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, 2006

[ ] 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 0-25753
                               ___________________

                           FITTIPALDI LOGISTICS, INC.
                           --------------------------
        (Exact name of small business issuer as specified in its charter)

               Nevada                                 87-04496677
               ------                                 -----------
  (State or other jurisdiction of        (I.R.S. Employer Identification No.)
   incorporation or organization)

              903 Clint Moore Road, Boca Raton, Florida 33487-2802
              ----------------------------------------------------
                    (Address of principal executive offices)

                                 (561) 998-7557
                                 --------------
                           (Issuer's telephone number)

                                 not applicable
                                 --------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

                               ___________________

Check whether the issuer (1) 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 [ ]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of November 14, 2006, the number
of outstanding shares of the issuer's common stock was 106,454,220.

     Transitional Small Business Disclosure Format (check one): Yes [  ] No [X]
 ______________________________________________________________________________


<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS
                                -----------------



                                                                                                           Page
                                                                                                           ----
<S>                                                                                                          <C>
PART I.  FINANCIAL INFORMATION
-------  ---------------------

Item 1.  Financial Statements (Unaudited):

         Consolidated Balance Sheet, September 30, 2006                                                      4

         Consolidated Statements of Operations, Three Months Ended
            September 30, 2006 and 2005                                                                      5

         Consolidated Statements of Cash Flows, Three Months Ended
            September 30, 2006 and 2005                                                                      6

         Notes to Consolidated Financial Statements                                                          7

Item 2.  Management's Discussion and Analysis or Plan of Operation                                          26

Item 3.  Controls and Procedures                                                                            34

PART II. OTHER INFORMATION
-------- -----------------

Item 1.  Legal Proceedings                                                                                  35

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                                        35

Item 3.  Defaults Upon Senior Securities                                                                    36

Item 4.  Submission of Matters to a Vote of Security Holders                                                36

Item 5.  Other Information                                                                                  36

Item 6.  Exhibits                                                                                           36
</TABLE>





















                                       2
<PAGE>
           Cautionary Statements Regarding Forward Looking Information

         Certain statements in this annual report contain or may contain
forward-looking statements that are subject to known and unknown risks,
uncertainties and other factors which may cause actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
forward-looking statements were based on various factors and were derived
utilizing numerous assumptions and other factors that could cause our actual
results to differ materially from those in the forward-looking statements. These
factors include, but are not limited to, our ability to implement our business
model, raise sufficient capital to fund our operating losses and pay our ongoing
obligations, economic and market conditions and fluctuations, government and
industry regulation, competition, and other factors. Most of these factors are
difficult to predict accurately and are generally beyond our control. You should
consider the areas of risk described in connection with any forward-looking
statements that may be made herein. Readers are cautioned not to place undue
reliance on these forward-looking statements and readers should carefully review
this annual report in its entirety, including the risks described in "Risk
Factors." Except for our ongoing obligations to disclose material information
under the Federal securities laws, we undertake no obligation to release
publicly any revisions to any forward-looking statements, to report events or to
report the occurrence of unanticipated events. These forward-looking statements
speak only as of the date of this annual report, and you should not rely on
these statements without also considering the risks and uncertainties associated
with these statements and our business.
























                                        3
<PAGE>
                         PART I. FINANCIAL INFORMATION
                         -----------------------------

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
<CAPTION>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                               September 30, 2006
                                   (UNAUDITED)
<S>                                                                             <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                    $    251,000
   Accounts receivable, net of allowance of $97,287                                1,971,489
   Prepaid expenses                                                                  193,110
                                                                                ------------
        Total current assets                                                       2,415,599

Property and equipment                                                               650,733
     Less: accumulated depreciation                                                 (286,306)
                                                                                ------------
        Net property and equipment                                                   364,427

Software development costs, net of accumulated amortization
     of $166,862                                                                   1,089,449
Deferred financing costs                                                              27,101
Intangible asset, net of accumulated amortization of $241,546                         30,379
Restricted cash for interest on debentures                                             2,395
Other assets                                                                         392,165
                                                                                ------------

Total assets                                                                    $  4,321,515
                                                                                ============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
   Notes payable - short term                                                   $    272,280
   Convertible notes payable less discount of $44,809                              3,477,191
   Lines of credit                                                                   861,053
   Accounts payable                                                                  995,392
   Accrued expenses                                                                  850,166
   Accrued salaries                                                                  179,604
                                                                                ------------
       Total current liabilities                                                   6,635,686

Long term debt:
   Long term notes payable                                                            40,660
   Convertible notes payable less discount of $382,018                                82,982
                                                                                ------------
       Total liabilities                                                           6,759,328

Stockholders' deficit :
Preferred stock, $.01 par value, 1,000,000 shares authorized:
   Series B convertible preferred stock, $.01 par value, 200,000
      shares authorized; 151,600  shares issued and outstanding                        1,516
   Series C convertible preferred stock, $.01 par value, 20,000
      shares authorized; 832 shares issued and outstanding                                 8
   Series D convertible preferred stock, $.01 par value, 40
      shares authorized; 38 shares issued and outstanding                                 --
   Series Y convertible preferred stock, $.01 par value, 87,000
      shares authorized; 87,000  shares issued and outstanding                           870
   Common stock, $.001 par value, 250,000,000 shares
      authorized; 99,152,180 issued and outstanding                                   99,152
   Deferred compensation                                                          (1,345,104)
   Additional paid-in capital                                                     25,048,209
   Accumulated deficit                                                           (26,242,464)
                                                                                ------------

       Total stockholders' deficit                                                (2,437,813)
                                                                                ------------

Total liabilities and stockholders' deficit                                     $  4,321,515
                                                                                ============
</TABLE>
                             See accompanying notes
                                       4
<PAGE>
<TABLE>
<CAPTION>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


                                                  Three months ended September 30,
                                                  -------------------------------
                                                       2006             2005
                                                    ------------      ----------
<S>                                                 <C>             <C>
Revenue:
Freight transportation                              $  6,387,696    $  8,199,598
Access services                                               --           5,668
                                                    ------------    ------------

       Total revenue                                   6,387,696       8,205,266

Operating expenses:
   Freight transportation                              5,762,524       7,320,256
   Selling, general and administrative:
        Salaries, benefits and consulting fees           744,969       1,000,828
        Other selling, general and administrative        523,773         574,633
                                                    ------------    ------------

       Total operating expenses                        7,031,266       8,895,717
                                                    ------------    ------------

       Loss from operations                             (643,570)       (690,451)
                                                    ------------    ------------

Other income (expense):
   Gain on asset disposal                                     --           1,415
   Forgiveness of debt                                   (94,864)             --
   Interest expense, net                                (772,659)       (471,581)
   Other income                                               --           2,906
                                                    ------------    ------------

       Total other expense                              (867,523)       (467,260)
                                                    ------------    ------------

Net loss                                              (1,511,093)     (1,157,711)
                                                    ============    ============

Loss per share-basic and diluted                    $      (0.02)   $      (0.02)
                                                    ============    ============

Weighted average shares outstanding
      - basic and diluted                             92,444,796      69,327,258
                                                    ============    ============
</TABLE>






                             See accompanying notes

                                       5
<PAGE>
<TABLE>
<CAPTION>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                                                               Three months ended September 30,
                                                                            ----------------------------------------
                                                                                 2006                     2005
                                                                            ----------------         ---------------
<S>                                                                          <C>                       <C>
Cash flows from operating activities:
   Net loss                                                                  $(1,511,093)              $(1,157,711)
   Adjustments to reconcile net loss to
      net cash used in operating activities:
        Depreciation                                                              32,679                    26,334
        Amortization of software development costs                                13,523                    13,523
        Amortization of intangible asset                                          12,440                    41,262
        Amortization of deferred compensation                                    181,592                    45,875
        Amortization of deferred financing costs                                  42,374                   235,618
        Amortization of discount on notes payable                                571,813                    62,278
        Increase (decrease) in allowance for doubtful accounts                        --                   (17,997)
        Loss on forgiveness of debt                                               94,864                        --
        Issuance of stock options and warrants
          for services and conversion                                                 --                    28,581
        Issuance of stock for services, interest and litigation settlement            --                   104,700
        Changes in operating assets and liabilities:
            Decrease (increase) in accounts receivable                           801,530                  (319,480)
            Decrease (increase) in prepaid expenses                               77,697                    (8,790)
            Decrease (increase) in other assets                                   61,063                  (131,256)
            (Decrease) increase in accounts payable and accrued expenses        (952,136)                  360,703
                                                                             -----------               -----------
               Net cash used in operating activities                            (573,654)                 (716,360)
                                                                             -----------               -----------
Cash flows from investing activities:
   Purchases of property and equipment                                           (14,191)                  (31,167)
   Capitalized costs of software development                                     (69,446)                  (93,328)
                                                                             -----------               -----------
               Net cash used in investing activities                             (83,637)                 (124,495)
                                                                             -----------               -----------
Cash flows from financing activities:
   Proceeds from promissory notes                                                 76,000                        --
   Proceeds from line of credit net of costs of $0 and $0, respectively               --                   125,171
   Repayments of line of credit                                                  (51,234)
   Proceeds from sale of preferred stock and warrants net of costs of $0
      and $0, respectively                                                       660,000
   Proceeds from sale of common stock and warrants net of costs of $0
      and $0, respectively                                                            --                   807,500
                                                                             -----------               -----------
               Net cash provided by financing activities                         684,766                   932,671
                                                                             -----------               -----------

               Net increase in cash and cash equivalents                          27,475                    91,816

Cash and cash equivalents, beginning of period                                   223,525                   837,753
                                                                             -----------               -----------
Cash and cash equivalents, end of period                                     $   251,000               $   929,569
                                                                             ===========               ===========
</TABLE>







                             See accompanying notes
                                        6
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1 - DESCRIPTION OF BUSINESS

Organization
------------
Fittipaldi Logistics, Inc. (the "Company"), formerly Power2Ship, Inc., was
incorporated in Nevada on October 28, 1987. On March 11, 2003, the Company
merged with Freight Rate, Inc. which became a wholly owned subsidiary. The
Company is a technology company that specializes in providing pertinent,
real-time information to the worldwide transportation and security industries.
Its technological solutions integrate disparate legacy systems, and synthesize
historically fragmented inaccessible data. This data is then reformatted into
valuable, actionable information, and delivered to appropriate end users across
the logistics value chain. Specific applications of our technology include:
vehicle tracking, inventory/asset visibility, secure trucking, and matching
available freight with available trucks. The Company is licensed by the United
States Department of Transportation as a broker, arranging for transportation of
freight (except household goods) by motor carriers. The Company has a patent
pending solution for providing freight carriers (currently trucking companies),
shippers (companies sending or receiving freight) and their customers with
supply chain, tracking and other logistics information.

