilities  require  annual  renewals and are  collateralized  by personal
      guarantees  by  two  directors  and  restricted   cash  of   approximately
      $4,000,000.  As of  September  30, 2004 and  December  31,  2003,  amounts
      outstanding  against these  facilities  were  $3,539,230  and  $3,508,594,
      respectively.


                                       6
<PAGE>

                                PACIFIC CMA, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2004 AND 2003


NOTE 6:  RELATED PARTY TRANSACTIONS

        The Company had the following balances with related parties:

                                              SEPTEMBER 30,       DECEMBER 31,
                                                  2004                2003
                                             ----------------------------------
           Payable to Alfred Lam, CEO        $         8,911    $        20,493
                                             ===============    ===============


      There  were no  material  related  party  transactions  for the nine month
      periods ended September 30, 2004 and 2003.



NOTE 7:  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-KSB filed for
      the year ended December 31, 2003.

      The following  table  summarized  the Company's  operations  for the three
      months  ended  September  30,  2004  and  2003  analyzed  into air and sea
      forwarding services:

<TABLE>
<CAPTION>
                              AIR FORWARDING                  SEA FORWARDING                      TOTAL
                           2004           2003            2004             2003           2004             2003
                      ---------------------------------------------------------------------------------------------

<S>                   <C>             <C>             <C>             <C>             <C>             <C>
Revenue               $ 17,684,483    $ 11,306,643    $ 12,166,185    $  8,243,737    $ 29,850,668    $ 19,550,380
Cost of forwarding     (15,271,525)     (9,627,254)    (10,483,883)     (7,149,964)    (25,755,408)    (16,777,218)
Depreciation and
   amortization           (126,202)       (116,951)        (47,597)        (41,795)       (173,799)       (158,746)

Interest expense           (28,022)        (24,473)         (8,350)         (1,657)        (36,372)        (26,130)



Other segment
   expenses
   attributable to
   segment                (618,523)       (658,910)       (636,105)       (384,075)     (1,254,628)     (1,042,985)
                      ------------    ------------    ------------    ------------    ------------    ------------


Segment income        $  1,640,211    $    879,055    $    990,250    $    666,246       2,630,461       1,545,301
                                                      ------------    ------------    ------------    ------------


Net other
   unallocated
   expenses                                                                             (2,435,220)     (1,429,157)
                                                                                      ------------    ------------


Net income                                                                            $    195,241    $    116,144
                                                                                      ============    ============


Goodwill              $  1,720,019    $  2,012,826    $  1,020,489    $    670,942    $  2,740,508    $  2,683,768
Intangible assets          935,241       1,537,250         566,908         512,417       1,502,149       2,049,667
Other assets            20,063,451       9,812,243       7,374,716       4,233,375      27,438,167      14,045,618
                      ------------    ------------    ------------    ------------    ------------    ------------


       Total assets   $ 22,665,775    $ 13,362,319    $  8,930,026    $  5,416,734    $ 31,680,824    $ 18,779,053
                      ============    ============    ============    ============    ============    ============
</TABLE>


                                       7
<PAGE>

                                PACIFIC CMA, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2004 AND 2003


      The  following  table  summarized  the Company's  operations  for the nine
      months  ended  September  30,  2004  and  2003  analyzed  into air and sea
      forwarding services:

<TABLE>
<CAPTION>
                              AIR FORWARDING                 SEA FORWARDING                        TOTAL
                           2004           2003            2004            2003             2004           2003
                      --------------------------------------------------------------------------------------------


<S>                   <C>             <C>             <C>             <C>             <C>             <C>
Revenue               $ 42,255,188    $ 31,340,435    $ 25,613,481    $ 19,198,146    $ 67,868,669    $ 50,538,581
Cost of forwarding     (35,288,372)    (26,241,456)    (22,182,159)    (16,539,458)    (57,470,531)    (42,780,914)
Depreciation and
   amortization           (371,635)       (356,161)       (134,945)       (125,166)       (506,580)       (481,327)
Interest expense          (104,133)        (70,095)        (21,723)         (3,921)       (125,856)        (74,016)
Other segment
   expenses
   attributable to
   segment              (2,040,877)     (1,938,727)     (1,384,154)     (1,016,517)     (3,425,031)     (2,955,244)
                      ------------    ------------    ------------    ------------    ------------    ------------
Segment income        $  4,450,171    $  2,733,996    $  1,890,500    $  1,513,084       6,340,671       4,247,080
                      ============    ============    ============    ============


Net other
   unallocated
   expenses                                                                             (6,208,888)     (4,035,116)
                                                                                      ------------    ------------


Net income                                                                            $    131,783    $    211,964
                                                                                      ============    ============


Goodwill              $  1,720,019    $  2,012,826    $  1,020,489    $    670,942    $  2,740,508    $  2,683,768
Intangible assets          935,241       1,537,250         566,908         512,417       1,502,149       2,049,667
Other assets            20,063,451       9,812,243       7,374,716       4,233,375      27,438,167      14,045,618
                      ------------    ------------    ------------    ------------    ------------    ------------


       Total assets   $ 22,665,775    $ 13,362,319    $  8,930,026    $  5,416,734    $ 31,680,824    $ 18,779,053
                      ============    ============    ============    ============    ============    ============
</TABLE>



    GEOGRAPHICAL SEGMENTS

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

<TABLE>
<CAPTION>
                                 THREE MONTHS ENDED         NINE MONTHS ENDED
                                    SEPTEMBER 30               SEPTEMBER 30
                                 2004          2003         2004          2003
                             -----------------------------------------------------
<S>                          <C>           <C>           <C>           <C>
         Revenue
             * IATA Area 1   $ 5,472,086   $ 2,291,283   $10,366,288   $ 6,385,094
             * IATA Area 2     8,187,565     5,239,057    17,447,185    10,251,673
             * IATA Area 3    16,191,017    12,020,040    40,055,196    33,901,814
                             -----------   -----------   -----------   -----------

                Total        $29,850,668   $19,550,380   $67,868,669   $50,538,581
                             ===========   ===========   ===========   ===========
</TABLE>


                                       8
<PAGE>

                                PACIFIC CMA, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2004 AND 2003


<TABLE>
<CAPTION>
                                                 (UNAUDITED)                                       (UNAUDITED)
                                           AS OF SEPTEMBER 30, 2004                         AS OF SEPTEMBER 30, 2003
                                                OTHER ASSETS                                       OTHER ASSETS
                                   TRADE         (INCLUDING         TOTAL             TRADE         (INCLUDING          TOTAL
                                RECEIVABLES       GOODWILL)         ASSETS         RECEIVABLES       GOODWILL)         ASSETS
                              ---------------------------------------------------------------------------------------------------

             Assets
             <S>              <C>              <C>              <C>              <C>                  <C>             <C>
               *IATA Area 1   $    8,042,880   $    9,869,891   $   17,912,771   $    5,752,194       $5,876,094      $11,628,288
               *IATA Area 2        1,208,813               --        1,208,813          178,062               --          178,062
               *IATA Area 3        3,921,437        8,637,803       12,559,240        1,564,036        5,408,667        6,972,703
                              --------------   --------------   --------------   --------------   --------------   --------------

                    Total     $   13,173,130   $   18,507,694   $   31,680,824   $    7,494,292      $11,284,761      $18,779,053
                              ==============   ==============   ==============   ==============   ==============   ==============
</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 (Islamic Rep. 6f).

