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 MARCH 31, 2005

                                       OR

[ ]     TRANSITION  REPORT  PURSUANT  TO  SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE  ACT  OF  1934

                         FOR  THE  TRANSITION  PERIOD  FROM       TO
                                                            ------   ------

                         Commission File Number 0-25753

                               -------------------

                                POWER2SHIP, 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 [ ]

                      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 May 20, 2005, the number of
outstanding shares of the issuer's common stock was 62,570,209.

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

<PAGE>

                                TABLE OF CONTENTS
                                -----------------


                                                                            Page
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited):

      Consolidated Balance Sheet, March 31, 2005                               3

      Consolidated Statements of Operations, Three and Nine Months Ended
         March 31, 2005 and 2004                                               4

      Consolidated Statements of Cash Flows, Nine Months Ended
         March 31, 2005 and 2004                                               5

      Selected Notes to Consolidated Financial Statements for the Quarterly
         Period Ended March 31, 2005                                           6

Item 2.  Management's Discussion and Analysis or Plan of Operation            17

Item 3.  Controls and Procedures                                              22

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                    23

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds          23

Item 3.  Defaults Upon Senior Securities                                      23

Item 4.  Submission of Matters to a Vote of Security Holders                  23

Item 5.  Other Information                                                    23

Item 6.  Exhibits and Reports on Form 8-K                                     24

<PAGE>

                          PART I. FINANCIAL INFORMATION
                          -----------------------------

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

<TABLE>
<CAPTION>

                        POWER2SHIP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2005
                                   (UNAUDITED)


<S>                                                                     <C>
ASSETS
Current assets:
   Cash and cash equivalents                                      $    887,543
   Receivables, net of allowance of $2,963                             861,569
   Prepaid insurance                                                    22,009
                                                                  -------------
        Total current assets                                         1,771,121

Furniture and equipment                                                528,908
     Less: accumulated depreciation                                   (111,333)
                                                                  -------------
        Net furniture and equipment                                    417,575

Software Development Costs, net of accumulated amortization
     of $85,723                                                        645,397
Deferred financing costs                                               603,423
Intangible asset, net of accumulated amortization of $75,336           530,890
Restricted cash for interest on debentures                             125,467
Other assets                                                           243,602
                                                                  -------------

Total assets                                                      $  4,337,475
                                                                  =============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
   Notes payable - short term                                     $    627,500
   Line of Credit                                                      145,731
   Accounts payable                                                    521,167
   Accrued expenses                                                    495,021
   Accrued salaries                                                    117,204
                                                                  -------------
       Total current liabilities                                     1,906,623

Long term debt:
   Long term notes payable                                             100,000
   Convertible notes payable less discount of $132,669               3,789,331
   Convertible note payable to related party                           115,000
                                                                  -------------
Total liabilities                                                    5,910,954
                                                                  -------------

Stockholders' deficit:
Preferred stock, $.01 par value, 1,000,000 authorized:
   Series B convertible preferred stock, $.01 par value, 200,000
      shares authorized; 168,200  shares issued and outstanding          1,682
   Series C convertible preferred stock, $.01 par value, 20,000
      shares authorized; 832 shares issued and outstanding                   8
   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; 57,043,542 issued and outstanding                     57,044
   Deferred compensation                                              (189,470)
   Additional paid-in capital                                       15,765,099
   Accumulated deficit                                             (17,208,712)
                                                                  -------------

       Total stockholders' deficit                                  (1,573,479)
                                                                  -------------

Total liabilities and stockholders' deficit                       $  4,337,475
                                                                  =============
</TABLE>

                             SEE ACCOMPANYING NOTES

                                        3
<PAGE>

<TABLE>
<CAPTION>

                                    POWER2SHIP, INC. AND SUBSIDIARIES
                                  CONSOLIDATED STATEMENTS OF OPERATIONS
                                               (UNAUDITED)

                                                  Three months ended March 31,  Nine months ended March 31,
                                                   -------------------------    --------------------------
                                                       2005          2004           2005          2004
                                                   ------------  ------------   ------------  ------------
<S>                                                <C>           <C>           <C>           <C>
Revenue:
Freight transportation                             $ 1,473,526   $   409,519   $ 2,941,169   $ 1,052,326
Access services                                              -        86,935           180       290,012
Implementation services                                      -             -             -        23,925
                                                   ------------  ------------  ------------  ------------
       Total revenue                                 1,473,526       496,454     2,941,349     1,366,263

Operating expenses:
   Freight transportation                            1,207,628       375,377     2,517,682       928,425
   Selling, general and administrative:
        Salaries, benefits and consulting fees       1,855,170       986,138     2,989,219     2,164,487
        Other selling, general and administrative      471,362       250,262     1,300,437       775,667
                                                   ------------  ------------  ------------  ------------

       Total operating expenses                      3,534,160     1,611,777     6,807,338     3,868,579
                                                   ------------  ------------  ------------  ------------

       Loss from operations                         (2,060,634)   (1,115,323)   (3,865,989)   (2,502,316)
                                                   ------------  ------------  ------------  ------------

Other income (expense):
   Litigation settlement                                     -             -             -       (27,968)
   Interest expense                                   (513,296)      (69,997)     (932,964)     (289,880)
   Other income                                            443             -         1,014             -
                                                   ------------  ------------  ------------  ------------

       Total other expense                            (512,853)      (69,997)     (931,950)     (317,848)
                                                   ------------  ------------  ------------  ------------

Net loss                                           $(2,573,487)  $(1,185,320)  $(4,797,939)  $(2,820,164)
Less: Preferred stock dividend                               -        (3,160)            -    (1,262,472)
                                                   ------------  ------------  ------------  ------------

Loss available to common shareholders              $(2,573,487)  $(1,188,480)  $(4,797,939)  $(4,082,636)
                                                   ============  ============  ============  ============


Loss per share-basic and diluted                   $     (0.05)  $     (0.03)  $     (0.11)  $     (0.13)
                                                   ============  ============  ============  ============

Weighted average shares outstanding
      - basic and diluted                           47,469,723    36,558,571    41,910,942    31,778,682
                                                   ============  ============  ============  ============
</TABLE>

                             SEE ACCOMPANYING NOTES

                                        4
<PAGE>

<TABLE>
<CAPTION>

                                   POWER2SHIP, INC. AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (UNAUDITED)