On February 25, 2005, the Company formed P2S Holdings, Inc., a Florida
corporation, as a wholly owned subsidiary. Then, on March 21, 2005, Commodity
Express Transportation, Inc. ("CXT"), a wholly owned subsidiary of P2S Holdings
formed as a Delaware corporation on March 21, 2002, acquired certain assets and
liabilities representing the business of Commodity Express Transportation, Inc.,
a South Carolina based company engaged in the business of motor carriage
specializing in full truckload transportation services primarily using dry vans
(see Note 8 - "Acquisitions" for further details). CXT presently serves the
southeastern United States from its South Carolina base with a fleet of 92
tractors comprised of 45 owned units and 47 owner-operator units with which it
has independent contractor lease agreements and 285 trailers. In addition, CXT
rents a 137,000 square foot warehouse facility in South Carolina to service its
largest customer and provides freight transportation brokerage services through
its wholly owned subsidiary, Commodity Express Brokerage, Inc., a Florida
corporation formed on March 3, 2005.

Also, on March 21, 2005, Power2Ship Intermodal, Inc. ("P2SI"), a wholly owned
subsidiary of CXT formed as a Delaware corporation on March 21, 2002, acquired
certain assets and liabilities representing the business of GFC, Inc. It is a
New Jersey based company in the business of motor carriage specializing in
intermodal drayage transportation services. Effective June 30, 2006, the
operations of P2SI ceased to exist (see Note 8 - "Acquisitions" for further
details).

The accompanying unaudited financial statements for the period ended September
30, 2006 have been prepared in accordance with generally accepted accounting
principles for interim financial information and with instructions to Form
10-QSB. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles as would be included in
audited financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations for the three month
period ended September 30, 2006 are not necessarily indicative of the results to
be expected for the fiscal year ended June 30, 2007.

                                       7
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS

Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All material intercompany transactions have been
eliminated.

Reclassifications
-----------------
Certain prior period balances have been reclassified to conform to the current
year's presentation. These reclassifications had no impact on previously
reported results of operations or stockholders' deficit.

Cash and Cash Equivalents
-------------------------
The Company considers all unrestricted deposits and highly liquid investments,
readily convertible to known amounts, with an original maturity of three months
or less, to be cash equivalents.

Property and Equipment
----------------------
Property and equipment is stated at cost. Depreciation on property and equipment
is calculated using the straight-line method over the estimated useful lives of
the assets. Expenditures for major renewals and betterments that extend the
useful lives of the assets are capitalized. Expenditures for maintenance and
repairs of the assets are charged to expense as incurred.

Income Taxes
------------
Under the asset and liability method of FASB Statement 109, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities, and their respective tax bases and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Deferred
tax assets are reduced by a valuation allowance, when in the Company's opinion
it is likely that some portion or the entire deferred tax asset will not be
realized.

Revenue Recognition
-------------------
The Company follows the guidance of the Securities and Exchange Commission's
Staff Accounting Bulletin 104 for revenue recognition. In general, the Company
records revenue when persuasive evidence of an arrangement exists, services have
been rendered or product delivery has occurred, the sales price to the customer
is fixed or determinable, and collectability is reasonably assured. The
following policies reflect specific criteria for the reported revenue streams of
the Company:

         Freight transportation revenue consists of the total dollar value of
         services purchased from us by our customers. The Company recognizes
         freight transportation revenue when shipments of goods reach their
         destinations and the receiver of the goods acknowledges their receipt
         by signing a bill of lading. At that time, our obligations to the
         customer are completed and collection of receivables is reasonably
         assured. Emerging Issues Task Force Issue No. 99-19, "Reporting Revenue
                                       8
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS, continued

         Gross as a Principal versus Net as an Agent", establishes the criteria
         for recognizing revenues on a gross or net basis. When we provide these
         freight transportation services, we are the primary obligor, we are a
         principal to the transaction not an agent, we have the risk of loss for
         collection, we have discretion to select the supplier when we do not
         supply the services and we have latitude in pricing decisions.

         Access services revenue is recognized in the month that access to the
         P2S MobileMarket(TM) is provided to customers. When the Company
         provides equipment to customers, in conjunction with providing access
         services to them, on any basis in which ownership is retained by the
         Company, then the Company accounts for equipment provided to the
         customer as part of the access services agreement and revenue is
         recognized ratably over the term of the agreement.

         Implementation services revenue, generated pursuant to software
         development contracts with customers, is recognized on the percentage
         of completion basis for each deliverable provided for in the contract.
         Revenue from implementation services is expected to be insignificant as
         a percentage of total revenue in the foreseeable future.

Stock-Based Compensation
------------------------
The Company previously accounted for stock-based compensation issued to its
employees using the intrinsic value method. Accordingly, compensation cost for
stock options issued was measured as the excess, if any, of the fair value of
our common stock at the date of grant over the exercise price of the options.
The pro forma net loss and per share amounts as if the fair value method had
been applied to employee stock options granted are presented below for the three
months ended September 30, 2005 and the actual net loss and per share amounts
are presented below for the three months ended September 30, 2006 in accordance
with the Company's adoption of SFAS 123(R) effective January 1, 2006.

For purposes of the following disclosures during the transition period of
adoption of SFAS 123(R), the weighted-average fair value of options has been
estimated on the date of grant using the Black-Scholes option pricing model with
the following weighted average assumptions used for grants for the three months
ended September 30, 2006: no dividend yield; expected volatility of 174%; risk
free interest rate of 4.5%; and the actual term of options granted. Had the
compensation cost for the three months ended September 30, 2005 been determined
based on the fair value at the grant dates, our net loss and basic and diluted
loss per share would have been reduced to the pro forma amount for that period
indicated in the table below. For the three months ended September 30, 2006, the
net loss and loss per share reflect the actual deduction for option expense as
compensation. Compensation recorded for stock options is a non-cash expense
item.








                                       9
<PAGE>
<TABLE>
<CAPTION>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS, continued

                                                                     Three Months Ended       Three Months Ended
                                                                     September 30, 2006       September 30, 2005
                                                                     ------------------       ------------------
<S>                                                                      <C>                        <C>
Loss available to common shareholders, as reported                       $(1,511,093)               $(1,157,711)

Less: Stock-based employee compensation expense
      determined under fair value based method, net of                             -                    (18,120)
      related tax effects

Net loss                                                                 $(1,511,093)               $(1,175,831)

Loss per share:
  Basic and diluted - as reported                                              $(.02)                     $(.02)


  Basic and diluted - pro forma                                                $(.02)                     $(.02)

</TABLE>
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

Impairment of long-lived assets
-------------------------------
The Company evaluates the recoverability and carrying value of its long-lived
assets at each balance sheet date, based on guidance issued in SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets." Among other
factors considered in such evaluation is the historical and projected operating
performance of business operations, the operating environment and business
strategy, competitive information and market trends. At September 30, 2006, the
Company had no assets which were considered to be impaired.

Research and Development
------------------------
Research and development costs are expensed as incurred. No research and
development expenses were incurred for the three months ended September 30, 2006
and 2005.


Computer Software and Web Site Development Costs
------------------------------------------------
The Company has adopted the provisions of AICPA Statement of Position ("SOP")
98-1, Accounting for the Costs of Software Developed or Obtained for Internal
Use, and Emerging Issues Task Force ("EITF") Consensus #00-2, Accounting for Web
Site Development Costs. The type of costs incurred by the Company in developing
its internal use software and Web site include, but are not limited to, payroll
and payroll-related costs (e.g. fringe benefits) for employees who devote time
to the internal use computer software or Web site project, consulting fees, the

                                       10
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS, continued

price of computer software purchased from third parties and travel expenses
incurred by employees or consultants in their duties directly associated with
developing the software. These costs are either expensed or capitalized
depending on the type of cost and the stage of development of the software and
Web site. SOP 98-1 and EITF #00-2 define three stages of development:

       - the preliminary or planning stage includes all activities related to
         conceptualizing, evaluating and selecting the alternatives for
         implementing the project including, but not limited to, developing a
         project plan, determining desired functionalities and content,
         identifying required hardware and software tools and selecting external
         vendors and consultants. All internal and external costs during the
         preliminary project stage are expensed as incurred.

       - the application and infrastructure development stage begins immediately
         upon conclusion of the preliminary or planning stage and includes, but
         is not limited to, all activities related to designing the software
         configuration and software interfaces, acquiring or customizing the
         software necessary to build the application, coding, hardware
         installation and testing, including parallel processing. Generally, any
         internal and external costs incurred during the application and
         infrastructure development stage are capitalized and amortized on a
         straight-line basis over the estimated economic life of the software of
         three to five years. General and administrative costs and overhead
         costs are not capitalized. Amortization for each module or component of
         software begins after all substantial testing is completed and it is
         deemed to be ready for its intended use. The only exception to
         beginning amortization at that time would be if the functionality of
         that module or component is entirely dependent on the completion of
         other modules or component in which case the amortization would begin
         when both the module and the other modules upon which it is
         functionally dependent are ready for their intended use.

       - the post-implementation/operation stage includes, but is not limited
         to, activities related to training, user administration, application
         maintenance, system backups, routine security reviews, the costs of
         which are expensed as incurred. Also, upgrades and enhancements that
         result in additional functionality may occur during this stage, the
         costs of which are amortized on a straight-line basis over the
         estimated economic life of the upgrade or enhancement of three to five
         years.

At September 30, 2006, the net book value of capitalized software was
$1,089,449. Amortization expense for the three months ended September 30, 2006
and 2005 was $13,523 and $13,523, respectively.

The Company makes ongoing evaluations of the recoverability of its capitalized
internal use software and Web site by comparing the amount capitalized for each
module or component of software to their estimated net realizable values. If
such evaluations indicate that the unamortized costs exceed the net realizable
values, the Company writes off the amount by which the unamortized costs exceed
the net realizable values.
                                       11
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS, continued

Concentrations of Credit Risk and Accounts Receivable
-----------------------------------------------------
Financial assets that potentially subject the Company to significant
concentrations of credit risk consist primarily of cash and cash equivalents and
accounts receivable. The Company's investment policy is to invest in low risk,
highly liquid investments. The Company does not believe it is exposed to any
significant credit risk in its cash investments.

The Company maintains its cash balances at financial institutions that are
insured by the Federal Deposit Insurance Corporation or the Securities Investor
Protection Corporation up to $100,000 per institution. At September 30, 2006,
the Company's cash balances exceeded the insured limits by approximately
$100,000. The Company has not experienced any losses in such accounts and
believes it is not exposed to any significant credit risk on cash on deposit.

The Company performs on-going credit evaluations of its customer base including
those that represent its accounts receivable at September 30, 2006. The Company
maintains reserves for potential credit losses and such losses historically have
been within management's expectations.

The Company has a deposit of approximately $28,000 with a factoring company that
may be used to cover potential credit losses that is included in other assets on
the balance sheet. The Company no longer factors its accounts receivable.