        *  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 8:  CONCENTRATIONS

        The Company had sales to two major customers  (deferred as customers who
        represent  10% or more of total  sales).  Sales to these  customers as a
        percent of total sales are as follows:

<TABLE>
<CAPTION>
                                       THREE MONTHS ENDED           NINE MONTHS ENDED
                                          SEPTEMBER 30                SEPTEMBER 30
                     MAJOR CUSTOMER    2004          2003          2004          2003
              ------------------------------------------------------------------------------
              <S>                      <C>           <C>           <C>            <C>
                     A                  15%           19%           14%           15%
                     B                                14%                         13%
</TABLE>



                                       9
<PAGE>

                                PACIFIC CMA, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2004 AND 2003


NOTE 9:  INVESTMENT IN AFFILIATE

        The  investment in affiliate  relates to a 35% ownership of Shanghai Air
        Cargo Ground  Handling  Services,  Ltd. The affiliate is a joint venture
        which began operations in April 2004. Financial results of operations of
        the affiliate from inception to September 30, 2004 are summarized below:

<TABLE>
<CAPTION>
                                                          (UNAUDITED)      (UNAUDITED)
                                                         THREE MONTHS      NINE MONTHS
                                                             ENDED            ENDED
                                                         SEPTEMBER 30,    SEPTEMBER 30,
                                                             2004              2004
                                                      ------------------------------------
<S>                                                         <C>              <C>
            Net Sales                                       328,978          529,098

            Cost of Sales                                   202,278          325,923

            Gross Profit                                    116,831          187,302

            Net Income / (Loss)                              49,829           (5,428)

            Equity in income / (loss) of affiliate           17,440           (1,900)
</TABLE>


                                       10
<PAGE>

Item 2 Management's Discussion and Analysis or Plan 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",  "will",
"hopes",  "seeks",  "anticipates",  "expects", and the like, often identify such
forward-looking  statements, but are not the only indication that a statement is
a forward-looking  statement. Such forward-looking statements include statements
concerning  our plans and  objectives  with  respect to the  present  and future
operations of Pacific CMA, Inc. (herein the "Company," "Registrant", "us", "we",
"our" and  similar  terms)  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  Registrant 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.

      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:

|X|   International  economic and political risks,  over which we have little or
      no control;
|X|   Political  uncertainty  in Hong Kong and  China  making  it  difficult  to
      develop any long range planning;
|X|   Relations between the United States and China remaining stable;
|X|   The  Chinese   government   could  change  its  policies   toward  private
      enterprises or expropriate private enterprises;
|X|   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;
|X|   Fluctuations in exchange rates;
|X|   Our dependence on third parties for equipment and services;


                                       11
<PAGE>

|X|   Competition from our own cargo agents;
|X|   Having a seasonal  business  that  causes  fluctuations  in our results of
      operations and financial condition;
|X|   A lack of ongoing contractual relationships with our customers;
|X|   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;
|X|   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
|X|   Our  insurance  may not be  sufficient  to cover  losses or damages to the
      freight we ship or for  consequential  damages for a shipment of hazardous
      materials.

      Many of  these  factors  are  beyond  our  control,  and you  should  read
carefully the factors  described in "Risk Factors" in the  Registrant's  filings
(including its Forms 10-KSB 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 Pacific CMA Inc.'s 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.


                                       12
<PAGE>

ACCOUNTING FOR INCOME TAXES

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

|X|   Significant under-performance relative to expected historical or projected
      future operating results;
|X|   Significant changes in the manner of our use of the acquired assets or the
      strategy for our overall business; and
|X|   Significant negative economic trends.

      When  determining  whether the  carrying  value of  long-lived  assets and
goodwill  is  impaired  based  upon the  existence  of one or more of the  above
factors,  we determine the existence of impairment by comparison of the carrying
amount of the asset to expected  future cash flows to be generated by the asset.
If such assets are considered impaired, the impairment is measured as the amount
by which the  carrying  value of the assets  exceeds  their fair  values.  As of
September  30,  2004,  goodwill  totaled  approximately  $2.74  million,   other
intangible  assets  amounted to  approximately  $1.50 million and our long-lived
assets,  consisting  primarily of net  property,  plant and  equipment,  totaled
$549,603.

      As  required  by  SFAS  No.  142,  goodwill  and  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,


                                       13
<PAGE>

"Accounting  for the  Impairment or Disposal of Long-Lived  Assets".  During the
period from 2002 and 2004, we acquired the below companies and recorded goodwill
and intangibles associated with these acquisitions. It is summarized as follows:

<TABLE>
<CAPTION>
Date of Acquisition      Name of Company Acquired         Goodwill                  Intangible assets
                                                          (recorded  at the  time   (Customer relationships)
                                                          of Acquisition)
--------------------------------------------------------------------------------------------------------------
<S>                      <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 Ground        $               36,493       $                 -
                         Handling Services Ltd
</TABLE>

      As  required  by 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 intangible customer relationship assets are amortized over a period of
five years while  goodwill is not amortized,  but rather is tested  annually for
impairment  in  accordance  with  SFAS No.  142.  The  above  acquisitions  were
accounted for in accordance with SFAS 141, and 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.

OVERVIEW

      The  following   discussion  is  applicable  to  the  Company's  financial
conditions  and results of operations  for the periods ended  September 30, 2004
and September 30, 2003. The Company does not carry on any business activities by
itself. Instead, through its Hong Kong based subsidiary, AGI Logistics (HK) Ltd.
("AGI")  and  its  New  York  based  subsidiary,   Airgate  International  Corp.
("Airgate"),  the Company  facilitates  and  provides  supply  chain  management
solutions,  contract  logistics  services and international  freight  forwarding
services.

