**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: September 30, 2008




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
      120 th Avenue
      N.E., Bellevue, WA 98005


(Address
      of Principal Executive Offices)


(425)
      943-4599


(Issuer’s
      Telephone Number, including Area Code)


N/A


(Former
      Name, Former Address, and Former Fiscal Year, if Changed Since Last
      Report)


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 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 34,701,960 issued and outstanding shares of the registrant’s common stock,
      par value $.001 per share, as of November 10, 2008.


















**RADIANT
      LOGISTICS, INC.**


**TABLE
      OF CONTENTS**




PART
                I. FINANCIAL INFORMATIONItem
                1.
            
            Condensed
                Consolidated Financial Statements - UnauditedCondensed
                Consolidated Balance Sheets at September 30, 2008 and June 30,
                2008
            
            
            3Condensed
                Consolidated Statements of Operations for the three months ended
                September
                30, 2008 and 2007
            
            
            4Condensed
                Consolidated Statement of Stockholders’ Equity for the three months ended
                September 30, 2008
            
            
            5Condensed
                Consolidated Statements of Cash Flows for the three months ended
                September
                30, 2008 and 2007
            
            
            6Notes
                to Condensed Consolidated Financial Statements
            
            
            7Item
                2.
            
            Management’s
                Discussion and Analysis of Financial Conditions and Results of
                Operations
            
            
            18Item
                4T.
            
            Controls
                and Procedures
            
            
            29PART
                II OTHER INFORMATIONItem
                6.
            
            Exhibits
            
            
            30




2





**RADIANT
      LOGISTICS, INC.**


**Condensed
      Consolidated Balance Sheets**


(unaudited)


September
                  30, 2008
              
              June
                  30, 2008ASSETSCurrent
                  assets -Cash
                  and cash equivalents
              
              $
              897,547
              
              $
              392,223Accounts
                  receivable, net of allowance for doubtful accountsof
                  $740,306 at September 30, 2008 and $513,479at
                  June 30, 2008
              
              
              25,122,808
              
              
              14,404,002Current
                  portion of employee loan receivable andother
                  receivables
              
              
              521,643
              
              
              68,367Prepaid
                  expenses and other current assets
              
              
              356,812
              
              
              425,657Income
                  tax deposit
              
              
              433,417
              
              
              -Deferred
                  tax asset
              
              
              167,653
              
              
              292,088Total
                  current assets
              
              
              27,499,880
              
              
              15,582,337Property
                  and equipment, net
              
              
              961,538
              
              
              717,542Acquired
                  intangibles, net
              
              
              4,294,842
              
              
              1,242,413Goodwill
              
              
              10,811,142
              
              
              7,824,654Employee
                  loan receivable
              
              
              40,000
              
              
              40,000Investment
                  in real estate
              
              
              40,000
              
              
              40,000Deposits
                  and other assets
              
              
              435,552
              
              
              131,496Minority
                  interest
              
              
              34,775
              
              
              24,784Total
                  long term assets
              
              
              15,656,311
              
              
              9,303,347Total
                  assets
              
              $
              44,117,729
              
              $
              25,603,226LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  liabilities -Notes
                  payable - current portion of long term debt
              
              $
              113,306
              
              $
              113,306Accounts
                  payable and accrued transportation costs
              
              
              18,553,305
              
              
              9,914,831Commissions
                  payable
              
              
              2,426,416
              
              
              1,136,859Other
                  accrued costs
              
              
              1,149,029
              
              
              221,808Income
                  taxes payable
              
              
              -
              
              
              498,142Due
                  to former Adcom shareholder
              
              
              2,402,301
              
              
              -Total
                  current liabilities
              
              
              24,664,357
              
              
              11,884,946Long
                  term debt
              
              
              8,577,435
              
              
              4,272,032Deferred
                  tax liability
              
              
              1,561,924
              
              
              422,419Total
                  long term liabilities
              
              
              10,139,359
              
              
              4,694,451Total
                  liabilities
              
              
              34,783,716
              
              
              16,579,397Stockholders'
                  equity: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;issued
                  and outstanding: 34,701,960 at September 30, 2008and
                  34,660,293 at June 30, 2008
              
              
              16,158
              
              
              16,116Additional
                  paid-in capital
              
              
              7,763,613
              
              
              7,703,658Retained
                  earnings
              
              
              1,554,242
              
              
              1,304,055Total
                  stockholders’ equity
              
              
              9,334,013
              
              
              9,023,829$
              44,117,729
              
              $
              25,603,226




The
      accompanying notes form an integral part of these condensed consolidated
      financial statements.