Advertising
-----------
Advertising is expensed as incurred. Advertising expenses for the three months
ended September 30, 2006 and 2005 totaled approximately $10,506 and $25,167,
respectively.

NOTE 3 - CONCENTRATIONS

During the quarter ended September 30, 2006, one customer accounted for
$3,975,719 or approximately 62% of the Company's quarterly revenue and that same
customer accounted for $284,386 or approximately 14% of accounts receivable as
of September 30, 2006. No other customer accounted for more than 10% of revenue
or accounts receivable.

NOTE 4 - NOTE RECEIVABLE

In May 2005, the Company loaned $50,000 to an unrelated third party that issued
the Company a short-term promissory note with a term of sixty days and an
interest rate of 10%. The note was repaid with interest in October 2005.

NOTE 5 - INTANGIBLE ASSETS

In March 2005, the Company allocated $89,874 of the purchase price for certain
assets of Commodity Express Transportation, Inc. These intangible assets are
being amortized over their estimated useful lives of 5 years. In March 2006, the
Company determined that the net realizable value of the intangible assets of
Commodity Express Transportation, Inc. should be reduced to $45,925 and recorded
$43,949 of impairments to intangible assets.

Also, in March 2005, the Company allocated $334,600 of the purchase price for
certain assets of GFC, Inc. to intangible assets attributable to the customer
                                       12
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 5 - INTANGIBLE ASSETS, continued

lists of these businesses. These intangible assets were being amortized over
their estimated useful lives of 5 years. In March 2006, the Company entered into
a settlement agreement and mutual release with the parties that sold it the GFC
assets in which the Company agreed to issue the seller 300,000 shares of its
common stock valued at $38,700 and to pay the seller a total of $36,000 over two
years in full settlement of the $191,667 outstanding balance of the purchase
price. Based on this settlement, the Company determined that the net realizable
value of the intangible assets purchased from GFC should be reduced to $220,933
and recorded a $113,667 impairment to intangible assets. Power2Ship Intermodal
ceased operations effective June 30, 2006 and the Company recorded a $185,578
impairment to reduce the intangible assets to $0.

In July and August, 2004, the Company entered into Intellectual Property
Assignment Agreements with three of its executives pursuant to which each of
them assigned to the Company all of their right, title and interest in and to
all the intellectual property which they had contributed to the Company in the
past in consideration for an aggregate of 600,000 shares of the Company's common
stock that was issued in January 2005. The Company believes that there are no
other parties with any claims to any right, title and interest in and to any of
the Company's intellectual property. The shares issued in this transaction were
valued at their fair market value of $226,000 and recorded as an intangible
asset which was amortized over its estimated useful life of 24 months from the
effective dates of the Intellectual Property Assignment Agreements.

The Company recorded amortization expense for its intangible assets for the
three months ended September 30, 2006 and 2005 of $12,440 and $41,262,
respectively. At September 30, 2006, future amortization expense for these
intangible assets was as follows:

                           2007             $   5,878
                           2008                 8,909
                           2009                 8,909
                           2010                 6,683
                                            ---------
                                            $  30,379
                                            =========

NOTE 6 - NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

As of September 30, 2006, the balance on the Company's revolving line of credit
with Branch Banking and Trust Company was $861,053.

As of September 30, 2006, the Company owed $50,440 to a vendor for software
maintenance services of which $23,280 were recorded as short term and $27,160 as
long term notes payable.

In August 2006, the Company issued a $40,000 short-term promissory note to one
accredited investor. The note has an interest rate of 10% and a maturity date in
November 2006. In October, the holder exchanged the $40,000 note for 1.6 shares
of the Series D convertible preferred stock.

In July 2006, the Company issued $36,000 short-term promissory notes to five
accredited investors. The notes have an interest rate of 10% and maturity dates
                                       13
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 6 - NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE, continued

in October 2006. In October, one holder exchanged a $10,000 note for 0.4 shares
of the Series D convertible preferred stock and the other four holders exchanged
$26,000 of these notes for 5.2 shares of Series F convertible preferred stock.

In June 2006, the Company issued a $50,000 short-term promissory note to one
accredited investor. The note had an interest rate of 10% and a maturity date of
September 25, 2006. In September, the holder exchanged this note for two shares
of the Series D convertible preferred stock.

In April and May 2006, the Company issued $940,000 of its Series D 8% unsecured
convertible debentures to seven accredited investors, all of whom were existing
significant shareholders of our company, in consideration for $690,000 and the
exchange of $250,000 principal amount of the Company's unsecured short term
promissory notes and convertible debentures. The maturity date of the Series D
debentures is the earlier to occur of June 30, 2008 or the date the Company
receives proceeds from a private or public offering of its securities resulting
in gross proceeds of at least $5,000,000. The debenture holders received
three-year warrants to purchase an aggregate of 9,400,000 shares of common stock
for $0.05 per share. The fair value of these warrants, estimated using the
Black-Scholes option-pricing model, was $613,640 and recorded as discounts on
notes payable to be amortized as interest expense over the term of the
debentures. In addition, the Company modified the exercise prices of warrants
previously granted to the seven debenture holders to purchase an aggregate of
14,650,000 shares of common stock at prices ranging from $0.10 to $1.00 per
share, to an exercise price of $0.05 per share. The increase in value associated
with the modified warrants, estimated using the Black-Scholes option-pricing
model, was $106,199 and recorded as discounts on notes payable to be amortized
as interest expense over the term of the debentures. The key assumptions used in
this estimate were the market price of our common stock on the grant date of
each warrant, no dividend yield, an expected volatility factor of 192.56%, an
approximate risk-free interest rate of 7.25% and a three year expected life.
Finally, the conversion price per share of these debentures equal to 80% of the
price per common share offered by the Company in any subsequent offering, but in
no event less than $0.02 per share or greater than $0.10 per share, results in
recognition of a beneficial conversion provision having a value of $235,000.
However, after giving affect to the fair value of the warrants granted in
conjunction with these debentures, the beneficial conversion provision was
limited to the remaining face value of the debentures or $220,161 that was
recorded as discounts on notes payable to be amortized as interest expense over
the term of the debentures. During the three months ended September 30, 2006,
two holders converted an aggregate of $225,000 into 10,558,185 shares of common
stock and three holders exchanged an aggregate of $250,000 into 10 shares of the
Company's Series D convertible preferred stock.

In March 2006, the Company borrowed $100,000 from one accredited investor and
issued the investor a short-term 8% unsecured promissory note with a due date of
April 30, 2006. In April 2006, the investor exchanged the note for a $100,000
principal amount Series D 8% convertible debenture.

In December 2005, the Company borrowed $400,000 from one accredited investor and
issued the investor a $400,000 unsecured debenture having a maturity date of May
15, 2006 at which date a $40,000 transaction fee is due and payable. The lender
received a five-year warrant to purchase 1,000,000 shares of common stock for
$.07 per share that expires on December 30, 2010. The fair value of this warrant
was estimated on its grant date using the Black-Scholes option-pricing model
                                       14
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 6 - NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE, continued

when the market price was $.07 per share and assuming no dividend yield, an
expected volatility factor of 193%, an approximate risk-free interest rate of
7.25% and a five year expected life. The warrant was valued at $68,200 which was
recorded as a discount on notes payable and is being amortized as interest
expense over the term of the debenture. The principal amount of the note and
associated transaction fee were paid to the investor prior to the maturity date
in May 2006.

In October and November 2005, the Company issued $420,000 of its Series C 10%
unsecured, convertible debentures to eight accredited investors in consideration
for $320,000 and the forgiveness of a $100,000 unsecured short-term promissory
note originally issued to one investor in January 2005. The maturity dates of
the debentures are the earlier to occur of the one-year anniversary of the
debentures or the date the Company receives at least $5,000,000 in aggregate
proceeds from subsequent financings. In addition, the lenders received
three-year warrants to purchase an aggregate of 5,600,000 shares of common stock
for $0.15 per share. The fair value of these warrants was estimated on their
grant dates using the Black-Scholes option-pricing model when the market prices
ranged from $.13 to $.15 per share and assuming no dividend yield, an expected
volatility factor of 193%, an approximate risk-free interest rate of 7.25% and a
three year expected life. Since these warrants were valued at $700,133, which
exceeded the principal amount of the debentures, the discount on notes payable
was limited to $420,000 and is being amortized as interest expense over the term
of the debentures. The conversion price per share is the greater of i) $0.15 or
ii) 50% of the average closing price of the common stock for the ten trading
days immediately preceding the conversion date. However, in the event the
Company sells unregistered shares of its common stock, excluding shares
underlying employee options or shares issued in connection with a merger or
acquisition, for less than $0.15 per share, then the conversion price for any
outstanding debentures automatically changes to the greater of i) 50% of the
average closing price of the Common Stock on the Over-the-Counter Bulletin Board
or such other quotation system as the Common Stock may be principally quoted for
the ten (10) trading days immediately preceding the date that holder provides
written notice to Company of their intent to exercise the conversion provision
or ii) the lowest price per share paid by any investor for the Company's
unregistered shares of common stock at any time between the date of issue of the
debenture and the conversion date. Since the Company sold shares of its common
stock for $.10 per share in December 2005, a beneficial conversion feature was
realized which, in this case, is not recorded since the discount on notes
payable associated with the warrants already equaled the principal amount of the
debentures. In January 2006, one holder converted $25,000 principal amount of
the debentures, and $432 of accrued interest, into 254,316 shares of common
stock. In April and May 2006, three holders exchanged an aggregate of $250,000
of the debentures for $250,000 of the Series D debentures and in September 2006
two holders exchanged an aggregate of $40,000 for $40,000 of the Series D
convertible preferred stock leaving a balance of $105,000 at September 30, 2006.

In March 2005, pursuant to its asset purchase agreement with GFC, Inc., the
Company agreed to pay GFC a total of $200,000 in twenty-four equal payments of
$8,333 per month without interest commencing on April 21, 2005 and continuing
for the next twenty-three consecutive months subject to partial or full
acceleration based on the gross freight revenue of Power2Ship Intermodal
generated during the one month period commencing on March 21, 2006. In March
2006, the Company entered into a settlement agreement and mutual release with
the parties that sold it the GFC assets in which the Company agreed to issue the
                                       15
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 6 - NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE, continued

seller 300,000 shares of its common stock valued at $42,000 and to pay the
seller a total of $36,000 over two years in full settlement of the $191,667
outstanding balance of the purchase price. In March 2006, the Company recorded
an impairment of intangible assets of $113,667 based on this settlement. As of
September 30, 2006, the Company had recorded $18,000 of this obligation as
current notes payable and $13,500 as long term notes payable. Effective June 30,
2006, Power2Ship Intermodal ceased operations.