                                                                           Nine months ended March 31,
                                                                                2005          2004
                                                                            ------------  ------------
<S>                                                                              <C>           <C>
Cash flows from operating activities:
   Net loss                                                                 $(4,797,939)  $(2,820,164)
   Adjustments to reconcile net loss to
      net cash used in operating activities:
        Depreciation                                                             38,533        26,440
        Amortization of software development costs                               40,569        27,097
        Amortization of intangible asset                                         75,336             -
        Amortization of deferred compensation                                   148,530        34,735
        Amortization of deferred financing costs                                303,491             -
        Amortization of discount on notes payable                                68,211        11,062
        Issuance of stock options and warrants
          for services and conversion                                           525,183       498,988
        Issuance of stock for services, interest and litigation settlement    1,066,509       546,687
        Changes in operating assets and liabilities:
            (Increase) decrease in receivables                                 (542,480)      284,275
            Decrease (increase) in prepaid insurance                             37,030        17,068
            Decrease (increase) in other assets                                (193,913)     (108,000)
            (Decrease) increase in accounts payable and accrued expenses        586,514       (17,216)
                                                                            ------------  ------------

               Net cash used in operating activities                         (2,644,426)   (1,499,028)
                                                                            ------------  ------------

Cash flows from investing activities:
   Purchases of property and equipment                                         (316,435)      (58,054)
   Capitalized costs of software development                                   (268,502)     (252,776)
                                                                            ------------  ------------

               Net cash used in investing activities                           (584,937)     (310,830)
                                                                            ------------  ------------

Cash flows from financing activities:
   Proceeds from convertible promissory notes net of costs of $100,000
       and $269,071, respectively                                               900,000     1,257,929
   Proceeds from promissory notes                                               642,500             -
   Repayments of promissory notes                                              (195,000)     (385,000)
   Procceds from line of credit net of costs of $40,305                         105,426             -
   Proceeds from sale of preferred stock net of costs of $0 and
      $30,000  respectively                                                           -     1,110,960
   Proceeds from sale of common stock net of costs of $0 and
      $430,767  respectively                                                  1,831,850       287,178
                                                                            ------------  ------------

               Net cash provided by financing activities                      3,284,776     2,271,067
                                                                            ------------  ------------

               Net increase in cash and cash equivalents                         55,413       461,209

Cash and cash equivalents, beginning of period                                  832,130        63,318
                                                                            ------------  ------------

Cash and cash equivalents, end of period                                    $   887,543   $   524,527
                                                                            ============  ============
</TABLE>


                             SEE ACCOMPANYING NOTES

                                        5
<PAGE>

                        POWER2SHIP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

NOTE 1 - DESCRIPTION OF BUSINESS

ORGANIZATION
------------
Power2Ship, Inc. (the "Company"), formerly Jaguar Investments, 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 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. This information, which instantly becomes accessible
through the Company's password-protected, web-based MobileMarket(TM), enables
users to make better-informed, cost-effective logistics decisions. Since March
2003 the Company's primary source of revenue has been derived from providing
transportation services for shippers' inbound and outbound freight both as a
freight broker and by utilizing its own transportation equipment. The Company's
system is capable of tracking freight while in transit thereby enabling shippers
to optimize their supply chain and reduce their transportation, warehousing and
inventory carrying costs. Also, the Company provides carriers with free,
unlimited use of a web-based asset management system which enables them to track
the location, destination and availability of their transportation equipment. In
addition to helping better manage the utilization of carriers' assets and
drivers, the MobileMarket(TM) can automatically display information about their
available transportation equipment to shippers who, in turn, can select the
appropriate equipment to transport their freight.

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.
CXT provides its transportation services by contracting with independent truck
owner-operators and drivers that use trucks provided by CXT. Also, CXT rents a
137,000 square foot distribution facility in South Carolina used by 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. See Note 7 - "Acquisitions" for further
details related to this transaction.

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. It has operations in Port Newark,
New Jersey, Charleston, South Carolina and Charlotte, North Carolina. See Note 7
- "Acquisitions" for further details related to this transaction.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS

BASIS OF PRESENTATION
---------------------
For accounting purposes, the merger with Freight Rate, Inc. was treated as a
recapitalization of Freight Rate, Inc. and accounted for as a reverse
acquisition. Therefore, the financial statements reported herein and
accompanying notes thereto reflect the assets, liabilities and operations of
Freight Rate, Inc. as if it had been the reporting entity since inception. In
addition, the financial statements reported herein and accompanying notes
thereto reflect the assets, liabilities and operations of Commodity Express
Transportation, Inc. and Power2Ship Intermodal, Inc. beginning on March 21, 2005
as this was the date that these entities completed their respective acquisitions
and commenced operations.

                                        6
<PAGE>

The accompanying unaudited financial statements for the period ended March 31,
2005 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 and
nine month periods ended March 31, 2005 are not necessarily indicative of the
results to be expected for the year ended June 30, 2005.

The accompanying consolidated financial statements are prepared assuming the
Company will continue as a going concern. During the nine months ended March 31,
2005 and 2004, the Company incurred losses from operations of $(3,865,989) and
$(2,502,316), respectively, and had negative cash flows from operations of
$(2,644,426) and $(1,499,028), respectively. While the Company has increased its
revenue, both internally and through acquisition, reduced its operating expenses
and is attempting to increase sales and reduce expenses further, the sales
growth and expense reductions have not been significant enough to support the
Company's daily operations. Management intends to continue raising additional
funds with private placements of its debt and equity securities to accredited
investors. While the Company believes in the viability of its strategy to
improve sales volume and reduce expenses and in its ability to raise additional
funds, there can be no assurances to that effect. The financial statements do
not include any adjustments that might result from the outcome of these
uncertainties.

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.

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
          Gross as a Principal versus Net as an Agent, establishes the criteria
          for recognizing revenues on a gross or net basis. In these
          transactions, 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 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.

LOSS PER COMMON SHARE
---------------------
Basic loss per common share is based upon the weighted average number of common
shares outstanding during the year. Diluted earnings (loss) per common share
include the effects of potential dilution that would occur if securities (such
as warrants) or other contracts (such as options) to issue common stock were
exercised or converted into common stock. Such instruments that are convertible
into common stock are excluded from the computation in periods in which they
have an anti-dilutive effect. Potential common shares included in the
computation are not presented in the consolidated financial statements, as their
effect would be anti-dilutive.

