**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, 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  ̈





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes o
      No x





**APPLICABLE
      ONLY TO CORPORATE ISSUERS**





State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date: As of November 17, 2005, the number of
      outstanding shares of the issuer’s common stock was 74,611,470.





Transitional
      Small Business Disclosure Format (check one): Yes  ̈ No x


**______________________________________________________________________________**








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TABLE
                OF CONTENTSPagePART
                I. FINANCIAL INFORMATIONItem
                1. Financial Statements (Unaudited):Consolidated
                Balance Sheet, September 30, 2005
            
            4Consolidated
                Statements of Operations, Three Months EndedSeptember
                30, 2005 and 2004
            
            5Consolidated
                Statements of Cash Flows, Three Months EndedSeptember 30, 2005 and 2004
            
            6Notes
                to Consolidated Financial Statements for the Three Months EndedSeptember 30, 2005
            
            7Item
                2. Management's Discussion and Analysis or Plan of
                Operation
            
            19Item
                3. Controls and Procedures
            
            25PART
                II. OTHER INFORMATIONItem
                1. Legal Proceedings
            
            25Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            
            25Item
                3. Defaults Upon Senior Securities
            
            27Item
                4. Submission of Matters to a Vote of Security Holders
            
            27Item
                5. Other Information
            
            27Item
                6. Exhibits
            
            27





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**PART
      I. FINANCIAL INFORMATION**





**ITEM
      1. FINANCIAL STATEMENTS (UNAUDITED)**


















































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  **POWER2SHIP,
                    INC. AND SUBSIDIARIES****CONSOLIDATED
                    BALANCE SHEET****September
                    30, 2005****ASSETS**Current
                    assets:Cash
                    and cash equivalents
                
                $
                929,569Accounts
                    receivable, net of allowance of $12,861
                
                
                1,458,904Short
                    term note receivable
                
                
                50,000Prepaid
                    insurance
                
                
                108,385Total
                    current assets
                
                
                2,546,858Property
                    and equipment
                
                
                561,675Less:
                    accumulated depreciation
                
                
                (162,913
                )Net
                    property and equipment
                
                
                398,762Software
                    development costs, net of accumulated amortizationof
                    $112,769
                
                
                804,961Deferred
                    financing costs
                
                
                250,909Intangible
                    asset, net of accumulated amortization of $154,587
                
                
                483,387Restricted
                    cash for interest on debentures
                
                
                2,308Other
                    assets
                
                
                500,254Total
                    assets
                
                $
                4,987,439**LIABILITIES
                    AND STOCKHOLDERS' DEFICIT**Current
                    liabilities:Notes
                    payable - short term
                
                $
                200,000Current
                    portion of convertible notes payable less discount of
                    $39,735
                
                
                2,135,265Line
                    of credit
                
                
                241,831Accounts
                    payable
                
                
                1,370,906Accrued
                    expenses
                
                
                609,842Accrued
                    salaries
                
                
                180,547****Total current liabilities
                
                
                4,738,391Long
                    term debt:Long
                    term notes payable
                
                
                91,667Convertible
                    notes payable less discount of $180,345
                
                
                1,416,655Convertible
                    note payable to related party
                
                
                115,000****Total liabilities
                
                
                6,361,713Stockholders'
                    deficit:Preferred
                    stock, $.01 par value, 1,000,000 shares authorized:Series
                    B convertible preferred stock, $.01 par value, 200,000shares
                    authorized; 161,200 shares issued and outstanding
                
                
                1,612Series
                    C convertible preferred stock, $.01 par value, 20,000shares
                    authorized; 832 shares issued and outstanding
                
                
                8Series
                    Y convertible preferred stock, $.01 par value, 87,000shares
                    authorized; 87,000 shares issued and outstanding
                
                
                870Common
                    stock, $.001 par value, 250,000,000 sharesauthorized;
                    74,511,471 issued and outstanding
                
                
                74,511Deferred
                    compensation
                
                
                (430,220
                )Additional
                    paid-in capital
                
                
                19,192,749Accumulated
                    deficit
                
                
                (20,213,804
                )Total
                    stockholders' deficit
                
                
                (1,374,274
                )Total
                    liabilities and stockholders' deficit
                
                $
                4,987,439*See
                    accompanying notes*
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**POWER2SHIP,
                INC. AND SUBSIDIARIES****CONSOLIDATED
                STATEMENTS OF OPERATIONS**Three
                Months Ended September 30,2005
            
            2004Revenue:Freight
                transportation
            
            $
            8,199,598
            
            $
            730,726Implementation
                services
            
            
            5,668
            
            
            -Total
                revenue
            
            
            8,205,266
            
            
            730,726Operating
                expenses:Freight
                transportation
            
            
            7,320,256
            
            
            651,772Selling,
                general and administrative:Salaries,
                benefits and consulting fees
            
            
            1,000,828
            
            
            614,814Other
                selling, general and administrative
            
            
            574,633
            
            
            420,465Total
                operating expenses
            
            
            8,895,717
            
            
            1,687,051Loss
                from operations
            
            
            (690,451
            )
            
            (956,325
            )Other
                income (expense):Gain
                on asset disposal
            
            
            1,415
            
            
            -Interest
                expense, net
            
            
            (471,581
            )
            
            (197,123
            )Other
                income
            
            
            2,906
            
            
            -Total
                other expense
            
            
            (467,260
            )
            
            (197,123
            )Net
                loss
            
            $
            (1,157,711
            )
            $
            (1,153,448
            )Loss
                per share - basic and diluted
            
            $
            (0.02
            )
            $
            (0.03
            )Weighted
                average shares outstanding-
                basic and diluted
            
            
            69,327,258
            
            
            38,668,813*See
                accompanying notes*





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**POWER2SHIP,
                INC. AND SUBSIDIARIES****CONSOLIDATED
                STATEMENTS OF CASH FLOWS**Three
                Months Ended September 30,2005
            