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

      The business of AGI was first  established in August 1998 and now consists
of its own operations, as well as those of its subsidiaries. On January 1, 2001,
its Hong Kong incorporated subsidiaries included Sparkle Shipping, Godown, Wharf
& Transp. Co., Ltd. (Sparkle),  Shenzhen Careship  International  Transportation
Ltd. ("SZ  Careship"),  formerly known as Guangzhou  Huasheng  Int'l  Forwarding
Ltd.,  and  AGI  Logistics   (Shenzhen)  Ltd.  ("AGI   (Shenzhen)")   which  was
incorporated in The People's  Republic of China ("the PRC").  AGI (Shenzhen) and


                                       14
<PAGE>

Sparkle  were  disposed  by AGI  Group  on May  11,  2001  and  April  2,  2002,
respectively,  in  conjunction  with the decision by AGI to  concentrate  on the
international  freight forwarding  business.  The business activities of Sparkle
were  concentrated  on the 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 Group's
non-asset  based strategic plan and the Group decided to dispose of it, in order
to concentrate the Group's resources and investments on the operations of AGI HK
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,  Pacific CMA  completed  the  acquisition  of Paradigm
International  Inc.  ("Paradigm").  Paradigm  is  a  non-asset  based  logistics
services  company based in Miami,  Florida.  It primarily  handles air and ocean
shipments in Latin American.

      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 that airport.

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

      The following discussion,  concerning the results of operations, liquidity
and  capital  resources  of  Pacific  CMA,  is based  solely  upon the  business
operations  that are  carried  on by the  Company's  subsidiaries  for the three
months and nine months ended September 30, 2004 and 2003.

      The following is a list of significant new  developments  occurring during
the nine months ended September 30, 2004:

|X|   Pacific  CMA's  shares of common  stock were listed on the  Frankfurt  and
      Berlin Stock  Exchanges and commenced  trading on January 20, 2004,  under
      the symbol "PWZ";
|X|   Appointment of John M. Dauernheim as Chief Operating Officer;
|X|   Appointment of Bill Stangland as Chief Financial Officer;
|X|   Named as the Official  Freight  Forwarder of the ASAP global Sourcing Show
      held in Las Vegas from February 22 to 25, 2004;
|X|   Entered into contract rate agreements with three additional airlines (Thai
      Airways, Singapore Airlines and Royal Brunei);


                                       15
<PAGE>

|X|   Our sales and  marketing  team in the Europe  Market was  strengthened  by
      hiring new marketing staff in United Kingdom;
|X|   Issued $5 million of 6% Convertible Preferred Stock, the proceeds of which
      are intended to assist the Company maintain its growth;
|X|   Completed  the  acquisition  of Paradigm  International  Inc., a non-asset
      based logistics Services Company based in Miami, Florida;
|X|   Its affiliate,  Shanghai Air Cargo Ground Handling  Services Ltd (Shanghai
      Air Cargo) commenced its operations;
|X|   Acquired 60% of the outstanding  common stock of AGI Freight Singapore Pte
      Ltd.
|X|   Paradigm  Global   Logistics,   a  wholly  owned  subsidiary  of  Paradigm
      International Inc., started its operations in Los Angeles.


RESULTS OF OPERATIONS  THREE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED WITH THREE
MONTHS ENDED SEPTEMBER 30, 2003

OVERALL RESULTS

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

      Total  revenue  for  the  quarter  ended   September  30,  2004  increased
approximately  52.7%,  compared with the period ended  September 30, 2003,  from
$19,550,380  in 2003 to  $29,850,668  in  2004.  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 and new operations
in Los Angeles.

      Revenue derived from the operations of AGI increased  approximately  88.9%
during third  quarter of 2004 when  compared  with the same period of 2003.  The
significant organic growth of AGI was the result of the following factors:

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



                                       16
<PAGE>

|X|   Improvements in the agency network which enabled AGI to secure new freight
      business;
|X|   The  establishment of two additional branch offices in Tianjin and Futian,
      PRC by Shenzhen Careship  Transportation  Limited in the Mainland China, a
      subsidiary of AGI, during the period.

      The revenue of Airgate represented  approximately 69% of our total revenue
for the third quarter of 2004.  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
September 2002.

      Revenue  derived  from the  operation of Airgate  increased  approximately
30.1% during the third quarter of 2004,  when  compared  with that of 2003.  The
increase is the result of the effort of Airgate staff and its Chicago  operation
maturing.

      Total  revenue  derived from Paradigm  International  Inc. and AGI Freight
Singapore Pte Ltd amounted to approximately $1.38 million,  which represent 4.6%
of total revenue of the Group.

      When  compared with 2003,  the cost of forwarding  during third quarter of
2004 increased  approximately  53.5%, from $16,777,218 in 2003 to $25,755,408 in
2004. The increase in costs was primarily the result of the organic  growth,  as
well as the acquisition in Singapore and new operations in Los Angeles.

      Gross profit margin for the three months ended September 30, 2004 and 2003
decreased to 13.7% from 14.2%.  The decrease in gross profit  margin was because
initially  we could not shift all oil  surcharges  from the  airlines  and ocean
vessels to our customers.  Gross profit  (revenue minus cost of forwarding)  for
the  third  quarter  of 2004  increased  47.7%,  from  $2,773,162  in  2003,  to
$4,095,260 in 2004.

      Net income  increased  68.1% from $116,144 in the third quarter of 2003 to
$195,241  in the same period of 2004.  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 expenses" respectively.

BUSINESS SEGMENT OPERATING RESULTS

      The results of operations for each segment are as follows:

      Airfreight  Operations:   Revenue  from  airfreight  operations  increased
approximately   56.4%,  from  $11,306,643  in  the  third  quarter  of  2003  to
$17,684,483  in  the  same  period  of  2004.  Airfreight  revenue  for  foreign
operations  (that includes AGI Group and AGI Singapore)  was  $7,372,474,  while
airfreight revenue for domestic  operations (that includes Airgate and Paradigm)
was  $12,204,913;   with  offsetting  inter-company  transactions  amounting  to
$1,892,904. The volume of airfreight improved in the third quarter of 2004, when
compared  with the third  quarter  of 2003,  which was  primarily  due to (i) an


                                       17
<PAGE>

increase  in routing  orders  from Asia to the United  States as a result of new
customers  and agents in India,  Mombassa and Africa who joined the Group during
the second  half of 2003,  (ii) The  operation  of Airgate  International  Corp.
(Chicago),  which was  established in September  2002, is becoming more and more
mature; (iii) the acquisition of Paradigm on April 30, 2004 and it has commenced
additional operations in Los Angeles in July 2004; and (iv) AGI Singapore joined
the Group in the third quarter of 2004.

      Costs for the airfreight  forwarding  operations  during the third quarter
increased  approximately  58.6%,  from  $9,627,254  in third  quarter of 2003 to
$15,271,525  in the third  quarter  of 2004.  Airfreight  cost  attributable  to
foreign operations was $6,263,188 while airfreight cost attributable to domestic
operations were $10,901,241;  with offsetting  inter-company  costs amounting to
$1,892,904.   The  gross  profit  margin  decreased   approximately  8.7%,  from
approximately  14.9% in the third quarter of 2003 to approximately  13.6% in the
third  quarter of 2004.  The  decrease was the result of  increasing  oil prices
which  pushed up the cost of  airfreight.  After  netting  with the  increase in
revenue, overall gross profit increased approximately 43.7% to $2,412,958.

