3
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                   FORM 10-QSB
(MARK ONE)

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

                         FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004
                                       OR

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

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

                         Commission File Number 0-25753
                               -------------------

                                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, FLORIDA33487-2802
  (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 November 12, 2004, the number
of outstanding shares of the issuer's common stock was 39,591,289.

     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, September 30, 2004                    4

         Consolidated Statements of Operations, Three Months Ended
            September 30, 2004 and 2003                                    5

         Consolidated Statements of Cash Flows, Three Months Ended
            September 30, 2004 and 2003                                    6

         Selected Notes to Consolidated Financial Statements for
           the Quarterly Period Ended September 30, 2004                   7

Item 2.  Management's Discussion and Analysis or Plan of Operation        14

Item 3.  Controls and Procedures                                          20

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                21

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds      21

Item 3.  Defaults Upon Senior Securities                                  21

Item 4.  Submission of Matters to a Vote of Security Holders              21

Item 5.  Other Information                                                21

Item 6.  Exhibits                                                         21


<PAGE>

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

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

<TABLE>
<CAPTION>

                         POWER2SHIP, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2004
                                   (UNAUDITED)


<S>                                                               <C>
ASSETS
Current assets:
   Cash and cash equivalents                                      $    528,756
   Receivables, net of allowance of $2,963                             468,743
   Prepaid insurance                                                    37,339
                                                                  -------------
        Total current assets                                         1,034,838

Furniture and equipment                                                367,911
     Less: accumulated depreciation                                    (85,355)
                                                                  -------------
        Net furniture and equipment                                    282,556

Deferred financing costs                                               775,528
Intangible asset, net of accumulated amortization of $18,834           207,166
Restricted cash for interest on debentures                             124,474
Other assets                                                            50,682
                                                                  -------------

Total assets                                                      $  2,475,244
                                                                  =============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
   Notes payable - short term                                     $     60,000
   Accounts payable                                                    133,610
   Accrued expenses                                                    253,212
   Accrued salaries                                                     59,713
                                                                  -------------
       Total current liabilities                                       506,535

Long term debt:
Long term notes payable                                                  5,000
Convertible notes payable less discount of $178,143                  3,743,857
Convertible note payable to related party                              115,000

Stockholders' deficit :
Preferred stock, $.01 par value, 1,000,000 authorized:
   Series B convertible preferred stock, $.01 par value, 200,000
      shares authorized; 198,000  shares issued and outstanding          1,980
   Series C convertible preferred stock, $.01 par value, 20,000
      shares authorized; 10,832 shares issued and outstanding              108
   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; 38,855,289 shares issued and outstanding              38,855
   Additional paid-in capital                                       12,118,388
   Accumulated deficit                                             (14,055,349)
                                                                  -------------

       Total stockholders' deficit                                  (1,895,148)
                                                                  -------------

Total liabilities and stockholders' deficit                       $  2,475,244
                                                                  =============
</TABLE>


                             See accompanying notes
                                        4

<PAGE>

<TABLE>
<CAPTION>

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

                                                                Three months ended
                                                   ------------------------------------------
                                                    September 30, 2004    September 30, 2003
                                                   --------------------  --------------------
<S>                                                <C>                   <C>
Revenue:
  Freight transportation                           $           730,726   $           334,652
  Access services                                                    -               105,000
                                                   --------------------  --------------------

       Total revenue                                           730,726               439,652

Operating expenses:
   Freight transportation                                      651,772               295,796
   Selling, general and administrative:
        Salaries, benefits and consulting fees                 614,814               671,429
        Other selling, general and administrative              406,941               304,627
   Research and development                                     87,188                76,441
                                                   --------------------  --------------------

       Total operating expenses                              1,760,715             1,348,293
                                                   --------------------  --------------------

       Loss from operations                                 (1,029,989)             (908,641)
                                                   --------------------  --------------------

Other income (expense):
   Interest income                                                   9                   353
   Interest expense                                           (197,132)              (85,731)
   Other income                                                      -                    50
                                                   --------------------  --------------------

       Total other expense                                    (197,123)              (85,328)
                                                   --------------------  --------------------

Net loss                                           $        (1,227,112)  $          (993,969)
                                                   ====================  ====================


Loss per share-basic and diluted                   $             (0.03)  $             (0.04)
                                                   ====================  ====================