In January 2005, the Company issued a 5% unsecured three-month promissory note
for $30,000 to one accredited investor. The Company obtained a waiver from the
investor as to the repayment of $30,000 of principal and accrued interest in
April 2005. In August 2005, the investor forgave the repayment of the promissory
note and accrued interest in consideration for the purchase of one unit
consisting of 200,000 shares of common stock and a warrant to purchase 200,000
shares for $0.15 per share that expires on July 31, 2008.

In June and September 2004, the Company issued $1,000,000 and $1,000,000,
respectively, of its Series B 5% secured convertible debentures to one
accredited investor. Interest accrues at the rate of 5% per annum during the
term of the debentures unless converted or redeemed prior to their maturity
dates. The Company paid $225,000 in commissions and expenses related to these
debentures that were accounted for as deferred financing costs and are being
amortized as interest expense over the term of the debentures. Any portion of
the outstanding balance of the debentures may be converted by the holder at any
time into common stock at a conversion price per share equal to the lesser of
$0.456 or 100% of the average of the three lowest closing bid prices of the
common stock for the thirty trading days immediately preceding the conversion
date. The Company may redeem the debentures at any time by providing three days
notice and paying a premium of up to 20% of the amount being redeemed in a
combination of cash and common stock. The Company has provided the debenture
holder with a security interest in its tangible and intangible assets, subject
to automatic subordination to most traditional asset-based loans, to secure the
prompt payment of principal.

As of September 30, 2006, the Series B 5% secured convertible debenture holder
had converted $250,000 of the debentures into 5,725,248 shares of common stock
leaving an outstanding balance of $1,750,000. These debentures were not repaid
when due. In September 2006, the Company reached agreement with the investor
with respect to these debentures and $350,000 of its 14.25% secured convertible
debentures due December 31, 2006 also held by this investor. The investor agreed
not to exercise its rights of conversion under the aforementioned debentures
until November 1, 2006, for which the Company paid $100,000 in accrued interest,
and not to exercise its rights of conversion under the aforementioned debentures
from November 1 until January 1, 2007 upon the Company paying the holder an
additional $100,000 in accrued interest by November 1, 2006 (see Note 10 -
"Subsequent Events" for further details). In addition, the Company agreed to
amend the conversion price of the $350,000 principal amount of 14.25% secured
convertible debenture to make it identical to the conversion price of the 5%
Series B secured convertible debentures which is the lesser of i) $0.456 per
share or ii) 100% of the average of the three lowest closing bid prices for our
common stock, as quoted by Bloomberg, LP, for the 30 trading days immediately
preceding any conversion date.

Also in June 2004, the Company issued the Series B 5% secured convertible
debenture holder and a placement agent an aggregate of 816,260 shares of its
                                       16
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 6 - NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE, continued

common stock valued at $310,179 upon entering into a Standby Equity Distribution
Agreement and related agreements with the investor. The value of these shares
was accounted for as deferred financing costs that are being amortized as
interest expense over a two-year term. In July 2005, the Standby Equity
Distribution Agreement and related agreements were terminated and the
unamortized deferred financing costs of $155,090 were amortized as interest
expense.

In March and April, 2004, the Company issued $1,747,000 of its 14.25% secured
convertible debentures to 35 accredited investors and paid commissions and
expenses of $227,110 accounted for as deferred financing costs that are being
amortized as interest expense over the terms of the debentures. In addition, the
Company issued 873,500 warrants valued at $108,160 and 131,025 common shares
valued at $55,031 to the lenders accounted for as interest expense. The
debentures mature on December 31, 2006, and earn interest of 14.25% per annum
payable semi-annually in arrears on June 30 and December 31. The debentures may
be converted by the holders at any time into common stock at a conversion price
per share of $0.2673. EITF 98-5 requires that a beneficial conversion feature be
recognized when the conversion price is less than the market price at the time
the debentures are issued. The Company recognized a beneficial conversion
provision of $194,111 that was recorded as a discount on notes payable and is
being amortized as interest expense over the remaining terms of the debentures.
The Company may redeem the debentures with fifteen days notice at any time, by
paying a premium of up to 15% of their original purchase price in a combination
of cash and common stock. The Company has provided the debenture holders with a
security interest in its tangible and intangible assets, subject to automatic
subordination to most traditional asset-based loans, to secure the prompt
payment of principal. In addition, the Company is subject to a security
agreement requiring it to deposit six months of interest on the debentures in a
separate account with Newbridge Securities Corporation to be paid to investors
in the event of a default. As of September 30, 2006, one investor had converted
$150,000 of their debentures into common stock decreasing the outstanding
balance to $1,597,000 (see Note 10 - "Subsequent Events" for further details).
In September 2006, the Company reached agreement with one of the investors with
respect to $350,000 of these debentures in which the Company agreed to amend the
conversion price to the lesser of i) $0.456 per share or ii) 100% of the average
of the three lowest closing bid prices for our common stock, as quoted by
Bloomberg, LP, for the 30 trading days immediately preceding any conversion
date. The Company may be in default under certain covenants contained in its
agreements with the debenture holders. If the Company receives notice of
noncompliance and potential default, the Company would have an obligation to
rectify or otherwise receive a waiver from the debenture holders under the terms
of those agreements. While the Company has not received any such notice to date,
it is possible that notice could be provided in the future, which would likely
cause the Company to be in default under its agreement and obligations to the
debenture holders. Any default could accelerate the Company's obligations to the
debenture holders in the remaining principal amount of $1,597,000 together with
all accrued and unpaid interest thereon and perhaps other obligations owed to
other parties. We cannot assure you that we would be in a position to arrange
alternative financing to satisfy these obligations in the event of a default.

In July 2003, the Company issued a promissory note in the amount of $170,000 to
a software vendor for licenses to use certain logistics software. The note
                                       17
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 6 - NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE, continued

required the Company to pay $30,000 upon issuing the note followed by 22
consecutive payments of $5,000 on the first of each month from August 2003
through May 2005 for a total of $140,000. All the aforementioned payments were
made when due and the $30,000 remaining balance of the note was waived resulting
in a write-off of $30,000 against prepaid interest and a gain of $18,111 during
fiscal year 2005.

In March 2003, the Company issued a convertible promissory note in the amount of
$175,000 to an unaffiliated Company shareholder. The interest rate of the note
is 8% per annum and it has a maturity date of June 30, 2006. The holder of the
note has the right to convert the outstanding principal balance of the note into
the Company's common stock at any time prior to its maturity date at a
conversion price equal to the lesser of 1) $1.51 per share or 2) 50% of the
average of the closing bid prices of the common stock for the five trading days
immediately preceding the date of conversion but no less than $0.25 per share.
Given this type of conversion provision, EITF 98-5 specifies that a beneficial
conversion feature be recognized based upon the five days preceding the
commitment date. This resulted in a beneficial conversion of $175,000 which was
treated as a discount on notes payable which is being amortized as interest
expense over the term of the debt. The note is in default and the holder has
notified the Company that it is seeking to accelerate full repayment of the
$175,000 in principal and accrued interest thereon, and such default may result
in acceleration of other obligations owed to other parties. We cannot assure you
that we would be in a position to arrange alternative financing to satisfy these
obligations.

In March 2003, the Company issued a convertible promissory note in the amount of
$135,000 to its Chief Executive Officer upon the forgiveness of $147,520 of
accrued salary. During fiscal year 2004, the Company repaid $20,000 of this note
decreasing its outstanding balance to $115,000 which remains the outstanding
balance as of March 31, 2006. The interest rate of the note is 8% per annum and
it has a maturity date of June 30, 2006. The holder of the note has the right to
convert the outstanding principal balance of the note into the Company's common
stock at any time prior to its maturity date at a conversion price equal to the
lesser of 1) $1.51 per share or 2) 50% of the average of the closing bid prices
of the common stock for the five trading days immediately preceding the date of
conversion but no less than $0.75 per share. In September 2006, the Company
entered into a Separation and Severance Agreement with the Company's Chief
Executive Officer in which he settled all outstanding claims with the Company,
including this note and accrued interest thereon, and agreed to the cancellation
of all options previously granted to him in consideration for $20,000 and a
warrant to purchase 11,000,000 shares of common stock for $0.025 per share that
expires in five years.

NOTE 7 - STOCKHOLDERS' DEFICIT

Common Stock
------------
During the three months ended September 30, 2006, the Company issued an
aggregate of 14,804,430 shares of its common stock consisting of:

         -     10,558,185 shares issued upon the conversion of $225,000 Series D
               8% unsecured convertible debentures and accrued interest thereon
               to two investors;
                                       18
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 7 - STOCKHOLDERS' DEFICIT, continued

         -     4,166,245 shares issued upon the conversion of $150,000 Series B
               5% secured convertible debentures to its sole debenture holder;
               and

         -     80,000 shares issued upon the conversion of 4,000 shares of
               Series B convertible preferred stock by two investors.

Options and Warrants
--------------------
The Company's board of directors has the authority to determine when and to whom
it grants options and warrants to purchase shares of the Company's common stock.
In addition, the board determines the number of options and warrants to be
granted and all other terms and conditions related to these securities such as
the recipients' vesting schedules, expiration dates, exercise prices and
restrictions.

The Company adopted SFAS 123(R), "Accounting for Stock-Based Compensation",
effective March 31, 2006. Accordingly, the Company now measures the cost of
employee services received in exchange for stock options based on the grant-date
fair value of the options. This cost is recognized over the vesting period, if
any, specified in the stock option agreement. Prior to adopting SFAS 123(R), the
Company had chosen to account for stock-based compensation using the intrinsic
value method prescribed by Accounting Principles Board Opinion No. 25 in which
the cost of employee stock options was measured as the excess, if any, of the
estimated fair value of the Company's stock on the grant date over the exercise
price of the stock options.

For purposes of the pro forma calculations, the fair value of each option was
estimated on the date of the grant using the Black-Scholes option-pricing model
with the following assumptions used:

                    Weighted average:                        2006         2005
                    -----------------                        ----         ----
                    Dividend yield                           None         None
                    Expected volatility factor               174%         152%
                    Approximate risk free interest rates     4.5%        2.75%
                    Expected lives, in years                   3            3

The determination of fair values for all stock options and warrants is based on
the assumptions described in the preceding paragraph, and because additional
option grants are expected to be made each year, the above pro forma disclosures
are not representative of pro forma effects on reported net income or loss for
future years.












