SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
  FORM
10-Q
  x
              QUARTERLY
      REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For the
quarterly period ended: March 31, 2010
  o
              TRANSITION
      REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For the
transition period from ___________ to _____________
  Commission
File Number: 000-50283
 
 RADIANT LOGISTICS,
INC.
 (Exact
Name of Registrant as Specified in Its Charter)
 
 Delaware
              
              04-3625550(State
      or Other Jurisdiction of
                Incorporation
      or Organization)
              
              (IRS
      Employer Identification No.)
 
 1227 120th Avenue
N.E., Bellevue, WA 98005
 
 (Address
of Principal Executive Offices)
 
 (425) 943-4599
 
 
 N/A
 
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act 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 o
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o No o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of large accelerated filer, accelerated filer and smaller reporting
company in Rule 12b-2 of the Exchange Act. (Check one):
  Large
      accelerated filer o
                Accelerated
      filer oNon-accelerated
      filer   o
                Smaller
      reporting company x(Do
      not check if a smaller reporting company)
 
 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
 
 There
were 31,967,811 issued and outstanding shares of the registrant’s common stock,
par value $.001 per share, as of May 14, 2010.
 
 
 
  RADIANT
LOGISTICS, INC.
 TABLE
OF CONTENTS
  PART
      I. FINANCIAL INFORMATIONItem
      1.
              Condensed
      Consolidated Financial Statements - UnauditedCondensed
      Consolidated Balance Sheets at March 31, 2010 and June 30,
      2009
              
              2Condensed
      Consolidated Statements of Operations for the three months and nine months
      ended March 31, 2010 and 2009
              
              3Condensed
      Consolidated Statement of Stockholders’ Equity for the nine months ended
      March 31, 2010
              
              4Condensed
      Consolidated Statements of Cash Flows for the nine months ended March 31,
      2010 and 2009
              
              5Notes
      to Condensed Consolidated Financial Statements
              
              7Item
      2.
              Management’s
      Discussion and Analysis of Financial Conditions and Results of
      Operations
              
              17Item
      4T.
              Controls
      and Procedures
              
              31PART
      II OTHER INFORMATIONItem
      1.
              Legal
      Proceedings
              
              32Item
      2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds
              
              32Item
      6.
              Exhibits
              
              33
  
  RADIANT
LOGISTICS, INC.
 Condensed
Consolidated Balance Sheets
  (unaudited)
 
 March
      31,
                  2010
              
              
              June
      30,2009ASSETSCurrent
      assets:Cash
      and cash equivalents
              
              $
              -
              
              
              $
              890,572Accounts
      receivable, net of allowance of $669,759 and $754,578,
      respectively
              
              
              18,471,694
              
              
              
              17,275,387Current
      portion of employee loan receivable
              
              
              12,600
              
              
              
              53,700Current
      portion of  station and other receivables
              
              
              802,129
              
              
              
              522,088Income
      tax deposit
              
              
              -
              
              
              
              535,074Prepaid
      expenses and other current assets
              
              
              451,273
              
              
              
              305,643Deferred
      tax asset
              
              
              504,430
              
              
              
              427,713Total
      current assets
              
              
              20,242,126
              
              
              
              20,010,177Furniture
      and equipment, net
              
              
              500,379
              
              
              
              760,507Acquired
      intangibles, net
              
              
              2,303,411
              
              
              
              3,179,043Goodwill
              
              
              494,291
              
              
              
              337,000Employee
      loan receivable, net of current portion
              
              
              38,000
              
              
              
              40,000Station
      and other receivables, net of current portion
              
              
              162,636
              
              
              
              37,500Investment
      in real estate
              
              
              40,000
              
              
              
              40,000Deposits
      and other assets
              
              
              211,693
              
              
              
              359,606Total
      long term assets
              
              
              3,250,031
              
              
              
              3,993,149Total
      assets
              
              $
              23,992,536
              
              
              $
              24,763,833LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)Current
      liabilities:Checks
      issued in excess of funds
              
              $
              44,148
              
              
              $
              -Accounts
      payable and accrued transportation costs
              
              
              13,058,103
              
              
              
              13,249,628Commissions
      payable
              
              
              1,422,517
              
              
              
              1,323,004Other
      accrued costs
              
              
              603,278
              
              
              
              472,202Income
      taxes payable
              
              
              276,612
              
              
              
              -Due
      to former Adcom shareholder
              
              
              947,466
              
              
              
              2,153,721Total
      current liabilities
              
              
              16,352,124
              
              
              
              17,198,555Long
      term debt
              
              
              7,448,662
              
              
              
              7,869,110Other
      long term liabilities
              
              
              23,544
              
              
              
              -Deferred
      tax liability
              
              
              -
              
              
              
              352,387Total
      long term liabilities
              
              
              7,472,206
              
              
              
              8,221,497Total
      liabilities
              
              
              23,824,330
              
              
              
              25,420,052Stockholders'
      equity (deficit):Radiant
      Logistics, Inc. stockholders' equity (deficit):Preferred
      stock, $0.001 par value, 5,000,000 shares authorized; no shares issued or
      outstanding
              
              
              -
              
              
              
              -Common
      stock, $0.001 par value, 50,000,000 shares
      authorized,  32,334,811 and 34,106,960 shares issued and
      outstanding, respectively
              
              
              16,157
              
              
              
              16,157Additional
      paid-in capital
              
              
              8,053,300
              
              
              
              7,889,458Treasury
      stock, at cost, 2,367,149 and 595,000 shares, respectively
              
              
              (645,163
              )
              
              
              (138,250
              )Retained
      deficit
              
              
              (7,311,224
              )
              
              
              (8,425,491
              )Total
      Radiant Logistics, Inc. stockholders’ equity (deficit)
              
              
              113,070
              
              
              
              (658,126
              )Non-controlling
      interest
              
              
              55,136
              
              
              
              1,907Total
      stockholders’ equity (deficit)
              
              
              168,206
              
              
              
              (656,219
              )Total
      liabilities and stockholders’ equity (deficit)
              
              $
              23,992,536
              
              
              $
              24,763,833
  The
accompanying notes form an integral part of these condensed consolidated
financial statements.
  2
  RADIANT
LOGISTICS, INC.
 Condensed
Consolidated Statements of Operations
 (unaudited)
 
 THREE
      MONTHS ENDED
                MARCH
      31,
              
              
              NINE
      MONTHS ENDED
                MARCH
      31,2010
              
              
              2009
              
              
              2010
              
              
              2009Revenue
              
              $
              32,863,624
              
              
              $
              29,718,852
              
              
              $
              106,007,803
              
              
              $
              104,626,813Cost
      of transportation
              
              
              22,522,506
              
              
              
              18,971,855
              
              
              
              73,613,523
              
              
              
              69,207,198Net
      revenues
              
              
              10,341,118
              
              
              
              10,746,997
              
              
              
              32,394,280
              
              
              
              35,419,615Agent
      commissions
              
              
              7,104,883
              
              
              
              6,981,916
              
              
              
              22,398,448
              
              
              
              23,535,316Personnel
      costs
              
              
              1,448,374
              
              
              
              1,825,106
              
              
              
              4,402,236
              
              
              
              5,548,465Selling,
      general and administrative expenses
              
              
              551,139
              
              
              
              1,188,977
              
              
              
              2,800,572
              
              
              
              3,309,679Depreciation
      and amortization
              
              
              386,145
              
              
              
              479,061
              
              
              
              1,181,862
              
              
              
              1,267,124Goodwill
      impairment
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              11,403,342Restructuring
      charges
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              220,000Total
      operating expenses
              
              
              9,490,541
              
              
              
              10,475,060
              
              
              
              30,783,118
              
              
              
              45,283,926Income
      (loss) from operations
              
              
              850,577
              
              
              
              271,937
              
              
              
              1,611,162
              
              
              
              (9,864,311
              )Other
      income (expense):Interest
      income
              
              
              35,130
              
              
              
              2,482
              
              
              
              38,403
              
              
              
              8,900Interest
      expense
              
              
              (56,404
              )
              
              
              (68,392
              )
              
              
              (142,195
              )
              
              
              (166,471
              )Other
              
              
              155,406
              
              
              
              (18,089
              )
              
              
              254,171
              
              
              
              12,126Gain
      on extinguishment of debt
              
              
              -
              
              
              
              190,000
              
              
              
              -
              
              
              
              190,000Gain
      on litigation settlement
              
              
              -
              
              
              
              -
              
              
              
              354,670
              
              
              
              -Total
      other income
              
              
              134,132
              
              
              
              106,001
              
              
              
              505,049
              
              
              
              44,555Income
      (loss) before income tax (expense) benefit
              
              
              984,709
              
              
              
              377,938
              
              
              
              2,116,211
              
              
              
              (9,819,756
              )Income
      tax (expense) benefit
              
              
              (511,050
              )
              
              
              (63,150
              )
              
              
              (918,715
              )
              
              
              166,881Net
      income (loss)
              
              
              473,659
              
              
              
              314,788
              
              
              
              1,197,496
              
              
              
              (9,652,875
              )Less:
      Net income attributable to non-controlling interest
              
              
              (24,551
              )
              
              
              (21,750
              )
              
              
              (83,229
              )
              
              
              (19,604
              )Net
      income (loss) attributable to Radiant Logistics, Inc.
              
              $
              449,108
              
              
              $
              293,038
              
              
              $
              1,114,267
              
              
              $
              (9,672,479
              )Net
      income (loss) per common share – basic
              
              $
              .01
              
              
              $
              .01
              
              
              $
              .03
              
              
              $
              (.28
              )Net
      income (loss) per common share – diluted
              
              $
              .01
              
              
              $
              .01
              
              
              $
              .03
              
              
              $
              (.28
              )Weighted
      average shares outstanding:Basic
      shares
              
              
              32,391,859
              
              
              
              34,701,960
              
              
              
              32,767,213
              
              
              
              34,699,679Diluted
      shares
              
              
              32,533,794
              
              
              
              34,701,960
              
              
              
              32,937,774
              
              
              
              34,699,679
  The
accompanying notes form an integral part of these condensed consolidated
financial statements.
  3
  RADIANT
LOGISTICS, INC.
 Condensed
Consolidated Statement of Stockholders’ Equity (Deficit)
 (unaudited)
  RADIANT
      LOGISTICS, INC. STOCKHOLDERSCOMMON
      STOCK
              
              
              ADDITIONAL
      PAID-IN CAPITAL
              
              
              TREASURY
      STOCK
              
              
              RETAINED
      EARNINGS (DEFICIT)
              
              
              NONCONTROLLING
      INTEREST
              
              
              TOTAL
      STOCKHOLDERS’ EQUITY (DEFICIT)SHARES
              
              
              AMOUNTBalance
      at June 30, 2009
              
              
              34,106,960
              
              
              $
              16,157
              
              
              $
              7,889,458
              
              
              $
              (138,250
              )
              
              $
              (8,425,491
              )
              
              $
              1,907
              
              
              $
              (656,219
              )Repurchase
      of common stock
              
              
              (1,772,149
              )
              
              
              -
              
              
              
              -
              
              
              
              (506,913
              )
              
              
              -
              
              
              
              -
              
              
              
              (506,913
              )Share-based
      compensation
              
              
              -
              
              
              
              -
              
              
              
              163,842
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              163,842Distribution
      to non-controlling interest
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (30,000
              )
              
              
              (30,000
              )Net
      income for the nine months ended March 31, 2010
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,114,267
              
              
              
              83,229
              
              
              
              1,197,496Balance
      at March 31, 2010
              
              
              32,334,811
              
              
              $
              16,157
              
              
              $
              8,053,300
              
              
              $
              (645,163
              )
              
              $
              (7,311,224
              )
              
              $
              55,136
              
              
              $
              168,206
  The
accompanying notes form an integral part of these condensed consolidated
financial statements.
  4
  RADIANT
LOGISTICS, INC.
 Condensed
Consolidated Statements of Cash Flows
 (unaudited)
 
 NINE
      MONTHS ENDED MARCH 31, 2010
              
              
              NINE
      MONTHS ENDED MARCH 31, 2009CASH
      FLOWS PROVIDED BY OPERATING ACTIVITIES:Net
      income (loss)
              
              $
              1,197,496
              
              
              $
              (9,652,875
              )ADJUSTMENTS
      TO RECONCILE NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING
      ACTIVITIES:non-cash
      compensation expense (stock options)
              
              
              163,842
              
              
              
              123,714non-cash
      issuance of common stock (services)
              
              
              -
              
              
              
              12,084amortization
      of intangibles
              
              
              875,632
              
              
              
              914,215deferred
      income tax benefit
              
              
              (429,104
              )
              
              
              (1,268,034
              )depreciation
      and leasehold amortization
              
              
              306,230
              
              
              
              352,908gain
      on litigation settlement
              
              
              (354,670
              )
              
              
              -goodwill
      impairment
              
              
              -
              
              
              
              11,403,342gain
      on extinguishment of debt
              
              
              -
              
              
              
              (190,000
              )amortization
      of bank fees
              
              
              37,262
              
              
              
              12,257provision
      for doubtful accounts
              
              
              (11,630
              )
              
              
              134,101CHANGE
      IN OPERATING ASSETS AND LIABILITIES:accounts
      receivable
              
              
              (1,111,488
              )
              
              
              8,354,248employee
      loan receivable
              
              
              43,100
              
              
              
              (10,033
              )station
      and other receivables
              
              
              (393,945
              )
              
              
              (99,260
              )prepaid
      expenses and other assets
              
              
              (137,317
              )
              
              
              171,684checks
      issued in excess of funds
              
              
              44,148
              
              
              
              -accounts
      payable and accrued transportation costs
              
              
              (195,800
              )
              
              
              (6,914,471
              )commissions
      payable
              
              
              99,513
              
              
              
              232,188other
      accrued costs
              
              
              (148,412
              )
              
              
              32,009other
      long-term liabilities
              
              
              23,544
              
              
              
              -income
      taxes payable
              
              
              276,612
              
              
              
              -income
      tax deposit
              
              
              535,074
              
              
              
              (1,288,396
              )due
      to former Adcom shareholder
              
              
              (20,834
              )
              
              
              -Net
      cash provided by operating activities
              
              
              799,253
              
              
              
              2,319,681CASH
      FLOWS USED FOR INVESTING ACTIVITIES:Acquisition
      of Adcom Express, Inc., net of acquired cash, including an additional
      $62,246 of costs incurred post-closing
              
              
              -
              
              
              
              (4,839,042
              )Purchase
      of furniture and equipment
              
              
              (46,102
              )
              
              
              (215,785
              )Payments
      to former shareholders of Airgroup
              
              
              -
              
              
              
              (556,639
              )Payments
      made to former Adcom shareholder
              
              
              (686,362
              )
              
              
              -Net
      cash used for investing activities
              
              
              (732,464
              )
              
              
              (5,611,466
              )CASH
      FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES:Proceeds
      from (payments on) credit facility, net of credit fees
              
              
              (420,448
              )
              