Weighted average shares outstanding
      - basic and diluted                                   38,668,813            27,570,670
                                                   ====================  ====================
</TABLE>


                             See accompanying notes
                                        5

<PAGE>

<TABLE>
<CAPTION>

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

                                                                                    Three months ended
                                                                        ------------------------------------------
                                                                         September 30, 2004    September 30, 2003
                                                                        --------------------  --------------------
<S>                                                                     <C>                   <C>
Cash flows from operating activities:
   Net loss                                                             $        (1,227,112)  $          (993,969)
   Adjustments to reconcile net loss to
      net cash used in operating activities:
        Depreciation                                                                 12,555                 9,059
        Amortization of intangible asset                                             18,834                     -
        Amortization of deferred financing costs                                     91,081                     -
        Amortization of discount on notes payable                                    22,737                     -
        Issuance of stock options and warrants
          for services and conversion                                                22,841                36,064
        Issuance of stock for services and interest                                 108,799               271,158
        Changes in operating assets and liabilities:
            (Increase) decrease in receivables                                     (149,654)              118,162
            Decrease in prepaid insurance                                            21,700                 9,624
            Decrease in other assets                                                      -                 2,000
            Decrease in accounts payable and accrued expenses                      (100,343)             (136,871)
                                                                        --------------------  --------------------

               Net cash used in operating activities                             (1,178,562)             (684,773)
                                                                        --------------------  --------------------

Cash flows from investing activities:
   Purchases of property and equipment                                               (9,812)              (12,041)
                                                                        --------------------  --------------------

               Net cash used in investing activities                                 (9,812)              (12,041)
                                                                        --------------------  --------------------

Cash flows from financing activities:
   Proceeds from convertible promissory notes net of costs of $100,000
      and $0, respectively                                                          900,000                     -
   Repayments of promissory notes                                                   (15,000)             (145,000)
   Repayments of promissory notes - related party                                         -               (20,000)
   Proceeds from sale of preferred stock net of costs of $30,000
      and $0, respectively                                                                -               981,500
   Proceeds from sale of common stock net of costs of $0
      and $201,428, respectively                                                          -               121,477
                                                                        --------------------  --------------------

               Net cash provided by financing activities                            885,000               937,977
                                                                        --------------------  --------------------

               Net increase (decrease) in cash and cash equivalents                (303,374)              241,163

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

Cash and cash equivalents, end of period                                $           528,756   $           304,481
                                                                        ====================  ====================

Supplemental disclosure of cash flow information:

   Cash paid for interest during the period                             $                 -   $                 -
                                                                        ====================  ====================

   Cash paid for income taxes during the period                         $                 -   $                 -
                                                                        ====================  ====================
</TABLE>


                             See accompanying notes
                                        6

<PAGE>

                         POWER2SHIP, INC. AND SUBSIDIARY

                   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 and is
currently its sole operating entity. The Company's patent pending system
delivers supply chain, tracking and other logistics information to freight
carriers (currently trucking companies), shippers (companies sending or
receiving freight) and their customers. This information, which is accessible
through the Company's password-protected, web-based MobileMarket(TM), enables
users to make better-informed, cost-effective logistics decisions.

The Company is licensed by the United States Department of Transportation to
arrange for the transportation of freight (except household goods) by motor
vehicle. Since October 2002 the Company's primary source of revenue has been
derived by providing freight transportation for its shipper customers using
various independent carriers located throughout the United States. In addition,
the Company's MobileMarket(TM) system keeps track of the freight while it is in
transit which assists 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 tracks the location, destination and availability of their
transportation equipment. In addition to helping better manage the utilization
of their assets and drivers, information about available transportation
equipment that meets a shipper's requirements automatically is offered to
shippers through the MobileMarket(TM). In most instances, the Company will
generate revenue when a shipper selects a carrier through the MobileMarket(TM)
to move its freight.

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.

The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
as would be included in audited financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The results of operations
for the three-month period ended September 30, 2004 are not necessarily
indicative of the results to be expected for the year ended June 30, 2005. The
interim financial statements should be read in conjunction with the audited
financial statements and notes contained in the Company's Annual Report on Form
10-KSB for the year ended June 30, 2004.