                                       19
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 7 - STOCKHOLDERS' DEFICIT, continued

Stock options
-------------

A summary of the stock option activity is as follows:
<TABLE>
<CAPTION>
                                                                                    Weighted
                                                                                    Average
                                                                                    Exercise      Number      Exercise Price
                                                                                     Price      of Options      Per Option
                                                                                     -----      ----------      ----------
<S>                                                                                  <C>         <C>          <C>     <C>
       Outstanding options at June 30, 2006                                          $0.35       13,600,741   $0.15 - $1.01
       Granted.........................................................              $0.025      23,000,000       $0.025
       Expired.........................................................              $0.19         (265,520)  $0.38  - $0.50
       Cancelled.......................................................              $0.33       (5,785,391)  $0.25  - $0.38
                                                                                                 ----------
       Outstanding options at September 30, 2006                                     $0.11       30,549,830   $0.025 - $1.01
                                                                                                 ==========

       Exercisable options at September 30, 2006                                     $0.36       30,549,830   $0.025 - $1.01
                                                                                                 ==========
</TABLE>
The following table summarizes information concerning stock options outstanding
and exercisable at September 30, 2006:
<TABLE>
<CAPTION>
                                                                         Weighted                      Weighted
                                                                          Average                       Average
                                             Number of Options           Remaining                     Exercise
         Range of Exercise Price                Outstanding            Life in Years                     Price
         -----------------------                -----------            -------------                     -----
<S>               <C>                           <C>                        <C>                           <C>
                  $0.025                        23,000,000                 4.97                          $0.025
               $0.15 - $0.40                     7,224,830                 0.90                          $0.34
               $0.52 - $1.01                       325,000                 1.13                          $0.97
                                                ----------
                                                30,549,830
                                                ==========
</TABLE>

















                                       20
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 7 - STOCKHOLDERS' DEFICIT, continued

Warrants
--------
A summary of the warrant activity is as follows:
<TABLE>
<CAPTION>
                                                                        Weighted
                                                                        Average
                                                                        Exercise    Number of   Exercise Price
                                                                          Price     Warrants      Per Warrant
                                                                          -----     --------      -----------
<S>                                                                      <C>       <C>               <C>
Outstanding warrants at June 30, 2006                                    $0.13     59,912,536    $0.05  - $2.00
Granted............................................                      $0.025    11,000,000        $0.025
Cancelled..........................................                         --             --           --
Expired............................................                      $0.47       (859,250)   $0.05  - $2.00
                                                                                   ----------
Outstanding warrants at September 30, 2006                               $0.12     70,053,286    $0.025 - $2.00
                                                                                   ----------
Exercisable warrants at September 30, 2006                               $0.12     68,419,954    $0.025 - $2.00
                                                                                   ==========
</TABLE>
The following table summarizes information concerning warrants outstanding at
September 30, 2006:
<TABLE>
<CAPTION>
                                                                          Weighted               Weighted
                                                                          Average                Average
                                                                         Remaining               Exercise
             Range of Exercise Price       Number of Warrants          Life in Years              Price
             -----------------------       ------------------          -------------              -----
<S>              <C>       <C>                 <C>                          <C>                  <C>
                 $ 0.025 - $0.15               63,784,627                   2.52                 $  0.09
                  $ 0.20 - $0.74                5,228,684                   1.34                 $  0.41
                  $ 0.75 - $2.00                1,039,975                   0.86                 $  0.88
                                              -----------
                                               70,053,286
                                              ===========
</TABLE>
The following table summarizes information concerning warrants exercisable at
September 30, 2006:
<TABLE>
<CAPTION>
                                                                          Weighted
                                                                          Average
                                                                          Exercise
             Range of Exercise Price       Number of Warrants              Price
             -----------------------       ------------------              -----
<S>               <C>       <C>                <C>                         <C>
                  $ 0.025 - 0.15               62,951,295                  $0.09
                  $ 0.20 - $0.74                4,428,684                  $0.39
                  $ 0.75 - $2.00                1,039,975                  $0.12
                                               ----------
                                               68,419,954
                                               ==========
</TABLE>
                                       21
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 8 - ACQUISITIONS

In March 2005, a wholly owned subsidiary of the Company, Commodity Express
Transportation, Inc., purchased certain assets, including customer lists,
maintenance equipment, office equipment, telecommunications equipment, certain
contracts, five vehicles/trucks, and assumed certain liabilities of Commodity
Express Transportation, Inc., a South Carolina company, for a purchase price of
$100,000 in cash and the assumption of liabilities in the amount of $193,655
(see Note 5 "Intangible Assets" for further details). In addition, upon closing
this transaction, the Company replaced certain deposits and a letter of credit
previously made or issued on the seller's behalf with third parties in the
aggregate amount of approximately $145,000 related to the operation of the
seller's business and, after closing, replaced approximately $20,000 of
additional letters of credit. The Company also assumed certain leases related to
the operation of the seller's business, including tractor leases, owner/operator
leases and a warehouse lease. At the closing of this transaction, the Company
entered into a(n):

         - equipment lease agreement whereby the Company agreed to lease from
the seller certain trailers for terms ranging from twelve to sixty months;

         - commercial lease pursuant to which the Company agreed to rent from
the seller the commercial property used as the corporate offices for Commodity
Express Transportation for a term of five years for $4,200 per month with a
one-year renewal option for $5,040 per month;

         - agreement with TPS Logistics, Inc., a company in the transportation
brokerage business in which the president of Commodity Express Transportation is
an officer, to be the exclusive carrier for TPS' largest customer in
consideration for one percent of the gross receipts from such customer for a
term that will terminate on the earlier of March 20, 2010 or when the agreement
between TPS and its largest customer is no longer effective;

         - consulting agreement with Stokes Logistics Consulting, LLC, a company
in which the president of Commodity Express Transportation is a principal,
having a term of five years which may be extended for two successive one year
terms upon consent of both parties, pursuant to which he will be paid a monthly
consulting fee based upon gross revenue of Commodity Express Transportation,
with the minimum and maximum payable in any one year of $100,000 and $200,000,
respectively;

         - employment agreement with W.A. Stokes, president of Commodity Express
Transportation, having a term of one year which may be extended for two
additional one year terms, pursuant to which he will be paid an annual base
salary of $150,000 and a quarterly bonus based on the gross revenue that Mr.
Stokes is responsible for generating from facilities operated by its current
largest customer other than its South Carolina facility;

         - escrow agreement pursuant to which the Company deposited all the
shares of its wholly owned subsidiary that acquired the assets of Commodity
Express Transportation into an escrow account until March 21, 2007 during which
period the Company retains voting rights over these securities except in the
event of a default under the escrow agreement, which would occur if the net
worth of Commodity Express Transportation dropped below certain levels or if the
Company was delinquent in its payments under the equipment or commercial lease
agreements, consulting agreement or agreement with TPS Logistics, Inc. described
above, in which case(s) the seller would have the right to assume control of
                                       22
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 8 - ACQUISITIONS

Commodity Express Transportation until such default(s) had been cured; and

         - fee assumption agreement pursuant to which the Company agreed to
assume the seller's liability to pay the business broker involved with this
transaction $100,000 which the Company paid at the closing with the issuance of
370,370 shares of our common stock.

In March 2005, a wholly owned subsidiary of the Company, Power2Ship Intermodal,
Inc., purchased certain assets, including trucking and brokerage authority
permits, contracts with shipping customers, contracts with agents, lease
contracts with owner-operators and escrow deposits from owner-operators and
agents from GFC, Inc., a South Carolina company, for a purchase price of
$300,000, of which $100,000 was paid by canceling the $100,000 secured
promissory note made by the seller to the Company, and $200,000 is to be paid in
twenty-four equal monthly payments of $8,333.33 subject to partial or full
acceleration based on the gross freight revenue of Power2Ship Intermodal
generated during the one month period commencing on March 21, 2006 and the
assumption of those obligations corresponding to owner-operator and agent escrow
deposits. In addition, the Company issued the seller a three-year warrant to
purchase 200,000 shares of the Company's common stock for $.30 per share, which
vests 50% on the closing date and 50% on the one year anniversary of the closing
date which was valued at $34,600 using the fair value estimated on the date of
the grant using the Black-Scholes option-pricing model. In March 2006, the
Company entered into a Settlement Agreement and Mutual General Release that,
among other terms and conditions, the $191,667 outstanding balance of the
promissory note made by the Company to the seller was settled for $30,000,
payable $1,500 per month over consecutive 24 months, and 300,000 shares of the
Company's common stock valued at its fair market value of $42,000. Effective
June 30, 2006, the operations of Power2Ship Intermodal, Inc. ceased to exist
(see Note 5 "Intangible Assets" for further details).

Also, in conjunction with the acquisition of certain assets from GFC, the
Company entered into a consulting agreement with Michael Allora, the former
president of GFC, with a term of five years and automatic one-year extensions
unless terminated prior thereto. The agreement provides for Mr. Allora to earn a
commission based on the annual increases, if any, in the gross revenue of the
acquired business with such commission to be paid in five equal annual
installments as well as a three-year stock option at the end of each yearly
period during which the annual gross revenue of the acquired business has
increased from the prior year and is in excess of $10,000,000. This agreement
was terminated in September 2005 due to certain breaches by Mr. Allora.

NOTE 9 - RELATED PARTY TRANSACTIONS

In September, Richard Hersh resigned as Chief Executive Officer of the Company
and entered into a separation and severance agreement in which he agreed to the
cancellation of all his outstanding options, including options to purchase an
aggregate of 6,182,642 shares of the Company's common stock exercisable at
prices ranging from $0.25 to $0.38 per share and an option to purchase 10% of
the common stock of the Company's subsidiary Commodity Express Transportation,
Inc. for $60,000, to forgive a convertible promissory note with a principal
balance of $115,000 and accrued interest of $32,241, to forego $313,201 in
accrued compensation, and to settle any other claims with, or obligations by,
the Company, in consideration for $20,000 and a warrant to purchase 11,000,000
shares of common stock for $0.025 per share that expires in five years. In
                                       23
<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 9 - RELATED PARTY TRANSACTIONS, continued

addition, Mr. Hersh entered into a consulting agreement with the Company that
has a term of five years and a monthly consulting fee of $10,000. He will advise
the Company's management and board of directors on various business matters
including identifying and introducing the Company to prospective investors,
lenders, strategic partners, acquisition and merger candidates and joint venture
partners.

In September, the Company's Board of Directors elected David S. Brooks Chief
Executive Officer of the Company. Mr. Brooks entered into an employment
agreement with the Company having a term of two years with one-year renewals
thereafter unless terminated by either party prior thereto. Mr. Brooks' annual
base salary of $150,000 may be deferred until the Company has raised an
aggregate of $3,000,000 and he received an option to purchase 9,000,000 shares
of common stock for $0.025 per share that expires in five years. In August 2006,
Mr. Brooks purchased one share of the Company's Series D convertible preferred
stock for $25,000 in a private transaction and in October 2006 purchased five
shares of the Company's Series F convertible preferred stock for $25,000 in a
private transaction.

In September, the Company's Board of Directors elected S. Kevin Yates Chief
Operating Officer of the Company. Mr. Yates entered into an employment agreement
with the Company having a term of two years with one-year renewals thereafter
unless terminated by either party prior thereto. Mr. Yates' annual base salary
of $150,000 may be deferred until the Company has raised an aggregate of
$3,000,000 and he received an option to purchase 9,000,000 shares of common
stock for $0.025 per share that expires in five years.