              
              3,413,899Distribution
      to non-controlling interest
              
              
              (30,000
              )
              
              
              -Purchases
      of treasury stock
              
              
              (506,913
              )
              
              
              -Net
      cash provided by (used for) financing activities
              
              
              (957,361
              )
              
              
              3,413,899NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
              
              
              (890,572
              )
              
              
              122,114CASH
      AND CASH EQUIVALENTS, BEGINNING OF  PERIOD
              
              
              890,572
              
              
              
              392,223CASH
      AND CASH EQUIVALENTS, END OF PERIOD
              
              $
              -
              
              
              $
              514,337SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Income
      taxes paid
              
              $
              588,393
              
              
              $
              2,430,840Interest
      paid
              
              $
              117,349
              
              
              $
              166,471
  The
accompanying notes form an integral part of these condensed consolidated
financial statements.
  5
  RADIANT
LOGISTICS, INC.
 Condensed
Consolidated Statements of Cash Flows
 (unaudited)
 
 Supplemental
disclosure of non-cash investing and financing activities:
  In
November 2008, the Company recorded $633,333 as an accrued payable and an
increase to goodwill for the final annual earn-out payment due to the former
Airgroup shareholders for the Company’s acquisition of Airgroup.
  In
November 2008, the Company finalized its purchase price allocation resulting in
a decrease of net assets acquired by $62,694 due to unutilized transaction
costs.  The effect of this transaction was a decrease to goodwill and
a decrease to accrued payables.
  In
December 2008, the Company completed its quarterly analysis of allowance for
doubtful accounts.  Included in the analysis of doubtful accounts was
$205,462 relating to receivables acquired in the Adcom
transaction.  Pursuant to the purchase agreement for the acquisition
of Adcom, the $205,462 was offset against amounts otherwise due to the former
Adcom shareholder.
  In
December 2008, the Company paid $333,277 to the former Airgroup shareholders for
the earn-out payment recorded on the books for the year ended June 30,
2008.  The earn-out payment was recorded at June 30, 2008 in the
amount of $416,596, and payable in shares of Company common
stock.  The payment was discounted by $83,319 as the former Airgroup
shareholders agreed to receive cash rather than Company
shares.    The effect of this transaction was a decrease to
goodwill and the amount owed to the former Airgroup shareholders.
  In
September 2009, the Company finalized its purchase price allocation relating to
the acquisition of Adcom, resulting in an increase of net assets acquired by
$151,550 due to increased transaction costs and other adjustments to the fair
value of the acquired assets. The effect of this transaction was an increase to
goodwill of $157,291 with offsetting changes to other balance sheet amounts as
follows: a decrease to the allowance for doubtful accounts of $72,280, an
increase in other receivables of $11,831, an increase in accounts payable of
$4,275, an increase of other accrued costs of $279,488, and a decrease in the
amount due to the former Adcom shareholder of $42,361.
  6
  RADIANT
LOGISTICS, INC.
 Notes
to Condensed Consolidated Financial Statements
 (unaudited)
  NOTE
1 – THE COMPANY AND BASIS OF PRESENTATION
  The
Company
  Radiant
Logistics, Inc. (the “Company”) was incorporated in the State of Delaware on
March 15, 2001. Currently, the Company is executing a strategy to build a global
transportation and supply chain management company through organic growth and
the strategic acquisition of best-of-breed non-asset based transportation and
logistics providers to offer its customers domestic and international freight
forwarding and an expanding array of value added supply chain management
services, including order fulfillment, inventory management and
warehousing.
  The
Company completed the first step in its business strategy through the
acquisition of Airgroup Corporation ("Airgroup") effective as of January 1,
2006. Airgroup is a Bellevue, Washington based non-asset based logistics company
providing domestic and international freight forwarding services through a
network which includes a combination of company-owned and exclusive agent
offices across North America.
  The
Company continues to identify a number of additional companies as suitable
acquisition candidates and has completed two material acquisitions over the past
twenty four months. In November 2007, the Company acquired Automotive Services
Group in Detroit, Michigan to service the automotive industry. In September
2008, the Company acquired Adcom Express, Inc. d/b/a Adcom Worldwide ("Adcom")
adding an additional 30 locations across North America and augmenting the
Company’s overall domestic and international freight forwarding
capabilities.
  In
connection with the acquisition of Adcom, the Company changed the name of
Airgroup Corporation to Radiant Global Logistics, Inc. ("RGL") in order to
better position its centralized back-office operations to service both the
Airgroup and Adcom network brands.
  RGL,
through the Airgroup and Adcom network brands, has a diversified account base
including manufacturers, distributors and retailers using a network of
independent carriers and international agents positioned strategically around
the world.
  By
implementing a growth strategy supported by the RGL platform, the Company is
building a leading global transportation and supply-chain management company
offering a full range of domestic and international freight forwarding and other
value added supply chain management services, including order fulfillment,
inventory management and warehousing.
  The
Company’s growth strategy will continue to focus on both organic growth and
acquisitions. From an organic perspective the Company will focus on
strengthening existing and expanding new customer relationships. One of the
drivers of the Company’s organic growth will be retaining existing, and securing
new exclusive agency locations. Since the Company’s acquisition of Airgroup in
January 2006, the Company has focused its efforts on the build-out of its
network of exclusive agency offices, as well as enhancing its back-office
infrastructure and transportation and accounting systems.
  As the
Company continues to build out its network of exclusive agent locations to
achieve a level of critical mass and scale, it is executing an acquisition
strategy to develop additional growth opportunities. The Company’s acquisition
strategy relies upon two primary factors: first, the Company’s ability to
identify and acquire target businesses that fit within its general acquisition
criteria; and second, the continued availability of capital and financing
resources sufficient to complete these acquisitions.
  Successful
implementation of the Company’s growth strategy depends upon a number of
factors, including its ability to: (i) continue developing new agency locations;
(ii) locate acquisition opportunities; (iii) secure adequate funding to finance
identified acquisition opportunities; (iv) efficiently integrate the businesses
of the companies acquired; (v) generate the anticipated economies of scale from
the integration; and (vi) maintain the historic sales growth of the acquired
businesses in order to generate continued organic growth. There are a variety of
risks associated with the Company’s ability to achieve its strategic objectives,
including the ability to acquire and profitably manage additional businesses and
the intense competition in the industry for customers and for acquisition
candidates.
  7
  The
Company will continue to search for targets that fit within its acquisition
criteria. The Company’s ability to secure additional financing depends in part
upon the sale of debt or equity securities, and the development of an active
trading market for its securities.
  Interim
Disclosure
  The
condensed consolidated financial statements included herein have been prepared,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC").  Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States have been
condensed or omitted pursuant to such rules and regulations. The Company’s
management believes that the disclosures are adequate to make the information
presented not misleading.  These condensed financial statements should
be read in conjunction with the financial statements and the notes thereto
included in the Company’s Annual Report on Form 10-K for the year ended June 30,
2009.
  The
interim period information included in this Quarterly Report on Form 10-Q
reflects all adjustments, consisting of normal recurring adjustments, that are,
in the opinion of the Company’s management, necessary for a fair statement of
the results of the respective interim periods.  Results of operations
for interim periods are not necessarily indicative of results to be expected for
an entire year.
  Basis
of Presentation
  The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries as well as a single variable interest entity, Radiant
Logistics Partners LLC ("RLP"), which is 40% owned by Radiant Global Logistics
(f/k/a Airgroup Corporation), a wholly-owned subsidiary of the Company, and
whose accounts are included in the consolidated financial statements. All
significant intercompany balances and transactions have been
eliminated.
  NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  a) Use
of Estimates
  The
preparation of financial statements and related disclosures in accordance with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Such estimates include revenue
recognition, accruals for the cost of purchased transportation, the fair value
of acquired assets and liabilities, accounting for the issuance of shares and
share based compensation, the assessment of the recoverability of long-lived
assets (specifically goodwill and acquired intangibles), the establishment of an
allowance for doubtful accounts and the valuation allowance for deferred tax
assets. Estimates and assumptions are reviewed periodically and the effects of
revisions are reflected in the period that they are determined to be necessary.
Actual results could differ from those estimates.
  b) Fair
Value Measurements
  In
general, fair values determined by Level 1 inputs utilize quoted prices
(unadjusted) in active markets for identical assets or liabilities. Fair values
determined by Level 2 inputs utilize observable inputs other than Level 1
prices, such as quoted prices for similar assets or liabilities, quoted prices
in markets that are not active or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the
related assets or liabilities. Fair values determined by Level 3 inputs are
unobservable data points for the asset or liability, and include situations
where there is little, if any, market activity for the asset or
liability.
  8
  c) Fair
Value of Financial Instruments
  The fair
values of the Company’s receivables, income tax deposit, accounts payable and
accrued transportation costs, commissions’ payable, other accrued costs and
amounts due to former Adcom shareholder approximate the carrying values dues to
the relatively short maturities of these instruments. The fair value of the
Company’s long-term debt, if recalculated based on current interest rates, would
not differ significantly from the recorded amount.
  d) Cash
and Cash Equivalents
  For
purposes of the statements of cash flows, cash equivalents include all highly
liquid investments with original maturities of three months or less which are
not securing any corporate obligations.
  e) Concentrations
  The
Company maintains its cash in bank deposit accounts, which, at times, may exceed
federally insured limits. The Company has not experienced any losses in such
accounts.
  f) Accounts
Receivable
  The
Company’s receivables are recorded when billed and represent claims against
third parties that will be settled in cash. The carrying value of the Company’s
receivables, net of the allowance for doubtful accounts, represents their
estimated net realizable value. The Company evaluates the collectability of
accounts receivable on a customer-by-customer basis. The Company records a
reserve for bad debts against amounts due to reduce the net recognized
receivable to an amount the Company believes will be reasonably collected. The
reserve is a discretionary amount determined from the analysis of the aging of
the accounts receivable, historical experience and knowledge of specific
customers.
  g) Station
and Other Receivables
  On
occasion the Company extends credit to agent-based
stations.
  In March
2010, it was determined the Company had overpaid business and occupancy
("B&O") taxes to the State of Washington Department of Revenue during an
audit of the 2006 – 2009 calendar year B&O tax returns.  The audit
resulted in a $394,795 receivable due from the State of Washington which is
included with station and other receivables on the condensed consolidated
balance sheet as of March 31, 2010.  The results of the audit also
reduced selling, general and administrative expenses on the condensed
consolidated statements of operations by the same amount for the three and nine
months ended March 31, 2010.
  h) Furniture
& Equipment
  Technology
(computer software, hardware, and communications), furniture, and equipment are
stated at cost, less accumulated depreciation over the estimated useful lives of
the respective assets. Depreciation is computed using five to seven year lives
for vehicles, communication, office, furniture, and computer equipment and the
double declining balance method. Computer software is depreciated over a three
year life using the straight line method of depreciation. For leasehold
improvements, the cost is depreciated over the shorter of the lease term or
useful life on a straight line basis. Upon retirement or other disposition of
these assets, the cost and related accumulated depreciation are removed from the
accounts and the resulting gain or loss, if any, is reflected in other income or
expense. Expenditures for maintenance, repairs and renewals of minor items are
charged to expense as incurred. Major renewals and improvements are
capitalized.
  i) Goodwill
  The
Company performs an annual impairment test for goodwill. The first step of the
impairment test requires that the Company determine the fair value of its
reporting unit, and compare the fair value to the reporting unit's carrying
amount. The Company has only one reporting unit.  To the extent the
reporting unit's carrying amount exceeds its fair value, an indication exists
that the reporting unit's goodwill may be impaired and the Company must perform
a second more detailed impairment assessment. The second impairment assessment
involves allocating the reporting unit’s fair value to all of its recognized and
unrecognized assets and liabilities in order to determine the implied fair value
of the reporting unit’s goodwill as of the assessment date. The implied fair
value of the reporting unit’s goodwill is then compared to the carrying amount
of goodwill to quantify an impairment charge as of the assessment date. The
Company performs its annual impairment test effective as of April 1 of each
year, unless events or circumstances indicate impairment may have occurred
before that time.
  9
  During
the second quarter of fiscal 2009, in connection with the preparation of the
condensed consolidated financial statements included herein, the Company
concluded that indicators of potential impairment were present due to the
sustained decline in the Company’s share price which resulted in the market
capitalization of the Company being less than its book value.  The
Company conducted an impairment test during the second quarter of fiscal 2009
based on the facts and circumstances at that time and its business strategy in
light of existing industry and economic conditions, as well as taking into
consideration future expectations. As the Company had significantly grown the
business since its initial acquisition of Airgroup, it had also grown its
customer relationship intangibles as the Company added additional
stations.  Through its impairment testing and review, the Company
concluded that its discounted cashflow analysis supported a valuation of its
identifiable intangible assets well in excess of their carrying
value.  Factoring this with management’s assessment of the fair value
of other assets and liabilities resulted in no residual implied fair value
remaining to be allocated to goodwill.  However, generally accepted
accounting principles ("GAAP") do not allow the Company to recognize the
previously unrecognized intangible assets in connection with these new
stations.  As a result, at December 31, 2008, the Company
recorded a non-cash goodwill impairment charge of $11.4 million. The
Company does not expect this non-cash charge to have any impact on the Company’s
compliance with the financial covenants in its credit agreement.
  j) Long-Lived
Assets
  Acquired
intangibles consist of customer related intangibles and non-compete agreements
arising from the Company’s acquisitions. Customer related intangibles are
amortized using accelerated methods over approximately 5 years and non-compete
agreements are amortized using the straight line method over the term of the
underlying agreements. See Notes 4 and 5.
  The
Company reviews long-lived assets to be held-and-used for impairment whenever
events or changes in circumstances indicate the carrying amount of the assets
may not be recoverable. If the sum of the undiscounted expected future cash
flows over the remaining useful life of a long-lived asset is less than its
carrying amount, the asset is considered to be impaired. Impairment losses are
measured as the amount by which the carrying amount of the asset exceeds the
fair value of the asset. When fair values are not available, the Company
estimates fair value using the expected future cash flows discounted at a rate
commensurate with the risks associated with the recovery of the asset. Assets to
be disposed of are reported at the lower of carrying amount or fair value less
costs to sell. Management has performed a review of all long-lived assets and
has determined no impairment of the respective carrying value has occurred as of
March 31, 2010.
  k) Commitments
  The
Company has operating lease commitments for equipment rentals, office space, and
warehouse space under non-cancelable operating leases expiring at various dates
through May 2021.  As of March 31, 2010 minimum future lease
payments under these non-cancelable operating leases for the next five fiscal
years and thereafter are as follows:
  Fiscal
      Year Ending June 30
              
              Amount2010
      (remaining portion)
              