                                        7
<PAGE>

The following table presents pro forma net loss and per share amounts as if the
fair value method had been applied to employee stock options and warrants
granted:


                                                     Nine Months Ended March 31,
                                                     --------------------------
                                                         2005         2004
                                                         ----         ----
Loss available to common shareholders, as reported   $(4,797,939)  $(4,082,636)


Add: Stock compensation expense to employees
     included in reported net loss, net of
     related tax effects                                      -              -

Deduct: Total stock compensation expense to employees
        expense determined under fair value based
        method for all awards, net of related tax
        effects                                         (148,967)     (173,853)
                                                     -----------   ------------
Pro forma loss available to common shareholders      $(4,946,906)  $(4,256,489)
                                                     ===========   ============
Loss per share:
Basic and diluted - as reported                      $     (0.11)  $     (0.13)
                                                     ===========   ============
Basic and diluted - pro forma                        $     (0.12)  $     (0.13)
                                                     ===========   ============


RESEARCH AND DEVELOPMENT
------------------------
Costs incurred for research and development activities are expensed as incurred.
No research and development expenses were incurred for the nine months ended
March 31, 2005 and 2004.

SOFTWARE 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
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.

                                        8
<PAGE>

     -    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 March 31, 2005, the net book value of capitalized software was $645,397.
Amortization expense for the nine months ended March 31, 2005 was $40,569.

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.

CONCENTRATIONS OF CREDIT RISK
-----------------------------
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 March 31, 2005, the
Company's cash balances exceeded the insured limits by $579,543. 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 March 31, 2005. The Company
maintains reserves for potential credit losses and such losses historically have
been within management's expectations.

ADVERTISING
-----------
Advertising is expensed as incurred. Advertising expenses for the nine months
ended March 31, 2005 and 2004 were $153,320 and $12,538, respectively.

RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------
In December 2004, the FASB issued SFAS 123 (revised 2004) "Share-Based Payment".
This Statement requires that the cost resulting from all share-based
transactions be recorded in the financial statements.  The Statement establishes
fair value as the measurement objective in accounting for share-based payment
arrangements and requires all entities to apply a fair-value-based measurement
in accounting for share-based payment transactions with employees. The Statement
also establishes fair value as the measurement objective for transactions in
which an entity acquires goods or services from non-employees in share-based
payment transactions.  The Statement replaces SFAS 123 "Accounting for
Stock-Based Compensation" and supersedes APB Opinion No. 25 "Accounting for
Stock Issued to Employees".  The provisions of this Statement will be effective
for the Company beginning with its fiscal year ending 2006.  The Company is
currently evaluating the impact this new Standard will have on its financial
position, results of operations or cash flows.

NOTE 3 - CONCENTRATIONS

During the nine months ended March 31, 2005, the Company's three largest
customers, Tire Kingdom, Carroll Tire and Amcor PET Packaging accounted for 37%,
12% and 17%, respectively, of the Company's revenue.  These three customers
accounted for 49% of the Company's accounts receivable as of March 31, 2005.

NOTE 4 - INTANGIBLE ASSETS

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 is to be 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 is being 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 the nine months ended March 31, 2005
of $75,336.

                                        9
<PAGE>

In March 2005, the Company allocated $45,626 of the purchase price for Commodity
Express Transportation, Inc. and $334,600 of the purchase price for GFC, Inc. to
intangible assets attributable to the customer lists of these businesses which
will be amortized over their estimated useful lives of 5 years. See Note 7 -
"Acquisitions" for further details of these transactions.

NOTE 5 - NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

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
$8,333.33 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. The Company
has recorded $100,000 of this obligation as current, and $100,000 as long term,
notes payable.

In the quarter ended March 31, 2005, the Company issued $352,500 of 10%
unsecured short-term promissory notes to four private lenders and a $30,000 5%
unsecured short-term promissory note to one other private lender. These notes
matured between April 3 and April 14. The Company recorded interest expense of
$5,452 related to these notes for the nine months ended March 31, 2005. See Note
7 - Subsequent Events for the disposition of these notes.

In October and November 2004, the Company issued two $55,000, 5% unsecured
promissory notes to two private investors. The maturity date of both of these
notes was January 3, 2005. In conjunction with the notes, the Company paid loan
fees totaling $10,000. The Company obtained waivers from both lenders as to the
repayment of principal and accrued interest on January 3, 2005 and their consent
to change the maturity date of the notes to April 3, 2005. The Company recorded
interest expense of $2,231 related to these notes for the nine months ended
March 31, 2005. See Note 7 - Subsequent Events for the disposition of these
notes.

The Company sold a total of $2,000,000 of Series B 5% secured convertible
debentures, $1,000,000 in June 2004 and $1,000,000 in September 2004, to Cornell
Capital Partners, LP. These debentures mature on the second anniversary of their
respective issue dates. The Company recorded interest expense of $257,185
related to these debentures for the nine months ended March 31, 2005.

In March and April 2004, the Company sold a total of $1,747,000 principal amount
of its secured convertible debentures. The interest rate of the debentures is
14.25% per annum and their maturity dates are March and April of 2007. The
Company recorded interest expense of $248,948 related to these debentures for
the nine months ended March 31, 2005. The Company paid the $124,473.75 December
2004 interest payment for these debentures using funds from its account
established pursuant to the security agreement with the debenture holders. Then,
pursuant to the security agreement, the Company replenished the account on
February 10, 2005.

On July 15, 2003, the Company issued a promissory note for $170,000 to a
software vendor for licenses to use certain logistics software. The note
replaced a prior note that the Company had issued to the software vendor for the
licenses, and accrued interest thereon, in the amount of $158,111 which became
the subject of a lawsuit and other disputed claims by various parties. The new
note bears no interest and 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
beginning on August 1, 2003 for a total of $140,000. The new note payable was
recorded at its face value of $170,000, the previous note and accrued interest
were written off and prepaid interest of $11,889 was recorded. A provision of
the new note states that if all required payments are made on or before their
applicable due dates, or within their permitted grace periods, the $30,000
remaining balance of the note will be waived. The Company expects to receive the
waiver in the quarter ending June 30, 2005 and to write off the note balance of
$30,000 against the prepaid interest, leaving a gain of $18,101. At March 31,
2005, the outstanding balance on the note was $35,000.

                                       10
<PAGE>

On March 6, 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 Company recorded interest expense of
$52,831 related to this note, including $42,331 of amortization of the discount.

NOTE 6 - STOCKHOLDERS' DEFICIT

PREFERRED STOCK
---------------

During the nine months ended March 31, 2005, the Company converted 10,000 shares
of Series C preferred stock into 1,000,000 shares of common stock for one
shareholder.

During the nine months ended March 31, 2005, the Company converted 29,800 shares
of Series B preferred stock into 596,000 shares of common stock for four
shareholders.