In September 2006, the Company terminated for cause its employment agreement
with Michael Darden, its President. Thereafter, Mr. Darden resigned as a
Director from the Company and its subsidiaries. In October 2006, Mr. Darden
filed a lawsuit in Broward County, Florida naming as defendant Freight Rate,
Inc. d/b/a Power2Ship, Inc. and alleging breach of his employment agreement. The
complaint states that Mr. Darden was damaged pursuant to the termination of his
employment agreement in the amount of $306,427.64. The Company believes it has
substantial defenses and counterclaims against Mr. Darden, including wrongful
appropriation of funds of the Company.

In August, David S. Brooks and Kevin Yates, the Company's current Chief
Executive Officer and Chief Operating Officer, respectively, entered into a
consulting agreement to provide the Company with business advisory services
including strategic evaluation, planning and advice, fund-raising support, sales
and marketing support, contract negotiation and business development. The term
of the agreement was 12 months with an optional six-month extension. Subject to
the successful completion of various financing activities the Company is
pursuing, the Company agreed to pay each of them a fee of $100,000.

NOTE 10 - SUBSEQUENT EVENTS

In October and November 2006, the Company issued 293 shares of its Series E
convertible preferred stock to 6 accredited investors in consideration for the
exchange of $280,000 principal amount of the Company's 14.25% secured
convertible debentures and $12,684 of accrued interest thereon. The preferred
stock is convertible into the Company's common stock at 100% of the average of
the three lowest closing bid prices of the Company's common stock, as quoted by
                                       24

<PAGE>
                   FITTIPALDI LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 10 - SUBSEQUENT EVENTS, continued

Bloomberg, LP, for the ten (10) trading days immediately preceding the date the
Company receives a conversion notice from the preferred stockholder. In October,
one holder converted $5,000 of the Series E convertible preferred stock into
123,152 shares of common stock.

In October and November 2006, the Company issued approximately 70 shares of its
Series F convertible preferred stock to 18 accredited investors, all of whom
were existing shareholders of our company, in consideration for $222,500 and the
exchange of $126,000 principal amount of the Company's short term unsecured
promissory notes. The preferred stock is convertible into the Company's common
stock at $0.025 per share.

On October 11, 2006, the Company entered into an Amendment to the License
Agreement dated March 1, 2005 with EF Marketing, LLC and Emerson Fittipaldi. The
Amendment includes provisions providing the Company with the exclusive right to
use the property licensed from EF Marketing globally rather than solely in the
United States and its territories and the right to change its corporate name to
include the name Fittipaldi. Also, the term of the License Agreement was changed
from 5 years to an ongoing basis. In consideration for these and other
amendments, the Company agreed to provide EF Marketing with a percentage of the
net operating cash (as defined in the Amendment) generated by the Company's
operations, a five-year warrant to purchase 8,000,000 shares of its common stock
for $0.025 per share valued using the Black-Scholes Option Pricing Model at
$387,200 and the right to designate one member to the Company's board of
directors. No such director has been designated as of the filing of this current
report.

In October 2006, the Company granted options to its employees to purchase an
aggregate of 9,900,000 shares of its common stock for $0.025 per share expiring
in October 2011. These options were valued using the Black Scholes Option
Pricing model at $529,650 and recorded as salary expense. Simultaneously with
granting these options, the Company cancelled options to its employees to
purchase an aggregate of 6,207,694 shares of its common stock for prices ranging
from $0.15 to $0.52 per share expiring from 2006 through 2008.

In October 2006, the Company made the second of two interest payments of
$100,000 to the holder of $1,750,000 of its 5% Series B secured convertible
debentures, which matured in June and September 2006. This payment, specified in
an agreement with the holder entered into in September 2006, precludes the
holder from exercising its rights of conversion under all debentures held by it
through December 31, 2006.

In October 2006, the Company issued $100,000 of 10% short-term unsecured
promissory notes to two accredited investors with maturity dates in January
2007.








                                       25
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The following discussion and analysis of financial condition and
results of our operations should be read in conjunction with the consolidated
financial statements and the notes to those statements included elsewhere in
this report.

Forward-looking Information

         This quarterly report on Form 10-QSB, including the discussion and
analysis of our financial condition and results of operations and our
disclosures about market risk, contain certain "forward-looking statements."
These statements represent our expectations, beliefs, intentions, or strategies
concerning future events and by their nature involve risks and uncertainties.
Forward-looking statements include, among others, statements about our future
performance, the continuation of historical trends, the sufficiency of our
sources of capital for future needs, the expected impact of recently issued
accounting pronouncements, and the outcome or effects of litigation. Risks that
could cause actual results to differ materially from our current expectations
include changes in market demand and pricing for our services, the impact of
competition, changes in relationships with our customers, our ability to obtain
sufficient carrier capacity at competitive rates to transport freight, our
ability to retain shippers willing to have us move their freight, the risks
associated with litigation and insurance coverage, the impacts of war on the
economy, and changing economic conditions. Therefore, actual results may differ
materially from our expectations based on these and other risks and
uncertainties.

Critical Accounting Policies

         Financial Reporting Release No. 60, which was released by the SEC,
requires all companies to include a discussion of critical accounting policies
or methods used in the preparation of financial statements. Note 2 to our
consolidated financial statements includes a summary of the significant
accounting policies and methods used in the preparation of our consolidated
financial statements. The following is a brief discussion of the more
significant accounting policies and methods used by us:

         - General. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities and the reported amounts of
revenues and expenses. Actual results could differ from those estimates.

         - Revenue Recognition. The Company recognizes freight transportation
revenue when shipments reach their destinations and the receiver acknowledges
the receipt of goods by signing a bill of lading. Revenue from access fees is
recognized in the month that access to our P2S MobileMarket(TM) is provided to
customers. Revenue generated from implementation services, pursuant to software
development contracts with customers defining the scope of work, is recognized
on the percentage of completion basis for each deliverable provided for in the
contract. Revenue from implementation services are non-recurring and are
expected to significantly decrease in total and as a percent of total revenue in
future periods.

OVERVIEW

         In March 2005 we acquired certain assets and liabilities of Commodity
Express Transportation, Inc., a South Carolina company, and GFC, Inc., a South
Carolina company. The consolidated financial statements and accompanying notes
thereto included elsewhere in this report reflect the assets, liabilities and

                                       26
<PAGE>
results of operations of these two acquisitions from their respective dates of
acquisition. These two transactions have substantially increased both our
revenues and operating expenses.

         For the fiscal years ended June 30, 2006 and 2005 and the three months
ended September 30, 2006 and 2005, virtually all of our revenue was generated by
providing freight transportation services. Revenue from freight transportation
services includes the total dollar value of services purchased from us by our
customers. We provide freight transportation for our shipper customers using our
own transportation equipment (asset based), on transportation equipment of
owner-operators which are affiliated with our subsidiary CXT as well as numerous
unaffiliated independent carriers located throughout the United States
(non-asset based). We are a principal in the transaction to transport the
freight. By accepting our customer's order, we accept certain responsibilities
for transportation of the load from its origin to its destination. In instances
when we arrange for transportation of the load by an unaffiliated independent
carrier, the carrier's contract is with our company, not our shipper customer,
and we are responsible for prompt payment of carrier charges. We are also
generally responsible to our shipper customer for any claims for damage to
freight while in transit. The price we charge for these freight transportation
services depends largely upon the prices charged by our competitors as well as
upon several factors, including the distance the freight is being transported,
the type of transportation equipment required to move the freight, the distance
that equipment is from the origin of the freight and whether or not that
equipment is available in our fleet, the value of the freight and the
availability of loads near the locations where the freight is to be delivered.

         To a lesser extent, we have historically generated revenues from access
services and implementation services. For the fiscal year ended June 30, 2004,
revenue from access services and implementation services represented
approximately 14% and approximately 1%, respectively, of our total revenue for
that year. For the fiscal year ended June 30, 2005 less than 1% of our total
revenue was attributable to revenue from access services and we reported no
revenue during that period from implementation services. For the year ended June
30, 2006 revenue from access services and implementation services represented
less than 0.1% of total revenue. For the three months ended September 30, 2006,
we reported no revenue from access or implementation services Access services
revenue represents revenue generated from the unlimited use of the information
available through our proprietary application for a fixed monthly fee.
Implementation services include design, programming and testing of custom
developed interfaces that permit our proprietary application to communicate and
share data with a customer's existing computer software. While we market these
services to our existing and potential customer base, we cannot predict if we
will report significant revenue from either access services or implementation
services in any future periods.

         During fiscal years ended June 30, 2006 and 2005, revenue generated
from one customer represented approximately 53% and 40%, respectively, of our
freight transportation revenue. For the three months ended September 30, 2006,
this same customer accounted for approximately 62% of our revenue. Because our
agreement with that customer can be terminated upon a 30 days notice to us, our
dependence on revenues from this customer puts us at risk until such time, if
ever, that we can diversify our revenue base. In order to lessen the risks to us
from this dependence on a single customer, we are marketing our services to
potential shipper customer and companies involved in freight security to the
maximum extent permitted by our limited sales and marketing budget.

         Effective June 30, 2006, management decided to cease the operations of
Power2Ship Intermodal as it had been unprofitable since its acquisition.
Excluding changes in revenue and costs by our other operations, we expect this
                                       27
<PAGE>
event to result in freight transportation revenue and expenses for fiscal year
2007 decreasing by approximately $3,200,000, selling, general and administrative
expenses being reduced by approximately $60,000 and our interest expense
declining by approximately $60,000.

         Most of our revenue during fiscal year 2007 is expected to be generated
by the assets of a freight transportation company we acquired in March 2005
which now comprise the operations of our CXT subsidiary. CXT is a freight
transportation services provider serving customers located in the southeastern
United States. Its freight transportation services are provided by independent
truck owner-operators under contract with CXT or by independent drivers that
utilize tractors and trailers provided by CXT, as well as by other trucking
companies, including Power2Ship, arranged by CXT's freight transportation
brokerage.

         Another potential source of revenue may be generated for incorporating
our secure, wireless, Internet-based system as a component in the security
solutions being developed by other companies to counteract the threat of
terrorism. Our system is capable of capturing and processing data transmitted
wirelessly from other technologies that may be part of any comprehensive
security system. Examples of these technologies include radio-frequency
identification (RFID) tags fastened to the outside of containers and/or
trailers, smart tags affixed to the goods inside shipping containers, and
electronic seals applied at the time the container is loaded. Further, our
system has the ability to alert a truck's owner or authorities if a vehicle
deviates from its designated route. Because our application was designed to
provide economic benefit to the transportation industry, we believe that it is
uniquely suited to providing a Homeland Security solution without causing
onerous expense to either the private or public sector.