The accompanying consolidated financial statements are prepared assuming the
Company will continue as a going concern. During the three months ended
September 30, 2004 and 2003, the Company incurred net losses of $1,227,112 and
$993,969, respectively. During the three months ended September 30, 2004 and
2003, the Company had negative cash flows from operations of $1,178,562 and
$684,773, respectively. While the Company is attempting to increase sales, the
growth has not been significant enough to support the Company's daily
operations. Management intends continue raising additional funds by way of
public and/or private offerings. While the Company believes in the viability of
its strategy to improve sales volume 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.

                                        7
<PAGE>


PRINCIPLES OF CONSOLIDATION
---------------------------
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary. All material intercompany transactions have been
eliminated.

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

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

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

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

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

     -    Freight transportation revenue consists of the total dollar value of
          services purchased from us by our customers. The Company recognizes
          freight transportation revenue when shipments of goods reach their
          destinations and the receiver of the goods acknowledges their receipt
          by signing a bill of lading. At that time, our obligations to the
          customer are completed and collection of receivables is reasonably
          assured. Emerging Issues Task Force Issue No. 99-19, Reporting Revenue
          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.

FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
The carrying amounts reported in the balance sheet for cash, receivables,
accounts payable, notes payable and accrued expenses approximate their fair
market value based on the short-term maturity of these instruments.

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

                                        8
<PAGE>

IMPAIRMENT OF LONG-LIVED ASSETS
-------------------------------
The Company evaluates the recoverability and carrying value of its long-lived
assets at each balance sheet date, based on guidance issued in SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets." Among other
factors considered in such evaluation is the historical and projected operating
performance of business operations, the operating environment and business
strategy, competitive information and market trends. At September 30, 2004, the
Company had no assets which were considered to be impaired.

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.

RESEARCH AND DEVELOPMENT
------------------------
Research and development costs are expensed as incurred.

INTERNAL USE SOFTWARE AND WEB SITE DEVELOPMENT COSTS
----------------------------------------------------
The Company uses SFAS No. 86, "Accounting for the Costs of Computer Software to
be Sold, Leased or Otherwise Marketed" to determine whether to expense or
capitalize the costs associated with the development of its internal use
software and Web site. Any costs incurred by the Company in creating its
computer software and Web site are charged to expense until the technological
feasibility of the computer software and Web site have been established.
Thereafter, all software and Web site productions costs are capitalized and
subsequently reported at the lower of unamortized cost or net realizable value.
The internal use software and web site development costs incurred by the Company
since its inception have been expensed since they are incurred prior to
technological feasibility. Once the Company has established technological
feasibility by completing a working model of its software and Web site that has
been confirmed by testing, it immediately becomes available for general release
to customers.

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 September 30, 2004,
the Company's cash balances exceeded the insured limits by approximately
$400,000. The Company has not experienced any losses in such accounts and
believes it is not exposed to any significant credit risk on cash on deposit.

The Company performs on-going credit evaluations of its customer base including
those that represent its accounts receivable at September 30, 2004. Two
customers accounted for 65% of the Company's accounts receivable at September
30, 2004. The Company maintains reserves for potential credit losses and such
losses historically have been within management's expectations.

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.

                                        9
<PAGE>

NOTE 3 - 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 two years from
the effective dates of the Intellectual Property Assignment Agreements. The
Company recorded amortization expense of $18,834 for the first quarter of fiscal
year 2005.

NOTE 4 - CONVERTIBLE NOTES PAYABLE

On June 28, 2004 the Company entered into a Securities Purchase Agreement with
Cornell Capital Partners, LP to sell Cornell $2,000,000 of our Series B 5%
Secured Convertible Debentures.  Under the terms of this agreement, in June 2004
we issued $1,000,000 principal amount of the Series B 5% Secured Convertible
Debentures to Cornell and in September, 2004, pursuant to the terms of the
Securities Purchase Agreement and following the filing of a registration
statement with the SEC which included the shares of common stock issuable upon
the conversion of the Series B 5% Secured Convertible Debentures, the Company
issued an additional $1,000,000 of its Series B 5% Convertible Debentures to
Cornell.  In connection with the September issuance, the Company paid
commissions and expenses of $100,000 that were accounted for as deferred
financing costs to be amortized over the term of the debentures.  The debentures
mature in June and September, 2006, and earn interest of 5.00% per annum payable
at maturity. The debentures may be converted by the holder at any time into
common stock at a conversion price equal to the lesser of an amount equal to
120% of the closing bid price of the common stock as of the closing date or 100%
of the average of the three lowest closing bid prices of the common stock for
the thirty trading days immediately preceding the conversion date. The Company
may redeem the debentures, with three days notice at any time, by paying a
premium of 20% of their original purchase price in a combination of cash and
common stock.  The Company has granted the debenture holders a security interest
in its tangible and intangible assets, subject to automatic subordination to
most traditional asset-based loans, to secure the prompt payment of principal.