            2004Cash
                flows from operating activities:Net
                loss
            
            $
            (1,157,711
            )
            $
            (1,153,448
            )Adjustments
                to reconcile net loss tonet
                cash used in operating activities:Depreciation
            
            
            26,334
            
            
            12,555Amortization
                of software development costs
            
            
            13,523
            
            
            13,523Amortization
                of intangible asset
            
            
            41,262
            
            
            18,834Amortization
                of deferred compensation
            
            
            45,875
            
            
            -Amortization
                of deferred financing costs
            
            
            235,618
            
            
            91,081Amortization
                of discount on notes payable
            
            
            62,278
            
            
            22,737Decrease
                in allowance for doubtful accounts
            
            
            (17,997
            )
            
            -Issuance
                of stock options and warrantsfor
                services and conversion
            
            
            28,581
            
            
            22,841Issuance
                of stock for services, interest and litigation settlement
            
            
            104,700
            
            
            108,799Changes
                in operating assets and liabilities:Increase
                in receivables
            
            
            (319,480
            )
            
            (149,654
            )Decrease
                (increase) in prepaid insurance
            
            
            (8,790
            )
            
            21,700Increase
                in other assets
            
            
            (131,256
            )
            
            -Increase
                (decrease) in accounts payable and accrued expenses
            
            
            360,703
            
            
            (100,343
            )Net
                cash used in operating activities
            
            
            (716,360
            )
            
            (1,091,375
            )Cash
                flows from investing activities:Purchases
                of property and equipment
            
            
            (31,167
            )
            
            (9,812
            )Capitalized
                costs of software development
            
            
            (93,328
            )
            
            (87,187
            )Net
                cash used in investing activities
            
            
            (124,495
            )
            
            (96,999
            )Cash
                flows from financing activities:Proceeds
                from convertible promissory notes, net of costs of $0and
                $100,000, respectively
            
            
            -
            
            
            900,000Repayments
                of promissory notes
            
            
            -
            
            
            (15,000
            )Proceeds
                from line of credit, net of costs of $0 and $0,
                respectively
            
            
            125,171
            
            
            -Proceeds
                from sale of common stock and warrants, net of costsof
                $0 and $0, respectively
            
            
            807,500
            
            
            -Net
                cash provided by financing activities
            
            
            932,671
            
            
            885,000Net
                increase (decrease) in cash and cash equivalents
            
            
            91,816
            
            
            (303,374
            )Cash
                and cash equivalents, beginning of period
            
            
            837,753
            
            
            832,130Cash
                and cash equivalents, end of period
            
            $
            929,569
            
            $
            528,756*See
                accompanying notes*





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**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 MobileMarketTM ,
      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 s hippers’
      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 MobileMarketTM 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 13 - “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.





The
      accompanying unaudited financial statements for the period ended September
      30,
      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 month
      period ended September 30, 2005 are not necessarily indicative of the results
      to
      be expected for the year ended June 30, 2006.





**NOTE
      2 - SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS**





**Principles
      of Consolidation**


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


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          7
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**Reclassifications**


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





**Cash
      and Cash Equivalents**


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





**Property
      and Equipment**


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





**Income
      Taxes**


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





**Revenue
      Recognition**




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




Freight
      transportation revenue consists of the total dollar value of services purchased
      from us by our customers. The
      Company recognizes freight transportation revenue when shipments of goods reach
      their destinations and the receiver of the goods acknowledges their receipt
      by
      signing a bill of lading. At
      that
      time, our obligations to the customer are completed and collection of
      receivables is reasonably assured. Emerging Issues Task Force Issue No. 99-19,
      “Reporting Revenue Gross as a Principal versus Net as an Agent”, establishes the
      criteria for recognizing revenues on a gross or net basis. When we provide
      these
      freight transportation services, we are the primary obligor, we are a principal
      to the transaction not an agent, we have the risk of loss for collection, we
      have discretion to select the supplier when we do not supply the services and
      we
      have latitude in pricing decisions.





Access
      services r evenue
      is
      recognized in the month that access to the P2S MobileMarketTM 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


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          8
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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. The Company had
      outstanding options, warrants and shares issuable upon conversion of outstanding
      convertible debt and preferred stock totaling 75,286,659 and 40,316,803 as
      of
      September 30, 2005 and 2004, respectively, which it did not use in computing
      its
      diluted loss per share because the Company had net losses for the periods
      presented in its financial statements and the inclusion of these securities
      would have been anti-dilutive.





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 30,2005
            
            2004Loss
                available to common shareholders, as reported
            
            $
            (1,157,711
            )
            $
            (1,153,448
            )Add:
                Stock compensation expense to employeesincluded
                in reported net loss, net of related tax effects
            
            
            -
            
            
            -Deduct:
                Total stock compensation expense to employeesexpense
                determined under fair value basedmethod
                for all awards, net of related tax effects
            
            
            (18,120
            )
            
            (9,280
            )Pro
                forma loss available to common shareholders
            
            $
            (1,175,831
            )
            $
            (1,162,728
            )Loss
                per share:Basic
                and diluted - as reported
            
            $
            (0.02
            )
            $
            (0.03
            )Basic
                and diluted - pro forma
            
            $
            (0.02
            )
            $
            (0.03
            )





**Research
      and Development**


Research
      and development costs are expensed as incurred. No research and development
      expenses were incurred for the quarters ended September 30, 2005 and
      2004.





**Computer
      Software and Web Site Development Costs**


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




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          9
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the application, coding, hardware installation and testing, including parallel
      processing. Generally, any internal and external costs incurred during the
      application and infrastructure development stage are capitalized and amortized
      on a straight-line basis over the estimated economic life of the software of
      three to five years. General and administrative costs and overhead costs are
      not
      capitalized. Amortization for each module or component of software begins after
      all substantial testing is completed and it is deemed to be ready for its
      intended use. The only exception to beginning amortization at that time would
      be
      if the functionality of that module or component is entirely dependent on the
      completion of other modules or component in which case the amortization would
      begin when both the module and the other modules upon which it is functionally
      dependent are ready for their intended use.