         During the remainder of fiscal year 2007, our greatest challenge will
be raising sufficient additional capital to fund our ongoing operations, pay our
past due obligations and other obligations as they become due and continue to
implement our business model. As of October 31, 2006, we had $1,750,000 of
Series B 5% secured convertible debentures and a $175,000 unsecured convertible
promissory note that were past due, $1,317,000 of 14.25% secured convertible
debentures which becomes due December 31, 2006 and $168,000 of unsecured debt
which becomes due by June 30, 2007. In September 2006, we entered into an
agreement with the holder of $1,750,000 of our Series B secured convertible
debentures that were past due pursuant to which we paid $200,000 of accrued
interest in September and October, effectively extending the maturity date of
this debt until December 31, 2006. While we have deferred certain employees'
compensation and reduced or eliminated certain non-essential personnel and
administrative costs, if we are unable to secure additional capital as needed we
may be unable to satisfy this secured and unsecured debt which could adversely
affect our ability to continue our operations as presently conducted, as well as
severely limiting our ability to diversify our revenue sources. If we are unable
to satisfy the secured debt when it becomes due, the holders could foreclose on
our assets and we would be forced to cease our operations.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2006 compared to the Three Months Ended
September 30, 2005

Revenue

         Total revenue generated during the three months ended September 30,
2006 decreased by $1,811,570 or 22% as compared with total revenue generated
during the three months ended September 30, 2005. The decrease in revenue for
                                       28
<PAGE>
the three months ended September 30, 2006 included decreases of:

         -     $1,095,396 or approximately 93% in freight transportation revenue
               generated by Power2Ship Intermodal, Inc. due to its operations
               ceasing on June 30, 2006;

         -     $716,506 or approximately a 10% decrease in freight
               transportation revenue generated by Commodity Express
               Transportation, Inc. and the Company's Florida-based freight
               brokerage operation due to a decrease in freight rates from the
               rates charged during the three months ended September 30, 2005 in
               the aftermath of Hurricane Katrina as well as a reduction in the
               number of freight brokerage employees who were not generating
               sufficient revenue with acceptable gross margins to justify their
               positions; and

         -     $5,668 or 100% in revenue from access services during the three
               months ended September 30, 2006 compared with the three months
               ended September 30, 2005.

         Management expects revenue to increase in the second and third fiscal
quarters of fiscal year 2007 versus the first fiscal quarter due to normal
seasonal increases in demand and then to decline in the fourth fiscal quarter as
demand softens. Most of our revenue is expected to be generated from providing
freight transportation services using our fleet of tractors and trailers and
from our freight brokerage operations. In addition, we expect to generate
revenue in fiscal year 2007 by providing logistics consulting and implementation
services to large shipper customers such as Averitt Express. Another source of
revenue projected for the latter half of fiscal year 2007 is providing logistics
consulting and implementation services to countries outside the United States
such as Brazil where we are expecting to begin operations in our second fiscal
quarter. Finally, we are seeking, subject to the availability of sufficient
financing, to increase our revenue by acquiring one or more trucking or third
party logistics companies. We have not entered into any acquisition agreements
as of the date of this quarterly report and cannot predict if and when we may do
so.

Operating Expenses

         Total operating expenses incurred during the three months ended
September 30, 2006 decreased by $1,864,451 or approximately 21% compared with
the three months ended September 30, 2005. The decrease during the three months
ended September 30, 2006 primarily was attributed to decreases of:

         -    $1,557,732 or approximately 21% in freight transportation
              expenses, consisting of direct costs associated with transporting
              freight either with our own trucks or through non-affiliated
              trucking companies we hired to move loads for our shipper
              customers, as compared with the three months ended September 30,
              2005. This decrease was attributed to a $1,075,297 or
              approximately a 93% decrease by Power2Ship Intermodal, Inc. due to
              its operations ceasing on June 30, 2006 and a $482,435 or
              approximately an 8% decrease by Commodity Express Transportation,
              Inc. associated with its lower revenue. This percentage decrease
              in freight transportation expense was approximately 1% lower than
              the percentage decrease in revenue reflecting a decrease in the
              gross margin on freight transportation services to 9.8% for the
              three months ended September 30, 2006 versus 10.7% for the three
              months ended September 30, 2005. This decrease in gross margin
              during the three months ended September 30, 2006 primarily was
              attributed to the decrease in freight rates from the rates charged
                                       29
<PAGE>
              during the three months ended September 30, 2005 in the aftermath
              of Hurricane Katrina.

         -    $306,719 or approximately 19.5% in selling, general and
              administrative expenses as compared with the three months ended
              September 30, 2005 primarily was attributed to decreases of:

              -   $255,859 or approximately 26% in salaries, benefits and
                  consulting fees consisting of:

                  -   Salaries and benefits which decreased by $131,247 or
                      approximately 20% to $509,985 in the three months ended
                      September 30, 2006 from $641,232 during the three months
                      ended September 30, 2005. This decrease was attributed
                      primarily to a decrease in the number of employees to 16
                      as of September 30, 2006 from 28 as of September 30, 2005
                      due to the elimination of certain non-essential
                      administrative and support personnel and certain freight
                      brokers that were not generating sufficient revenue with
                      acceptable gross margins to justify their positions; and

                  -   Consulting fees which decreased by $70,862 or
                      approximately 23% in the three months ended September 30,
                      2006 to $231,944 from $302,806 during the three months
                      ended September 30, 2005. This decrease was a result of a
                      reduction in the number of consultants engaged by the
                      Company as well as to an increase in the average length of
                      the consulting agreements over which the consulting
                      expenses are realized compared to consulting agreements
                      entered into during the three months ended September 30,
                      2005.

                  Management expects salaries and consulting expenses during the
              remaining quarters of fiscal year 2007 to be comparable to those
              incurred during the first quarter.

              -   Other selling, general and administrative expenses decreased
                  by $50,860 or approximately 9% during the three months ended
                  September 30, 2006 as compared with the three months ended
                  September 30, 2005. This decrease consisted of an:

                  -   $89,758 decrease by the Company's Florida-based operation
                      primarily attributed to a:

                      -    $28,552 reduction in accounting expenses which, in
                           2005, included the one-time audit upon the
                           acquisition of CXT;

                      -    $14,625 decrease in travel, meals and entertainment
                           expenses and a $9,339 decrease in advertising,
                           convention and trade show expenses as a result of
                           management's decision to stop advertising our
                           products and services to shippers and carriers in
                           trade publications, transportation industry websites
                           and other media and not to attend conventions and
                           trade shows;

                      -    $16,990 decrease in Web hosting expenses as a result
                           of our hosting the system in-house;
                                       30
<PAGE>
                      -    $18,842 decrease in amortization of our intellectual
                           property as the amortization period ended in July and
                           August 2006;

                      -    $8,047 decrease in bank service charges primarily as
                           a result of reducing the transaction fees we incurred
                           to electronically pay our carriers by paying these
                           carriers directly and

                      -    $14,956 increase in legal fees.

                  -   $30,207 decrease by Power2Ship Intermodal, Inc. due to it
                      ceasing operations on June 30, 2006; that partially
                      was offset by an increase of

                  -   $69,105 by Commodity Express Transportation, Inc.
                      primarily attributed to a:

                      -    $17,749 increase in taxes and licenses for tractors
                           and trailers;

                      -    $14,115 increase in administrative expenses primarily
                           due to hiring of one additional administrative
                           employee; and a

                      -    $21,290 increase in South Carolina income tax expense

         Management expects other selling, general and administrative expenses
during the remaining quarters of fiscal year 2007 to be comparable to those
incurred during the first quarter.

Other Income (Expenses)

         Total other expenses increased by $400,263 or approximately 86% during
the three months ended September 30, 2006 as compared with the three months
ended September 30, 2005. This increase primarily resulted from an increase in
interest expense, net of interest income, of $301,078 or approximately 64% and a
loss of $94,864 on forgiveness of debt related to the severance and settlement
agreement entered into with the Company's former Chief Executive Officer. The
increase in interest expense primarily was associated with the issuance and
re-pricing of warrants to the purchasers of $940,000 principal amount of our
Series D convertible debentures in the fourth quarter of fiscal year 2006 and to
the conversion of $475,000 of these debentures in the first quarter of fiscal
year 2007 resulting in the acceleration of interest expense associated with
these debentures.

         Management expects other expenses, primarily interest expense, during
the second quarter of fiscal 2007 to be comparable to the interest expense
incurred during the first quarter of fiscal 2006. Interest expense during the
second half of fiscal 2007 will depend on how we handle our outstanding debt. If
this debt is retired or converted to equity, then interest expense would be
expected to decline substantially. However, if outstanding debt is re-structured
or replaced with other debt, then interest expense would be expected to increase
as a result of costs incurred in such lending arrangements that may include
higher interest rates, penalties and other transaction fees. We currently are
offering to exchange our $1,317,000 principal amount of our 14.25% secured
convertible debentures for our Series E convertible preferred stock. Also, we
are negotiating with the holder of $175,000 principal amount of our 8% unsecured
convertible promissory note to exchange the holder's debenture for our equity
securities. Finally, we are seeking to repay $1,750,000 of our 5% secured
convertible debentures with the proceeds from the sale of our equity securities.
                                       31
<PAGE>
However, we currently have no commitments for converting any of these debentures
and there can be no assurance that acceptable financing to repay our debentures
can be obtained on suitable terms, if at all.

LIQUIDITY AND CAPITAL RESOURCES

         We have experienced losses and negative cash flows from operations
since our inception. As of September 30, 2006, we had an accumulated deficit of
$26,242,464, a stockholders' deficit of $2,437,813, and our independent
auditors' report on our financial statements for fiscal year 2006 contained an
explanatory paragraph regarding our ability to continue as a going concern. Our
ability to continue as a going concern is dependent upon our ability to obtain
the necessary financing to meet our obligations and repay our liabilities when
they become due and to increase our revenues and generate profitable operations
in the future. We plan to continue to provide for our capital requirements
through the sale of equity or debt securities; however, we have no firm
commitments from any third party to provide this financing and we cannot assure
you we will be successful in raising working capital as needed. There are no
assurances that we will have sufficient funds to execute our business plan, pay
our obligations as they become due or generate positive operating results. If we
are unable to raise additional capital, we may be required to reduce or
eliminate certain of our operations.