COMMON STOCK
------------
During the nine months ended March 31, 2005, the Company issued an aggregate of
18,795,396 shares of its common stock. This total issuance consisted of
12,219,000 shares sold to fifty-two investors pursuant to the Company's unit
offering for which it received $1,831,850 of net proceeds, 5,280,396 shares
issued to twenty-three individuals and entities as compensation valued at
$1,066,509 pursuant to various consulting and other types of agreements, 596,000
shares issued to four shareholders upon conversion of their Series B preferred
stock, 1,000,000 shares issued to one shareholder upon conversion of their
Series C preferred stock and the cancellation of 300,000 shares issued to one
consulting company. For the nine months ended March 31, 2005, the Company
recorded $338,000 in deferred compensation for the shares issued as compensation
pursuant to agreements, eliminated $208,410 in deferred compensation for the
cancelled shares and amortized $148,530 as consulting expenses.

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.

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), encourages, but does not require, companies to
record compensation cost for stock-based employee compensation plans at fair
value. The Company has chosen to account for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees", and related Interpretations.
Accordingly, compensation cost for stock options and warrants is measured as the
excess, if any, of the estimated fair value of the Company's stock at the date
of the grant over the amount an employee must pay to acquire the stock. The
Company has adopted the "disclosure only" alternative described in SFAS 123 and
SFAS 148, which require pro forma disclosures of net income and earnings per
share as if the fair value method of accounting had been applied.

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:

                                       11
<PAGE>

Weighted average:                                2005            2004
----------------                                 ----            ----
Dividend yield                                   None            None
Expected volatility factor                       83%             55%
Approximate risk free interest rates             4%              3%
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.

STOCK OPTIONS
-------------

A summary of the stock option activity is as follows:

                                          Weighted
                                          Average
                                          Exercise     Number     Exercise Price
                                           Price     of Options     Per Option
                                         --------    ----------     ----------
Outstanding options at June 30, 2004      $0.40      14,753,749    $0.31 - $1.01
Granted                                   $0.38       1,768,340        $0.38
Expired                                   $0.38         (13,242)       $0.38
Cancelled                                 $0.38        (221,755)       $0.38
                                                      ---------
Outstanding options at March 31, 2005     $0.40      16,287,092    $0.31 - $1.01
                                                      =========
Exercisable options at March 31, 2005     $0.39      14,531,252    $0.31 - $1.01
                                                      =========

The following table summarizes information concerning stock options outstanding
at March 31, 2005.

<TABLE>
<CAPTION>
                                               Weighted       Weighted
                                                average       average
                           Number of Options   remaining      exercise
Range of Exercise Price      Outstanding     life in years     price
------------------------     -----------     -------------     ------
<S>                              <C>              <C>           <C>
0.31 - 0.40                  14,879,316           1.71         $ 0.37
0.50 - 0.56                   1,107,776           0.54         $ 0.55
1.01                            300,000           2.54         $ 1.01
                             -----------
                             16,287,092
                             ==========
</TABLE>

The following table summarizes information concerning stock options exercisable
at March 31, 2005.

<TABLE>
<CAPTION>
                                               Weighted
                                                average
                                               exercise
Range of Exercise Price     Number of Options    price
------------------------    -----------------    ------
<S>                                <C>            <C>
0.31 - 0.40                     13,298,476       $ 0.37
0.50 - 0.56                      1,082,776       $ 0.55
    1.01                           150,000       $ 1.01
                            -----------------
                                14,531,252
                            =================
</TABLE>

                                       12
<PAGE>

WARRANTS
--------

A summary of the warrant activity is as follows:

                                          Weighted
                                          Average
                                          Exercise Number of   Exercise Price
                                            Price   Warrants    Per Warrant
                                          -------   --------    -----------
Outstanding warrants at June 30, 2004      $0.73    8,271,039  $0.38 - $2.00
Granted                                    $0.17   16,271,047  $0.15 - $0.50
Cancelled                                  $0.75     (498,625)     $0.75
Expired                                    $0.79   (2,391,191) $0.75 - $1.13
                                                   ----------
Outstanding warrants at March 31, 2005     $0.31   21,652,270  $0.15 - $2.00
                                                   ==========
Exercisable warrants at March 31, 2005     $0.30   20,542,270  $0.15 - $2.00
                                                   ==========

The following table summarizes information concerning warrants outstanding at
March 31, 2005:

<TABLE>
<CAPTION>
                                                 Weighted  Weighted
                                                 average    average
                                                remaining   exercise
Range of Exercise Price   Number of Warrants  Life in years  price
------------------------  ------------------  -------------  ------
<S>                       <C>                 <C>            <C>
0.15  -  0.80                 20,593,154           2.63      $ 0.26
1.00  -  1.30                    791,600           1.41      $ 1.05
1.50  -  2.00                    267,516           1.11      $ 1.81
                          ------------------
                              21,652,270
                          ==================
</TABLE>



The following table summarizes information concerning warrants exercisable at
March 31, 2005:

<TABLE>
<CAPTION>
                                              Weighted
                                              average
                                             exercise
Range of Exercise Price   Number of Warrants  price
------------------------  ------------------  ------
<S>                       <C>                 <C>
     0.15  -  0.80           19,483,154       $ 0.26
     1.00  -  1.30              791,600       $ 1.05
     1.50  -  2.00              267,516       $ 1.81
                          ------------------
                             20,542,270
                          ==================
</TABLE>



NOTE 7 - ACQUISITIONS

In March 2005 we purchased certain assets, including customer lists, back-shop
equipment, office equipment, telecommunications equipment, certain contracts,
five vehicle/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 4
"Intangible Assets" for further details related to the allocation of the
purchase price. In addition, we 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 agreed to replace additional letters of credit totaling
approximately $20,000 on or before June 10, 2005. We 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,
we entered into a(n):

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

                                       13
<PAGE>

     -     commercial lease pursuant to which we 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 we will pay 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 we agreed to pay 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 we have deposited all the shares
of Commodity Express Transportation into an escrow account until March 21, 2007
during which period we retain voting rights over these securities expect in the
event of a default under the escrow agreement, which would occur if the net
worth of Commodity Express Transportation drops below certain levels or if we
are delinquent in our payments under the equipment or commercial lease
agreements, consulting agreement or agreement with TPS Logistics, Inc. described
above, the seller would have the right to assume control of Commodity Express
Transportation until such default has been cured; and

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

In March 2005, we 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 will 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.

Also, in conjunction with this transaction, we entered into a five year
consulting agreement with automatic one-year extensions unless terminated prior
thereto, with Michael Allora, the former president of GFC. 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.