      Total segment overhead  attributable to the airfreight  operation slightly
decreased by  approximately  3.5%, from $800,334 in the third quarter of 2003 to
$772,747 in the third quarter of 2004, as a result of more  resources  allocated
to sea freight  operations.  Details regarding the increase in overhead expenses
are discussed below under the section "Non Operating Expenses".

      In conclusion,  net segment income from  airfreight  operations  increased
approximately  86.6% from $879,055 in the third quarter of 2003 to $1,640,211 in
the third  quarter of 2004.  The  increase in net segment  income was mainly the
result of the organic growth of AGI and Airgate.

      Sea  Freight  Operation:  Revenue  from sea freight  operations  increased
approximately 47.6%, from $8,243,737 in the third quarter of 2003 to $12,166,185
in the third quarter of 2004. Sea freight  revenue for foreign  operations  were
$2,971,309,  while sea freight revenue for domestic  operations were $9,374,722,
with offsetting  inter-company  transactions amounting to $179,846. The increase
in  revenue  for the  period  was due to the  contribution  from the new  branch
offices of  Shenzhen  Careship  in PRC and the  increase  in quantity of freight
consolidation by Airgate Chicago.

      Costs for sea freight forwarding operation increased  approximately 46.6%,
from $7,149,964 in the third quarter of 2003 to $10,483,883 in the third quarter
of 2004. Sea freight cost  attributable  to foreign  operations  were $2,400,880
while  costs   attributable  to  domestic   operations  were  $8,262,849,   with
inter-company costs amounting to $179,846.

      The gross  profit  margin  slightly  increased  approximately  3.8%,  from
approximately  13.3% in the third quarter of 2003 to approximately  13.8% in the
same  period  of  2004.  The  increase  was due to  better  management  of cargo
consolidation resulting from the increase in revenue.

      Total segment overhead attributable to the sea freight operation increased
approximately  61.9%,  from $427,527 in third quarter of 2003 to $692,052 in the
same period of 2004. Overall net income for the sea freight operation  increased
approximately  48.6%,  from $666,246 in the third quarter of 2003 to $990,250 in
the same period of 2004.  The  increase in net segment  income was mainly due to
the increase in revenue and gross profit margin for sea freight operation during
the period.


                                       18
<PAGE>

OPERATING EXPENSES
GENERAL AND ADMINISTRATIVE EXPENSES

      General and administrative  expenses increased by approximately  40.4%, to
$3,418,383  in the third  quarter of 2004 from  $2,435,239 in the same period of
2003. The following are the factors that caused the increase in expenses:

      Sales  commission:  Sales commission  increased  approximately  22.5% from
$460,680  in the third  quarter of 2003 to  $564,325 in the same period of 2004.
The increase was a result of increase in freight  forwarding  revenue during the
third quarter of 2004.

      Salaries and  allowance:  Salaries and allowance  increased  approximately
39.9% from  $1,102,639  in the third  quarter of 2003 to  $1,542,503 in the same
period of 2004. The increase was due to the addition of  approximately  63 staff
people during 2004 in order to keep pace with our growth.

STOCK-BASED COMPENSATION COST

      Stock-based  compensation cost increased  approximately 91.2% from $58,134
for the three months ended September 30, 2003 to $111,148 for the same period in
2004. During the period from November 2003 to September 2004, 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.  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.

Details of the 2,105,000 shares are as follows:

      On or about November 7, 2003, we entered into four service agreements with
three employees and an independent sales representative.  Under the terms of the
agreements,  as amended in March 2004, we granted these  employees and the sales
representative  an aggregate of 1,950,000 shares of our common stock. 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 them to continue to provide  services to us from January 1,
2004 through  December 31, 2013.  The  agreement  with the sales  representative
requires him to provide services to us from January 1, 2004 through December 31,
2005.

      Also in March 2004, the Company  entered into a service  agreement with an
employee  (formerly a director of the Company until  September 11, 2004).  Under
the terms of the agreement,  the Company granted the 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 agreement requires the employee to
continue  to provide  services  to the  Company  from  January  1, 2004  through


                                       19
<PAGE>

December  31, 2008.  On September  11, 2004,  this  employee  resigned  from the
position of director but agreed to continue to act as an independent  consultant
for British market development. These shares are being held by the Company until
the completion of his term on December 31, 2008.

      Also in March  2004 and May 2004,  the  Company  issued  50,000  shares of
common stock to a business advisor and 5,000 shares to an employee.  The Company
recorded an expense of $64,100 which is the estimated fair value of the stock on
the grant date.

DEPRECIATION AND AMORTIZATION

      Depreciation and amortization increased approximately 4.58%, from $191,252
in 2003 to $200,013 in 2004. The increase was mainly due to additional  computer
hardware and software  were  purchased for the  implementation  of new logistics
system and office renovation at Airgate.

      Amortization  arises  from  an  intangible  customer   relationship  asset
recorded in  conjunction  with the  acquisition of Airgate on April 30, 2002. We
recorded  this  asset  at the  cost of  $2,860,000  and are  amortizing  it on a
straight-line  basis  over a  period  of 5  years.  During  the  quarters  ended
September 30, 2004 and 2003, the amortization expense attributable to this asset
was $143,000.

      With the acquisition of Paradigm  International Inc. on April 30, 2004, we
recorded an intangible customer  relationship asset of $26,708. Same as Airgate,
the cost of the intangible  customer  relationship asset is being amortized on a
straight-line  basis  over a period of 5 years.  In the third  quarter  of 2004,
$1,335 was expensed as amortization.

NON-OPERATING EXPENSES
INTEREST AND OTHER INCOME

      Interest and other income  decreased  from $57,806 in the third quarter of
2003 to $26,275 in the same  period of 2004.  This was due to the  reduction  of
office management fees received from sub-letting the office in Hong Kong.

INTEREST EXPENSE

      Interest  expense  increased to $71,766 in the third  quarter of 2004 from
$47,782  in the same  period of 2003.  The  increase  in  interest  expense  was
primarily due to an increase in  short-term  working  capital  financing and the
rise in interest rate during 2004.

PREFERRED STOCK DIVIDEND AND AMORTIZATION OF ISSUANCE COST

      During April and May 2004, the Company sold to two institutional investors
$5,000,000  stated amount of its Series A Preferred Stock and issued warrants to
purchase  1,562,500  shares of common  stock at an  exercise  price of $1.76 per
share for 718,250 shares and $2.00 per share for 718,250  shares.  Such Series A
Preferred  Stock is mandatory  redeemable  and was recorded in  accordance  with
Statement 150 "Accounting for Certain Financial Instruments With Characteristics


                                       20
<PAGE>

of Both  Liabilities and Equity".  The dividends paid and accrued are charged to
expenses in the  statements of  operations.  In accordance  with EITF 98-5,  the
intrinsic value of the beneficial  conversion option of $166,667 was recorded as
additional  expenses and credited to additional  paid-in-capital for the quarter
ended September 30, 2004.