3




**RADIANT
      LOGISTICS, INC.**


**Condensed
      Consolidated Statements of Operations**


**(unaudited)**




THREE
                MONTHS ENDED
              SEPTEMBER
                30,2008
            
            2007Revenue
            
            $
            32,403,220
            
            $
            25,557,234Cost
                of transportation
            
            
            21,219,498
            
            
            17,116,375Net
                revenue
            
            
            11,183,722
            
            
            8,440,859Agent
                commissions
            
            
            7,553,153
            
            
            5,851,818Personnel
                costs
            
            
            1,613,699
            
            
            1,546,934Selling,
                general and administrative expenses
            
            
            1,117,033
            
            
            694,867Depreciation
                and amortization
            
            
            315,356
            
            
            239,868Restructuring
                charges
            
            
            220,000
            
            
            -Total
                operating expenses
            
            
            10,819,241
            
            
            8,333,487Income
                from operations
            
            
            364,481
            
            
            107,372Other
                income (expense):Interest
                income
            
            
            988
            
            
            1,200Interest
                expense
            
            
            (25,697
            )
            
            (25,740
            )Other
            
            
            53,084
            
            
            (19,743
            )Total
                other income (expense)
            
            
            28,375
            
            
            (44,283
            )Income
                before income tax expense
            
            
            392,856
            
            
            63,089Income
                tax (expense) benefit
            
            
            (152,659
            )
            
            7,731Income
                before minority interests
            
            
            240,197
            
            
            70,820Minority
                interest
            
            
            9,990
            
            
            17,612Net
                income
            
            $
            250,187
            
            $
            88,432Net
                income per common share - basic
            
            $
            .01
            
            $
            -Net
                income per common share - diluted
            
            $
            .01
            
            $
            -Weighted
                average shares outstanding:Basic
                shares
            
            
            34,695,166
            
            
            33,961,639Diluted
                shares
            
            
            34,800,257
            
            
            34,442,963





The
      accompanying notes form an integral part of these condensed consolidated
      financial statements.





4




**RADIANT
      LOGISTICS, INC.**


**Condensed
      Consolidated Statement of Stockholders’ Equity**


(unaudited)




ADDITIONAL
                PAID-IN
                CAPITAL
              
              RETAINED
                EARNINGS
              
              TOTAL
                STOCKHOLDERS'
                EQUITYCOMMON
                  STOCKSHARES
              
              AMOUNTBalance
                  at June 30, 2008
              
              
              34,660,293
              
              $
              16,116
              
              $
              7,703,658
              
              $
              1,304,055
              
              $
              9,023,829Share
                  based compensation
              
              
              -
              
              
              -
              
              
              47,913
              
              
              -
              
              
              47,913Shares
                  issued for investor relations services
              
              
              41,667
              
              
              42
              
              
              12,042
              
              
              
              
              
              12,084Net
                  income for the three months endedSeptember
                  30, 2008
              
              
              -
              
              
              -
              
              
              -
              
              
              250,187
              
              
              250,187Balance
                  at September 30, 2008
              
              
              34,701,960
              
              $
              16,158
              
              $
              7,763,613
              
              $
              1,554,242
              
              $
              9,334,013




The
      accompanying notes form an integral part of these condensed consolidated
      financial statements.





5




**RADIANT
      LOGISTICS, INC.**


**Condensed
      Consolidated Statements of Cash Flows**


**(unaudited)**





For
                three months ended September 30,2008
            
            2007CASH
                FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES:Net
                income
            
            $
            250,187
            
            $
            88,432ADJUSTMENTS
                TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATION
                ACTIVITIESshare
                based compensation
            
            
            47,913
            
            
            61,258stock
                issued for investor relations services
            
            
            12,084
            
            
            -amortization
                of intangibles
            
            
            217,015
            
            
            136,840change
                in deferred taxes
            
            
            47,940
            
            
            (46,526
            )depreciation
            
            
            98,341
            
            
            95,875amortization
                of bank fees
            
            
            3,414
            
            
            7,153minority
                interest in (loss) of subsidiaries
            
            
            (9,990
            )
            
            (17,612
            )provision
                for doubtful accounts
            
            
            95,414
            
            
            26,265CHANGE
                IN ASSETS AND LIABILITIES -accounts
                receivable
            
            
            (163,920
            )
            
            (2,466,357
            )employee
                receivable and other receivables
            
            
            (40,236
            )
            
            1,984prepaid
                expenses and other assets
            
            
            152,605
            
            
            (574,099
            )accounts
                payable and accrued transportation costs
            
            
            913,584
            
            
            328,866commissions
                payable
            
            
            69,644
            
            
            86,883other
                accrued costs
            
            
            230,424
            
            
            (102,823
            )income
                taxes payable
            
            
            (413,114
            )
            
            (107,580
            )income
                tax deposits
            
            
            (433,417
            )
            
            -Net
                cash provided by operating activities
            
            
            1,077,888
            
            
            (2,481,441
            )CASH
                FLOWS USED FOR INVESTING ACTIVITIES:acquisition
                of Adcom Express, Inc including an additional $26,809 cost incurred
                post
                closing
            