The following Pro Forma Combined Financial Statements of Power2Ship, Inc.,
Commodity Express Transportation, Inc. and Power2Ship Intermodal, Inc. give
effect to the acquisitions of certain assets of Commodity Express
Transportation, Inc. and Power2Ship Intermodal, Inc. under the purchase method
of accounting prescribed by Accounting Principles Board Opinion No. 16, Business
Combinations, as if they had occurred on July 1, 2003. These pro forma
statements are presented for illustrative purposes only. The pro forma
adjustments are based upon available information and assumptions that management
believes are reasonable.

                                       14
<PAGE>

<TABLE>
<CAPTION>

Pro Forma Combined Statement of Operations for the Nine Months Ended March 31, 2005


                                                                Commodity     Power2Ship   Pro Forma
                                                  Power2Ship     Express      Intermodal   Adjustments    Pro Forma
                                                 ------------  ------------  ------------  ------------  ------------
<S>                                              <C>           <C>           <C>           <C>           <C>
Revenue:
Freight transportation                           $ 2,941,169   $11,865,993   $ 4,117,692   $          -  $18,924,854
Access services                                          180             -             -              -          180
Implementation services                                    -             -             -              -            -
                                                 ------------  ------------  ------------  ------------  ------------

       Total revenue                               2,941,349    11,865,993     4,117,692              -   18,925,034

Operating expenses:
   Freight transportation                          2,517,682     7,353,481     3,441,909              -   13,313,072
   Selling, general and administrative:                    -
      Salaries, benefits and consulting fees       2,989,219     1,668,503       201,705              -    4,859,427
      Other selling, general and administrative    1,300,437     2,631,660       403,501              -    4,335,598
                                                 ------------  ------------  ------------  ------------  ------------

       Total operating expenses                    6,807,338    11,653,644     4,047,115              -   22,508,097
                                                 ------------  ------------  ------------  ------------  ------------

       Profit (loss) from operations              (3,865,989)      212,349        70,577              -   (3,583,063)
                                                 ------------  ------------  ------------  ------------  ------------

Other income (expense):
   Litigation settlement                                   -             -             -              -            -
   Interest income                                        28             -             -              -           28
   Interest expense                                 (932,992)     (182,550)      (73,805)             -   (1,189,347)
   Other income                                        1,014             -             -              -        1,014
                                                 ------------  ------------  ------------  ------------  ------------

       Total other expense                          (931,950)     (182,550)      (73,805)             -   (1,188,305)
                                                 ------------  ------------  ------------  ------------  ------------

Profit (loss) available to common shareholders   $(4,797,939)  $    29,799   $    (3,228)  $          -  $(4,771,368)
                                                 ============  ============  ============  ============  ============
</TABLE>

                                       15
<PAGE>

<TABLE>
<CAPTION>

Pro  Forma  Combined Statement of Operations For The Nine Months Ended March 31, 2004:

                                                                Commodity     Power2Ship    Pro Forma
                                                  Power2Ship     Express      Intermodal   Adjustments    Pro Forma
                                                 ------------  ------------  ------------  ------------  ------------
<S>                                                  <C>           <C>           <C>           <C>           <C>
Revenue:
Freight transportation                           $ 1,052,326   $11,867,598   $ 2,574,316   $          -  $15,494,240
Access services                                      290,012             -             -              -      290,012
Implementation services                               23,925             -             -              -       23,925
                                                 ------------  ------------  ------------  ------------  ------------
                                                           -             -             -              -
       Total revenue                               1,366,263    11,867,598     2,574,316              -   15,808,177

Operating expenses:
   Freight transportation                            928,425     7,353,481     2,013,244              -   10,295,150
   Selling, general and administrative:
      Salaries, benefits and consulting fees       2,154,487     1,668,503       250,770              -    4,073,760
      Other selling, general and administrative      785,667     2,631,660       230,406              -    3,647,733
                                                 ------------  ------------  ------------  ------------  ------------

       Total operating expenses                    3,868,579    11,653,644     2,494,420              -   18,016,643
                                                 ------------  ------------  ------------  ------------  ------------

       Profit (loss) from operations              (2,502,316)      213,954        79,896              -   (2,208,466)
                                                 ------------  ------------  ------------  ------------  ------------

Other income (expense):
   Litigation settlement                             (27,968)            -             -              -      (27,968)
   Interest income                                       846             -             -              -          846
   Interest expense                                 (290,726)     (182,550)      (41,678)             -     (514,954)
   Other income                                            -             -             -              -            -
                                                 ------------  ------------  ------------  ------------  ------------

       Total other expense                          (317,848)     (182,550)      (41,678)             -     (542,076)
                                                 ------------  ------------  ------------  ------------  ------------

Profit (loss) available to common shareholders   $(2,820,164)  $    31,404   $    38,218   $          -  $(2,750,542)
                                                 ============  ============  ============  ============  ============
</TABLE>

NOTE 8 - SUBSEQUENT EVENTS

During the period from April 1, 2005 through the filing of this report, the
Company:

     -    sold 4,276,667 shares of common stock and warrants to purchase
          4,276,667 shares of common stock for $0.15 per share until February
          28, 2008 to seventeen investors pursuant to the Company's unit
          offering and received proceeds of $279,000 and the forgiveness of
          $362,500 of short term promissory notes by six private lenders


     -    granted stock options to purchase an aggregate of 3,717,164 shares of
          its common stock with an exercise price of $0.25 per share and an
          expiration date of May 2, 2008 to four individuals including Richard
          Hersh, its Chief Executive Officer and Chairman of its board of
          Directors, Michael Darden, its President and member of its board of
          its board of directors, John Urbanowicz, its Vice President of
          Information Technology and Brett Kublin, a member of its board of
          directors

     -    granted a warrant to purchase 500,000 shares of its common stock with
          an exercise price of $0.25 per share and an expiration date of May 2,
          2008 to a consulting company, the principal of which is a member of
          the boards of directors of Power2Ship Holdings, Inc., a wholly owned
          subsidiary of the Company, Commodity Express Transportation, Inc.,
          Power2Ship Intermodal, Inc., and Commodity Express Brokerage, Inc.