      Again,  the  issuance  cost  related  to the  placement  of the  Series  A
Preferred  Stock is  amortized  over its term to maturity,  which is 4 years.  A
total of $75,549 was expensed during the third quarter of 2004.

AMORTIZATION OF PREFERRED STOCK DISCOUNT

      In accordance with 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 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,
$46,601 was expensed during the third quarter ended September 30, 2004.

NINE MONTHS ENDED  SEPTEMBER 30, 2004 COMPARED WITH NINE MONTHS ENDED  SEPTEMBER
30, 2003

OVERALL RESULTS

Total  revenue  for  the  nine  months  ended   September  30,  2004   increased
approximately  34.3%,  when compared  with the period ended  September 30, 2003,
from  $50,538,581  in 2003 to  $67,868,669  in 2004.  Same as the quarter  ended
September  30,  2004,  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 and new operations in Los Angeles.

      Revenue derived from the foreign operations increased  approximately 51.3%
from  $14,792,758  to $22,380,735  during nine months ended  September 30, 2004,
when compared with the same period of 2003.  The  significant  organic growth of
foreign operations was the result of the following factors:

|X|   An  increase  in the  routed  freight  traffic  from the  existing  agency
      partners;
|X|   Improvements in the agency network which enabled AGI to secure new freight
      business
|X|   Establishment of new branch offices in Mainland China.
|X|   Inclusion of the results of a newly acquired company, AGI Singapore.

      The revenue of the domestic  operations  represented  approximately 75% of
our total revenue for the nine months ended September 30, 2004.  Revenue derived
from the domestic operations  increased  approximately 26.9% from $40,217,746 to
$51,054,742  during the first nine months of 2004,  when  compared  with that of
2003.  The  increase  was the  result of the effort of  Airgate's  staff and the
inclusion  of revenue  generated  by  Paradigm,  which was acquired on April 30,
2004.


                                       21
<PAGE>

      As compared  with the nine months ended  September  30, 2003,  the cost of
forwarding during the first nine months of 2004 increased  approximately  34.3%,
from $42,780,914 in 2003 to $57,470,531 in 2004. Cost of forwarding increased in
line with the revenue growth.

      Gross profit margins for the nine months ended September 30, 2004 and 2003
were both 15.3%.  Gross profit  (revenue minus cost of forwarding) for the first
nine months of 2004 increased approximately 34%, from $7,757,667 during the nine
months  ended  September  30,  2003 to  $10,398,138  in the  nine  months  ended
September 30, 2004.

      Due to the  increase  in  stock-based  compensation  cost and the  various
expenses  relating to the Series A Preferred  Stock sold during 2004, net income
decreased by $80,181 from  $211,964 in the nine months ended  September 30, 2003
to $131,783 in the nine months ended September 30, 2004. Details of the non-cash
compensation  cost and  expenses  related to the Series A  Preferred  Stock were
discussed in the section "Operating expenses" and "Non-operating expenses".

BUSINESS SEGMENT OPERATING RESULTS

      The results of operations for each segment are as follows:

      AIRFREIGHT  OPERATIONS:   Revenue  from  airfreight  operations  increased
approximately  34.8%,  from  $31,340,435  for  the  nine  months  ended  2003 to
$42,255,188  for the  same  period  of  2004.  Airfreight  revenue  for  foreign
operations was $16,104,501, while airfreight revenue for domestic operations was
$31,209,952, with offsetting inter-company transactions amounting to $5,059,265.
The volume  improvement  was primarily due to (i) an increase in routing  orders
from Asia to the United States as a result of new customers and agents in India,
Mombassa  and Africa who joined the Group  during the first nine months of 2003,
(ii)  The  operation  of  Airgate  International  Corp.  (Chicago),   which  was
established  in September of 2002, is maturing,  (iii) the Company was adversely
affected  in the first  quarter  2003 due to the  outbreak  of the SARS virus in
Asia, (iv) the acquisition of Paradigm  International Inc. on April 30, 2004 and
AGI  Freight  Singapore  Pte Ltd in July  2004 have  contributed  to part of the
increase, (v) Paradigm Global Logistics commenced its operations in July 2004.

      Costs for the  airfreight  forwarding  operations  during  the first  nine
months of 2004 increased approximately 34.5%, from $26,241,456 in the first nine
months  of 2003 to  $35,288,372  in the same  period  of 2004.  Airfreight  cost
attributable  to  foreign  operations  was  $13,306,211  while  airfreight  cost
attributable to domestic operations was $27,041,427 and offsetting inter-company
costs were $5,059,266 during the first nine months of 2004. The gross margin was
stable  at  16.5%  and  16.3%  in  the  first  nine  months  of  2004  and  2003
respectively.

      Total segment overhead  attributable to the airfreight operation increased
approximately  6.4%,  from  $2,364,983  during the first nine  months of 2003 to
$2,516,645  in the same  period  of 2004.  Details  regarding  the  increase  in
overhead  expenses are discussed  below under the section  title "Non  Operating
Expenses".


                                       22
<PAGE>

      In conclusion,  net segment income for the airfreight  operation increased
approximately  62.8%  for  the  nine  months  ended  September  30,  2004,  from
$2,733,996 in 2003 to $4,450,171 in the same period of 2004. The increase in net
segment income was the result of the organic growth of AGI and Airgate,  as well
as the inclusion of the results of newly acquired and established subsidiaries.

      SEA  FREIGHT  OPERATION:  Revenue  from sea freight  operations  increased
approximately  33.4%,  from  $19,198,146  in the  first  nine  months of 2003 to
$25,613,481  in the same  period  of  2004.  Sea  freight  revenue  for  foreign
operations was $6,276,234, while sea freight revenue for domestic operations was
$19,844,788,  and offsetting inter-company transactions were $507,542 during the
first nine months of 2004.  The increase in revenue during the period was due to
our new agents in India,  Japan and Turkey,  who introduced  more customers into
our network.  These new customers  generated more revenue in the Shanghai market
starting  from the second  quarter of 2003.  There was also an  increment in the
quantity of freight consolidation at Airgate Chicago.

      Costs for the sea freight  forwarding  operation  increased  approximately
34.1%,  from  $16,539,458 in the first nine months of 2003 to $22,182,159 in the
same period of 2004.  Sea freight cost  attributable  to foreign  operations was
$5,028,719, while the costs attributable to domestic operations was $17,660,982,
with offsetting  inter-company costs amounting to $507,542 during the first nine
months of 2004.

      The gross profit margin  decreased  approximately  2.9%, from 13.8% in the
first nine months of 2003 to 13.4% in the same period of 2004,  which was due to
our market penetration  strategy in Shanghai and Chicago.  Despite the reduction
in gross  margin,  overall gross profit  increased by  approximately  29.1%,  to
$3,431,322 as a result of increase in trade volume from the first nine months of
2003 to the same period of 2004.