              $
              113,4832011
              
              
              280,6822012
              
              
              229,5672013
              
              
              221,1582014
              
              
              230,921Thereafter
              
              
              1,879,677Total
      minimum lease payments
              
              $
              2,955,488
  Included
in these future commitments are upcoming rental lease payments pertaining to the
Company’s new corporate office location.  The initial term of this
lease commences on June 1, 2010, and is set to expire on May 31,
2021.  Rent for the first 12-month period has been abated by the
landlord and lease payments will begin on June 1, 2011.
  l) Income
Taxes
  Deferred
income tax assets and liabilities are recognized for the expected future tax
consequences of events that have been reflected in the consolidated financial
statements. Deferred tax assets and liabilities are determined based on the
differences between the book values and the tax bases of particular assets and
liabilities. Deferred tax assets and liabilities are measured using tax rates in
effect for the years in which the differences are expected to reverse. A
valuation allowance is provided to offset the net deferred tax assets if, based
upon the available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized.
  The
Company reports a liability for unrecognized tax benefits resulting from
uncertain income tax positions taken or expected to be taken in an income tax
return.  Estimated interest and penalties are recorded as a component
of interest expense or other expense, respectively.
  m) Revenue
Recognition and Purchased Transportation Costs
  The
Company is the primary obligor responsible for providing the service desired by
the customer and is responsible for fulfillment, including the acceptability of
the service(s) ordered or purchased by the customer. At the Company’s sole
discretion, it sets the prices charged to its customers, and is not required to
obtain approval or consent from any other party in establishing its prices. The
Company has multiple suppliers for the services it sells to its customers, and
has the absolute and complete discretion and right to select the supplier that
will provide the product(s) or service(s) ordered by a customer, including
changing the supplier on a shipment-by-shipment basis. In most cases, the
Company determines the nature, type, characteristics, and specifications of the
service(s) ordered by the customer. The Company also assumes credit risk for the
amount billed to the customer.
  As a
non-asset based carrier, the Company does not own transportation assets. The
Company generates the major portion of its air and ocean freight revenues by
purchasing transportation services from direct (asset-based) carriers and
reselling those services to its customers. Based upon the terms in the contract
of carriage, revenues related to shipments where the Company issues a House
Airway Bill ("HAWB") or a House Ocean Bill of Lading ("HOBL") are recognized at
the time the freight is tendered to the direct carrier at origin. Costs related
to the shipments are also recognized at this same time based upon anticipated
margins, contractual arrangements with direct carriers, and other known factors.
The estimates are routinely monitored and compared to actual invoiced costs. The
estimates are adjusted as deemed necessary by the Company to reflect differences
between the original accruals and actual costs of purchased
transportation.
  This
method generally results in recognition of revenues and purchased transportation
costs earlier than the preferred methods under GAAP which do not recognize
revenue until a proof of delivery is received or which recognize revenue as
progress on the transit is made. The Company’s method of revenue and cost
recognition does not result in a material difference from amounts that would be
reported under such other methods.
  n) Share-Based
Compensation
  The
Company accounts for share-based compensation under the fair value recognition
provisions such that compensation cost is measured at the grant date based on
the value of the award and is expensed ratably over the vesting period.
Determining the fair value of share-based awards at the grant date requires
judgment, including estimating the percentage of awards which will be forfeited,
stock volatility, the expected life of the award, and other inputs. If actual
forfeitures differ significantly from the estimates, share-based compensation
expense and the Company's results of operations could be materially
impacted.
  10
  For the
three months ended March 31, 2010, the Company recorded share based compensation
expense of $54,939, which, net of income taxes, resulted in a $34,062 reduction
of net income. For the three months ended March 31, 2009, the Company recorded
share based compensation expense of $43,022, which, net of income taxes,
resulted in a $26,674 reduction of net income.
  For the
nine months ended March 31, 2010, the Company recorded share based compensation
expense of $163,842 which, net of income taxes, resulted in a $101,582 reduction
of net income. For the nine months ended March 31, 2009, the Company recorded
share based compensation expense of $123,714, which, net of income taxes,
resulted in a $76,703 reduction of net income.
  o) Basic
and Diluted Income per Share
 Basic
income per share is computed by dividing net income (loss) attributable to
common stockholders by the weighted average number of common shares outstanding.
Diluted income per share is computed similar to basic income per share except
that the denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common shares, such as
stock options, had been issued and if the additional common shares were
dilutive.
  For the
three months ended March 31, 2010, the weighted average outstanding number of
potentially dilutive common shares totaled 32,533,794 shares of common stock,
including options to purchase 3,620,000 shares of common stock at March 31,
2010, of which 3,060,000 were excluded as their effect would have been
anti-dilutive. For the three months ended March 31, 2009, the weighted average
outstanding number of potentially dilutive common shares totaled 34,701,960
shares of common stock.  Options to purchase 3,285,000 shares of
common stock were not included in the diluted EPS computation for the three
months ended March 31, 2009 as the exercise prices of those options were greater
than the market price of common shares and were thus
anti-dilutive.
  For the
nine months ended March 31, 2010, the weighted average outstanding number of
potentially dilutive common shares totaled 32,937,774 shares of common stock,
including options to purchase 3,620,000 shares of common stock at March 31,
2010, of which 3,060,000 were excluded as their effect would have been
antidilutive. For the nine months ended March 31, 2009, the weighted average
outstanding number of potentially dilutive common shares totaled 34,699,679
shares of common stock.  Options to purchase 3,285,000 shares of
common stock were not included in the diluted EPS computation for
the  nine months ended March 31, 2009 as there was a loss for the
period so the shares are anti-dilutive.
  The following table reconciles the
numerator and denominator of the basic and diluted per share computations for
earnings per share as follows:
 
 Three
      months
                ended
                March
      31, 2010
              
              
              Three
      months ended
                March
      31,
                2009
              
              
              Nine
      months ended
                March
      31, 2010
              
              
              Nine
      months ended
                March
      31, 2009Weighted
      average basic shares outstanding
              
              
              32,391,859
              
              
              
              34,701,960
              
              
              
              32,767,213
              
              
              
              34,699,679Options
              
              
              141,935
              
              
              
              -
              
              
              
              170,561
              
              
              
              -Weighted
      average dilutive shares outstanding
              
              
              32,533,794
              
              
              
              34,701,960
              
              
              
              32,937,774
              
              
              
              34,699,679
 
 p) Comprehensive Income
  The
Company has no components of Comprehensive Income and, accordingly, no Statement
of Comprehensive Income has been included in the accompanying consolidated
financial statements.
  11
  q) Reclassifications
 Certain
amounts for prior periods have been reclassified in the consolidated financial
statements to conform to the classification used in fiscal 2010.
  NOTE
3 – RECENT ACCOUNTING PRONOUNCEMENTS
  In
June 2009, the Financial Accounting Standards Board ("FASB") issued
guidance now codified in FASB Accounting Standards Codification ("ASC") Topic
105, Generally Accepted Accounting Principles, as the single source of
authoritative nongovernmental GAAP. FASB ASC Topic 105 does not change current
GAAP, but is intended to simplify user access to all authoritative GAAP by
providing all authoritative literature related to a particular topic in one
place. All existing accounting standard documents have been superseded and all
other accounting literature not included in the FASB Codification is now
considered non-authoritative. These provisions of FASB ASC Topic 105 are
effective for interim and annual periods ending after September 15, 2009
and, accordingly, are effective for the Company for the current fiscal reporting
period. The adoption of this guidance did not have an impact on the Company’s
financial condition or results of operations, but will impact its financial
reporting process by eliminating all references to pre-codification standards.
On the effective date of this guidance, the Codification superseded all
then-existing non-SEC accounting and reporting standards, and all other
non-grandfathered, non-SEC accounting literature not included in the
Codification became non-authoritative.
  In
August 2009, the FASB issued Accounting Standards Update ("ASU")
No. 2009-05, Fair Value Measurements and Disclosures. The guidance in ASU
2009-05 provides clarification that in circumstances in which a quoted price in
an active market for the identical liability is not available, an entity is
required to measure fair value using certain prescribed valuation techniques.
The amendments in ASU 2009-05 were effective for the Company’s first quarter of
fiscal 2010. The adoption of this guidance did not have a material impact on the
Company’s financial position or results of operations.
  In August
2009, the FASB issued ASU No. 2009-06, Implementation Guidance on Accounting for
Uncertainty in Income Taxes and Disclosure Amendment for Nonpublic Entities. The
guidance in ASU 2009-06 improves current accounting by helping achieve
consistent application of accounting for uncertainty in income taxes and is not
intended to change existing practice.   ASU 2009-06 also
eliminates disclosures previously required for nonpublic entities. ASU 2009-06
is effective for interim and annual periods ending after September 15, 2009. The
adoption of this guidance did not have a material impact on the Company’s
financial position or results of operations.
  In
January 2010, the FASB issued ASU No. 2010-06, Improving Disclosures about Fair
Value Measurements. The guidance in ASU 2010-06 provides amendments to
literature on fair value measurements and disclosures currently within the ASC
by clarifying certain existing disclosures and requiring new disclosures for the
various classes of fair value measurements.   ASU 2010-06 is
effective for interim and annual periods beginning after December 15, 2009,
except for the disclosures about purchases, sales, issuances, and settlements in
the roll forward of activity in Level 3 fair value measurements, which are
effective for fiscal years beginning after December 15, 2010, and for interim
periods within those fiscal years.  The adoption of this guidance is
not expected to have a material impact on the Company’s financial position or
results of operations.
  In
February 2010, the FASB issued ASU No. 2010-09, Subsequent Events (Topic 855):
Amendments to Certain Recognition and Disclosure Requirements.  The
guidance in ASU 2010-09 addresses both the interaction of the requirements of
Topic 855, Subsequent Events, with the SEC’s reporting requirements and the
intended breadth of the reissuance disclosures provision related to subsequent
events, potentially changing reporting by both private and public entities
depending on the facts and circumstances surrounding the nature of the change.
All of the amendments in ASU 2010-09 are effective upon issuance of the final
update, except for the use of the issued date for conduit debt obligors which is
effective for interim and annual periods ending after June 15,
2010.  The adoption of this guidance is not expected to have a
material impact on the Company’s financial position or results of
operations.
  NOTE
4 – ACQUISITION OF ADCOM EXPRESS, INC.
  On
September 5, 2008, the Company entered into and closed a Stock Purchase
Agreement (the "Agreement") pursuant to which it acquired 100% of the issued and
outstanding stock of Adcom Express, Inc., d/b/a Adcom Worldwide ("Adcom"), a
privately-held Minnesota corporation. For financial accounting purposes, the
transaction was deemed to be effective as of September 1, 2008. The stock was
acquired from Robert F. Friedman, the sole shareholder of Adcom. The total value
of the transaction was $11,050,000, consisting of: (i) $4,750,000 in cash paid
at the closing; (ii) $250,000 in cash payable shortly after the closing, subject
to adjustment, based upon the working capital of Adcom as of August 31, 2008;
(iii) up to $2,800,000 in four "Tier-1 Earn-Out Payments" of up to $700,000
each, covering the four year earn-out period through June 30, 2012, based upon
Adcom achieving certain levels of "Gross Profit Contribution" (as defined in the
Agreement), payable 50% in cash and 50% in shares of Company common stock
(valued at delivery date); (iv) a "Tier-2 Earn-Out Payment" of up to $2,000,000,
equal to 20% of the amount by which the Adcom cumulative Gross Profit
Contribution exceeds $16,560,000 during the four year earn-out period; and (v)
an "Integration Payment" of $1,250,000 payable on the earlier of the date
certain integration targets are achieved or 18 months after the closing, payable
50% in cash and 50% in shares of Company common stock (valued at delivery date).
The Integration Payment, the Tier-1 Earn-Out Payments and certain amounts of the
Tier-2 Payments may be subject to acceleration upon occurrence of a "Corporate
Transaction" (as defined in the Agreement), which includes a sale of Adcom or
the Company, or certain changes in corporate control. The cash component of the
transaction was financed through a combination of existing funds and the
proceeds from the Company’s revolving credit facility.
  12
  Founded
in 1978, Adcom provides a full range of domestic and international freight
forwarding solutions to a diversified account base including manufacturers,
distributors and retailers through a combination of three company-owned and
twenty-seven independent agency locations across North America.
  The total
purchase price consisted of an initial payment of $4,750,000, acquisition
expenses of $288,346, and $220,000 in restructuring charges.  Also
included in the acquisition is $1,250,000 in future integration payments and
$319,845 in working capital and other adjustments.  The total net
assets acquired were $6.61 million.  The following table summarizes
the final allocation of the purchase price based on the estimated fair value of
the acquired assets at September 5, 2008.
 
 Current
      assets
              
              $
              11,948,619Furniture
      & equipment
              
              
              291,862Notes
      receivable
              
              
              343,602Intangibles
              
              
              3,200,000Goodwill
              
              
              3,248,660Other
      assets
              
              
              325,296Total
      assets acquired
              
              
              19,358,039Current
      liabilities assumed
              
              
              11,533,848Long-term
      deferred tax liability
              
              
              1,216,000Total
      liabilities acquired
              
              
              12,749,848Net
      assets acquired
              
              $
              6,608,191
  None of
the goodwill is expected to be deductible for income tax purposes.
  The
results of operations related to this acquisition are included in the Company's
statement of income from the date of acquisition in September 2008.
  13
  NOTE 5 – ACQUIRED INTANGIBLE
ASSETS
  The table
below reflects acquired intangible assets related to the acquisitions of
Airgroup, Automotive Services Group and Adcom:
  As
      ofMarch
      31, 2010
              
              
              As
      ofJune
      30, 2009Gross
                Carrying
                Amount
              
              
              Accumulated
                Amortization
              
              
              Gross
                Carrying
                Amount
              
              
              Accumulated
      AmortizationAmortizable
      intangible assets:Customer
      related
              
              $
              5,752,000
              
              
              $
              3,523,309
              
              
              $
              5,752,000
              
              
              $
              2,679,547Covenants
      not to compete
              
              
              190,000
              
              
              
              115,280
              
              
              
              190,000
              
              
              
              83,410Total
              
              $
              5,942,000
              
              
              $
              3,638,589
              
              
              $
              5,942,000
              
              
              $
              2,762,957Aggregate
      amortization expense:For
      nine months endedMarch
      31, 2010
              
              
              
              
              
              $
              875,632For
      nine months endedMarch
      31, 2009
              
              
              
              
              
              $
              914,215Aggregate
      amortization expense for the years ending June 30:2010
      – For the remainder of the year
              
              
              
              
              
              $
              283,6532011
              
              
              
              
              
              
              827,7622012
              
              
              
              
              
              
              769,7722013
              
              
              
              
              
              
              374,3442014
              
              
              
              
              
              
              47,880Total
              
              
              
              
              
              $
              2,303,411
  NOTE
6 – VARIABLE INTEREST ENTITY
  Certain
entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have the sufficient equity at risk for
the entity to finance its activities without additional subordinated financial
support from other parties are considered "variable interest entities". RLP is
40% owned by Radiant Global Logistics ("RGL"), qualifies as a variable interest
entity and is included in the Company’s consolidated financial statements (see
Note 7). RLP commenced operations in February 2007. Non-controlling interest
recorded on the income statement was an expense of $24,551 and $21,750 for the
three months ended March 31, 2010 and 2009,
respectively.  Non-controlling interest recorded on the income
statement was an expense of $83,229 and $19,604 for the nine months ended March
31, 2010 and 2009, respectively.
  The
following table summarizes the balance sheets of RLP:
  March
      31,
              