     -    granted a warrant to purchase 350,000 shares of its common stock with
          an exercise price of $0.15 per share and an expiration date of
          February 2, 2008 to a consultant

                                       16
<PAGE>

     -    obtained a waiver from one private lender as to the repayment of
          $30,000 of principal and accrued interest on April 10, 2005 and their
          consent to extend the maturity date of the note for sixty days until
          June 9, 2005

     -    granted 1,250,000 shares of common stock and a warrant to purchase
          1,250,000 shares of common stock for $0.50 per share until May 17,
          2008 to a consultant to provide the Company's executive with various
          financial and transactional advice

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.
For accounting purposes, our merger with Freight Rate, Inc. was treated as a
recapitalization of Freight Rate, Inc. and accounted for as a reverse
acquisition.  Therefore, the financial statements and accompanying notes thereto
included elsewhere in this report reflect the assets, liabilities and operations
of Freight Rate, Inc. as if it had been the reporting entity since inception. In
February 2004 we changed our fiscal year from May 31 to June 30 in order to
align our quarterly reporting obligations with calendar quarters.

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.

                                       17
<PAGE>

     -     Stock Based Compensation. The Company uses SFAS No. 123, "Accounting
           ------------------------
for Stock-Based Compensation," which permits entities to recognize as expense
over the vesting period the fair value of all stock-based awards on the date of
grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the
provision of APB Opinion No. 25 and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants as if the
fair-value-based method defined in SFAS No. 123 has been applied. The Company
has elected to continue to apply the provisions of APB Opinion No. 25 and
provide the pro forma disclosure provisions of SFAS No. 123 and SFAS No. 148.

OVERVIEW

     We operate as an application service provider that delivers supply chain,
tracking and logistics information to the freight industry.  We provide
logistics information and services to shippers that need to have truckloads of
goods transported to or from their facilities.  In certain instances, we provide
consulting services to enable our shipper customers to integrate their systems
with our logistics information system. We also provide logistics information and
services to trucking companies (carriers) that operate fleets of trucks which
enable these companies to manage the utilization of their transportation assets
and personnel.  Our mission is to provide our shipper and carrier members with
easily accessible and useful information that allows them to be more profitable
by improving the utilization of transportation assets and optimizing the
efficiency of the supply chain.

     We began providing our freight transportation and implementation services
in October 2002 and we began providing logistics information access services in
March 2003.  A key component of our business model is building our customer base
so that we have a sufficient number of shippers and carriers utilizing our
Web-based P2S MobileMarket(TM) system so that when a shipper customer wants to
move a load of freight we can offer one or more carriers with available trucks
and trailers that meet their criteria.  We have been able to increase the number
of shipper customers from whom we generated revenue from eight at March 31, 2004
to 27 at March 31, 2005. We have entered into agreements to provide
transportation services with some of our shipper customers including
International Paper, Nestle Waters, Tyco International, Ltd., Tofutti Brands,
Luckey Logistics, Gold Coast Freightways, Associated Grocers, Caruso Foods,
Compass Roadmaster, Paper Pak and Valmont Industries. We can provide no
assurance, however, as to the amount of revenue, if any, we will generate from
such customers, since these agreements do not commit them to using us for any
specific volume of transportation services.

     We are presently able to identify available capacity among our carrier
customers to move only a very small percentage of these loads.  Given the tens
of thousand of transportation routes in the U.S., in order to have the P2S
MobileMarket(TM) be successful we must substantially increase the number of our
carrier customers in order to capture a greater percentage of our shipper
customer's inbound and outbound transportation business.  We spent $106,534 in
the nine months ended March 31, 2005 compared to $12,165 in the nine months
ended March 31,  2004 in marketing our services to potential carriers and
shippers.  As of March 31, 2005, approximately 2,095 carriers had registered on
our website to become members. Of the 2,095 carriers that are currently
registered to participate in our MobileMarket(TM), approximately 1,907 have
entered into carrier agreements with us. We have used approximately 496 of these
carriers to transport freight for our shipper customers. We intend to continue
to increase our marketing efforts during fiscal 2005, including utilizing trade
publications, transportation industry websites and direct mail as well as
company participation in industry trade shows and trade organizations.

     Our business model also includes the pursuit of mergers, acquisitions and
joint ventures of strategic, trucking companies and other transportation-related
providers. These transactions result in our gaining additional trucking capacity
for our existing shipper customers without incurring any additional marketing
expense and obtaining new shipper customers. In addition, the acquisition of
Commodity Express Transportation, Inc., which has the federal operating
authorities required to operate as a trucking company, enables us to recruit
truck owner-operators to increase our trucking capacity. During the quarter
ended March 31, 2005, we consummated the acquisitions of Commodity Express
Transportation, Inc. and GFC, Inc. as described in Note 7 to the financial
statements in this Form 10-QSB and in Forms 8-K filed on March 25, 2005 and
March 28, 2005. Our ability to pursue additional transactions is subject to the
availability of sufficient capital as may be necessary. While we have identified
potential targets for additional mergers, acquisitions or joint ventures, we
have not signed any definitive agreements with any parties as of the date of
this report and we cannot assure you we will be successful in consummating any
transactions with any of these targets.

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     We also are in discussions with several technology and defense companies
that, in response to the Homeland Security Act and Operation Safe Commerce, are
collaborating to develop solutions that address global transportation security
issues.  We believe that our secure, wireless, Internet-based system which uses
a combination of global positioning satellite technologies can become a key
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 could be
part of any comprehensive security system.  Examples of these technologies may
include radio-frequency identification (RFID) tags fastened to containers and/or
trailers, smart tags affixed to the goods inside shipping containers, electronic
seals applied at the time the container is loaded and geo fencing to alert a
truck's owner or authorities if a vehicle deviates from its designated route.
There can be no assurances, however, that we will ever enter into any agreements
with the companies we are in discussions with or that we will ever generate any
significant revenues.

     Also, we have begun marketing the P2S MobileMarket(TM) outside of the
United States. In November 2004, we retained International Logistics Solutions
to represent the company outside of North America. In April, 2005, our
President, Michael Darden, traveled to Brazil to attend meetings with several
major Brazilian companies to educate them about the P2S MobileMarket(TM) and
explore their interest in becoming customers if it was introduced in Brazil.

RESULTS OF OPERATIONS

NINE MONTHS ENDED MARCH 31, 2005 COMPARED TO NINE MONTHS ENDED MARCH 31, 2004

REVENUE

     Total revenue generated during the nine months ended March 31, 2005
increased by $1,575,086 or approximately 115% as compared with total revenue
generated during the nine months ended March 31, 2004. The increase during the
nine month period ended March 31, 2005 was attributed to the following:

     -    Freight transportation revenue increased $1,888,843 or approximately
          179%. Approximately $777,545 or 41% of this increase was generated by
          Commodity Express Transportation, Inc. (CXT) and Power2Ship
          Intermodal, Inc. (P2SI), our two acquisitions that closed on March 21,
          2005. The remainder of the increase was attributed to $1,111,478 or
          105% greater revenue generated by our pre-acquisition Power2Ship
          operations as a result of growth of revenue from existing customers
          such as Tire Kingdom and Carroll Tire and additional revenue from
          several new shipper customers.