NOTE 5 - STOCKHOLDERS' EQUITY

COMMON STOCK
------------
On August 16, 2004, the Company amended its articles of incorporation to
increase its number of authorized shares of common stock from 100 million to 250
million. This action was approved unanimously by the Company's Board of
Directors and consented to in writing by shareholders of the Company holding a
majority of its issued and outstanding voting stock in lieu of having a special
meeting of shareholders.

In March 2004, the Company issued 600,000 shares of common stock valued at
$300,000 pursuant to a consulting agreement. One-half of these shares, valued at
$150,000, were earned and expensed upon issuance and the other half was recorded
as $150,000 of deferred compensation to be earned on September 1, 2004 unless
the agreement was terminated by either party prior to that date.  In August,
2004, the Company notified the consultant that it was terminating the agreement,
the shares were returned by the consultant reducing common stock outstanding by
300,000 shares and deferred compensation was reduced by $150,000,

During the three months ending September 30, 2004, the Company issued 307,143
shares of common stock to four consultants who provided various general
management and business advisory services and recorded the shares as consulting
expense at their fair market value of $108,799.

During the three months ending September 30, 2004, the Company issued 600,000
shares of common stock to three of its executives and recorded the shares at
their fair market value of $226,000 (see Note 3 Intangible Assets for additional
details).

                                       10
<PAGE>

OPTIONS AND WARRANTS
--------------------
The Company's board of directors has the authority to determine when and to whom
it grant 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.

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:

                                        Three Months Ended September 30,
                                         ------------------------------
                                               2004         2003
                                               ----         ----
Loss available to
 common shareholders:         As reported  $(1,227,112)   $(993,969)
                                             =========      ========

                              Pro forma    $(1,217,832)   $(1,008,204)
                                             =========      ========

Loss per share,
 basic and diluted:           As reported     $ (0.03)     $ (0.04)
                                             =========      ========

                              Pro forma       $ (0.03)     $ (0.04)
                                             =========      ========

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:

                                                     2004       2003
                                                     ----       ----
Dividend yield                                       None       None
Expected volatility factor                         57 - 88 %   0 - 64%
Approximate risk free interest rates                  5%         3%
Expected lives, in years                             1-30       1-5

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
-------------
In August 2004, the Company cancelled 221,755 options which had been issued to
its former Chairman in accordance with an agreement between the parties.

                                       11
<PAGE>

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
Cancelled                                  $0.38       (221,755)      $0.38
                                                      ---------
Outstanding options at September 30, 2004  $0.40     14,531,994   $0.31 - $1.01
                                                     ==========
Exercisable options at September 30, 2004  $0.39     14,356,994   $0.31 - $1.01
                                                     ==========

The following table summarizes information concerning stock options outstanding
at September 30, 2004.

<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                 13,124,218           2.12      $ 0.37
0.50 - 0.56                  1,107,776           1.04      $ 0.55
1.01                           300,000           3.04      $ 1.01
                            -----------
                            14,531,994
                            ===========
</TABLE>

The following table summarizes information concerning stock options exercisable
at September 30, 2004.

<TABLE>
<CAPTION>


                                           Weighted
                                            average
                                           exercise
Range of Exercise Price   Number of Options  price
------------------------  -----------------  ------
<S>                       <C>                <C>
0.31 - 0.40                   13,124,218    $ 0.37
0.50 - 0.56                    1,082,776    $ 0.55
1.01                             150,000    $ 1.01
                        -----------------
                               14,356,994
                        =================
</TABLE>


WARRANTS
--------
The Company charged to expense the fair value of the instruments granted for
services using the Black-Scholes option-pricing model.