              
              June
      30,2010
              
              
              2009ASSETSAccounts
      receivable – Radiant Logistics
              
              $
              102,537
              
              
              $
              6,656Prepaid
      expenses and other current assets
              
              
              1,297
              
              
              
              2,165Total
      assets
              
              $
              103,834
              
              
              $
              8,821LIABILITIES
      AND PARTNERS' CAPITALChecks
      issued in excess of bank balance
              
              $
              633
              
              
              $
              212Other
      accrued costs
              
              
              11,308
              
              
              
              5,431Total
      liabilities
              
              
              11,941
              
              
              
              5,643Partners'
      capital
              
              
              91,893
              
              
              
              3,178Total
      liabilities and partners' capital
              
              $
              103,834
              
              
              $
              8,821
  14
  NOTE
7 – RELATED PARTY
  RLP is
owned 40% by RGL and 60% by Radiant Capital Partners, LLC ("RCP"), a company for
which the Chief Executive Officer of the Company is the sole member. RLP is a
certified minority business enterprise which was formed for the purpose of
providing the Company with a national accounts strategy to pursue corporate and
government accounts with diversity initiatives. As currently structured, RCP’s
ownership interest entitles it to a majority of the profits and distributable
cash, if any, generated by RLP. The operations of RLP are intended to provide
certain benefits to the Company, including expanding the scope of services
offered by the Company and participating in supplier diversity programs not
otherwise available to the Company. RGL currently provides administrative
services necessary to operate RLP while RLP continues to develop. As the RLP
operations mature, the Company will evaluate and approve all related service
agreements between the Company and RLP, including the scope of the services to
be provided by the Company to RLP and the fees payable to the Company by RLP, in
accordance with the Company’s corporate governance principles and applicable
Delaware corporation law. This process may include seeking the opinion of a
qualified third party concerning the fairness of any such agreement or the
approval of the Company’s shareholders. RLP is consolidated in the financial
statements of the Company (see Note 6).
  NOTE
8 – FURNITURE AND EQUIPMENT
  Furniture
and equipment consists of the following:
  March
      31,
              
              
              June
      30,2010
              
              
              2009Vehicles
              
              $
              33,788
              
              
              $
              33,788Communication
      equipment
              
              
              4,043
              
              
              
              1,353Office
      equipment
              
              
              311,191
              
              
              
              309,156Furniture
      and fixtures
              
              
              91,727
              
              
              
              66,036Computer
      equipment
              
              
              374,155
              
              
              
              554,337Computer
      software
              
              
              1,070,355
              
              
              
              884,384Leasehold
      improvements
              
              
              56,821
              
              
              
              44,0021,942,080
              
              
              
              1,893,056Less:  Accumulated
      depreciation and amortization
              
              
              (1,441,701
              )
              
              
              (1,132,549
              )Furniture
      and equipment – net
              
              $
              500,379
              
              
              $
              760,507
  Depreciation
and amortization expense related to furniture and equipment was $306,230 and
$352,908 for the nine months ended March 31, 2010 and 2009,
respectively.
  NOTE
9 – LONG TERM DEBT
  In March
2010, the Company’s $15.0 million revolving credit facility, including a $0.5
million sublimit to support letters of credit (collectively, the "Facility"),
was increased to $20.0 million with a maturity date of March 31, 2012. The
Facility is collateralized by accounts receivable and other assets of the
Company and its subsidiaries. Advances under the Facility are available to fund
future acquisitions, capital expenditures or for other corporate purposes,
including the repurchase of the Company’s stock. Borrowings under the facility
bear interest, at the Company’s option, at the bank’s prime rate minus 0.75% to
plus 0.50% or LIBOR plus 1.75% to 3.00%, and can be adjusted up or down during
the term of the Facility based on the Company’s performance relative to certain
financial covenants. The Facility is collateralized by accounts receivable and
other assets of the Company and its subsidiaries and provides for advances of up
to 80% of eligible domestic accounts receivable and for advances of up to 60% of
eligible foreign accounts receivable.
  The terms
of the Facility are subject to certain financial and operational covenants which
may limit the amount otherwise available under the Facility. The first covenant
limits funded debt to a multiple of 4.00 times the Company’s consolidated EBITDA
(as adjusted) measured on a rolling four quarter basis. The second financial
covenant requires the Company to maintain a basic fixed charge coverage ratio of
at least 1.1 to 1.0. The third financial covenant is a minimum profitability
standard that requires the Company not to incur a net loss before taxes,
amortization of acquired intangibles and extraordinary items in any two
consecutive quarterly accounting periods.
  15
  Under the
terms of the Facility, the Company is permitted to make additional acquisitions
without the lender's consent only if certain conditions are satisfied. The
conditions imposed by the Facility include the following: (i) the absence of an
event of default under the Facility; (ii) the company to be acquired must be in
the transportation and logistics industry; (iii) the purchase price to be paid
must be consistent with the Company’s historical business and acquisition model;
(iv) after giving effect for the funding of the acquisition, the Company must
have undrawn availability of at least $1.0 million under the Facility; (v) the
lender must be reasonably satisfied with projected financial statements the
Company provides covering a 12 month period following the acquisition; (vi) the
acquisition documents must be provided to the lender and must be consistent with
the description of the transaction provided to the lender; and (vii) the number
of permitted acquisitions is limited to three per calendar year and shall not
exceed $7.5 million in aggregate purchase price financed by funded debt. In the
event that the Company is not able to satisfy the conditions of the Facility in
connection with a proposed acquisition, it must either forego the acquisition,
obtain the lender's consent, or retire the Facility. This may limit or slow the
Company’s ability to achieve the critical mass it may need to achieve its
strategic objectives.
  The
co-borrowers of the Facility include Radiant Logistics, Inc., RGL (f/k/a
Airgroup Corporation), Radiant Logistics Global Services, Inc. ("RLGS"), RLP,
and Adcom Express, Inc. (d/b/a Adcom Worldwide). RLP is owned 40% by RGL and 60%
by RCP, an affiliate of the Company’s Chief Executive Officer. RLP has been
certified as a minority business enterprise, and focuses on corporate and
government accounts with diversity initiatives. As a co-borrower under the
Facility, the accounts receivable of RLP are eligible for inclusion within the
overall borrowing base of the Company and all borrowers will be responsible for
repayment of the debt associated with advances under the Facility, including
those advanced to RLP.  At March 31, 2010, the Company was in
compliance with all of its covenants.
  As of
March 31, 2010, the Company had $5,964,398 advances under the Facility and
$1,484,264 in outstanding checks, which had not yet been presented to the bank
for payment. The outstanding checks have been reclassified from our cash
accounts, as they will be advanced from, or against, our Facility when presented
for payment to the bank.  The forgoing results in total long term debt
of $7,448,662.
  At March
31, 2010, based on available collateral and $205,000 in outstanding letter of
credit commitments, there was $4,863,811 available for borrowing under the
Facility based on advances outstanding.
  NOTE
10 – PROVISION FOR INCOME TAXES
  Deferred
income taxes are reported using the liability method. Deferred tax assets are
recognized for deductible temporary differences and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.
  The
acquisitions of Airgroup and Adcom resulted in $2,148,280 of long term deferred
tax liability resulting from certain amortizable intangibles identified during
the Company’s purchase price allocation which are not deductible for tax
purposes. The long term deferred tax liability will be reduced as the
non-deductible amortization of the intangibles is recognized. See Note
5.
  For the
three months ended March 31, 2010, the Company recognized net income tax expense
of $511,050 consisting of current income tax expense of $678,622, and deferred
income tax benefit of $167,572.
  For the
nine months ended March 31, 2010, the Company recognized net income tax expense
of $918,715 consisting of current income tax expense of $1,347,819, and deferred
income tax benefit of $429,104.
  The
Company was subjected to an IRS audit for the tax year ended June 30,
2007.  The audit resulted in additional federal income tax expense of
$146,175 which was expensed in the three months ended March 31,
2010.
  16
  Tax years
which remain subject to examination by state authorities are the years ended
June 30, 2007, 2008 and 2009. Tax years which remain subject to examination
by Federal authorities are the years ended June 30, 2007, 2008 and
2009.
  NOTE
11 – STOCKHOLDERS’ EQUITY
  Preferred
Stock
  The
Company is authorized to issue 5,000,000 shares of preferred stock, par value at
$.001 per share. As of March 31, 2010 and 2009, none of the shares were issued
or outstanding.
  Common
Stock Repurchase Program
  During
2009, the Company's Board of Directors approved a stock repurchase program,
pursuant to which up to 5,000,000 shares of its common stock could be
repurchased under the program through December 31, 2010.  During the
nine months ended March 31, 2010, the Company purchased 1,772,149 shares of its
common stock under this repurchase program at a cost of $506,913.
  NOTE
12 – SHARE-BASED COMPENSATION
  During
the nine months ended March 31, 2010, the Company issued employee options to
purchase 250,000 stock options at $0.28 per share. The options vest 20% per year
over a five year period.
  Share
based compensation costs recognized during the nine months ended March 31, 2010,
include compensation costs based on the fair value estimated on the grant-date
for all share based payments granted to date. No options have been exercised as
of March 31, 2010.
  During
the nine months ended March 31, 2010, the weighted average fair value per share
of employee options granted in August 2009 was $0.15.  The fair value
of options granted were estimated on the date of grant using the Black-Scholes
option pricing model, with the following assumptions for each issuance of
options:
  Risk-Free
      Interest Rate
              1.57%Expected
      Term
              6.5
      yearsExpected
      Volatility
              64.3%Expected
      Dividend Yield
              0.00%Forfeiture
      Rate
              0.00%
  During
the nine months ended March 31, 2010 and 2009, the Company recognized stock
option compensation expense of $163,842 and $123,714,
respectively.  The following table summarizes activity under the plan
for the nine months ended March 31, 2010.
  Number
      of Shares
              
              
              Weighted
      Average
                Exercise
      Price
              
              
              Weighted
                Average
                Remaining
                Contractual
                Life
      - Years
              
              
              Aggregate
                Intrinsic
                ValueOutstanding
      at June 30, 2009
              
              
              3,370,000
              
              
              $
              0.520
              
              
              7.08
      years
              
              
              $
              67,200Granted
              
              
              250,000
              
              
              
              0.280
              
              
              
              -
              
              
              
              -Exercised
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Forfeited
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Expired
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Outstanding
      at March 31, 2010
              
              
              3,620,000
              
              
              $
              0.504
              
              
              6.53
      years
              
              
              $
              28,000Exercisable
      at March 31, 2010
              
              
              2,150,000
              
              
              $
              0.578
              
              
              5.84
      years
              
              
              $
              4,200
  NOTE
13 – OPERATING AND GEOGRAPHIC SEGMENT INFORMATION
  Operating
segments are identified as components of an enterprise about which separate
discrete financial information is available for evaluation by the chief
operating decision-maker, or decision-making group, in making decisions
regarding allocation of resources and assessing performance. The Company's chief
decision-maker is the Chief Executive Officer. The Company continues to operate
in a single operating segment.
  The
Company’s geographic operations outside the United States include shipments to
and from Canada, Central America, Europe, Africa, Asia and Australia. The
following data presents the Company’s revenue generated from shipments to and
from these locations for the United States and all other countries, which is
determined based upon the geographic location of a shipment's initiation and
destination points (in thousands):
  United
      States
              
              
              Other
      Countries
              
              
              Total2010
              
              
              2009
              
              
              2010
              
              
              2009
              
              
              2010
              
              
              2009Three
      months ended March 31,Revenue
              
              $
              17,401
              
              
              $
              16,971
              
              
              $
              15,463
              
              
              $
              12,748
              
              
              $
              32,864
              
              
              $
              29,719Cost
      of transportation
              
              
              10,359
              
              
              
              9,309
              
              
              
              12,164
              
              
              
              9,663
              
              
              
              22,523
              
              
              
              18,972Net
      revenue
              
              $
              7,142
              
              
              $
              7,662
              
              
              $
              3,299
              
              
              $
              3,085
              
              
              $
              10,341
              
              
              $
              10,747
 
  United
      States
              
              
              Other
      Countries
              
              
              Total2010
              
              
              2009
              
              
              2010
              
              
              2009
              
              
              2010
              
              
              2009Nine
      months ended March 31,Revenue
              
              $
              54,897
              
              
              $
              56,714
              
              
              $
              51,111
              
              
              $
              47,913
              
              
              $
              106,008
              
              
              $
              104,627Cost
      of transportation
              
              
              32,802
              
              
              
              32,342
              
              
              
              40,812
              
              
              
              36,865
              
              
              
              73,614
              
              
              