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




At
      September 30, 2005 and 2004, the net book value of capitalized software was
      $804,962 and $491,129, respectively. Amortization expense for the quarterly
      periods ended September 30, 2005 and 2004 was $13,523 and $13,523,
      respectively.





The
      Company makes ongoing evaluations of the recoverability of its capitalized
      internal use software and Web site by comparing the amount capitalized for
      each
      module or component of software to their estimated net realizable values. If
      such evaluations indicate that the unamortized costs exceed the net realizable
      values, the Company writes off the amount by which the unamortized costs exceed
      the net realizable values.





**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, 2005,
      the Company's cash balances exceeded the insured limits by approximately
      $700,000. 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, 2005. The Company
      maintains reserves for potential credit losses and such losses historically
      have
      been within management's expectations.





**Advertising
      and marketing**


Advertising
      and marketing is expensed as incurred. Advertising and marketing expenses,
      including convention and trade show expenses, for the quarters ended September
      30, 2005 and 2004 were $25,167 and $63,035, respectively.





**Recent
      accounting pronouncements**


In
      December 2004, the FASB issued SFAS 123R "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 123R will be effective for the Company
      beginning with the first period after December 15, 2005.  The Company is
      currently evaluating the impact this new Standard will have on its financial
      position, results of operations or cash flows.


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          10
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 TOC





**NOTE
      3 - CONCENTRATIONS**





During
      the quarter ended September 30, 2005, one customer accounted for 53% of the
      Company’s revenue. No other customer accounted for more than 10% of revenue and
      no customers accounted for more than 10% of accounts receivable.





**NOTE
      4 - INTANGIBLE ASSETS**





In
      March
      2005, the Company allocated $77,374 of the purchase price for certain assets
      of
      Commodity Express Transportation, Inc. and $334,600 of the purchase price for
      certain assets of GFC, Inc. to intangible assets attributable to the customer
      lists of these businesses. These intangible assets are being amortized over
      their estimated useful lives of 5 years. The Company recorded amortization
      expense for the quarters ended September 30, 2005 and 2004 of $13,011 and $0,
      respectively. At Sep tember
      30, 2005, future amortization expense for these intangible assets is expected
      to
      be as follows:





2006
              $61,7962007
              82,3952008
              82,3952009
              82,3952010
              80,243$389,224





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 quarters ended September 30, 2005 and 2004 of $28,251 and $18,834,
      respectively.








**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
      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. As of September 30, 2005, the
      Company has recorded $100,000 of this obligation as current, and $91,667 as
      long
      term notes payable.





In
      January 2005, the Company issued a 10% unsecured, three-month, promissory note
      for $100,000 to one accredited investor. The Company obtained a waiver from
      the
      investor as to the repayment of $100,000 of principal and accrued interest
      in
      April 2005 and their consent to extend the maturity date of the note until
      September 30, 2005. In August 2005, the investor provided another waiver and
      consented to extend the maturity date until December 31, 2005. The Company
      recorded interest expense of $2,500 related to the $100,000 note for the quarter
      ended September 30, 2005. (See Note 8 - “Subsequent Events” for the ultimate
      disposition of this promissory note).





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


-
          11
          -
 TOC





In
      June
      and September 2004, the Company issued a total of $2,000,000 of its Series
      B 5%
      secured convertible debentures to one accredited investor. Interest on the
      outstanding balances of the debentures accrues at the rate of 5% per annum
      for
      the two-year term of the debentures or until they are converted or redeemed
      prior to their maturity dates. The Company paid $225,000 in commissions and
      expenses that were accounted for as deferred financing costs that are being
      amortized as interest expense over the term of the debentures. Any portion
      of
      the outstanding balance of the debentures may be converted by the holder at
      any
      time into common stock at a conversion price per share equal to the lesser
      of
      $0.456 or 100% of the average of the three lowest closing bid prices of the
      common stock for the thirty trading days immediately preceding the conversion
      date. The Company may redeem the debentures at any time by providing three
      days
      notice and paying a premium of up to 20% of the amount being redeemed in a
      combination of cash and common stock. The Company has provided the debenture
      holder with a security interest in its tangible and intangible assets, subject
      to automatic subordination to most traditional asset-based loans, to secure
      the
      prompt payment of principal. For the quarters ended September 30, 2005 and
      2004,
      the Company recorded interest expense, including amortization of deferred
      financing costs, of $52,937 and $73,765, respectively. The
      Company may be in default under certain covenants contained in the debenture
      and
      agreements related thereto. If the Company receives notice of noncompliance
      and
      potential default, the Company would have an obligation to rectify or otherwise
      receive a waiver from the investor under the terms of those agreements. While
      the Company has not received any such notice to date, it is possible that notice
      could be provided in the future, which would likely cause the Company to be
      in
      default under its agreement and obligations to the investor. Any default would
      permit the investor, in its sole discretion, to accelerate full repayment of
      the
      $2,000,000 in principal and accrued interest thereon, claim an indeterminate
      amount of penalties and perhaps result in acceleration of other obligations
      owed
      to other parties. We cannot assure you that we would be in a position to arrange
      alternative financing to satisfy this obligation in the event of a
      default.




Also
      in
      June 2004, the Company issued an aggregate of 816,260 shares of its common
      stock
      valued at $310,179 to the same investor that purchased the Series B convertible
      debentures and a placement agent upon entering into a Standby Equity
      Distribution Agreement and related agreements with the investor. The value
      of
      these shares was accounted for as deferred financing costs that are being
      amortized as interest expense over a two-year term. In July 2005, the Standby
      Equity Distribution Agreement and related agreements were terminated and the
      unamortized deferred financing costs of $155,090 were amortized as interest
      expense.