In March, 2004, the Company granted 600,000 warrants to purchase shares of the
Company's common stock at $0.75 per share which expire on March 31, 2007 to a
consultant for providing the Company with financial services for a period of one
year.  Pursuant to the consulting agreement, 300,000 warrants, valued at
$58,410, were earned and expensed as consulting fees upon issuance and the other
300,000 warrants were recorded as $58,410 of deferred compensation to be earned
on September 1, 2004 unless the agreement was terminated by either party prior
to that date.  In August, 2004, the Company notified the consultant that it was
terminating the agreement, the 300,000 warrants were returned by the consultant
for cancellation and the previously recorded deferred compensation was
eliminated.

                                       12
<PAGE>

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                                   $0.38          221,755         $0.38
Cancelled                                 $0.75         (300,000)        $0.75
Expired                                   $0.75          (13,242)        $0.75
                                                        ---------

Outstanding warrants at
 September 30, 2004                       $0.72        8,179,552    $0.38-$2.00
                                                       ==========

Exercisable warrants at
 September 30, 2004                       $0.73        7,979,551    $0.38-$2.00
                                                       ==========

The following table summarizes information concerning warrants outstanding at
September 30, 2004:
<TABLE>
<CAPTION>


                                                Weighted    Weighted
                                                 average     average
                                                remaining   exercise
Range of Exercise Price   Number of Warrants  Life in years  price
------------------------  ------------------  -------------  ------
<S>                       <C>                 <C>            <C>
0.38  -  0.80                     6,861,267        1.62      $ 0.63
1.00  -  1.30                     1,050,769        1.50      $ 1.07
1.50  -  2.00                       267,516        1.60      $ 1.81
                          ------------------

                                  8,179,552
                          ==================
</TABLE>

The following table summarizes information concerning warrants exercisable at
September 30, 2004:

<TABLE>
<CAPTION>

                                             Weighted
                                              average
                                             exercise
Range of Exercise Price   Number of Warrants  price
------------------------  ------------------  ------
<S>                       <C>                 <C>

0.38  -  0.80                 6,661,266       $ 0.63
1.00  -  1.30                 1,050,769       $ 1.07
1.50  -  2.00                   267,516       $ 1.81
                          ------------------

                              7,979,551
                          ==================
</TABLE>


NOTE 6 - SUBSEQUENT EVENTS

In November, 2004, the Company loaned $100,000 to an unaffiliated, non-asset
based, freight transportation company. The loan has an interest rate of 5% per
annum, matures on January 3, 2005 and is secured by a pledge of all of the
issued and outstanding capital stock of the borrower.

                                       13
<PAGE>

In October and November, 2004 the Company issued $110,000 principal amount
unsecured promissory notes to two private lenders that are unaffiliated third
parties. The notes have an interest rate of 5% per annum which accrues until
they mature on January 3, 2005  The net proceeds of these notes were used to
make the loan to the unaffiliated, non-asset based, freight transportation
company described above. In conjunction with these loans, the Company paid loan
fees totaling $10,000.

The Company entered into a one-year consulting agreement with a principal
shareholder, who is not a member of the Company's management, to provide
business advisory services in consideration for 150,000 shares of common stock.

                                       14
<PAGE>

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

     The following discussion and analysis of financial condition and results of
our operations should be read in conjunction with the consolidated financial
statements and the notes to those statements included elsewhere in this report.
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 1 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.

     -     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.

                                       15
<PAGE>


OVERVIEW

     We operate as an application service provider (ASP) that delivers supply
chain, tracking and logistics information to the freight industry.  We began
reporting revenue during the fourth quarter of fiscal 2003 following our March
2003 merger with Freight Rate, Inc.   We provide logistics information and
services to shippers that need to have truckloads of goods transported to or
from their facilities.  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 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 our shipper customers from whom we generated revenues from four at September
30, 2003 to 21 at September 30, 2004. 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 successfully build
our company 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 $63,035 in the first quarter of
fiscal year 2005 compared to $22,395 in the first quarter of fiscal year 2004 in
marketing our services to potential carriers and shippers.  As of September 30,
2004, approximately 1,750 carriers had registered on our website to become
members as compared with approximately 270 of carriers at September 30, 2003. Of
the 1,750 carriers that are currently registered to participate in our
MobileMarket(TM), approximately 400 have entered into carrier agreements with us
and provided us with proof that they maintain the required levels of liability
insurance. We have used approximately 342 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.