              69,207Net
      revenue
              
              $
              22,095
              
              
              $
              24,372
              
              
              $
              10,299
              
              
              $
              11,048
              
              
              $
              32,394
              
              
              $
              35,420
  ITEM
2.   Management’s Discussion and Analysis of Financial Condition
and Results of Operations
  CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
  This
report includes forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, regarding future operating performance,
events, trends and plans. All statements other than statements of historical
fact contained herein, including, without limitation, statements regarding our
future financial position, business strategy, budgets, projected revenues and
costs, and plans and objectives of management for future operations, are
forward-looking statements. Forward-looking statements generally can be
identified by the use of forward-looking terminology such as "may," "will,"
"expects," "intends," "plans," "projects," "estimates," "anticipates," or
"believes" or the negative thereof or any variation thereon or similar
terminology or expressions. We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements are not guarantees and are subject to known and
unknown risks, uncertainties and assumptions about us that may cause our actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. While it
is impossible to identify all of the factors that may cause our actual operating
performance, events, trends or plans to differ materially from those set forth
in such forward-looking statements, such factors include the inherent risks
associated with our ability to: (i) to use Airgroup as a "platform" upon which
we can build a profitable global transportation and supply chain management
company; (ii) retain and build upon the relationships we have with our exclusive
agency offices; (iii) continue the development of our back office infrastructure
and transportation and accounting systems in a manner sufficient to service our
expanding revenues and base of exclusive agency locations; (iv) maintain the
future operations of Adcom in a manner consistent with its past practices; (v)
integrate the operations of Adcom with our existing operations, (vi) continue
growing our business and maintain historical or increased gross profit margins;
(vii) locate suitable acquisition opportunities; (viii) secure the financing
necessary to complete any acquisition opportunities we locate; (ix) assess and
respond to competitive practices in the industries in which we compete; (x)
mitigate, to the best extent possible, our dependence on current management and
certain of our larger exclusive agency locations; (xi) assess and respond to the
impact of current and future laws and governmental regulations affecting the
transportation industry in general and our operations in particular; and (xii)
assess and respond to such other factors which may be identified from time to
time in our Securities and Exchange Commission ("SEC") filings and other public
announcements including those set forth in Part 1 Item 1A of our Annual Report
on Form 10-K for the fiscal year ended June 30, 2009. All subsequent written and
oral forward-looking statements attributable to us, or persons acting on our
behalf, are expressly qualified in their entirety by the foregoing. 
Readers are cautioned not to place undue reliance on our forward-looking
statements, as they speak only as of the date made. Except as required by law,
we assume no duty to update or revise our forward-looking
statements.
  17
  The
following discussion and analysis of our financial condition and result of
operations should be read in conjunction with the financial statements and the
related notes and other information included elsewhere in this
report.
  Overview
  We are a
Bellevue, Washington based non-asset based logistics company providing domestic
and international freight forwarding services through a network of exclusive
agent offices across North America. Operating under the Airgroup, Adcom and RLP
brands, we service a diversified account base including manufacturers,
distributors and retailers using a network of independent carriers and
international agents positioned strategically around the world.
  By
implementing a growth strategy, we intend to build a leading global
transportation and supply-chain management company offering a full range of
domestic and international freight forwarding and other value added supply chain
management services, including order fulfillment, inventory management and
warehousing.
  As a
non-asset based provider of third-party logistics services, we seek to limit our
investment in equipment, facilities and working capital through contracts and
preferred provider arrangements with various transportation providers who
generally provide us with favorable rates, minimum service levels, capacity
assurances and priority handling status. Our non-asset based approach allows us
to maintain a high level of operating flexibility and leverage a cost structure
that is highly variable in nature while the volume of our flow of freight
enables us to negotiate attractive pricing with our transportation
providers.
  Our
growth strategy continues to focus on both organic growth and acquisitions. From
an organic perspective, we are focused on strengthening existing and expanding
new customer relationships. One of the drivers of our organic growth will be
retaining existing, and securing new exclusive agency locations as well as
enhancing our back-office infrastructure and transportation and accounting
systems.
  As we
continue to build out our network of exclusive agent locations to achieve a
level of critical mass and scale, we are executing an acquisition strategy to
develop additional growth opportunities. We continue to identify a number of
additional companies as suitable acquisition candidates and completed our second
material acquisition in September 2008, when we acquired Adcom Express, Inc.
d/b/a Adcom Worldwide ("Adcom") which contributed an additional 30 locations
across North America and augmented our overall domestic and international
freight forwarding capabilities.
  18
  We will
continue to search for targets that fit within our acquisition criteria.
Successful implementation of our growth strategy depends upon a number of
factors, including our ability to: (i) continue developing new agency locations;
(ii) locate acquisition opportunities; (iii) secure adequate funding to finance
identified acquisition opportunities; (iv) efficiently integrate the businesses
of the companies acquired; (v) generate the anticipated economies of scale from
the integration; and (vi) maintain the historic sales growth of the acquired
businesses in order to generate continued organic growth. There are a variety of
risks associated with our ability to achieve our strategic objectives, including
the ability to acquire and profitably manage additional businesses and the
intense competition in the industry for customers and for acquisition
candidates.
  Performance
Metrics
  Our
principal source of income is derived from freight forwarding services. As a
freight forwarder, we arrange for the shipment of our customers’ freight from
point of origin to point of destination. Generally, we quote our customers a
turn-key cost for the movement of their freight. Our price quote will often
depend upon the customer’s time-definite needs (first day through fifth day
delivery), special handling needs (heavy equipment, delicate items,
environmentally sensitive goods, electronic components, etc.) and the means of
transport (truck, air, ocean or rail). In turn, we assume the responsibility for
arranging and paying for the underlying means of transportation.
  Our
transportation revenue represents the total dollar value of services we sell to
our customers. Our cost of transportation includes direct costs of
transportation, including motor carrier, air, ocean and rail services. We act
principally as the service provider to add value in the execution and
procurement of these services to our customers. Our net transportation revenue
(gross transportation revenue less the direct cost of transportation) is the
primary indicator of our ability to source, add value to, and resell services
provided by third parties, and is considered by management to be a key
performance measure. In addition, management believes that measuring its
operating costs as a function of net transportation revenue provides a useful
metric, as our ability to control costs as a function of net transportation
revenue directly impacts operating earnings.
  Our
operating results will be affected as acquisitions occur. Since all acquisitions
are made using the purchase method of accounting for business combinations, our
financial statements will only include the results of operations and cash flows
of acquired companies for periods subsequent to the date of
acquisition.
  Our
GAAP-based net income will be affected by non-cash charges relating to the
amortization of customer related intangible assets and other intangible assets
arising from completed acquisitions. Under applicable accounting standards,
purchasers are required to allocate the total consideration in a business
combination to the identified assets acquired and liabilities assumed based on
their fair values at the time of acquisition. The excess of the consideration
paid over the fair value of the identifiable net assets acquired is to be
allocated to goodwill, which is tested at least annually for impairment.
Applicable accounting standards require that we separately account for and value
certain identifiable intangible assets based on the unique facts and
circumstances of each acquisition. As a result of our acquisition strategy, our
net income will include material non-cash charges relating to the amortization
of customer related intangible assets and other intangible assets acquired in
our acquisitions. Although these charges may increase as we complete more
acquisitions, we believe we will actually be growing the value of our intangible
assets (e.g., customer relationships). Thus, we believe that earnings before
interest, taxes, depreciation and amortization ("EBITDA") is a useful financial
measure for investors because it eliminates the effect of these non-cash costs
and provides an important metric for our business.  Further, the
financial covenants of our credit facility adjust EBITDA to exclude costs
related to share based compensation expense and other non-cash
charges.
  Our
compliance with the financial covenants of our credit facility is particularly
important given the materiality of the credit facility to our day-to-day
operations and overall acquisition strategy. Our debt capacity, subject to the
requisite collateral at an advance rate of 80% of eligible domestic accounts
receivable and up to 60% of eligible foreign receivables, is limited to a
multiple of 4.00 times our consolidated EBITDA (as adjusted) as measured on a
rolling four quarter basis. If we fail to comply with the covenants in our
credit facility and are unable to secure a waiver or other relief, our financial
condition would be materially weakened and our ability to fund day-to-day
operations would be materially and adversely affected. Accordingly, we intend to
employ EBITDA and adjusted EBITDA as management tools to measure our historical
financial performance and as a benchmark for future financial
flexibility.
  19
  Our
operating results are also subject to seasonal trends when measured on a
quarterly basis. The impact of seasonality on our business will depend on
numerous factors, including the markets in which we operate, holiday seasons,
consumer demand and economic conditions.
  Since our
revenue is largely derived from customers whose shipments are dependent upon
consumer demand and just-in-time production schedules, the timing of our revenue
is often beyond our control. Factors such as shifting demand for retail goods
and/or manufacturing production delays could unexpectedly affect the timing of
our revenue. As we increase the scale of our operations, seasonal trends in one
area of our business may be offset to an extent by opposite trends in another
area. We cannot accurately predict the timing of these factors, nor can we
accurately estimate the impact of any particular factor, and thus we can give no
assurance any historical seasonal patterns will continue in future
periods.
  Results
of Operations
  Basis
of Presentation
  The
results of operations discussion that appears below has been presented utilizing
a combination of historical and, where relevant, pro forma information to
include the effects on our consolidated financial statements of our acquisition
of Adcom.  The pro forma results are developed to reflect a
consolidation of the historical results of operations of the Company and
adjusted to include the historical results of Adcom as if we had acquired Adcom
as of July 1, 2008.
 
 The pro
forma financial data is not necessarily indicative of results of operations
which would have occurred had this acquisition been consummated at the beginning
of the periods presented or which might be attained in the future.
 
 Three
months ended March 31, 2010 (actual and unaudited) and March 31, 2009 (actual
and unaudited)
  We
generated transportation revenue of $32.9 million and $29.7 million and net
transportation revenue of $10.3 million and $10.7 million for the three months
ended March 31, 2010 and 2009, respectively.  Net income was $0.4
million for the three months ended March 31, 2010, compared to net income of
$0.3 million for the three months ended March 31, 2009.
  We had
adjusted EBITDA of $1.1 million and $0.8 million for three months ended March
31, 2010 and 2009, respectively. EBITDA is a non-GAAP measure of income and does
not include the effects of interest and taxes and excludes the "non-cash"
effects of depreciation and amortization on current assets. Companies have some
discretion as to which elements of depreciation and amortization are excluded in
the EBITDA calculation. We exclude all depreciation charges related to property,
plant and equipment, and all amortization charges, including amortization of
leasehold improvements and other intangible assets. We then further adjust
EBITDA to exclude extraordinary items and costs related to share based
compensation expense, goodwill impairment charges and other non-cash charges
consistent with the financial covenants of our credit facility. As explained
above, we believe that EBITDA is useful to us and to our investors in evaluating
and measuring our financial performance.  While management considers
EBITDA and adjusted EBITDA useful in analyzing our results, it is not intended
to replace any presentation included in our consolidated financial
statements.  Set forth below is a reconciliation of EBITDA and
adjusted EBITDA to net income, the most directly comparable GAAP measure for the
three months ended March 31, 2010 and 2009.
  20
  The
following table provides a reconciliation of adjusted EBITDA to net income, the
most directly comparable GAAP measure in accordance with SEC Regulation G (in
thousands), for the three months ended March  31, 2010 and
2009:
  Three
      months ended
                March
      31,
              
              
              Change2010
              
              
              2009
              
              
              Amount
              
              
              PercentNet
      income
              
              $
              449
              
              
              $
              293
              
              
              $
              156
              
              
              
              53.2
              %Income
      tax expense
              
              
              511
              
              
              
              63
              
              
              
              448
              
              
              
              711.1
              %Net
      interest expense
              
              
              21
              
              
              
              66
              
              
              
              (45
              )
              
              
              (68.2
              %)Depreciation
      and amortization
              
              
              386
              
              
              
              479
              
              
              
              (93
              )
              
              
              (19.4
              %)EBITDA
              
              $
              1,367
              
              
              $
              901
              
              
              $
              466
              
              
              
              51.7
              %Share
      based compensation and other non-cash costs
              
              
              93
              
              
              
              47
              
              
              
              46
              
              
              
              97.9
              %Gain
      on extinguishment of debt
              
              
              -
              
              
              
              (190
              )
              
              
              190
              
              
              
              100.0
              %Business
      & Occupancy tax refund (including interest)
              
              
              (395
              )
              
              
              -
              
              
              
              (395
              )
              
              
              N/AAdjusted
      EBITDA
              
              $
              1,065
              
              
              $
              758
              
              
              $
              307
              
              
              
              40.5
              %
  The
following table summarizes transportation revenue, cost of transportation and
net transportation revenue (in thousands) for the three months ended March 31,
2010 and 2009 (actual and unaudited):
  Three
      months ended
                March
      31,
              
              Change2010
              
              2009
              
              Amount
              
              PercentTransportation
      revenue
              
              $
              32,864
              
              
              $
              29,719
              
              
              $
              3,145
              
              
              
              10.6
              %Cost
      of transportation
              
              
              22,523
              
              
              
              18,972
              
              
              
              3,551
              
              
              
              15.8
              %Net
      transportation revenue
              
              $
              10,341
              
              
              $
              10,747
              
              
              $
              (406
              )
              
              
              (3.8
              %)Net
      transportation margins
              
              
              31.5
              %
              
              
              36.2
              %
  Transportation
revenue was $32.9 million for the three months ended March 31, 2010, an increase
of 10.6% over transportation revenue of $29.7 million for the three months ended
March 31, 2009.  Domestic transportation revenue increased by 2.6% to
$17.4 million for the three months ended March 31, 2010, from $17.0 million for
the three months ended March 31, 2009.  International transportation
revenue increased by 21.3% to $15.5 million for the three months ended March 31,
2010, from $12.7 million for the comparable prior year
period.   These increases in revenue were primarily attributed to
new stations joining the network.
  Cost of
transportation increased to $22.5 million for the three months ended March 31,
2010, compared to $19.0 million for the three months ended March 31, 2009 as a
result of increased transportation revenues.
  Net
transportation margins decreased to 31.5% of transportation revenue for the
three months ended March 31, 2010, as compared to 36.2% of transportation
revenue for the three months ended March 31, 2009.  The margin
regression was attributed to proportionately higher international sales, which
typically yield lower margins, coupled with pricing pressures from
competitors.
  The
following table compares certain condensed consolidated statement of operations
data as a percentage of our net transportation revenue (in thousands) for the
three months ended March 31, 2010 and 2009 (actual and unaudited):
  Three
      months ended March 31,2010
                
                
                2009
                
                
                ChangeAmount
                
                
                Percent
                
                
                Amount
                
                
                Percent
                
                
                Amount
                
                
                PercentNet
      transportation revenue
                
                $
                10,341
                
                
                
                100.0
                %
                
                $
                10,747
                
                
                
                100.0
                %
                
                $
                (406
                )
                
                
                (3.8
                %)Agent
      commissions
                
                
                7,104
                
                
                
                68.7
                %
                
                
                6,982
                
                
                
                65.0
                %
                
                
                122
                
                
                
                1.7
                %Personnel
      costs
                
                
                1,449
                
                
                
                14.0
                %
                
                
                1,825
                
                
                
                17.0
                %
                
                
                (376
                )
                
                
                (20.6
                %)Selling,
      general and administrative
                
                
                551
                
                
                
                5.3
                %
                
                
                1,189
                
                
                
                11.1
                %
                
                
                (638
                )
                
                
                (53.7
                %)Depreciation
      and amortization
                
                
                386
                
                
                
                3.8
                %
                
                
                479
                
                
                
                4.5
                %
                
                
                (93
                )
                
                
                (19.4
                %)Total
      operating expenses
                
                
                9,490
                
                
                
                91.8
                %
                
                
                10,475
                
                
                
                97.5
                %
                
                
                (985
                )
                
                
                (9.4
                %)Income
      from operations
                
                
                851
                
                
                
                8.2
                %
                
                
                272
                
                
                
                2.5
                %
                
                
                579
                
                
                
                212.9
                %Gain
      on extinguishment of debt
                
                
                -
                
                
                
                0.0
                %
                
                
                190
                
                
                
                1.8
                %
                
                
                (190
                )
                
                
                (100.0
                %)Other
      income (expense)
                
                
                134
                
                
                
                1.3
                %
                
                
                (84
                )
                
                
                (0.8
                %)
                
                
                218
                
                
                
                259.5
                %Income
      before income taxes and noncontrolling interest
                
                
                985
                
                
                
                9.5
                %
                
                
                378
                
                
                
                3.5
                %
                
                
                607
                
                
                
                160.6
                %Income
      tax expense
                
                
                (511
                )
                
                
                (4.9
                %)
                
                
                (63
                )
                
                
                (0.6
                )
      %
                
                
                (448
                )
                
                
                711.1
                %Income
      before noncontrolling interest
                
                
                474
                
                
                
                4.6
                %
                
                
                315
                
                
                
                2.9
                %
                
                
                159
                
                
                
                (50.5
                )
      %Noncontrolling
      interest
                
                
                (25
                )
                
                
                (0.2
                %)
                
                
                (22
                )
                