      Total segment overhead attributable to the sea freight operation increased
approximately  34.5%, from $1,145,604 in first nine months of 2003 to $1,540,822
for the same period of 2004.  Overall  net income for the sea freight  operation
increased  approximately  24.9%, from $1,513,084 in first nine months of 2003 to
$1,890,500  for the same period in 2004.  The increase in net segment income was
mainly due to the increase of gross profit resulting from the increases in trade
volume.

OPERATING EXPENSES
GENERAL AND ADMINISTRATIVE EXPENSES

      General and administrative  expenses have increased by approximately 29.0%
to $9,016,218 in first nine months of 2004, compared with $6,990,033 in the same
period of 2003.  The  following  are the  factors  that  caused the  increase in
expenses:

      Sales commission:  Sales commission  increased  approximately  44.7%, from
$1,100,494  in the first nine months of 2003 to $1,592,749 in the same period of
2004.  The increase was a result of the  increase in freight  forwarding  income
during the nine months ended September 30, 2004.


                                       23
<PAGE>

      Salaries and  allowance:  Salaries and allowance  increased  approximately
21.7% from $3,171,047 for the nine months ended September 30, 2003 to $3,859,754
in the same  period of 2004.  This  increase  was the result of the  addition of
approximately 63 staff people during 2004 in order to keep pace with our growth.

STOCK-BASED COMPENSATION COST

      Stock-based  compensation  cost:  During the period from  November 2003 to
September  2004,  the Company  issued a total of 2,105,000  shares of its common
stock to five  employees,  an independent  sales  representative  and a business
advisor.   During  the  nine  months  ended  September  30,  2004,   stock-based
compensation  cost increased 325%, from $93,447 in the first nine months of 2003
to $397,543 in the same period of 2004.

DEPRECIATION AND AMORTIZATION

      Depreciation and amortization decreased  approximately 1.3%, from $577,988
in the first nine months of 2003 to  $570,414  in the same  period of 2004.  The
decrease was due to the reduction of depreciation for property and equipment.

      Amortization  arises  from  intangible  customer  relationship  assets was
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 nine  months  ended
September 30, 2004,  the  amortization  expense  attributable  to this asset was
$431,225, an increase of $2,225 when compared with the same period of 2003.

NON-OPERATING EXPENSES
INTEREST AND OTHER INCOME

      Interest  and other  income  increased  from  $143,949 for the nine months
ended  September 30, 2003 to $175,876 in the same period of 2004,  which was due
to various miscellaneous handling charges received from third parties during the
second quarter of 2004.

INTEREST EXPENSE

      Interest  expense  increased  to $234,427 in the first nine months of 2004
from $130,743 in the same period of 2003.  The increase in interest  expense was
primarily due to an increase in short-term working capital financing.

PREFERRED STOCK DIVIDEND AND AMORTIZATION OF ISSUANCE COST

      The Series A Preferred  Stock and detachable  stock warrants issued during
April and May 2004 were recorded in accordance  with  Statement 150  "Accounting
for Certain Financial  Instruments With  Characteristics of Both Liabilities and
Equity" and EITF 98-5. Accordingly,  a total of $384,454 was expensed during the
nine months ending September 30, 2004.


                                       24
<PAGE>

AMORTIZATION OF PREFERRED STOCK DISCOUNT

      In accordance with Opinion 14,  Accounting for Convertible  Debt and Debts
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 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,
$109,580 was expensed during the nine months ending September 30, 2004.

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 space  inventory  risk.  We pay for the  guarantees  we put up to the
carriers,  even if we do not have any customers' cargo to fill the space. We are
not able to ask our  customers to make these  guarantees  and,  accordingly,  we
assume all of the risks.

      The Company has purchased  freight  forwarders  liability  insurance  that
covers it against the claims from customers. We assume the responsibility of the
cargo,  and are  responsible  for its safe delivery.  Therefore,  we can be held
responsible and incur losses for any damages to the freight,  their  misdelivery
and similar matters.

      Changes in governmental  deregulation  efforts,  regulations governing the
Company's  products,  and even the  international  trade environment and tariffs
could all  affect the  Company's  business  in  unpredictable  ways.  Management
believes that 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 its  customers and this could result in eroding the Company's
operating margins.

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

      Additional risks and uncertainties include:

|X|   The Company's  dependence on international  trade resulting from favorable
      worldwide economic conditions.
|X|   The  Company's   dependence  on  retaining  and   recruiting   significant
      customers.
|X|   The  Company's  ability to hire and retain  skillful  employees in a tight
      labor market.
|X|   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.


                                       25
<PAGE>

|X|   Following the September 11 attacks, airlines charged additional costs such
      as fuel  surcharge,  insurance  surcharge  and war risk  surcharge.  These
      surcharges are generally passed to the shippers and consignees, which have
      increased  their shipping  costs.  As a result of these  increased  costs,
      customers   shipping   incentive  is  lower,   while  the  rate  of  order
      cancellation has risen.
|X|   During  March 2003,  The World  Health  Organization  received  reports of
      Severe Acute  Respiratory  Syndrome' in various  parts of the world.  SARS
      caused  airlines to reduce their  capacities  and  adversely  affected the
      external  trade from Hong Kong and the Pearl River  Delta.  The  Company's
      operations, therefore, were adversely affected by this epidemic.

LIQUIDITY AND CAPITAL RESOURCES

      We used  approximately  $2,868,750  and  $1,240,575 of cash from operating
activities for the nine months ended  September 30, 2004 and 2003  respectively.
The use of cash was mainly  attributable to the additional amounts used in other
receivables. It was also due to the increase in trade receivables as a result of
company growth and acquisition.

      Net cash used in  investing  activities  was  $655,164  during  first nine
months of 2004 while the net cash  provided by investing  activities  during the
same period of 2003 was $467,737.  During the first nine months of 2004, we used
$291,585 to acquire plant and equipment to improve our office  facilities and IT
system. We also used $246,493 to acquire a 35% equity investment in Shanghai Air
Cargo  Ground  Handling  Services  Ltd.,  as well as the deposits of a potential
equity investment in United States and joint venture in Hong Kong SAR.

      Net cash provided by financing activities was approximately $4,677,031 and
$1,007,972 for the period ended September 30, 2004 and 2003 respectively. During
the first three quarters of 2004,  the Company made payments on short-term  debt
to banks of $510,879 and principal  payment under capital lease  obligations  of
$36,086.  At the same time the  Company  also  issued $5 million of its Series A
Convertible Preferred Stock and detachable stock warrants.