     We are pursuing opportunities to provide logistics information and services
to government agencies responsible for ensuring the safe and secure
transportation of goods in containers aboard ships coming to U.S. ports.  We
believe that our P2S MobileMarket(TM), which was designed to capture and display
vast quantities of logistics information, will assist these agencies to
accomplish their goals.  The information available from our P2S MobileMarket
(TM) is also useful to maritime companies, logistics companies, container
leasing and manufacturing companies, freight forwarders, warehouse mangers and
other companies that provide freight management services.

     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.

                                       16
<PAGE>

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 2003

REVENUE

     Total revenue generated during the three months ended September 30, 2004,
our first quarter of fiscal 2005, increased by $291,074, or approximately 66%,
as compared with total revenue generated during the comparable three-month
period in 2003, our first quarter of fiscal 2004. The increase during the first
quarter of fiscal 2005 consisted of the following:

     -    Freight transportation revenue increased $396,074, or approximately
          118%. Approximately $113,724 or 29% of this increase was attributable
          to revenue generated from Tire Kingdom and Carroll Tire, two
          subsidiaries of TBC Corporation. The remainder of the $282,350
          increase in revenue was attributable to an increase in our number of
          shipper customers to 21 at September 30, 2004 from 4 as of September
          30, 2003. We anticipate that revenue from freight transportation will
          increase in fiscal 2005 as discussed below.

     -    Revenue from access services decreased $105,000 or 100%. We generated
          no revenue from access services during the first quarter of fiscal
          2005 as our contract with The Great Atlantic and Pacific Tea Company,
          Inc., which had generated $105,000 in the comparable 2004 period, was
          terminated in January 2004. Access services provide unlimited use of
          the information available through the Power2Ship MobileMarket(TM) for
          a fixed monthly fee. While we market these services to current and
          prospective customers, we cannot predict if we will report significant
          revenue from access services in future periods.

     We anticipate that revenue will continue to increase in the remainder of
fiscal 2005.  We expect that our increased sales and marketing efforts which
were begun in fiscal 2004 will result in additional shipper customers from whom
we will generate increased revenues from freight transportation services.  Our
business model also includes, subject to the availability of sufficient
financing, the acquisition of one or more truck transportation services
companies which, if consummated, will also increase our revenue.  We are not,
however, a party to any acquisition agreements as of the date of this report.
Finally, we entered into a letter of intent with L-3 Communications Security and
Detection Systems, Inc. in October 2004 and expect to enter into more research
and development or similar agreements related to global transportation security
with L-3 Communications and other technology and/or defense companies that will
generate additional revenue during fiscal year 2005. The letter of intent with
L-3 Communications deals with working together on projects related to monitoring
applications associated with container tracking and security status as well as
carrier and shipper logistics. There can be no assurances, however, that we will
enter into a definitive agreement with L-3 Communication or, if we do, that we
will ever generate any significant revenue or profits from such agreement.

OPERATING EXPENSES

     Total operating expenses incurred during the first quarter of fiscal year
2005 increased by $412,422 or approximately 31% compared to the first quarter in
fiscal year 2004. This increase consisted of the following:

     -    Freight transportation expense, consisting of charges from trucking
          companies that we hired to transport freight for our shipper
          customers, increased by $355,976, or approximately 120%, in the first
          quarter of fiscal year 2005 as compared with the first quarter of
          fiscal year 2004. Freight transportation expense is a variable cost
          that, during periods when gross margins are constant, increases by
          relatively the same percentage as freight transportation revenue. We
          expect freight transportation expense to increase proportionately with
          the increase in freight transportation revenue for the remainder of
          fiscal year 2005.

     -    Selling, general and administrative expenses increased by $45,699 or
          approximately 5%. The increase during the first quarter of fiscal 2005
          consisted of the following:

                                       17
<PAGE>

     -    Salaries, benefits and consulting fees decreased by $56,615 or
          approximately 8% in the first quarter of fiscal year 2005 as higher
          salaries and benefits were more than offset by lower consulting fees
          as follows:

          -    Salaries and benefits increased by $42,840 or approximately 11%
               to $431,731 in the first quarter of fiscal year 2005 from
               $388,891 in the first quarter of fiscal year 2004. This increase
               primarily was due to salary increases and to having one
               additional employee during the first quarter of fiscal year 2005.