                
                (0.2
                %)
                
                
                (3
                )
                
                
                13.6
                %Net
      income
                
                $
                449
                
                
                
                4.4
                %
                
                $
                293
                
                
                
                2.7
                %
                
                
                156
                
                
                
                53.2
                %
  21
  Agent
commissions were $7.1 million for the three months ended March 31, 2010, an
increase of 1.7% from $7.0 million for the three months ended March 31,
2009.  Agent commissions as a percentage of net transportation revenue
increased to 68.7% for the three months ended March 31, 2010, from 65.0% for the
comparable prior year period as a result of the proportional increase in
international revenues which typically yield lower margins than our domestic
revenues.
  Personnel
costs were $1.4 million for the three months ended March 31, 2010, a decrease of
20.6% from $1.8 million for the three months ended March 31,
2009.  Personnel costs as a percentage of net transportation revenue
decreased to 14.0% for the three months ended March 31, 2010, from 17.0% for the
comparable prior year period primarily as a result of reduced personnel costs
associated with the integration of the back-office operations of Adcom into the
operations of RGL.
  Selling,
general and administrative costs were $0.6 million for the three months ended
March 31, 2010, a decrease of 53.7% from $1.2 million for the three months ended
March 31, 2009.  The decrease resulted primarily from decreases in bad
debt and lease expenses and the business and occupancy tax refund of $395,000
issued to the Company by the State of Washington Department of Revenue. As a
percentage of net transportation revenue, other selling, general and
administrative costs decreased to 5.3% for the three months ended March 31,
2010, from 11.1% for the comparable prior year period.
  Depreciation
and amortization costs were approximately $0.4 million and $0.5 million for the
three months ended March 31, 2010 and 2009,
respectively.  Depreciation and amortization as a percentage of net
transportation revenue decreased to 3.8% for the three months ended March 31,
2010, from 4.5% for the comparable prior year period, primarily due to lower
amortization costs associated with the Airgroup & Adcom
acquisitions.
  Income
from operations was $0.9 million for the three months ended March 31, 2010,
compared to income from operations of $0.3 million for the three months ended
March 31, 2009.
  In the
three months ended March 31, 2009, the Company recorded a gain on early
extinguishment of debt in the amount of $0.2 million.  There was no
similar gain for the comparable current period.
  Other
income was $0.1 million for the three months ended March 31, 2010, compared to
other expense of less than $0.1 million for the three months ended March 31,
2009.  The change was primarily attributable to foreign exchange gains
from a stronger US dollar relative to historical transactions in foreign
currencies.
  Net
income was $0.4 million for the three months ended March 31, 2010, compared to
net income of $0.3 million for the three months ended March 31,
2009.
  Nine
months ended March 31, 2010 (actual and unaudited) and March 31, 2009 (actual
and unaudited)
  We
generated transportation revenue of $106.0 million and $104.6 million, and net
transportation revenue of $32.4 million and $35.4 million for the nine months
ended March 31, 2010 and 2009, respectively.  Net income was $1.1
million for the nine months ended March 31, 2010, compared to net loss of $9.7
million for the nine months ended March 31, 2009.
  22
  We had
adjusted EBITDA of $2.8 million and $2.9 million for the nine months ended March
31, 2010 and 2009, respectively. EBITDA is a non-GAAP measure of income and does
not include the effects of interest and taxes and excludes the "non-cash"
effects of depreciation and amortization on current assets. Companies have some
discretion as to which elements of depreciation and amortization are excluded in
the EBITDA calculation. We exclude all depreciation charges related to property,
plant and equipment, and all amortization charges, including amortization of
leasehold improvements and other intangible assets. We then further adjust
EBITDA to exclude extraordinary items and costs related to share based
compensation expense, goodwill impairment charges and other non-cash charges
consistent with the financial covenants of our credit facility. As explained
above, we believe that EBITDA is useful to us and to our investors in evaluating
and measuring our financial performance.  While management considers
EBITDA and adjusted EBITDA useful in analyzing our results, it is not intended
to replace any presentation included in our consolidated financial
statements.  Set forth below is a reconciliation of EBITDA and
adjusted EBITDA to net income (loss), the most directly comparable GAAP measure
for the nine months ended March 31, 2010 and 2009.
  The
following table provides a reconciliation of adjusted EBITDA to net income
(loss), the most directly comparable GAAP measure in accordance with SEC
Regulation G (in thousands), for the nine months ended March 31, 2010 and
2009:
  Nine
      months ended
                March
      31,
              
              
              Change2010
              
              
              2009
              
              
              Amount
              
              
              PercentNet
      income (loss)
              
              $
              1,114
              
              
              $
              (9,672
              )
              
              $
              10,786
              
              
              
              111.5
              %Income
      tax expense (benefit)
              
              
              919
              
              
              
              (167
              )
              
              
              1,086
              
              
              
              650.3
              %Net
      interest expense
              
              
              104
              
              
              
              157
              
              
              
              (53
              )
              
              
              (33.8
              %)Depreciation
      and amortization
              
              
              1,182
              
              
              
              1,267
              
              
              
              (85
              )
              
              
              (6.7
              %)EBITDA
              
              $
              3,319
              
              
              $
              (8,415
              )
              
              
              11,734
              
              
              
              139.4
              %Share
      based compensation and other non-cash costs
              
              
              246
              
              
              
              136
              
              
              
              110
              
              
              
              80.9
              %Gain
      on litigation settlement
              
              
              (355
              )
              
              
              -
              
              
              
              (355
              )
              
              
              N/AGoodwill
      impairment
              
              
              -
              
              
              
              11,403
              
              
              
              (11,403
              )
              
              
              (100.0
              %)Gain
      on extinguishment of debt
              
              
              -
              
              
              
              (190
              )
              
              
              190
              
              
              
              100.0
              %Business
      & Occupancy tax refund (including interest)
              
              
              (395
              )
              
              
              -
              
              
              
              (395
              )
              
              
              N/AAdjusted
      EBITDA
              
              $
              2,815
              
              
              $
              2,934
              
              
              $
              119
              
              
              
              4.1
              %
  The
following table summarizes transportation revenue, cost of transportation and
net transportation revenue (in thousands) for the nine months ended March 31,
2010 and 2009 (actual and unaudited):
  Nine
      months ended
                March
      31,
              
              
              Change2010
              
              
              2009
              
              
              Amount
              
              
              PercentTransportation
      revenue
              
              $
              106,008
              
              
              $
              104,627
              
              
              $
              1,381
              
              
              
              1.3
              %Cost
      of transportation
              
              
              73,614
              
              
              
              69,207
              
              
              
              4,407
              
              
              
              6.4
              %Net
      transportation revenue
              
              $
              32,394
              
              
              $
              35,420
              
              
              $
              (3,026
              )
              
              
              (8.5
              %)Net
      transportation margins
              
              
              30.6
              %
              
              
              33.9
              %
  Transportation
revenue was $106.0 million for the nine months ended March 31, 2010, an increase
of 1.3% over transportation revenue of $104.6 million for the nine months ended
March 31, 2009.  Domestic transportation revenue decreased by 3.2% to
$54.9 million for the nine months ended March 31, 2010, from $56.7 million for
the nine months ended March 31, 2009. The decrease was primarily attributed to
the effects from the slowing global economy.  International
transportation revenue increased by 6.7% to $51.1 million for the nine months
ended March 31, 2010, from $47.9 million for the comparable prior year period,
mainly attributable to the inclusion of international revenues associated with
the Adcom acquisition for the full nine months ended March 31,
2010.
  23
  Cost of
transportation increased 6.4% to $73.6 million for the nine months ended March
31, 2010, compared to $69.2 million for the nine months ended March 31,
2009.  Cost of transportation as a percentage of transportation
revenues increased as a result of a higher ratio of international sales which
typically yield lower margins.
 
 Net
transportation margins decreased to 30.6% of transportation revenue for the nine
months ended March 31, 2010, as compared to 33.9% of transportation revenue for
the nine months ended March 31, 2009.  The margin regression was
attributed to proportionately higher international sales, which typically yield
lower margins, coupled with pricing pressures from competitors.
  The
following table compares certain condensed consolidated statement of operations
data as a percentage of our net transportation revenue (in thousands) for the
nine months ended March 31, 2010 and 2009 (actual and unaudited):
  Nine
      months ended March 31,2010
              
              
              2009
              
              
              ChangeAmount
              
              
              Percent
              
              
              Amount
              
              
              Percent
              
              
              Amount
              
              
              PercentNet
      transportation revenue
              
              $
              32,394
              
              
              
              100.0
              %
              
              $
              35,420
              
              
              
              100.0
              %
              
              $
              (3,026
              )
              
              
              (8.5
              %)Agent
      commissions
              
              
              22,398
              
              
              
              69.1
              %
              
              
              23,535
              
              
              
              66.4
              %
              
              
              (1,137
              )
              
              
              (4.8
              %)Personnel
      costs
              
              
              4,402
              
              
              
              13.6
              %
              
              
              5,548
              
              
              
              15.7
              %
              
              
              (1,146
              )
              
              
              (20.7
              %)Selling,
      general and administrative
              
              
              2,801
              
              
              
              8.6
              %
              
              
              3,310
              
              
              
              9.3
              %
              
              
              (509
              )
              
              
              (15.4
              %)Depreciation
      and amortization
              
              
              1,182
              
              
              
              3.7
              %
              
              
              1,267
              
              
              
              3.6
              %
              
              
              (85
              )
              
              
              (6.7
              %)Restructuring
      charges
              
              
              -
              
              
              
              0.0
              %
              
              
              220
              
              
              
              0.6
              %
              
              
              (220
              )
              
              
              (100.0
              %)Goodwill
      impairment
              
              
              -
              
              
              
              0.0
              %
              
              
              11,403
              
              
              
              32.2
              %
              
              
              (11,403
              )
              
              
              (100.0
              %)Total
      operating expenses
              
              
              30,783
              
              
              
              95.0
              %
              
              
              45,283
              
              
              
              127.8
              %
              
              
              (14,500
              )
              
              
              (32.0
              %)Income
      (loss) from operations
              
              
              1,611
              
              
              
              5.0
              %
              
              
              (9,863
              )
              
              
              (27.8
              %)
              
              
              11,474
              
              
              
              116.3
              %Gain
      on extinguishment of debt
              
              
              -
              
              
              
              0.0
              %
              
              
              190
              
              
              
              0.5
              %
              
              
              (190
              )
              
              
              (100.0
              %)Gain
      on litigation settlement
              
              
              355
              
              
              
              1.1
              %
              
              
              -
              
              
              
              0.0
              %
              
              
              355
              
              
              
              N/AOther
      income (expense)
              
              
              150
              
              
              
              0.4
              %
              
              
              (146
              )
              
              
              (0.4
              %)
              
              
              296
              
              
              
              202.7
              %Income
      (loss) before income taxes and
      noncontrolling  interest
              
              
              2,116
              
              
              
              6.5
              %
              
              
              (9,819
              )
              
              
              (27.7
              %)
              
              
              11,935
              
              
              
              121.6
              %Income
      tax (expense) benefit
              
              
              (919
              )
              
              
              (2.8
              %)
              
              
              167
              
              
              
              0.5
              %
              
              
              (1,086
              )
              
              
              (650.3
              %)Income
      (loss) before noncontrolling interest
              
              
              1,197
              
              
              
              3.7
              %
              
              
              (9,652
              )
              
              
              (27.2
              %)
              
              
              10,849
              
              
              
              112.4
              %Noncontrolling
      interest
              
              
              (83
              )
              
              
              (0.3
              %)
              
              
              (20
              )
              
              
              (0.1
              %)
              
              
              (63
              )
              
              
              (315.0
              %)Net
      income (loss)
              
              $
              1,114
              
              
              
              3.4
              %
              
              $
              (9,672
              )
              
              
              (27.3
              %)
              
              $
              10,786
              
              
              
              111.5
              %
  Agent
commissions were $22.4 million for the nine months ended March 31, 2010, a
decrease of 4.8% from $23.5 million for the nine months ended March 31,
2009.  Agent commissions as a percentage of net transportation revenue
increased to 69.1% for the nine months ended March 31, 2010, from 66.4% for the
comparable prior year period as a result of the proportional increase in
international revenues which typically yield lower margins than our domestic
revenues and a corresponding reduction in commission expense.
  Personnel
costs were $4.4 million for the nine months ended March 31, 2010, a decrease of
20.7% from $5.5 million for the nine months ended March 31,
2009.  Personnel costs as a percentage of net transportation revenue
decreased to 13.6% for the nine months ended March 31, 2010, from 15.7% for the
comparable prior year period primarily as a result reduced personnel costs
associated with the integration of the back-office operations of Adcom into the
operations of RGL.
  Selling,
general and administrative costs were $2.8 million for the nine months ended
March 31, 2010, a decrease of 15.4% from $3.3 million for the nine months ended
March 31, 2009.  As a percentage of net transportation revenue,
selling, general and administrative costs decreased to 8.6% for the nine months
ended March 31, 2010, from 9.3% for the comparable prior year
period.  The decrease was primarily attributable to the business and
occupancy tax refund of $395,000 issued to the Company by the State of
Washington Department of Revenue.
  24
  Depreciation
and amortization costs were approximately $1.2 million for the nine months ended
March 31, 2010 and $1.3 million for the nine months ended March 31,
2009.  Depreciation and amortization as a percentage of net
transportation revenue increased to 3.7% for the nine months ended March 31,
2010, from 3.6% for the comparable prior year period, primarily due to the
decrease in net transportation revenue being greater than the decrease in
depreciation and amortization which are unaffected by changes in
operations.
  Restructuring
costs incurred in the nine months ended March 31, 2009, were $0.2 million as a
result of the Adcom acquisition and relate to the elimination of redundant
international personnel and facilities costs.  There were no similar
costs for the current period.
  In the
nine months ended March 31, 2009, the Company recorded an impairment charge to
goodwill in the amount of $11.4 million.  There was no similar charge
for the comparable current period.
  Income
from operations was $1.6 million for the nine months ended March 31, 2010,
compared to a loss from operations of $9.9 million for the nine months ended
March 31, 2009.  The difference was primarily due to the $11.4 million
impairment charge to goodwill.
  Other
income was $0.5 million for the nine months ended March 31, 2010, compared to
less than $0.1 million for the nine months ended March 31, 2009.  The
change was primarily attributable to foreign exchange gains from a stronger US
dollar relative to historical transactions in foreign currencies.
  Net
income was $1.1 million for the nine months ended March 31, 2010, compared to
net loss of $9.7 million for the nine months ended March 31,
2009.  The difference was primarily due to the $11.4 million
impairment charge to goodwill.
  Supplemental
Pro forma Information
  The
following table provides a reconciliation of adjusted EBITDA to net income
(loss), the most directly comparable GAAP measure in accordance with SEC
Regulation G (in thousands, for the nine months ended March 31, 2010 (actual and
unaudited) and March 31, 2009 (pro forma and unaudited)):
  Nine
      months ended
                March
      31,
              