      Working   capital  was  $7,554,172   (inclusive  of  restricted   cash  of
approximately  $5.58  million)  and  $1,850,649  as of  September  30,  2004 and
December 31, 2003 respectively.  We believe that we will be able to rely on cash
flow from  operations  for short-term  liquidity and have adequate  liquidity to
satisfy our material commitments for the twelve months after September 30, 2004.
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 newly acquired  subsidiary,  Paradigm  International  Inc. in
Latin  America,  and joint  ventures in the PRC,  and through a major  marketing


                                       26
<PAGE>

campaign  through  the  Indian  subcontinent,  including  India,  Sri  Lanka and
Bangladesh.  In order to  achieve  this  goal,  we will be  required  to raise a
certain amount of capital.  To a certain  extent,  these  activities will have a
significant impact on both liquidity and capital resources.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENT

      From time to time, we have entered into various  contractual  obligations,
which may be summarized as follows:


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

<S>                                     <C>            <C>            <C>            <C>            <C>
            Finance lease Obligations   $    143,110   $     66,755   $     76,355   $         --   $         --

            Operating Leases               1,494,676        538,997        908,844         46,835             --

            Cargo Space Commitments        6,679,255      6,679,255             --             --             --

            Material Employment              623,750        499,000        124,750             --             --
            Agreements
</TABLE>

      We have finance lease obligations of $143,110 as of September 30, 2004, of
which  $66,755 is repayable  within one year,  and $76,355 is repayable  after 1
year.

      The amount due to a director,  totaling $8,911,  represents  amount due to
Alfred Lam.

      Debts maturing within one year amounted to $52,338.

      We also entered into various  lease  commitments  for office  premises and
warehouses  in the United  States,  Hong Kong and China.  The total  outstanding
lease  commitments  under  non-cancelable  operating leases are $1,494,676 as of
September  30, 2004.  The current  portion of these  commitments  of $538,997 is
payable within one year.

      We have entered into written  agreements  with various sea and  airfreight
carriers  committing to take up a guaranteed  minimum amount of cargo space each
year. As of September 30, 2004, the amount  outstanding for such  commitments to
be entered into in 2004 was approximately $6.68 million.

      In connection with the acquisition of Airgate  International  Corporation,
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 September 30, 2004, our commercial commitments may be summarized as follows:


<TABLE>
<CAPTION>
OTHER COMMERCIAL                    TOTAL AMOUNTS       AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
COMMITMENTS                         COMMITTED
--------------------------------------------------------------------------------------------------
                                                       LESS THAN 1 YEAR                 1-3 YEARS
<S>         <C>                     <C>                <C>                          <C>
            Line of credit          $      2,500,000   $      2,500,000          $      --
            Overdraft                      1,343,371          1,343,371                 --
            Invoice Trust Receipt          2,195,859          2,195,859                 --
            Income tax loan                   52,338             52,338                 --
            Guarantees by bank               602,564            602,564                 --
            Other long-term loans             69,869                 --             69,869
</TABLE>


                                       27
<PAGE>

      As of September  30, 2004, to finance our working  capital,  our available
banking  facilities  consisted of  approximately  $11,000,000 that were 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  $6,039,230.  This  was  made  up of  (i)  $1,343,371  of  overdrafts;  (ii)
$2,195,859 of invoice trust  receipts and (iii)  $2,500,000  line of credit.  In
addition to the credit  facilities,  the  Company has a $52,338  Income Tax Loan
outstanding  as of  September  30,  2004.  Moreover,  there is  $602,564 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.

      In relation to the acquisition of AGI Freight  Singapore Pte Limited,  the
Group has  long-term  liabilities  from its minority  shareholders  amounting to
$69,869,  of which $11,645 is bearing an interest of 6% per annum and $58,224 is
interest fee. Neither amount will be repaid within one year.

OUTLOOK
      Despite a global economic  downturn,  we believe the following factors may
have a positive  impact on our future  results of  operation  and our  financial
conditions:

CHINA'S INCREASED EXPORTS
      According to a recent  research  report issued by Barrow Street  Research,
Inc.  (The "Barrow  Report")  between 1990 and 2003,  China's total exports have
grown  eight  times to over $380  billion.  China's  share of global  exports is
anticipated  to reach 6% in 2003, a 54% growth from 2000. The Barrow Report also
states that China accounted for 16% of the growth in the world economy,  ranking
second only to the U.S. The rising  trading  power of China has been  especially
important for transportation companies. With extensive operational centers based
in Hong Kong and South  China,  management  believes  that the  Company  is well
positioned to take advantage of this rapid growth in trade.

CLOSER ECONOMIC PARTNERSHIP ARRANGEMENT

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

      Under the CEPA,  Hong Kong  companies are permitted to set up wholly owned
enterprises  in  Mainland  China  to  provide  logistics  services  and  related
consultancy  services  for  ordinary  road  freight,  and  participating  in the
management and operation of logistics services through electronic means. It also
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,  for which such
agents can also enjoy  national  treatment in respect of the minimum  registered
capital requirement.  In addition,  tariff cuts are expected to boost trade. The
Development  Research  Centre  of  the  State  Council  has  forecast  that  WTO


                                       28
<PAGE>

membership  could  lead to an  extra  2.4% in  annual  export  growth.  The U.S.
International Trade Commission, who is working with China's April 1999 accession
offer,  forecast  that total exports would rise 10.1% once tariff cuts are fully
implemented.  After taking into account the secondary growth effects,  the boost
to export growth is 12.1%.  These  estimates  ignore the  additional  impacts on
removal of non-tariff barriers and liberalization of trade in services. 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  enjoy  from  CEPA,  through  our Hong
Kong-based AGI Logistics (HK) Ltd, Shenzhen Careship  Transportation Limited, as
well as AGI  China  Ltd,  we  believe  that we can  realize  the  "first  mover"
advantage. That is, we believe that our Hong Kong based subsidiaries can benefit
from CEPA  because  we have the  experience  in doing  business  in China and we
believe we are knowledgeable in China's regulations and business  practices.  We
also  believe  that our  existing  offices in Hong Kong and  Mainland  China can
respond  more  quickly  than  other  U.S.  freight  forwarders  to  the  ongoing
developments in China.

OUTSOURCING OF NON-CORE ACTIVITIES
      More and more companies  outsource  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,
which can assure a timely  delivery  of  products  at a lower cost and at higher
efficiency than if these functions were performed themselves.

GLOBALIZATION OF TRADE
      As  the   barriers  of   international   trade  are   gradually   reduced,
international  trade  will  similarly  increase.  In  addition,   companies  are
increasingly  sourcing the supplies and raw materials from the most  competitive
suppliers  throughout  the world.  This form of  sourcing  could also lead to an
increase in volumes of trade.

INCREASE IN 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,  more  implementation  of
demand-driven supply chains,  shorter production cycles and the increasing value
of individual shipments.

A SHIFT TOWARDS A DECREASING NUMBER OF GLOBAL SUPPLY CHAIN MANAGEMENT PROVIDERS
      Companies are reducing the number of freight  forwarders  and supply chain
management providers with which they are working so that they can concentrate on
a  limited  number  of  providers  who are  familiar  with  their  requirements,
processes,   and  procedures,   and  who  can  develop  the  long-term   partner
relationship.   As  a  result,  those  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 shift.