          -    Consulting fees decreased by $99,454 or approximately 35% in the
               first quarter of fiscal year 2005 to $183,083 from $282,538 in
               the first quarter of fiscal year 2004. This decrease was
               attributed to having fewer consultants.

     We expect salaries, benefits and consulting expenses in the remainder of
fiscal year 2005 to remain relatively constant, with increases in salaries and
fringe benefits anticipated to be offset by a decrease in consulting expenses.

     -    Other selling, general and administrative expenses increased by
          $102,314 or approximately 34% in the first quarter of fiscal year 2005
          as compared to the first quarter of fiscal year 2004. The expenses
          that contributed most to this increase were:

          -    Advertising and marketing expenses, including convention and
               trade show expenses, increased by $40,640 or approximately 182%
               to $63,035 in the first quarter of fiscal year 2005 from $22,395
               in the first quarter of fiscal year 2004. This increase was
               attributed to hiring a public relations firm and increasing the
               amount we spent to advertise our products and services to
               shippers and carriers in trade publications, transportation
               industry websites and other media. We expect advertising and
               marketing expenses in the remainder of fiscal year 2005 to
               continue to increase as we increase our advertising to shippers
               and carriers.

          -    Web hosting expense increased by $29,250 or approximately 407% to
               $36,431 in the first quarter of fiscal year 2005 from $7,181 in
               the first quarter of fiscal year 2004. This increase was a result
               of our receiving a one-time credit of $30,982 from our Web
               hosting vendor in fiscal 2004 as restitution for service problems
               we encountered. We expect Web hosting expense for the remainder
               of fiscal year 2005 to remain constant at the rate incurred
               during the first quarter of fiscal year 2005.

          -    Rent expense increased by $15,139 or approximately 48% to $46,914
               in the first quarter of fiscal year 2005 from $31,775 in the
               first quarter of fiscal year 2004. This increase was a result of
               the one-year period of discounted rent negotiated with our
               landlord coming to an end at the end of May 2004. We expect rent
               expense remain constant at the first quarter's rate for the
               remainder of fiscal year 2005.

     -    Research and development expenses increased $10,747 or approximately
          14% in the first quarter of fiscal year 2005 as compared with fiscal
          year 2003. This increase was primarily due to an in the compensation
          level of many of the employees in the research and development
          department. These employees design, program and test all of the
          computer software applications related to our logistics information
          system. We expect research and development expenses to be constant
          with the first quarter's rate for the remainder of fiscal year 2005.

OTHER INCOME (EXPENSES)

     Total other expenses increased by $111,795 or approximately 131% in the
first quarter of fiscal year 2005 as compared with the first quarter of fiscal
year 2004. This increase primarily resulted from an increase in interest expense
of $111,401, or approximately 130%, in the first quarter of fiscal year 2005
versus the first quarter of fiscal year 2004. This increase was associated with
a net increase of approximately $3,600,000 in our outstanding debt primarily
associated with our issuance of $1,747,000 principal amount of 14.25% secured
convertible debentures during March and April of 2004 and $2,000,000 principal
amount of 5% Series B secured convertible debentures during June and September
of 2004.

                                       18
<PAGE>

     We expect interest expense to be approximately $650,000 in the remainder of
fiscal year 2005 assuming no conversions or redemptions of our Series B 5%
secured convertible debentures or our 14.25% secured convertible debentures and
projected additional debt in the form of a revolving credit facility secured
primarily by our accounts receivable averaging approximately $500,000 which we
currently are seeking to obtain.  We do not, however, have any commitments for
any accounts receivable financing as of the date of this report.

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 September 30, 2004, we had an accumulated
deficit of $14,055,349, a stockholders' deficit of $1,895,148, and cash and cash
equivalents of $528,756.

     At September 30, 2004, we had a working capital surplus of $528,303 as
compared with a working capital surplus of $603,380 at June 30, 2004. This
$75,077 decrease in working capital was attributed to a $175,420 decrease in
current assets offset, in part, by a $100,343 decrease in current liabilities.
The increase in current assets consisted of a $303,374 decrease in cash, a
$149,654 increase in accounts receivable and a $21,700 decrease in prepaid
insurance. The increase in current liabilities during this period consisted of a
$115,343 decrease in accounts payable and accrued expenses and a $15,000
increase in accrued salaries.