In
      March
      and April, 2004, the Company issued $1,747,000 of its 14.25% secured convertible
      debentures to 35 accredited investors and paid commissions and expenses of
      $227,110 accounted for as deferred financing costs that are being amortized
      as
      interest expense over the terms of the debentures. In addition, the Company
      issued 873,500 warrants
      valued at $108,160 and 131,025
      common shares valued at $55,031 to the lenders accounted for as interest
      expense. The debentures mature on December 31, 2006, and earn interest of 14.25%
      per annum payable semi-annually in arrears on June 30 and December 31. The
      debentures may be converted by the holders at any time into common stock at
      a
      conversion price per share of $0.2673. This conversion price was a discount to the market price at the time the debentures
      were issued requiring the recognition of a beneficial conversion provision of
      $194,111 recorded as a discount on notes payable that is being amortized as
      interest expense over the remaining terms of the debentures. The Company may
      redeem the debentures with fifteen days notice at any time, by paying a premium
      of up to 15% of their original purchase price in a combination of cash and
      common stock. The Company has provided the debenture holders with a security
      interest in its tangible and intangible assets, subject to automatic
      subordination to most traditional asset-based loans, to secure the prompt
      payment of principal. In addition, the Company is required to set aside the
      equivalent of six months of interest on the debentures in a separate account
      with Newbridge Securities Corporation to be paid to investors in the event
      of a
      default. During the quarter ended September 30, 2005, the same investor that
      converted $50,000 of their investment into common stock converted an additional
      $100,000 leaving $1,597,000 in outstanding debentures. For the quarters ended
      September 30, 2005 and 2004, the Company recorded interest expense, including
      amortization of deferred financing costs, of $99,036 and $94,830, respectively. The
      Company may be in default under certain covenants contained in its agreements
      with the debenture holders. If the Company receives notice of noncompliance
      and
      potential default, the Company would have an obligation to rectify or otherwise
      receive a waiver from the debenture holders under the terms of those agreements.
      While the Company has not received any such notice to date, it is possible
      that
      notice could be provided in the future, which would likely cause the Company
      to
      be in default under its agreement and obligations to the debenture holders.
      Any
      default would accelerate the Company’s obligations to the debenture holders in
      the remaining principal amount of $1,597,000 together with all accrued and
      unpaid interest thereon and perhaps other


-
          12
          -
 TOC


obligations
      owed to other parties. We cannot assure you that we would be in a position
      to
      arrange alternative financing to satisfy this obligation in the event of a
      default.





In
      July
      2003, the Company issued a promissory note in the amount of $170,000 to a
      software vendor for licenses to use certain logistics software. The note
      required the Company to pay $30,000 upon issuing the note followed by 22
      consecutive payments of $5,000 on the first of each month from August 2003
      through May 2005 for a total of $140,000. A ll
      the
      aforementioned payments were made when due and the $30,000 remaining balance
      of
      the note was waived resulting in a write-off of $30,000 against prepaid interest and a gain of $18,111 during
      fiscal year 2004. For
      the
      quarters ended September 30, 2005 and 2004, the Company recorded no interest
      expense.





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. During the quarters
      ended September 30, 2005
      and
      2004, the Company recorded interest expense of $16,745 and $16,745,
      respectively, related to this note, including amortization of the discount
      on
      notes payable.





**NOTE
      6 - STOCKHOLDERS' DEFICIT**





**Preferred
      Stock**





During
      the quarter ended September 30, 2005, four shareholders converted 7,000 shares
      of Series B preferred stock into 140,000 shares of common stock.





**Common
      Stock**


During
      the quarter ended September 30, 2005, the Company issued an aggregate of
      8,377,445 shares of its common stock. This total issuance consisted of 5,583,333
      shares sold to twenty-one investors pursuant to the Company’s unit offering for
      which it received $807,500 of net proceeds and the forgiveness of a $30,000
      short term promissory note, 2,280,000 shares issued to two consultants valued
      at
      $437,200 pursuant to consulting agreements, 140,000 shares issued to four
      shareholders upon conversion of their Series B preferred stock and 374,112
      shares issued to one entity upon conversion of $100,000 of our 14.25% secured
      convertible debentures. For the quarter ended September 30, 2005, the Company
      recorded $332,500 in deferred compensation for the shares issued as compensation
      pursuant to agreements and amortized $45,875 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.


-
          13
          -
 TOC


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


Weighted
                  average:
              2005
              2004Dividend
                  yield
              None
              NoneExpected
                  volatility factor
              151.67%
              94%Approximate
                  risk free interest rates
              6.5%
              4.75%Expected
                  lives, in years
              3
              3


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





**Stock
      options**





A
      summary
      of the stock option activity is as follows:





WeightedAverageExercise
                
                Number
                
                Exercise
                    PricePrice
                
                of
                    Options
                
                Per
                    OptionOutstanding
                    options at June 30, 2005
                
                $
                0.37
                
                
                17,707,517
                
                $
                0.25
                    - $1.01Granted
                
                
                --
                
                
                --
                
                
                --Expired
                
                $
                0.53
                
                
                (1,035,056
                )
                $
                0.38
                    - $0.50Cancelled
                
                
                --
                
                
                --
                
                
                --Outstanding
                    options at September 30, 2005
                
                $
                0.36
                
                
                16,672,461
                
                $
                0.25
                    - $1.01Exercisable
                    options at September 30, 2005
                
                $
                0.36
                
                
                16,470,236
                
                $
                0.25
                    - $1.01




The
      following table summarizes information concerning stock options outstanding
      at
      September 30, 2005.