         At September 30, 2006, we had a working capital deficit of $4,220,087
as compared with a working capital deficit of $4,849,787 at June 30, 2006. This
$629,700 reduction of our working capital deficit during these three months was
attributed to an $851,752 decrease in current assets which was more than offset
by a $1,481,452 decrease in current liabilities. The decrease in current assets
consisted of decreases in accounts receivable of $801,530 primarily due to our
decrease in revenue and in prepaid insurance of $77,697 partially offset by an
increase in cash of $27,475. The decrease in current liabilities consisted of
decreases in the current portion of convertible notes payable of $74,346, in
convertible note payable to related party of $115,00, in the outstanding balance
on our line of credit of $51,234, in accounts payable and accrued expenses of
$1,097,980 primarily due to our decrease in revenue and the $100,000 interest
payment to the holder of our Series B 5% convertible debentures, and in accrued
salaries of $178,892 primarily associated with the forgiveness by Richard Hersh
pursuant to his Separation and Severance Agreement, partially offset by an
increase in short term notes payable of $36,000,

         During the three months ended September 30, 2006, our cash balance
increased by $27,475. This increase was the result of $573,654 used in operating
activities and $83,637 used in investing activities that was more than offset by
$684,766 provided by financing activities. This compares with an increase in our
cash balance of $91,816 during the three months ended September 30, 2005 as a
result of $716,360 used in operating activities and $124,495 used in investing
activities that was more than offset by $932,671 provided by financing
activities.

         During the three months ended September 30, 2006, we used $573,654 in
operating activities which was made up of our net loss of $1,511,093 and an
increase in cash used for operating assets and liabilities of $11,846 that
partially was offset by non-cash expenses including depreciation, amortization
and a loss on forgiveness of debt of $949,285. This compared with $716,360 used
in operating activities during the three months ended September 30, 2005 which
consisted of our net loss of $1,157,711 and an increase in cash used for
operating assets and liabilities of $98,823 that partially was offset by
non-cash expenses including depreciation, amortization and a change in the
allowance for doubtful accounts of $406,893 and issuances of our common stock,
options and warrants as payment for services, interest and compensation of
$133,281.
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<PAGE>
         The $83,637 used in investing activities during the three months ended
September 30, 2006 consisted of $69,446 of software development costs and
$14,191 for purchases of property and equipment. This compared with $124,495
used in investing activities during the three months ended September 30, 2005
which consisted of $93,328 of costs of software development and $31,167 for
purchases of property and equipment. The software developments costs primarily
are the salaries of our information technology employees who are continually
enhancing and making modifications to our internal use software. These costs are
expected to remain relatively constant for the remainder of fiscal year 2007.

         During the three months ended September 30, 2006, we generated net cash
from financing activities of $684,766 which consisted of net proceeds of
$660,000 from the issuance of 26.4 shares of our Series D convertible preferred
stock and $76,000 from the issuance of unsecured short term promissory notes
less $51,234 repaid on our line of credit. This compared with net cash provided
by financing activities of $932,671 during the three months ended September 30,
2005 which consisted of net proceeds of $807,500 from the issuance of
approximately 27 units of our common stock and warrants and $125,171 borrowed
from our revolving line of credit.

         We have a $3,000,000 revolving line of credit secured by our accounts
receivable with BB&T Corporation. This facility had a balance on September 30,
2006 of $861,053 and is in effect until February 2007.

            As of September 30, 2006, the Company was past due on the repayment
of principal and interest with respect to $1,750,000 principal amount of Series
B 5% secured convertible debentures and $175,000 principal amount of 8%
unsecured convertible promissory note. In September 2006, the Company reached
agreement with the sole holder of the Series B secured convertible debentures.
The investor agreed not to exercise its rights of conversion under the
aforementioned debenture until January 1, 2007, for which the Company paid
$100,000 in accrued interest in September and an additional $100,000 in accrued
interest in October. We intend to repay these debentures with the proceeds from
the sale of our equity securities. However, we currently have no commitments for
such financing and there can be no assurance that acceptable financing to repay
our debentures can be obtained on suitable terms, if at all.

         We are negotiating with the sole holder of $175,000 principal amount of
an 8% unsecured convertible promissory note that is past due to convert or
exchange some or all of this note for our equity securities or extend its
maturity date. However, we currently have no commitment for converting,
exchanging or extending the maturity date of this note and there can be no
assurance that, in the event the holder does not convert, exchange or extend the
maturity date of the note, that acceptable financing to repay this note can be
obtained on suitable terms, if at all.

         We estimate that our cash on hand at September 30, 2006 and our receipt
since then of $222,500 in net proceeds from sales of shares of our Series F
convertible preferred stock, $100,000 from issuances of short-term unsecured
promissory notes, the proceeds expected from verbal commitments made by
accredited investors to purchase shares of our Series F convertible preferred
stock and additional borrowings from our revolving credit facility, should fund
our operating activities for approximately ninety days from the date of filing
this report. Thereafter, we will need additional working capital to fund our
operations or may be forced to curtail some or all of our operations. Management
expects to raise approximately $2,000,000 through the sale of our equity
securities by December 31, 2006. However, we currently have no written
commitments to purchase these shares and there can be no assurance that such
commitments will be obtained and, if not, if alternative financing can be
obtained on a timely basis on suitable terms, if at all.

         Our future capital requirements depend primarily on the rate at which
we can decrease our use of cash to fund operations. Cash used for operations
will be affected by numerous known and unknown risks and uncertainties
                                       33
<PAGE>
including, but not limited to, our ability to successfully market our products
and services, the degree to which competitive products and services are
introduced to the market, and our ability to attract key personnel as we grow.
As long as our cash flow from operations remains insufficient to completely fund
operations, we will continue depleting our financial resources and seeking
additional capital through equity and/or debt financing. If we raise additional
capital through the issuance of debt, this will result in increased interest
expense. If we raise additional funds through the issuance of equity or
convertible debt securities, the percentage ownership of Power2Ship held by
existing stockholders will be reduced and those stockholders may experience
significant dilution. In addition, new securities may contain certain rights,
preferences or privileges that are senior to those of our common stock. There
can be no assurance that acceptable financing to fund our ongoing operations and
for future acquisitions or for the integration and expansion of existing
operations can be obtained on suitable terms, if at all. Our ability to continue
our existing operations and to continue to implement our growth and acquisition
strategy could suffer if we are unable to raise the additional funds on
acceptable terms which will have the effect of adversely affecting our ongoing
operations and limiting our ability to increase our revenues or possibly attain
profitable operations in the future. We are constantly evaluating our cash needs
and current burn rate, and we have a strategy whereby certain non-essential
personnel and administrative costs will be reduced or eliminated so that we may
continue to meet operating obligations until such time as we can raise
additional working capital. If we are unable, however, to secure the necessary
additional working capital as needed, we may be forced to curtail some or all of
our operations.

ITEM 3. CONTROLS AND PROCEDURES

         As required by Rule 13a-15 under the Securities Exchange Act of 1934,
as of the end of the period covered by this report, being September 30, 2006, we
have carried out an evaluation of the effectiveness of the design and operation
of our company's disclosure controls and procedures. This evaluation was carried
out under the supervision and with the participation of our company's
management, including our company's Chief Executive Officer. Based upon that
evaluation, our company's Chief Executive Officer concluded that our company's
disclosure controls and procedures are effective. There have been no changes in
our internal controls over financial reporting that occurred during the period
covered by this quarterly report that have materially affected, or are
reasonably likely to materially affect, our internal controls over financial
reporting.

         Disclosure controls and procedures and other procedures that are
designed to ensure that information required to be disclosed in our reports
filed or submitted under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported, within the time period specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in our reports filed under the
Securities Exchange Act of 1934 is accumulated and communicated to management
including our Chief Executive Officer as appropriate, to allow timely decisions
regarding required disclosure.









                                       34
<PAGE>
PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         On October 17, 2006, Michael J. Darden, former President and Director
of the Company, filed a lawsuit in the Circuit Court in Broward County, Florida
(Case No. 0616408) naming as defendant Freight Rate, Inc. d/b/a Power2Ship, Inc.
alleging breach of his employment agreement. The lawsuit was served on October
23, 2006. The complaint states that Mr. Darden was damaged pursuant to the
termination of his employment agreement in the amount of $306,427.64. The
Company terminated Mr. Darden's employment agreement for cause and believes it
has substantial defenses and counterclaims against Mr. Darden, including
wrongful appropriation of funds of the Company.

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

         In October and November 2006, we sold an aggregate of approximately 293
shares of Series E convertible preferred stock to six accredited investors in a
private placement exempt from registration under the Securities Act in reliance
on Section 4(2) of that act. We paid no sales commissions for these sales. We
exchanged $280,000 principal amount of our 14.25% secured convertible debentures
and $12,684 in accrued interest thereon previously issued to these investors. No
general solicitation or advertising was used in connection with this offering,
and the certificates evidencing the securities that were issued contained a
legend restricting their transferability absent registration under the
Securities Act or the availability of an applicable exemption therefrom. The
purchasers represented that they were acquiring the securities for investment
purposes only, and not with a view towards distribution or resale except in
compliance with applicable securities laws.

         In October and November 2006, we sold an aggregate of approximately 70
shares of Series F convertible preferred stock to 18 accredited investors in a
private placement exempt from registration under the Securities Act in reliance
on Section 4(2) of that act. We paid no sales commissions for these sales. We
received net proceeds of $222,500 and exchanged $126,000 principal amount of our
short term promissory notes issued to these investors. No general solicitation
or advertising was used in connection with this offering, and the certificates
evidencing the securities that were issued contained a legend restricting their
transferability absent registration under the Securities Act or the availability
of an applicable exemption therefrom. The purchasers represented that they were
acquiring the securities for investment purposes only, and not with a view
towards distribution or resale except in compliance with applicable securities
laws.

         In July and August 2006, we issued an aggregate of 10,558,185 shares of
our common stock to two accredited investors upon conversion of an aggregate of
$225,000 Series D 8% unsecured convertible debentures, and accrued interest
thereon, held by those debenture holders. The issuances were exempt from
registration under the Securities Act in reliance on an exemption provided by
Section 4(2) of that act.

         In July and August 2006, we issued an aggregate of 4,166,245 shares of
our common stock to one accredited investor upon conversions of an aggregate of
$150,000 principal amount of our Series B 5% secured convertible debentures. The
issuance was exempt from registration under the Securities Act in reliance on an
exemption provided by Section 4(2) of that act.

         In July and September 2006, we issued an aggregate of 80,000 shares of
our common stock to two accredited investors upon conversion of an aggregate of
4,000 shares of our Series B convertible preferred stock held by those

                                       35
<PAGE>
stockholders. The issuances were exempt from registration under the Securities
Act in reliance on an exemption provided by Section 4(2) of that act.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     None.

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

     None.

ITEM 5.  OTHER INFORMATION

     None.

ITEM 6.  EXHIBITS

(a)  Exhibits

     31.1     Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

     31.2     Rule 13a-14(a)/15d-14(a) Certification of Principal Financial and
              Accounting Officer

     31.2     Certification of Chief Executive Officer and Principal Financial
              and Accounting Officer pursuant to 18 U.S.C. Section 1350



































                                       36
<PAGE>
                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


Date:  November 14, 2006
                                     FITTIPALDI LOGISTICS, INC.

                                     By: /s/ David S. Brooks
                                         -------------------
                                         David S. Brooks
                                         Chief Executive Officer, principal
                                         executive officer and principal
                                         financial and accounting officer













































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