              
              Change2010
              
              
              2009
              
              
              Amount
              
              
              PercentNet
      income (loss)
              
              $
              1,114
              
              
              $
              (9,791
              )
              
              $
              10,905
              
              
              
              111.4
              %Income
      tax expense (benefit)
              
              
              919
              
              
              
              (159
              )
              
              
              1,078
              
              
              
              678.0
              %Net
      interest expense
              
              
              104
              
              
              
              230
              
              
              
              (126
              )
              
              
              (54.8
              %)Depreciation
      and amortization
              
              
              1,182
              
              
              
              1,300
              
              
              
              (118
              )
              
              
              (9.1
              %)EBITDA
              
              $
              3,319
              
              
              $
              (8,420
              )
              
              $
              11,739
              
              
              
              139.4
              %Share
      based compensation and other non-cash costs
              
              
              246
              
              
              
              136
              
              
              
              110
              
              
              
              80.9
              %Gain
      on litigation settlement
              
              
              (355
              )
              
              
              -
              
              
              
              (355
              )
              
              
              N/AGain
      on extinguishment of debt
              
              
              -
              
              
              
              (190
              )
              
              
              190
              
              
              
              100.0
              %Goodwill
      impairment
              
              
              -
              
              
              
              11,403
              
              
              
              (11,403
              )
              
              
              (100.0
              %)Business
      & Occupancy tax refund (including interest)
              
              
              (395
              )
              
              
              -
              
              
              
              (395
              )
              
              
              N/AAdjusted
      EBITDA
              
              $
              2,815
              
              
              $
              2,929
              
              
              $
              (114
              )
              
              
              3.9
              %
  25
  The
following table summarizes March 31, 2010 (actual and unaudited) and March 31,
2009 (pro forma and unaudited) transportation revenue, cost of transportation
and net transportation revenue (in thousands):
  Nine
      months ended
                March
      31,
              
              
              Change2010
              
              
              2009
              
              
              Amount
              
              
              PercentTransportation
      revenue
              
              $
              106,008
              
              
              $
              116,771
              
              
              $
              (10,763
              )
              
              
              (9.2
              %)Cost
      of transportation
              
              
              73,614
              
              
              
              77,547
              
              
              
              (3,933
              )
              
              
              (5.1
              %)Net
      transportation revenue
              
              $
              32,394
              
              
              $
              39,244
              
              
              $
              (6,850
              )
              
              
              (17.5
              %)Net
      transportation margins
              
              
              30.6
              %
              
              
              33.6
              %
  Transportation
revenue was $106.0 million for the nine months ended March 31, 2010, a decrease
of 9.2% over pro forma transportation revenue of $116.8 million for the nine
months ended March 31, 2009.
  Cost of
transportation was $73.6 million for the nine months ended March 31, 2010, a
decrease of 5.1% over pro forma costs of transportation of $77.6 million for the
nine months ended March 31, 2009.
  Net
transportation margins decreased to 30.6% for the nine months ended March 31,
2010, compared to pro forma transportation margins of 33.6% for the nine months
ended March 31, 2009.
  The
following table compares certain condensed consolidated statement of operations
data as a percentage of our net transportation revenue (in thousands) for the
nine months ended March 31, 2010 (actual and unaudited) and March 31, 2009 (pro
forma and unaudited):
  Nine
      months ended March 31,2010
              
              
              2009
              
              
              ChangeAmount
              
              
              Percent
              
              
              Amount
              
              
              Percent
              
              
              Amount
              
              
              PercentNet
      transportation revenue
              
              $
              32,394
              
              
              
              100.0
              %
              
              $
              39,224
              
              
              
              100.0
              %
              
              $
              (6,830
              )
              
              
              (17.4
              %)Agent
      commissions
              
              
              22,398
              
              
              
              69.1
              %
              
              
              26,507
              
              
              
              67.6
              %
              
              
              (4,109
              )
              
              
              (15.5
              %)Personnel
      costs
              
              
              4,402
              
              
              
              13.6
              %
              
              
              5,995
              
              
              
              15.3
              %
              
              
              (1,593
              )
              
              
              (26.6
              %)Selling,
      general and administrative
              
              
              2,801
              
              
              
              8.6
              %
              
              
              3,670
              
              
              
              9.4
              %
              
              
              (869
              )
              
              
              (23.7
              %)Depreciation
      and amortization
              
              
              1,182
              
              
              
              3.7
              %
              
              
              1,300
              
              
              
              3.3
              %
              
              
              (118
              )
              
              
              (9.1
              %)Restructuring
      charges
              
              
              -
              
              
              
              0.0
              %
              
              
              220
              
              
              
              0.6
              %
              
              
              (220
              )
              
              
              (100.0
              %)Goodwill
      impairment
              
              
              -
              
              
              
              0.0
              %
              
              
              11,403
              
              
              
              29.1
              %
              
              
              (11,403
              )
              
              
              (100.0
              %)Total
      operating expenses
              
              
              30,783
              
              
              
              95.0
              %
              
              
              49,095
              
              
              
              125.2
              %
              
              
              (18,312
              )
              
              
              (37.3
              %)Income
      (loss) from operations
              
              
              1,611
              
              
              
              5.0
              %
              
              
              (9,871
              )
              
              
              (25.2
              %)
              
              
              11,482
              
              
              
              116.3
              %Gain
      on extinguishment of debt
              
              
              -
              
              
              
              0.0
              
              
              
              190
              
              
              
              (0.5
              %)
              
              
              (190
              )
              
              
              100.0
              %)Gain
      on litigation settlement
              
              
              355
              
              
              
              1.1
              
              
              
              -
              
              
              
              0.0
              %
              
              
              355
              
              
              
              N/AOther
      income (expense)
              
              
              150
              
              
              
              0.4
              %
              
              
              (249
              )
              
              
              (0.6
              %)
              
              
              399
              
              
              
              160.2
              %Income
      (loss) before income taxes and noncontrolling interest
              
              
              2,116
              
              
              
              6.5
              %
              
              
              (9,930
              )
              
              
              (25.3
              %)
              
              
              12,046
              
              
              
              121.3
              %Income
      tax (expense) benefit
              
              
              (919
              )
              
              
              (2.8
              %)
              
              
              159
              
              
              
              (0.4
              %)
              
              
              (1,078
              )
              
              
              (678.0
              %)Income
      (loss) before noncontrolling interest
              
              
              1,197
              
              
              
              3.7
              %
              
              
              (9,771
              )
              
              
              (24.9
              %)
              
              
              10,968
              
              
              
              112.3
              %Noncontrolling
      interest
              
              
              (83
              )
              
              
              (0.3
              %)
              
              
              (20
              )
              
              
              (0.1
              %)
              
              
              (63
              )
              
              
              (315.0
              %)Net
      income (loss)
              
              $
              1,114
              
              
              
              3.4
              %
              
              $
              (9,791
              )
              
              
              (25.0
              %)
              
              $
              10,905
              
              
              
              111.4
              %
  Agent
commissions were $22.4 million for the nine months ended March 31, 2010, a
decrease of 15.5% from $26.5 million for the pro forma nine months ended March
31, 2009.  Agent commissions as a percentage of net transportation
revenue increased to 69.1% of net transportation revenue for the nine months
ended March 31, 2010, compared to 67.6% for pro forma nine months ended March
31, 2009.
  Personnel
costs were $4.4 million for the nine months ended March 31, 2010, a decrease of
26.6% from $6.0 million for the pro forma nine months ended March 31,
2009.  Personnel costs as a percentage of net transportation revenue
decreased to 13.6% of net transportation revenue for the nine months ended March
31, 2010, compared to 15.3% for the pro forma nine months ended March 31,
2009.
  Selling,
general and administrative costs were $2.8 million for the nine months ended
March 31, 2010, a decrease of 23.7% from $3.7 million for the pro forma nine
months ended March 31, 2009.  As a percentage of net transportation
revenue, other selling, general and administrative costs decreased to 8.6% for
nine months ended March 31, 2010 from 9.4% for the pro forma nine months ended
March 31, 2009.
  26
  Depreciation
and amortization costs were $1.2 million for the nine months ended March 31,
2010, and $1.3 million for the pro forma nine months ended March 31,
2009.  As a percentage of net transportation revenue, depreciation and
amortization costs increased to 3.7% for nine months ended March 31, 2010, from
3.3% for the pro forma nine months ended March 31, 2009.
  Restructuring
costs of $0.2 million were incurred in the pro forma nine months ended March 31,
2009.  There were no similar costs for the current
period.
  For the
pro forma nine months ended March 31, 2009, the Company recorded an impairment
charge to goodwill in the amount of $11.4 million.  There were no
similar costs for the current period.
  Income
from operations was $1.6 million for the nine months ended March 31, 2010,
compared to a loss from operations of $9.9 million for the pro forma nine months
ended March 31, 2009.
  Other
income was $0.5 million for the nine months ended March 31, 2010, compared to
other expense of $0.1 million for the pro forma nine months ended March 31,
2009.
  Net
income was $1.1 million for the nine months ended March 31, 2010, compared to a
net loss of $9.8 million for the pro forma nine months ended March 31,
2009.
  Liquidity and Capital
Resources
  Net cash
provided by operating activities was $0.8 million for the nine months ended
March 31, 2010, compared to $2.3 million for the nine months ended March 31,
2009.  The change was principally driven by a decrease in net
collections on outstanding receivables and an increase in amounts loaned to
stations, partially offset by a decrease in net payments on outstanding payables
and positive cash flows from income taxes attributable to current year net
income.
  Net cash
used for investing activities was $0.7 million for the nine months ended March
31, 2010, compared to net cash used of $5.6 million for the nine months ended
March 31, 2009.  Use of cash for the nine months ended March 31, 2010,
related primarily to payments made to the former Adcom shareholder. Use of cash
for the nine months ended March 31, 2009 consisted primarily of approximately
$4.8 million for the acquisition of Adcom, $0.2 million spent for furniture and
equipment, and $0.6 million in payments to former shareholders of
Airgroup.
  Net cash
used for financing activities was $1.0 million for the nine months ended March
31, 2010, compared to net cash provided of $3.4 million for the nine months
ended March 31, 2009.  The cash provided by financing activities for
the nine months ended March 31, 2010, consisted primarily of net payments on our
credit facility of $0.4 million, $0.5 million of treasury stock purchases and a
distribution to the non-controlling interest of a subsidiary of less than $0.1
million.  The cash provided by financing activities for the nine
months ended March 31, 2009, consisted of borrowings from our credit facility
for the acquisition of Adcom and to support working capital requirements driven
by the growth of our business.
  Acquisitions
  Below are
descriptions of material acquisitions made since 2006 including a breakdown of
consideration paid at closing and future potential earn-out payments. We define
"material acquisitions" as those with aggregate potential consideration of $1.0
million or more.
  Effective
January 1, 2006, we acquired all of the outstanding stock of Airgroup. The
transaction was valued at up to $14.0 million. This consisted of: (i) $9.5
million payable in cash at closing; (ii) a subsequent cash payment of $0.5
million, which was paid on December 31, 2007; (iii) as amended, an additional
base payment of $0.6 million payable in cash, $0.3 million of which was paid on
June 30, 2008 and $0.3 million was paid on January 1, 2009; (iv) a base earn-out
payment of $1.9 million payable in Company common stock over a three year
earn-out period based upon Airgroup achieving income from continuing operations
of not less than $2.5 million per year; and (v) as additional incentive to
achieve future earnings growth, an opportunity to earn up to an additional $1.5
million payable in Company common stock at the end of a five-year earn-out
period (the "Tier-2 Earn-Out"). For the years ended June 30, 2009 and 2008, the
former shareholders of Airgroup earned $633,000 and $417,000 in base earn-out
payments, respectively.
  27
  During
the quarter ended December 31, 2007, we adjusted the estimate of accrued
transportation costs assumed in the acquisition of Airgroup which resulted in
the recognition of approximately $1.4 million in non-recurring
income.  Pursuant to the acquisition agreement, the former
shareholders of Airgroup have indemnified us for taxes of $0.5 million
associated with the income recognized in connection with this change in
estimate, which has been reflected as a reduction of the additional base payment
otherwise payable to the former shareholders of Airgroup.
  In
November 2008, we amended the Airgroup Stock Purchase Agreement and agreed to
unconditionally pay the former Airgroup shareholders an earn-out payment of
$633,333 for the earn-out period ending June 30, 2009, to be paid on or about
October 1, 2009 by delivery of shares of common stock of the Company. In
consideration for the certainty of the earn-out payment, the former Airgroup
shareholders agreed (i) to waive and release us from any and all further
obligations to pay any earn-outs payments on account of shortfall amounts, if
any, which may have accumulated prior to June 30, 2009; (ii) to waive and
release us from any and all further obligation to account for and pay the Tier-2
Earn-Out payment; and (iii) that the earn-out payment to be paid for the
earn-out period ended June 30, 2009 would constitute a full and final payment to
the former Airgroup shareholders of any and all amounts due to the former
Airgroup shareholders under the Airgroup Stock Purchase Agreement. In March
2009, Airgroup shareholders agreed to receive $0.4 million in cash on an
accelerated basis rather than the $0.6 million in Company shares due in October
of 2009. No further payments of purchase price are due in connection with this
acquisition.
  In May
2007, we launched a new logistics service offering focused on the automotive
industry through our wholly owned subsidiary, Radiant Logistics Global Services,
Inc. ("RLGS"). We entered into an Asset Purchase Agreement (the “APA”) with Mass
Financial Corporation ("Mass") to acquire certain assets formerly used in the
operations of the automotive division of Stonepath Group, Inc. The original
agreement provided for a purchase price of up to $2.75 million, and was later
reduced due to indemnity claims asserted against Mass.
  In
November 2007, the purchase price was reduced to $1.6 million, consisting of
cash of $0.6 million and a $1.0 million credit in satisfaction of indemnity
claims asserted by us arising from our interim operation of the Purchased Assets
since May 22, 2007. Of the cash component, $0.1 million was paid in May of 2007,
$0.3 million was paid at closing, and a final payment of $0.2 million was to be
paid in November of 2008, subject to off-set of up to $0.1 million for certain
qualifying expenses incurred by us. Net of qualifying expenses and a discount
for accelerated payment, the final payment was reduced to $0.1 million and paid
in June of 2008. No further payments of purchase price are due in connection
with this acquisition.
  Effective
September 5, 2008, we acquired all of the outstanding stock of Adcom Express,
Inc. The transaction was valued at up to $11.05 million, consisting of: (i)
$4.75 million in cash paid at the closing; (ii) $250,000 in cash payable shortly
after the closing, subject to adjustment, based upon the working capital of
Adcom as of August 31, 2008; (iii) up to $2.8 million in four "Tier-1 Earn-Out
Payments" of up to $700,000 each, covering the four year earn-out period through
2012, based upon Adcom achieving certain levels of "Gross Profit Contribution"
(as defined in the stock purchase agreement), payable 50% in cash and 50% in
shares of our common stock (valued at delivery date); (iv) a "Tier-2 Earn-Out
Payment" of up to a maximum of $2.0 million, equal to 20% of the amount by which
the Adcom cumulative Gross Profit Contribution exceeds $16.56 million during the
four year earn-out period; and (v) an "Integration Payment" of $1.25 million,
payable (a) on the earlier of the date certain integration targets are achieved
or 18 months after the closing, and (b) payable 50% in cash and 50% in our
shares of our common stock (valued at delivery date).
  As
previously reported, Robert Friedman, the former shareholder of Adcom, filed an
arbitration claim against us regarding, among other things, the final purchase
price based upon the closing date working capital, as adjusted, of Adcom (the
“2009 Arbitration”).  On January 22, 2010, the arbitrator issued his
ruling which reduced Mr. Friedman’s closing date working capital calculation
from positive $1,086,626 to negative $357,255.  After giving effect
for other ancillary issues addressed in the 2009 Arbitration and the reserves
otherwise maintained in connection with the Friedman liability, the Company
reported a gain of approximately $355,000.
  28
  For the
year ended June 30, 2009, the former Adcom shareholder earned approximately
$337,000.  On or about January 22, 2010, Mr. Friedman filed a second
arbitration claim against us alleging that we breached the purchase agreement in
connection with the calculation and payment of post closing integration and
earn-out payments.  We have asserted our rights of set-off against
such payments, including those amounts awarded to us in the 2009 Arbitration
described above, and approximately $200,000 in settlement of a claim incurred as
result of Mr. Friedman's breach of certain representations and warranties
contained in the securities purchase agreement.
  As of
March 31, 2010, the Company owes Mr. Friedman $162,453 in cash and $785,013 in
Company stock.
  Assuming
minimum targeted earnings levels are achieved, the following table summarizes
our contingent base earn-out payments related to the acquisition of Adcom, for
the fiscal years indicated based on results of the prior year (in
thousands):
  Estimated
      payment anticipated for fiscal year(1):
              