Weighted
            
            WeightedNumber
                of
            
            Average
            
            AverageOptions
            
            Remaining
            
            ExerciseRange
                of Exercise Price
            
            Outstanding
            
            Life
                in Years
            
            Price$
                0.25 - 0.40
            
            
            16,147,461
            
            
            1.78
            
            $
            0.35$
                0.50 - 0.52
            
            
            225,000
            
            
            0.97
            
            $
            0.55$
                1.01
            
            
            300,000
            
            
            2.04
            
            $
            1.0116,672,461









The
      following table summarizes information concerning stock options exercisable
      at
      September 30, 2005.


WeightedAverageNumber
                of
            
            ExerciseRange
                of Exercise Price
            
            Options
            
            Price$
                0.25 - $0.40
            
            
            15,970,236
            
            $
            0.34$
                0.50
            
            
            200,000
            
            $
            0.50$
                1.01
            
            
            300,000
            
            $
            1.0116,470,236





-
          14
          -
 TOC


**Warrants**





A
      summary
      of the warrant activity is as follows:


WeightedAverageExercise
              
              Number
                  of
              
              Exercise
                  PricePrice
              
              Warrants
              
              Per
                  WarrantOutstanding
                  warrants at June 30, 2005
              
              $
              0.28
              
              
              30,483,206
              
              $
              0.15
                  - $2.00Granted
              
              $
              0.15
              
              
              5,583,333
              
              $
              0.15Cancelled
              
              $
              0.50
              
              
              (1,250,000
              )
              $
              0.15Expired
              
              
              --
              
              
              --
              
              
              --Outstanding
                  warrants at September 30, 2005
              
              $
              0.25
              
              
              34,816,539
              
              $
              0.15
                  - $2.00Exercisable
                  warrants at September 30, 2005
              
              $
              0.22
              
              
              33,766,539
              
              $
              0.15
                  - $2.00


The
      following table summarizes information concerning warrants outstanding at
      September 30, 2005:





Weighted
            
            WeightedAverage
            
            AverageNumber
                of
            
            Remaining
            
            ExerciseRange
                of Exercise Price
            
            Warrants
            
            Life
                in Years
            
            Price$
                0.15
            
            
            26,465,668
            
            
            2.49
            
            $
            0.15$
                1.00 - 1.30
            
            
            5,908,314
            
            
            2.14
            
            $
            0.42$
                1.50 - 2.00
            
            
            2,442,557
            
            
            1.10
            
            $
            0.9734,816,539





The
      following table summarizes information concerning warrants exercisable at
      September 30, 2005:





WeightedAverageNumber
                of
            
            ExerciseRange
                of Exercise Price
            
            Warrants
            
            Price$
                0.15 - 0.80
            
            
            26,465,668
            
            $
            0.15$
                0.20 - 0.74
            
            
            4,858,314
            
            $
            0.40$
                0.75 - 2.00
            
            
            2,442,557
            
            $
            1.1033,766,539





**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


-
          15
          -
 TOC


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;





-  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 additional facilities operated by its current largest customer
      outside of South Carolina;





-  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 except 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 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


-
          16
          -
 TOC


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 GFC, Inc. give effect to the acquisitions
      of
      certain assets of Commodity Express Transportation, Inc. and GFC, 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.





Pro
      Forma
      Combined Statement of Operations for the Three Months Ended September 30,
      2004


Power2Ship
                
                Express
                
                GFC
                
                Adjustments
                
                Pro
                    FormaRevenue:Freight
                    transportation
                
                $
                730,726
                
                $
                4,206,613
                
                $
                1,476,689
                
                $
                -
                
                $
                6,414,028Implementation
                    services
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                --
                
                
                
                
                
                
                
                
                -
                
                
                -
                
                
                -Total
                    revenue
                
                
                730,726
                
                
                4,206,613
                
                
                1,476,689
                
                
                -
                
                
                6,414,028Operating
                    expenses:Freight
                    transportation
                
                
                651,772
                
                
                3,655,697
                
                
                1,204,150
                
                
                -
                
                
                5,511,619Selling,
                    general and administrative:Salaries,
                    benefits and consulting fees
                
                
                614,814
                
                
                287,499
                
                
                118,449
                
                
                -
                
                
                1,020,762Other
                    selling, general and administrative
                
                
                420,465
                
                
                276,693
                
                
                110,352
                
                
                -
                
                
                807,510Total
                    operating expenses
                
                
                1,687,051
                
                
                4,219,889
                
                
                1,432,951
                
                
                -
                
                
                7,339,891Income
                    (loss) from operations
                
                
                (956,325
                )
                
                (13,276
                )
                
                43,738
                
                
                -
                
                
                (925,863
                )Other
                    income (expense):Forgiveness
                    of debt
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Interest
                    expense, net
                
                
                (197,123
                )
                
                (54,136
                )
                
                (26,665
                )
                
                -
                
                
                (277,924
                )Other
                    income
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Total
                    other expense
                
                
                (197,123
                )
                
                (54,136
                )
                
                (26,665
                )
                
                -
                
                
                (277,924
                )Net
                    income (loss)
                
                $
                (1,153,448
                )
                $
                (67,412
                )
                $
                17,073
                
                $
                -
                
                $
                (1,203,787
                )





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





-
            sold
                14.8 units consisting of $370,000 of Series C 10% unsecured convertible
                debentures with a one-year term and three-year warrants to purchase
                a
                total of 4,933,333 shares of common stock exercisable at $0.15 per
                shareand
                received net proceeds of $270,000 from six investors and the exchange
                of a
                $100,000 unsecured promissory note from one investor;
                the debentures are convertible into common stock at the greater of
                $0.15
                per share of 50% of the average closing price of the common stock
                for the
                five trading days immediately preceding the conversion date and are
                required to be repaid prior to maturity if the Company raises at
                least
                $5,000,000 in aggregate proceeds from sales of its securities following
                completion of the unit sale of which the debentures are a part, subject
                to
                the holders’ conversion rights;


-
          17
          -
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**-**
            issued
                three-year warrants to purchase 1,750,000 shares of common stock
                exercisable at $0.15 per share to three consultants to provide various
                management consulting services; and





**-**
            issued
                100,000 shares of common stock to one consultant to provide various
                management consulting services.