     During the first quarter of fiscal year 2005, our cash balance decreased by
$303,374. This decrease was attributed to $1,178,562 used in operating
activities and $9,812 used in investing activities offset in part by $885,000
provided by financing activities.

     During the first quarter of fiscal year 2004, our cash balance increased by
$241,163.  This increase was attributed to $684,773 used in operating activities
and $12,041 used in investing activities offset by $937,977 provided by
financing activities.

     Net cash used in operating activities of $1,178,562 in the first quarter of
fiscal year 2005 consisted of our net loss of $1,227,112 reduced by $113,818 of
amortization of financing costs and discounts on note, depreciation of $12,555,
amortization of intangible asset $18,834 and $131,640 in non-cash expenses
associated with the issuance of our common stock, options and warrants as
payment for services, interest, compensation and conversions, plus $228,297 in
cash used for operating assets and liabilities during the quarter.

     Net cash used in operating activities of $684,773 in the first quarter of
fiscal year 2004 consisted of our net loss of $993,969 less $316,281 of non-cash
expenses plus $7,085 in cash used for operating assets and liabilities during
the quarter.  Non-cash expenses primarily consisted of $307,222 of expenses
associated with the issuance of our common stock, options and warrants for
services, interest, compensation and conversions.

     Net cash used in investing activities in the first quarters of fiscal years
2005 and 2004 consisted of $9,812 and $12,041, respectively, used to purchase
various fixed assets including computers, furniture, fixtures and leasehold
improvements.

     Net cash provided by financing activities of $885,000 in the first quarter
of fiscal year 2005 consisted of $900,000 in net proceeds that we received from
the issuance of our Series B 5% secured convertible debentures less $15,000 in
repayments of promissory notes.

     Net cash provided by financing activities of $937,977 in the first quarter
of fiscal year 2004 included $981,500 in net proceeds received from the issuance
of shares of our Series B and Series C Convertible Preferred Stock, $121,477 in
net proceeds received from the issuance of shares of our common stock which were
partially offset by $165,000 in repayments of promissory notes

                                       19
<PAGE>

     We estimate that our cash on hand at September 30, 2004 will be sufficient
to fund our operating activities until approximately December 31, 2004.  We will
need additional working capital to fund our operations thereafter. We entered
into a Standby Equity Distribution Agreement with Cornell Capital Partners, LP
on June 28, 2004 pursuant to which Cornell has agreed to purchase from us, at
our option, up to $10,000,000 of our common stock during the two years after the
effectiveness of our registration statement which currently is being reviewed by
the Securities and Exchange Commission.  Our current registration statement
includes the number of shares that we estimate could be sold for approximately
$3.0 million.  We will be required to file additional registration statements
with the Securities and Exchange Commission and those registration statements
must be declared effective in order for us to issue and sell any additional
shares of common stock in excess of the $3.0 million to Cornell Capital Partners
under the Standby Equity Distribution Agreement.

     We will have the right to sell up to $500,000 of our shares to Cornell as
frequently as every seven trading days.  The share price for such sales will be
calculated at 98% of the lowest price (using the daily volume weighted average
price) of our common stock during the five trading days following the date on
which we notify Cornell of our intent to sell them the shares.  There are no
assurances, however, that the Securities and Exchange Commission will declare
our registration statement effective.  In the event the registration statement
does not become effective, prior to using all of our cash on hand we will be
required to seek additional capital through equity and/or debt financing.  There
are no assurances that we will be able to find such capital on terms acceptable
to us, or at all.

     Our future capital requirements depend primarily on the rate at which we
can decrease our use of cash to fund operations. Cash used for operations will
be affected by numerous known and unknown risks and uncertainties 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 capita.  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.


                                       20
<PAGE>

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 September 30, 2004, 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.

                                       21
<PAGE>

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     None

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
During the three months ended September 30, 2004, the Company:

-     Issued 127,143 shares of its common stock to two consultants as
compensation for consulting services to the Company and recorded the shares at
their fair market value of $41,000. 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.

ITEM 6. EXHIBITS
(a)   Exhibits:

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.


                                       22
<PAGE>

                                    SIGNATURE

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

Date:  November 15, 2004
                                              POWER2SHIP, INC.

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


                                       23
<PAGE>