              2011
              
              2012
              
              2013Earn-out
      period:
              
              7/1/2009
      – 6/30/2010
              
              7/1/2010
      –6/30/2011
              
              7/1/2011
      – 6/30/2012Earn-out
      payments:Cash
              
              
              $
              350
              
              
              $
              350
              
              
              $
              350Equity
              
              
              
              350
              
              
              
              350
              
              
              
              350Total
      potential earn-out payments
              
              
              $
              700
              
              
              $
              700
              
              
              $
              700Total
      gross margin targets
              
              
              $
              4,320
              
              
              $
              4,320
              
              
              $
              4,320
 
 (1)
Earn-out payments are paid October 1 following each fiscal year end in a
combination of cash and Company common stock.
  Credit
Facility
  In March
2010, the Company’s $15.0 million revolving credit facility, including a $0.5
million sublimit to support letters of credit (collectively, the "Facility"),
was increased to $20.0 million with a maturity date of March 31, 2012. The
Facility is collateralized by accounts receivable and other assets of the
Company and its subsidiaries. Advances under the Facility are available to fund
future acquisitions, capital expenditures or for other corporate purposes,
including the repurchase of the Company’s stock. Borrowings under the facility
bear interest, at the Company’s option, at the bank’s prime rate minus 0.75% to
plus 0.50% or LIBOR plus 1.75% to 3.00%, and can be adjusted up or down during
the term of the Facility based on the Company’s performance relative to certain
financial covenants. The Facility is collateralized by accounts receivable and
other assets of the Company and its subsidiaries and provides for advances of up
to 80% of eligible domestic accounts receivable and for advances of up to 60% of
eligible foreign accounts receivable.
  The terms
of the Facility are subject to certain financial and operational covenants which
may limit the amount otherwise available under the Facility. The first covenant
limits funded debt to a multiple of 4.00 times the Company’s consolidated EBITDA
(as adjusted) measured on a rolling four quarter basis. The second financial
covenant requires the Company to maintain a basic fixed charge coverage ratio of
at least 1.1 to 1.0. The third financial covenant is a minimum profitability
standard that requires the Company not to incur a net loss before taxes,
amortization of acquired intangibles and extraordinary items in any two
consecutive quarterly accounting periods.
  Under the
terms of the Facility, the Company is permitted to make additional acquisitions
without the lender's consent only if certain conditions are satisfied. The
conditions imposed by the Facility include the following: (i) the absence of an
event of default under the Facility; (ii) the company to be acquired must be in
the transportation and logistics industry; (iii) the purchase price to be paid
must be consistent with the Company’s historical business and acquisition model;
(iv) after giving effect for the funding of the acquisition, the Company must
have undrawn availability of at least $1.0 million under the Facility; (v) the
lender must be reasonably satisfied with projected financial statements the
Company provides covering a 12 month period following the acquisition; (vi) the
acquisition documents must be provided to the lender and must be consistent with
the description of the transaction provided to the lender; and (vii) the number
of permitted acquisitions is limited to three per calendar year and shall not
exceed $7.5 million in aggregate purchase price financed by funded debt. In the
event that the Company is not able to satisfy the conditions of the Facility in
connection with a proposed acquisition, it must either forego the acquisition,
obtain the lender's consent, or retire the Facility. This may limit or slow the
Company’s ability to achieve the critical mass it may need to achieve its
strategic objectives.
  29
  Given our
continued focus on the build-out of our network of exclusive agency locations,
we believe that our current working capital and anticipated cash flow from
operations are adequate to fund existing operations. However, continued growth
through strategic acquisitions, will require additional sources of financing as
our existing working capital is not sufficient to finance our operations and an
acquisition program. Thus, our ability to finance future acquisitions will be
limited by the availability of additional capital. We may, however, finance
acquisitions using our common stock in  payment of all or some portion
of the consideration. In the event that our common stock does not attain or
maintain a sufficient market value or potential acquisition candidates are
otherwise unwilling to accept our securities as part of the purchase price for
the sale of their businesses, we may be required to utilize more of our cash
resources, if available, in order to continue our acquisition program. If we do
not have sufficient cash resources through either operations or from debt
facilities, our growth could be limited unless we are able to obtain such
additional capital.
  Advances
made under our $20.0 million facility are limited to the eligible accounts
receivable available to support our borrowings.  As of March 31, 2010,
we have approximately $11.0 in eligible accounts receivable and, net of advances
outstanding, approximately $4.9 million in remaining availability under the
Facility to support future acquisitions and our on-going working capital
requirements. We expect to structure acquisitions with certain amounts paid at
closing, and the balance paid over a number of years in the form of earn-out
installments which are payable based upon the future earnings of the acquired
businesses payable in cash, stock or some combination thereof. Except for the
acquisition of our agent based stations, we would generally expect our
acquisitions to contribute additional eligible accounts receivable to our
borrowing base and create capacity for additional borrowings under our Facility.
As we continue to execute our acquisition strategy, we will be required to make
significant payments in the future if the earn-out installments under our
various acquisitions become due. While we believe that a portion of any required
cash payments will be generated by the acquired businesses, we may have to
secure additional sources of capital to fund the remainder of any cash-based
earn-out payments as they become due. This presents us with certain business
risks relative to the availability of capacity under our Facility, the
availability and pricing of future fund raising, as well as the potential
dilution to our stockholders to the extent the earn-outs are satisfied directly,
or indirectly, from the sale or issuance of equity.
  Off Balance Sheet
Arrangements
  As of
March 31, 2010, we did not have any relationships with unconsolidated entities
or financial partners, such as entities often referred to as structured finance
or special purpose entities, which had been established for the purpose of
facilitating off-balance sheet arrangements or other contractually narrow or
limited purposes. As such, we are not materially exposed to any financing,
liquidity, market or credit risk that could arise if we had engaged in such
relationships.
  Critical
Accounting Policies
  Accounting
policies, methods and estimates are an integral part of the consolidated
financial statements prepared by management and are based upon management’s
current judgments. Those judgments are normally based on knowledge and
experience with regard to past and current events and assumptions about future
events. Certain accounting policies, methods and estimates are particularly
sensitive because of their significance to the financial statements and because
of the possibility that future events affecting them may differ from
management’s current judgments. While there are a number of accounting policies,
methods and estimates that affect our financial statements, the areas that are
particularly significant include the assessment of the recoverability of
long-lived assets, specifically goodwill, acquired intangibles, and revenue
recognition.
  30
  We
perform an annual impairment test for goodwill. The first step of the impairment
test requires that we determine the fair value of each reporting unit, and
compare the fair value to the reporting unit’s carrying amount. To the extent a
reporting unit’s carrying amount exceeds its fair value, an indication exists
that the reporting unit’s goodwill may be impaired and we must perform a second
more detailed impairment assessment. The second impairment assessment involves
allocating the reporting unit’s fair value to all of its recognized and
unrecognized assets and liabilities in order to determine the implied fair value
of the reporting unit’s goodwill as of the assessment date. The implied fair
value of the reporting unit’s goodwill is then compared to the carrying amount
of goodwill to quantify an impairment charge as of the assessment date. We
typically perform our annual impairment test effective as of April 1 of each
year, unless events or circumstances indicate, an impairment may have occurred
before that time.
  Acquired
intangibles consist of customer related intangibles and non-compete agreements
arising from our acquisition. Customer related intangibles will be amortized
using accelerated methods over approximately 5 years and non-compete agreements
will be amortized using the straight line method over the term of the underlying
agreement.
  We review
long-lived assets to be held-and-used for impairment whenever events or changes
in circumstances indicate that the carrying amount of the assets may not be
recoverable. If the sum of the undiscounted expected future cash flows over the
remaining useful life of a long-lived asset is less than its carrying amount,
the asset is considered to be impaired. Impairment losses are measured as the
amount by which the carrying amount of the asset exceeds the fair value of the
asset. When fair values are not available, we estimate fair value using the
expected future cash flows discounted at a rate commensurate with the risks
associated with the recovery of the asset. Assets to be disposed of are reported
at the lower of carrying amount or fair value less costs to sell.
  As a
non-asset based carrier, we do not own transportation assets. We generate the
major portion of our air and ocean freight revenues by purchasing transportation
services from direct (asset-based) carriers and reselling those services to its
customers. Based upon the terms in the contract of carriage, revenues related to
shipments where we issue a House Airway Bill ("HAWB") or a House Ocean Bill of
Lading ("HOBL") are recognized at the time the freight is tendered to the direct
carrier at origin. Costs related to the shipments are also recognized at this
same time based upon anticipated margins, contractual arrangements with direct
carriers, and other known factors. The estimates are routinely monitored and
compared to actual invoiced costs. The estimates are adjusted as deemed
necessary by us to reflect differences between the original accruals and actual
costs of purchased transportation.
  This
method generally results in recognition of revenues and purchased transportation
costs earlier than the preferred methods under generally accepted accounting
principles ("GAAP") which do not recognize revenues until a proof of delivery is
received or which recognize revenues as progress on the transit is made. Our
method of revenue and cost recognition does not result in a material difference
from amounts that would be reported under such other methods.
  Item
4T. Controls and Procedures.
  An
evaluation of the effectiveness of our "disclosure controls and procedures" (as
such term is defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") as of March 31, 2010, was carried
out by our management under the supervision and with the participation of our
Chief Executive Officer ("CEO") who also serves as our Chief Financial Officer
("CFO"). Based upon that evaluation, our CEO/CFO concluded that, as of March 31,
2010, our disclosure controls and procedures were effective to provide
reasonable assurance that information we are required to disclose in reports
that we file or submit under the Exchange Act is (i) recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission rules and forms and (ii) accumulated and communicated to our
management, including our CEO/CFO, as appropriate to allow timely decisions
regarding disclosure.
  31
  There
have not been any changes in our internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred
during the fiscal quarter ended March 31, 2010, which have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.
  PART
II. OTHER INFORMATION
  Item
1.  Legal Proceedings.
  2010 Friedman Arbitration
Claim
  On or
about January 22, 2010, Robert Friedman, the former shareholder of Adcom, filed
an arbitration claim against us with the American Arbitration Association in
Minneapolis, MN alleging breach of the securities purchase between the Company
and Mr. Friedman.  Mr. Friedman alleges that we breached the agreement in
connection with the calculation and payment of post closing integration and
earn-out payments and by asserting rights of set-off against such
payments.  Mr. Friedman is seeking payment in an unspecified
amount.   We filed an answer denying liability and counterclaim
in the amount of $0.2 million, representing amounts paid by us in settlement of
a claim incurred as result of Mr. Friedman's breach of certain representations
and warranties contained in the securities purchase agreement.
  Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
  We have a
share repurchase program that authorizes us to purchase up to 5,000,000 shares
of common stock through December 31, 2010.  The share repurchases may
occur from time-to-time through open market purchases at prevailing market
prices or through privately negotiated transactions as permitted by securities
laws and other legal requirements.  The following table sets forth
information regarding our repurchases or acquisitions of common stock during the
three month period ended March 31, 2010:
 
 Period
              
              Total
                Number
      of
                Shares
      (or
                Units)
                Purchased
              
              
              Average
                Price
      Paid
                per
      Share
                (or
      Unit)
              
              
              Total
      Number
                of
      Shares
                Purchased
      as Part
                of
      Publicly
                Announced
      Plans
                or
      Programs
              
              
              Maximum
      Number
                (or
      Approximate Dollar
                Value)
      of Shares that May Yet Be Purchased Under thePlans
      or Programs (1)Repurchases
      from March 1, 2010 through March 31, 2010
              
              
              62,399
              
              
              $
              0.24
              
              
              
              1,772,149
              
              
              
              2,633,451Total
              
              
              62,399
              
              
              $
              0.24
              
              
              
              1,772,149
              
              
              
              2,633,451
  
 (1)
              In
      May 2009, our Board of Directors authorized the repurchase of up to
      5,000,000 shares of our common stock through December 31,
      2010.
  32
  Item
6. Exhibits
  Exhibit
      No.
              
              Exhibit
              
              Method
      of Filing31.1
              
              Certification
      by Principal Executive Officer and Principal Financial Officer pursuant
      to  Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act
      of 1934, as amended, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
              
              Filed
      herewith32.1
              
              Certification
      by the Principal Executive Officer and Principal Financial Officer
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002
              
              Filed
      herewith99.1
              
              Press
      Release dated May 17, 2010
              
              FiledHerewith
 
 33
 
 SIGNATURES
  Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
 RADIANT
      LOGISTICS, INC.Date:
      May 17, 2010
                
                
                /s/ Bohn H. CrainBohn
      H. Crain
                    Chief
      Executive Officer and Chief Financial Officer
  Date:
      May 17, 2010
                  
                  
                  /s/ Todd E.
      MacomberTodd
      E. Macomber
                        Senior
      Vice President and Chief Accounting Officer
  34
  EXHIBIT
INDEX
  Exhibit
      No.
              
              Exhibit31.1
              
              Certification
      by Principal Executive Officer and Principal Financial Officer pursuant to
      Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as
      amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      200232.1
              
              Certification
      by Principal Executive Officer/Principal Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 200299.1
              
              Press
      Release dated May 17, 2010
  35