-
          18
          -
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**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 MobileMarketTM 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.








-
          19
          -
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**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
      MobileMarketTM 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 September 30, 2004 to
      27 at
      September 30, 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. Further, in July 2005, we disclosed the start of a pilot program
      with International Paper to enable one of their core carriers to become
      e-commerce compliant by installing the P2S MobileMarket system in their trucks.
      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 MobileMarketTM 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 $25,167 in the quarter ended
      September 30, 2005 compared to $63,035 in the quarter ended September 30, 2004
      in advertising and marketing our services to potential carriers and shippers
      utilizing trade publications, transportation industry websites and direct mail
      as well as company participation in industry trade shows and trade
      organizations .
      We
      intend to curtail most of our marketing expenditures for the remainder of fiscal
      year 2006 unless we raise sufficient capital to increase our marketing efforts
      for which no assurances can be given.





As
      of
      September 30, 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
      MobileMarketTM, 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.





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, as
      amended on July 12, 2005, and on March 28, 2005. During the quarter ended
      September 30, 2005, we issued a press release disclosing a pending transaction
      with the North Carolina operation of a Southeastern United States van carrier
      which was closed in October 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.





-
          20
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In
      August
      2005 we issued a press release announcing our collaboration with L-3
      Communications on an end-to-end solution for secure and efficient container
      transportation worldwide. We are also in discussions with other several
      technology and defense companies that, in response to the Homeland Security
      Act
      and Operation Safe Commerce, are in the process of developing 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 L-3 Communications or any of the other
      companies we are in discussions with or, if we do, that we will ever generate
      any significant revenues from such agreements.





Also,
      we
      have begun marketing the P2S MobileMarketTM 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
      MobileMarketTM and explore their interest in becoming customers if it was
      introduced in Brazil.





In
      September 2005, we announced that we had signed a referral partner agreement
      to
      form a strategic alliance with ShipLogix in which both companies will
      cross-market each other’s systems to their respective customer bases as well as
      engage in joint sales and marketing activities.





**RESULTS
      OF OPERATIONS**





**Three
      Months Ended September 30, 2005 compared to Three Months Ended September 30,
      2004**





**Revenue**





Total
      revenue generated during the quarter ended September 30, 2005 increased by
      $7,474,540 or approximately 1,023% as compared with total revenue generated
      during the quarter ended September 30, 2004. The increase during the quarter
      ended September 30, 2005 was attributed to higher freight transportation revenue
      generated from:





-
            Commodity
                Express Transportation, Inc., our subsidiary which began operationsupon
                consummating an asset purchase in March 2005, that had revenue of
                $6,111,121 versus no revenue the same quarter of 2004;





-
            Power2Ship
                Intermodal, Inc., our subsidiary which began operations upon consummating
                an asset purchase in March 2005, that had revenue of $1,183,887 versus
                no
                revenue the same quarter of 2004;
                and





-
            Power2Ship
                which had an increase of $179,532 or approximately 25% to $910,258
                versus
                $730,726 in the same quarter of 2004 as a result of growth of revenue
                from
                existing customers such as Tire Kingdom and Carroll Tireand additional revenue from several new shipper customers.





Revenue
      from access services and implementation services during the quarter ended
      September 30, 2005 was $5,668 versus no revenue during the same quarter of
      2004.
      Access services provide unlimited use of the information available through
      the
      Power2Ship MobileMarketTM 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 MobileMarketTM.





During
      the quarter ended September 30, 2005, one customer accounted for 53% of the
      Company’s revenue. Our
      agreement with this customer may be cancelled upon thirty days notice Because
      of
      the significant nature of the revenue from this customer to our results of
      operations, however, the loss of this customer, prior to our obtaining a
      comparable amount of revenue from additional customers, could have a material
      adverse effect on our business operations and prospects.


-
          21
          -
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**Operating
      Expenses**





Total
      operating expenses incurred during the quarter ended September 30, 2005
      increased by $7,208,666 or approximately 427% compared to the quarter ended
      September 30, 2004. The
      increase during the quarter ended September 30, 2005 was attributed to the
      following:





-  Freight
      transportation expenses, consisting of direct costs associated with transporting
      freight either with our own trucks or through non-affiliated trucking companies
      we hired to move loads for our shipper customers, increased by $6,668,484 or
      approximately 1,023% in the quarter ended September 30, 2005 as compared with
      the same quarter during 2004. This percentage increase in freight transportation
      expense was approximately the same as the percentage increase in revenue
      indicating that our gross margin remained constant.





-  Selling,
      general and administrative expenses increased by $540,182 or approximately
      52%
      during the quarter ended September 30, 2005 compared to the quarter ended
      September 30, 2004. The increase during the quarter ended September 30, 2005
      was
      attributed to the following:





-
            Salaries,
                benefits and consulting fees increased by $386,014 or approximately
                63%
                during the quarter ended September 30, 2005 which consisted increases
                to:





-  Salaries
      and benefits by $266,290 or approximately 62% to $697,991 in the quarter ended
      September 30, 2005 from $431,701 during the same quarter of 2004. This increase
      can be attributed primarily to the $261,181 in salaries and benefits paid to
      employees of our subsidiaries Commodity Express Transportation, Inc. and
      Power2Ship Intermodal, Inc. during the quarter ended September 30, 2005
      partially offset to a decrease in the number of employees in our Boca Raton,
      Florida operation.





-  Consulting
      fees by $119,723 or approximately 65% in the quarter ended September 30, 2005
      to
      $302,806 from $183,083 during the same quarter of 2004. This increase was
      attributed to higher consulting fees, primarily in the forms of common stock
      and
      warrants, paid to a greater number of consultants to provide the Company with
      additional management consulting services than in the same quarter of 2004.