                                       29
<PAGE>

EXPIRATION OF GARMENT QUOTA IN 2005

      The garment quota in the U.S will expire in 2005.  With the  expiration of
this garment quota, exporters are uncertain of the business environment and as a
result, the Company  anticipates that garment exporters will attempt to increase
their sales and exports in 2004 before the quota expires,  which has a potential
for an increase in the volume of trade.

ITEM 2A 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:

      - FOREGIN EXCHANGE RISK
      The Company conducts business in many different  countries and currencies.
The Company's business often results in revenue billings issued in a country and
currency,  which differs from that where the expenses related to the service are
incurred. This brings a market risk to the Company's earnings.  Foreign exchange
rates  sensitivity  analysis can be quantified  by estimating  the impact on the
Company's  earnings as a result of hypothetical  change in the value of the U.S.
Dollar, the Company's functional  currency,  relative to the other currencies in
which the Company transacts business.  As one of the major subsidiaries uses the
Hong Kong Dollar  (HKD),  which has been linked to the U.S.  Dollar at a rate of
HKD7.8 to USD1, as its functional currency, there has been no material change in
the Company's  foreign exchange risk exposure.  However,  if HKD was unlinked to
the US Dollar,  an average 10%  weakening  of the U.S.  Dollar,  throughout  the
period ended September 30, 2004, would have had the effect of raising  operating
income approximately  $108,000. An average 10% strengthening of the U.S. Dollar,
for the same period  would have had the effect of reducing  operating  income by
approximately  $88,000.  The Company currently does not utilize any the derivate
financial instruments or hedging transactions to manage foreign currency risk.

      - INTEREST RATE RISK
      The Company does not currently utilize derivative financial instruments to
hedge against  changes in interest rates. At September 30, 2004, the Company had
cash and cash  equivalents  and  restricted  cash of $7.6 million and short-term
borrowings of $6.6 million, all subject to variable short-term interest rates. A
hypothetical  change in the  interest  rate of 10% would  have an  insignificant
impact  on the  Company's  earnings.  In  management's  view,  there has been no
material change in Company's market risk exposure between 2003 and 2004.


                                       30
<PAGE>

ITEM 3.           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-14(c) and 15d-14(c)  under the  Securities
Exchange  Act of 1934,  as amended) as of  September  30, 2004 (the  "Evaluation
Date"),  have  concluded  that,  as of 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.

                                     PART II

                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

      In March 2004,  the  Company  filed a complaint  (the  Complaint")  in the
United States  District Court for the Southern  District of New York,  captioned
Pacific CMA, Inc. and Alfred Lam a/k/a Alfred Lam King Ko v.  Frascona,  Joiner,
Goodman and  Greenstein,  P.C.,  Gary S. Joiner,  Thomas K Russell and John Does
1-10 (Case No. 04 CV 2213 (NRB)) (the "Action").  In the Complaint,  the Company
alleged  various  violations  of  the  anti-fraud   provisions  of  the  Federal
Securities  Laws  involving  the  purchase  and sale of  securities  against the
defendants  including,  but not limited to, the Company's prior counsel, as well
as breaches of fiduciary duty by that counsel.

      First Settlement Agreement.  Pursuant to the First Settlement Agreement by
and  between  the  Company  and  certain   defendants  (the  "First   Settlement
Agreement"),  in exchange for the Company  agreeing to dismiss the Action solely
against  each of the settling  defendants,  the  settling  defendants  agreed to
return to the  Company  and/or Mr. Lam, an  aggregate  of 725,000  shares of the
Company's common stock held by such persons,  and the Company agreed to register
for resale  under the  Securities  Act of 1933,  as  amended  (the  "Act"),  the
remaining  aggregate 660,000 shares of common stock held by such persons.  Under
the First Settlement Agreement, however, such 660,000 shares of common stock are
subject  to a  lock-up  agreement  providing  that  such  persons  may not sell,
transfer  or  otherwise  dispose  of  any  of  such  660,000  shares  until  the
registration  statement  covering such 660,000 shares became effective on August
3, 2004 by the Securities and Exchange  Commission (the  "Commission")  and then
following  August 3, 2004, such persons only may sell ten (10%) percent of their
aggregate holdings (66,000 shares) every thirty days.

      Second  Settlement  Agreement.  We  have  now  entered  into a  settlement
agreement  with the remaining  defendants in the Action (the "Second  Settlement
Agreement"),  in exchange for the Company agreeing to dismiss the Action against
the remaining  defendants,  these remaining  defendants  agreed to return to the
Company  and/or Mr. Lam, an aggregate of 36,848 shares of the  Company's  common
stock held by such person,  and the Company  agreed to register for resale under
the Act, the  remaining  aggregate  103,739  shares of common stock held by such


                                       31
<PAGE>

persons. Under the Second Settlement Agreement,  however, such 103,739 shares of
common stock are subject to a lock-up agreement  providing that such persons may
not sell,  transfer or otherwise dispose of any of such 103,739 shares until the
date a registration  statement  covering such 103,739 is declared effective (the
"Effective  Date") by the Commission and then following the Effective  Date, one
such settling  defendant,  Gary S. Joiner, has agreed to sell up to an aggregate
of 5,200  shares of Common  Stock every  thirty (30) days,  commencing  with the
thirty-first  day  after  the  registration  statement  becomes  effective.  The
settling  defendants may elect,  in certain  circumstances,  obtain at their own
cost and expense,  an opinion of counsel permitting the sale of the shares under
the Act and the  Company  has  agreed  not to  object  to or  prevent  such sale
provided  the  sale  is not in  contravention  of any  applicable  law,  rule or
regulation.

      The Complaint has now been dismissed.

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

      Not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

      Not applicable.

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

      Not applicable.

ITEM 5.    OTHER INFORMATION

      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-4(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
<PAGE>

      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)).

      (b)   Reports on Form 8-K

      Duringthe fiscal quarter covered by this Report,  the Registrant filed the
      following Reports on Form 8-K:

      Event Date          Filing Date       Items in Form 8-K Reported Upon
      ----------          -----------       -------------------------------

      October 27, 2004    October 28, 2004          5, 8.01 and 9.01


                                       33
<PAGE>

                                   SIGNATURES

      Pursuant to the  requirements of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.


                              PACIFIC CMA, INC.


Date:  November 12, 2004      By: /s/Alfred Lam
                                  ----------------------------------------------
                                    Name:   Alfred Lam
                                    Title:  Chairman of the Board of Directors
                                            (Principal Executive Officer)


Date:  November 12, 2004      By:/s/Bill Stangland
                                 -----------------------------------------------
                                    Name:   Bill Stangland
                                    Title:  Chief Financial Officer
                                            (Principal Financial and Accounting
                                            Officer)