     -    Revenue from access services and implementation services decreased
          approximately $314,000 or 100%. We generated minimal revenue from
          access services and implementation services during the nine month
          period ended March 31, 2005 as our sole contract for such services was
          terminated in January 2004. Access services provide unlimited use of
          the information available through the Power2Ship MobileMarket(TM) for
          a fixed monthly fee. Implementation services generally involve
          software development related to the design, programming and testing of
          a custom developed interface to the Power2Ship MobileMarket(TM).

OPERATING EXPENSES

     Total operating expenses incurred during the nine months ended March 31,
2005 increased by $2,938,759 or approximately 76% compared to the nine month
period ended March 31, 2004. The increase during the nine month period ended
March 31, 2005 was attributed to the following:

     -    Freight transportation expense, consisting of charges from trucking
          companies that we hired to transport freight for our shipper
          customers, increased by $1,589,257 or approximately 171% in the nine
          month period ended March 31, 2005 as compared with the nine month
          period ended March 31, 2004. This percentage increase in freight
          transportation expense was relatively close to the 179% increase in
          revenue which indicates that our gross margins were relatively
          constant during the period.

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<PAGE>

     -    Selling, general and administrative expenses increased by $1,349,502
          or approximately 46% during the nine month period ended March 31, 2005
          compared to the nine month period ended March 31, 2004. The increase
          during the nine month period ended March 31, 2005 was attributed to
          the following:

          -    Salaries, benefits and consulting fees increased by $824,732 or
               approximately 38% during the nine months ended March 31, 2005 as
               follows:

               -    Salaries and benefits increased by $326,282 or approximately
                    30% to $1,396,416 in the nine month period ended March 31,
                    2005 from $1,070,134 during the nine month period ended
                    March 31, 2004. This increase can be attributed to adding
                    several employees, providing salary raises and incurring
                    approximately $72,400 in salaries and benefits for CXT and
                    P2SI employees for the period following their acquisition on
                    March 21, 2005.

               -    Consulting fees increased by $498,450 or approximately 46%
                    in the nine month period ended March 31, 2005 to $1,592,803
                    from $1,094,353 during the nine month period ended March 31,
                    2004. This increase was attributed to more consultants
                    receiving greater compensation, primarily in the forms of
                    common stock and warrants.

     -    Other selling, general and administrative expenses increased by
          $524,770 or approximately 68% during the nine month period ended March
          31, 2005 as compared to the nine month period ended March 31, 2004.
          The most significant contributors to this increase were:

          -    Advertising and marketing expenses, including convention and
               trade show expenses, which increased by $138,249 or approximately
               265% to $190,447 during the nine months ended March 31, 2005 from
               $52,198 during the nine month period ended March 31, 2004. This
               increase was attributed to the expenses associated with an
               outside public relations firm, advertising our products and
               services to shippers and carriers in trade publications,
               transportation industry websites and other media and attending
               regional and national trade shows.

          -    Amortization expenses associated with software development costs
               and intangible assets which increased by $88,808 or approximately
               328% to $115,905 during the nine month period ended March 31,
               2005 from $27,097 during the nine month period ended March 31,
               2004. The increase was due to an increase in monthly amortization
               of software development costs from $1,500 to $4,500 in December
               2003 and an increase from $0 to approximately $9,400 in monthly
               amortization of intangible assets beginning in August 2004 upon
               the Company acquiring certain intellectual property from three of
               its executives in consideration for common stock valued at
               $226,000.

          -    Web hosting expenses which increased by $69,671 or approximately
               152% to $115,361 during the nine months ended March 31, 2005 from
               $45,690 during the nine month period ended March 31, 2004. This
               increase was a result of incurring additional monthly fees
               associated with software licenses in the nine months ended March
               31, 2005 and a one-time credit of $30,982 from our Web hosting
               vendor received in the nine months ended March 31, 2004 as
               restitution for service problems we encountered.

          -    Legal fees and expenses which increased by $46,238 or
               approximately 34% to $180,385 during the nine month period ended
               March 31, 2005 from $134,147 during the nine month period ended
               March 31, 2004. This increase resulted from our requiring a
               greater amount of legal services to prepare and review agreements
               and other documents incurred in the ordinary course of business
               including our required public filings, customer contracts and
               securities offerings and to represent us in various legal
               proceedings. In addition, we incurred significant legal expenses
               during the nine months ended March 31, 2005 related to the
               preparation of our registration statement on Form SB-2 and
               amendments thereto which subsequently was withdrawn.

                                       20
<PAGE>

          -    Rent expense, including our share of common area maintenance
               fees, increased by $45,607 or approximately 48% to $139,885
               during the nine month period ended March 31, 2005 from $94,278
               during the nine month period ended March 31, 2004. This increase
               was a result of a scheduled increase in rent per the lease
               agreement.

          -    Other selling, general and administrative expenses of
               approximately $89,920 incurred by CXT and P2SI for the period
               following their acquisition on March 21, 2005.

OTHER INCOME (EXPENSES)

     Total other expenses increased by $614,102 or approximately 193% during the
nine month period ended March 31, 2005 as compared with the nine month period
ended March 31, 2004. This increase primarily resulted from an increase in
interest expense of $642,266 or approximately 221%. The higher interest expense
was associated with the increase in our long term debt associated with our
issuances of $1,747,000 of 14.25% secured convertible debentures during March
and April of 2004 and $2,000,000 of 5% Series B secured convertible debentures
during June and September of 2004, the issuances of $110,000 of 5% unsecured
short term promissory notes in October and November 2004 and $482,500 of 10%
unsecured short term promissory notes in January and February 2005. In addition,
interest expense increased due to our $1,000,000 revolving line of credit
beginning in December 2004 and the amortization of deferred financing costs of
$303,491 and discounts on notes payable of $68,211 during the nine months ended
March 31, 2005.

LIQUIDITY AND CAPITAL RESOURCES

     We have experienced losses and negative cash flows from operations since
our inception, and our independent auditors' report on our financial statements
for fiscal year 2004 contains an explanatory paragraph regarding our ability to
continue as a going concern.  As of March 31, 2005, we had an accumulated
deficit of $17,208,712, a stockholders' deficit of $1,573,479, and cash and cash
equivalents of $887,543.