-
            Other
                selling, general and administrative expenses increased by $154,168
                or
                approximately 37% during the quarter ended September 30, 2005 as
                compared
                to the quarter ended September 30, 2004. The most significant contributors
                to this increase were:





-
            Expenses
                of $195,181 incurred by our subsidiary Commodity Express Transportation
                during the quarter ended September 30, 2005 as compared with no expenses
                during the same period of 2004 which was prior to it commencing
                operations.





-
            Expenses
                of $35,561 incurred by our subsidiary Power2Ship Intermodal during
                the
                quarter ended September 30, 2005 as compared with no expenses during
                the
                same period of 2004 which was prior to it commencing
                operations.





These
      increases were partially offset by a decrease of $76,574 in expenses incurred
      by
      our Boca Raton, Florida operation. The most significant contributors to this
      decrease were:





-
            Advertising
                and marketing expenses, including convention and trade show expenses,
                which decreased by $53,696 or approximately 85% to $9,338 during
                the
                quarter ended September 30, 2005 from $63,035 during the same quarter
                of
                2004. This decrease was a result of management’s decision to temporarily
                curtail our contractual arrangement 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
                to
                reduce our attendance at regional and national trade
                shows.


-
          22
          -
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-
            Legal
                fees and expenses which decreased by $54,262 or approximately 71%
                to
                $22,130 during the quarter ended September 30, 2005 from $76,392
                during
                the same quarter of 2004. This decrease resulted from our requiring
                less
                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 quarter ended September 30, 2004 related to the
                preparation of our registration statement on Form
                SB-2.





These
      decreases were partially offset by increases in:





-
            Accounting
                expenses of $16,010 or approximately 49% to $49,007 during the quarter
                ended September 30, 2005 from $32,997 during the same quarter of
                2004
                primarily as a result of the expense for the audit of Commodity Express
                Transportation, Inc. for the two year period prior to our acquisition
                of
                certain of its assets, and





-
            Bank
                services charges of $11,783 during the quarter ended September 30,
                2005
                from $256 during the same quarter of 2004 primarily as a result of
                the
                increase in transaction fees paid to our vendor that electronically
                pays
                our carriers.





**Other
      Income (Expenses)**





Total
      other expenses increased by $270,137 or approximately 137% during the quarter
      ended September 30, 2005 as compared with the same quarter of 2004. This
      increase primarily resulted from an increase in interest expense of $274,458
      or
      approximately 139%. The higher interest expense during the quarter ended
      September 30, 2005 was associated with our:





-
            Issuances
                during or after the quarter ended September 30, 2004 including $1,000,000
                of 5% Series B secured convertible debentures in September 2004,
                $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





-
            $1,000,000
                revolving line of credit which began in December 2004 and





-
            Amortization
                of deferred financing costs and discounts on notes payable of $235,618
                and
                $62,278, respectively compared with $91,081 and $22,737 during the
                same
                quarter of 2005.




**LIQUIDITY
      AND CAPITAL RESOURCES**





We
      have
      experienced losses and negative cash flows from operations since our inception.
      As of September 30, 2005, we had an accumulated deficit of $20,213,804, a
      stockholders' deficit of $1,374,274, and our independent auditors’ report on our
      financial statements for fiscal year 2005 contained an explanatory paragraph
      regarding our ability to continue as a going concern. Our ability to continue
      as
      a going concern is dependent upon our ability to obtain the necessary financing
      to meet our obligations and repay our liabilities when they become due and
      to
      increase our revenues and generate profitable operations in the future. We
      plan
      to continue to provide for our capital requirements through the sale of equity
      or debt securities; however, we have no firm commitments from any third party
      to
      provide this financing and we cannot assure you we will be successful in raising
      working capital as needed. There are no assurances that we will have sufficient
      funds to execute our business plan, pay our obligations as they become due
      or
      generate positive operating results. If we are unable to raise additional
      capital, we may be required to reduce or eliminate certain of our operations.





At
      September 30, 2005, we had a working capital deficit of $2,191,533 as compared
      with a working capital deficit of $38,477 at June 30, 2005. This $2,153,056
      decrease in working capital during this quarter was attributed to a $438,083
      increase in current assets that was more than offset by a $2,591,139 increase
      in
      current liabilities. The change in current assets consisted of increases in
      cash
      of $91,816, accounts receivable of $337,477 and prepaid insurance of $8,790.
      The
      change in current liabilities consisted of increases in the current portion
      of
      convertible


-
          23
          -
 TOC


notes
      payable of $2,135,265, accounts payable and accrued expenses of $328,384,
      accrued salaries of $32,319 and an increase in the outstanding balance of our
      line of credit of $125,171 that partially were offset by a decrease in short
      term notes payable of $30,000.





During
      the quarter ended September 30, 2005, our cash balance increased by $91,816.
      This increase was the result of $932,671 provided by financing activities that
      partially was offset by $716,360 used in operating activities and $124,495
      used
      in investing activities. This compared with a decrease in our cash balance
      of
      $303,374 during the quarter ended September 30, 2004 as a result of $1,091,375
      used in operating activities and $96,999 used in investing activities that
      partially were offset by $885,000 provided by financing activities.





During
      the quarter ended September 30, 2005, we used $716,360 in operating activities
      which was made up of our net loss of $1,157,711, changes in operating assets
      and
      liabilities of $98,823 and a decrease in allowance for doubtful accounts of
      $17,997 that partially were offset by depreciation and amortization of $424,890
      and issuances of our common stock, options and warrants as payment for services,
      interest and compensation of $133,281. This compared with $1,091,375 used in
      operating activities during the quarter ended September 30, 2004 which consisted
      of our net loss of $1,153,448 and changes in operating assets and liabilities
      of
      $228,297 that partially were offset by depreciation and amortization of $158,730
      and issuances of our common stock, options and warrants as payment for services,
      interest and compensation of $131,640.





The
      $124,995 cash used in investing activities during the quarter ended September
      30, 2005 consisted of $93,328 for development of our internal use software
      and
      $31,167 for purchases of property and equipment. This
      compared with $96,999 used in investing activities during the quarter ended
      September 30, 2004 which consisted of $87,187 for development of our internal
      use software and $9,812 for purchases of property and equipment.





During
      the quarter ended September 30, 2005, we generated net cash from financing
      activities of $932,671 which consisted of net proceeds of $807,500 from the
      issuance of units consisting of common stock and warrants and $125,171 from
      our
      revolving line of credit. This compared with net cash provided by financing
      activities of $885,000 during the quarter ended September 30, 2004 which
      consisted of net proceeds of $900,000 from the issuance of convertible
      promissory notes less $15,000 from the repayment of promissory
      notes.





We
      estimate that the $929,569 we had on hand at September 30, 2005 and, since
      October 1, 2005, our receipt of $320,000 in net proceeds pursuant to our unit
      offering, the exchange of a $100,000 short-term note payable for four units
      in
      our current offering, an expected decrease in cash used in operations as a
      result of our increasing transportation and MobileMarketTM revenue and additional
      borrowings from our $1,000,000 revolving credit facility will be sufficient
      to
      fund our operating activities for approximately sixty
      to
      ninety days from the date of filing this Form 10-QSB. 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.


-
          24
          -
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In
      July
      2005 we terminated our Standby Equity Distribution Agreement and several other
      related agreements with Cornell Capital Partners.





**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, 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 and that there are no occurrences during
      the period covered by this quarterly report that have materially affected,
      or
      are reasonably likely to materially affect, our internal controls over financial
      reporting.





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





**PART
      II. OTHER INFORMATION**





**ITEM
      1.**  **LEGAL
      PROCEEDINGS**





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





Between
      July and September 2005, we sold approximately 28 units of our securities to
      twenty-one investors in a private placement exempt from registration under
      the
      Securities Act of 1933 in reliance on Rule 506 of Regulation D of that act.
      Each
      unit consisted of 200,000 shares of common stock and a warrant to purchase
      200,000 shares of common stock for a total issuance of 5,583,333 shares of
      common stock and warrants to purchase 5,583,333 shares of common stock. Each
      warrant is exercisable until July 31, 2008 at an exercise price of $0.15 per
      share, subject to adjustment in the event that
      our
      outstanding share of common stock hereafter are  changed
      into or exchanged for a different number or kind of shares or other securities
      of the company or of another corporation by reason of merger, consolidation,
      other reorganization, recapitalization, reclassification, combination of shares,
      stock split or stock dividend . Clayton,
      Dunning & Company, Inc., Prestige Financial Center, Inc. and Newbridge
      Securities Corporation, member firms of the National Association of Securities
      Dealers, Inc., acted as selling agents for us and were paid a sales commission
      of 10% on all units sold by them. The units also were sold through the Company’s
      officers who received no sales commissions. We received net proceeds of
      $1,832,852 after payment of commissions and other costs related to the offering.
      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.







In
      July
      and August 2005 we issued 2,280,000 shares of common stock to two consultants
      as
      compensation pursuant to agreements to provide us with a variety of management
      consulting services. These shares were recorded at their fair market value
      of
      $434,920 which 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.




Between
      October 1, 2005 and the filing of this report, we sold approximately 15 units
      of
      our securities to seven investors in a private placement exempt from
      registration under the Securities Act of 1933 in reliance on Rule 506 of
      Regulation D of that act. Each unit consisted of a $25,000 Series C convertible
      debenture and a warrant to purchase 333,333 shares of common stock for a total
      issuance of warrants to purchase 4,933,333 shares of common stock. T he
      debentures mature on their respective one-year anniversaries, earn interest
      at
      the rate of 10% per annum, are convertible into common stock at the greater
      of
      $0.15 per share or 50% of the average closing price of the common stock for
      the
      five trading days immediately preceding the conversion date and are required
      to
      be repaid prior to maturity if the Company raises at least $5,000,000 in
      aggregate proceeds from sales of its securities following completion of the
      unit
      sale of which the debentures are a part, subject to the holders’ conversion
      rights. Each
      warrant is exercisable until October 31, 2008 at an exercise price of $0.15
      per
      share, subject to adjustment in the event that
      our
      outstanding share of common stock hereafter are  changed
      into or exchanged for a different number or kind of shares or other securities
      of the company or of another corporation by reason of merger, consolidation,
      other reorganization, recapitalization, reclassification, combination of shares,
      stock split or stock dividend . The
      units were sold through the Company’s officers who received no sales
      commissions. We received net proceeds of $270,000 after payment of costs related
      to the offering from six of the investors and one
      investor exchanged their $100,000 unsecured promissory note for four
      units .
      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.


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In
      November 2005 we issued three-year
      warrants to purchase 1,750,000 shares of common stock exercisable at $0.15
      per
      share to three consultants to provide various management consulting
      services .
      These
      warrants were recorded as deferred compensation at their fair market value
      of
      $186,720 which 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.





In
      November 2005 we issued 100,000 shares of common stock to one consultant to
      provide various management consulting services. These
      shares were recorded as deferred compensation at their fair market value of
      $13,000 which will be expensed over the term of the agreement. 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.


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**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)
                  Exhibits31.1
              Rule
                  13a-14(a)/15d-14(a) Certification of Chief
                  Executive Officer31.2
              Rule
                  13a-14(a)/15d-14(a) Certification of Principal
                  Financial and Accounting Officer32.1
              Certification
                  of Chief Executive Officer and Chief
                  Financial Officer Pursuant to 18 U.S.C. Section
                  1350.


**SIGNATURES**





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


Date:
                November 21, 2005
              POWER2SHIP,
                INC.
              
              By:/s/
                Richard Hersh
              Richard
                Hersh
              Chief
                Executive Officer,principal
                executive
              officer
                and principal financial and accounting
                officer





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