     At March 31, 2005, we had a working capital deficit of $135,502 as compared
with a working capital surplus of $603,380 at June 30, 2004. This $738,882
decrease in working capital during this nine month period was attributed to an
increase of $560,863 in current assets offset by an increase of $1,299,745 in
current liabilities.  The increase in current assets consisted of increases in
cash of $55,413 and accounts receivable of $542,480 partially offset by a
decrease in prepaid insurance of $37,030. The increase in current liabilities
consisted of increases in short term notes payable of $567,500, accounts payable
and accrued expenses of $530,890, accrued salaries of $72,491 and an increase of
$145,731 in the outstanding balance of our line of credit.

     During the nine months ended March 31, 2005, our cash balance increased by
$55,413. This increase was the result of $3,284,776 provided by financing
activities offset by $2,644,426 used in operating activities and $584,937 used
in investing activities. This compared with an increase in our cash balance of
$461,209 during the nine months ended March 31, 2004 as a result of $2,271,067
provided by financing activities offset by $1,499,028 used in operating
activities and $310,830 used in investing activities.

     During the nine months ended March 31, 2005, we used $2,644,426 in
operating activities which was comprised of our net loss of $4,797,939 and
$112,849 associated with changes in operating assets and liabilities during the
nine month period offset by $674,670 of depreciation and amortization and
$1,591,691 associated with issuances of our common stock, options and warrants
as payment for services, interest, compensation and conversions. This compared
with $1,499,028 used in operating activities during the nine months ended March
31, 2004 which was comprised of our net loss of $2,820,164 offset by $99,334 of
depreciation and amortization, $1,045,675 associated with the issuance of our
common stock, options and warrants for services, interest, compensation,
conversions and litigation settlement and $176,127 associated with changes in
operating assets and liabilities during the nine month period.

     The $584,937 cash used in investing activities during the nine months ended
March 31, 2005 consisted of $316,435 used to purchase property and equipment,
including $110,000 for GPS devices and $156,000 associated with the acquired
assets of Commodity Express Transportation, and $268,502 used in the development
of internal use software. This compared with $310,830 used in investing
activities during the nine months ended March 31, 2004 which consisted of
$58,054 used to purchase property and equipment and $252,776 used in the
development of internal use software

                                       21
<PAGE>

     During the nine months ended March 31, 2005, we generated net cash from
financing activities of $3,284,776 which consisted of net proceeds of $1,831,850
from the issuance of common stock, $900,000 from the issuance of a Series B
secured convertible debenture, $642,500 from the issuance of short term
unsecured promissory notes and $105,426 from our revolving line of credit less
$195,000 from the repayment of promissory notes. This compared with net cash
provided by financing activities of $2,271,067 during the nine months ended
March 31, 2004 which consisted of net proceeds of $1,257,929 from the issuance
of shares of our 14.25% secured convertible debentures and promissory notes,
$1,110,960 from the sales of shares of our Series B and Series C convertible
preferred stock, $287,178 from the sales of shares of our common stock less
$385,000 from the repayment of promissory notes.

     We estimate that our $887,543 of cash on hand at March 31, 2005 plus
$251,100 in net proceeds received pursuant to our unit offering from April 1
through May 20, 2005 and additional borrowings from our $1,000,000 credit
facility will be sufficient to fund our operating activities until approximately
July 31, 2005.  Thereafter, we will need additional working capital to fund our
operations.

     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 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 the Report, being March 31, 2005, 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 significant
changes in our company's internal controls or in other factors, which could
significantly affect internal control subsequent to the date we carried out our
evaluation.

     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 as appropriate, to allow timely decisions regarding required
disclosure.

                                       22
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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     On April 19, 2005, the Company received a complaint filed on April 14, 2005
in the circuit court of the 15th Judicial Circuit for Palm Beach County, Florida
(Palm Beach Media Associates, Inc. v. Power2Ship, Inc., Case No. 502005 CA
003494). The complaint alleges that the Company had breached an agreement
entered into between the Company and the plaintiff on June 4, 2004, a Florida
corporation that provides advertising and marketing services, by virtue of
having not paid certain fees claimed by the plaintiff. The Company filed its
answer and affirmative defenses to this complaint on May 16, 2005.

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

     During the three months ended March 31, 2005, the Company sold an aggregate
of 17,142,253 shares of common stock. This total consisted of 12,219,000 shares
sold to fifty-two investors for $1,832,852 pursuant to the Company's unit
offering, 3,923,252 shares issued to twelve individuals and entities as
compensation pursuant to various consulting and other types of agreements with
them and 1,000,000 shares issued to one shareholder upon conversion of their
10,000 shares of Series C convertible preferred stock.

The 12,219,000 shares issued pursuant to our unit offering were sold either
through Clayton, Dunning & Company, Inc., a member firm of the National
Association of Securities Dealers, Inc., who received a ten percent (10%) sales
commission on all units sold by them, as well as through the Company's officers,
who received no sales commissions, in private transactions exempt from
registration under the Securities Act in reliance on Rule 506 of Regulation D.
No general solicitation or advertising was used in connection with this
offering, and the certificates evidencing the shares 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 had access to business and financial information concerning our
company.  Each purchaser represented that they were acquiring the shares for
investment purposes only, and not with a view towards distribution or resale
except in compliance with applicable securities laws.

The 3,923,252 shares issued as compensation pursuant to agreements were recorded
at their fair market value of $1,138,709 of which 650,000 shares valued at
$202,500 were recorded as deferred compensation and will be expensed over the
terms of their respective agreements. Inasmuch as these consultants were
sophisticated investors, could bear the economic risk of the common stock and
had access to applicable information pertaining to the Company, the transactions
were deemed to be exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     None.

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

     None.

ITEM 5. OTHER INFORMATION

     None.

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ITEM 6. EXHIBITS

         10.38  Form of Warrant from 2005 Unit Offering

         31.1   Certification of Chief  Executive Officer pursuant to Section
                302 of the Sarbanes-Oxley Act of 2002.

         31.2   Certification of Chief Financial Officer pursuant to Section 302
                of the Sarbanes-Oxley Act of 2002.

         32.1   Certification of Chief Executive Officer and Chief Financial
                Officer Pursuant to 18 U.S.C. Section 1350.


                                       24
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                                    SIGNATURE

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:  May 23, 2005
                                         POWER2SHIP, INC.

                                         By:  /s/ Richard Hersh
                                              -----------------
                                              Richard Hersh
                                              Chief Executive Officer,
                                              principal executive officer
                                              and principal financial and
                                              accounting officers

                                       25
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