            
            (4,803,605
            )
            
            -purchase
                of technology and equipment
            
            
            (50,475
            )
            
            (169,079
            )Net
                cash used for investing activities
            
            
            (4,854,080
            )
            
            (169,079
            )CASH
                FLOWS PROVIDED BY FINANCING ACTIVITIES:issuance
                of notes receivable
            
            
            (25,000
            )
            
            -payments
                of notes receivable
            
            
            1,113
            
            
            -net
                proceeds from (payment to) credit facility
            
            
            4,305,403
            
            
            2,340,306Net
                cash provided by financing activities
            
            
            4,281,516
            
            
            2,340,306NET
                INCREASE (DECREASE) IN CASH
            
            
            505,324
            
            
            (310,214
            )CASH,
                BEGINNING OF THE PERIOD
            
            
            392,223
            
            
            719,575CASH,
                END OF PERIOD
            
            $
            897,547
            
            $
            409,361SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION:Income
                taxes paid
            
            $
            951,250
            
            $
            168,350Interest
                paid
            
            $
            24,427
            
            $
            25,740




The
      accompanying notes form an integral part of these condensed consolidated
      financial statements.




**Supplemental
      disclosure of non-cash investing and financing activities:**





None





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”) is
      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 and Adcom
      brands, the Company services 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, the Company intends 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, the Company seeks
      to
      limit its investment in equipment, facilities and working capital through
      contracts and preferred provider arrangements with various transportation
      providers who generally provide the Company with favorable rates, minimum
      service levels, capacity assurances and priority handling status. The Company’s
      non-asset based approach allows it to maintain a high level of operating
      flexibility and leverage a cost structure that is highly scalable in nature
      while the aggregate purchasing power of the Company’s freight volumes enables
      the Company to negotiate attractive pricing with transportation
      providers.




In
      furtherance of the Company’s growth strategy, in
      September of 2008, the Company completed the acquisiton of Adcom Express, Inc.
      d/b/a Adcom Worldwide, a Minneapolis, Minnesota-based, privately held company
      that provides a full range of domestic and international transportation and
      logistics services across North America. Founded in 1978, Adcom services a
      diversified account base including manufacturers, distributors and retailers
      through a combination of three company owned and twenty seven agency offices
      across North America. See Note 4.




**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. 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, although the Company’s
      management believes that the disclosures are adequate to make the information
      presented not misleading. The Company’s management suggests that these condensed
      financial statements 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, 2008.





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 also include the accounts of Radiant
      Logistics, Inc. and its wholly-owned subsidiaries as well as a single
      variable interest entity, Radiant Logistics Partners LLC which is 40% owned
      by
      Airgroup, a wholly owned subsidiary of the Company, whose accounts are included
      in the consolidated financial statements in accordance with Financial Accounting
      Standards Board (“FASB”) Interpretation No. 46(R) consolidation of “Variable
      Interest Entities” (See Note 6). All significant inter-company balances and
      transactions have been eliminated.


7




**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 of America
      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, accounting
      for
      the issuance of shares and share based compensation, fair value of acquired
      assets and liabilities, 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)**
            **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.





**c)**
            **Concentration**





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.





**d)**
            **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 receivables, historical experience and knowledge
      of
      specific customers.





**e)**
            **Property
                & 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.





Under
      the provisions of Statement of Position 98-1, *“Accounting
      for the Costs of Computer Software Developed or Obtained for Internal
      Use”* ,
      the Company capitalizes costs associated with internally developed and/or
      purchased software systems that have reached the application development stage
      and meet recoverability tests. Capitalized costs include external direct costs
      of materials and services utilized in developing or obtaining internal-use
      software, payroll and payroll-related expenses for employees who are directly
      associated with and devote time to the internal-use software project and
      capitalized interest, if appropriate. Capitalization of such costs begins when
      the preliminary project stage is complete and ceases no later than the point
      at
      which the project is substantially complete and ready for its intended purpose.





Costs
      for general and administrative, overhead, maintenance and training, as well
      as
      the cost of software that does not add functionality to existing systems, are
      expensed as incurred.




8




**f)**
            **Goodwill**





The
      Company follows the provisions of Statement of Financial Accounting Standards
      ("SFAS") No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 requires
      an
      annual impairment test for goodwill and intangible assets with indefinite lives.
      Under the provisions of SFAS No. 142, the first step of the impairment test
      requires that the Company 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 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, an impairment may have occurred
      before that time. As of September 30, 2008, management believes there are no
      indications of an impairment.





**g)**
            **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 consistent with the
      term
      of the underlying agreement which generally extends for a period of 4 to 5
      years. See Notes 3, 4 and 5.





The
      Company follows the provisions of SFAS No. 144, “Accounting for the Impairment
      or Disposal of Long-Lived Assets,” which establishes accounting standards for
      the impairment of long-lived assets such as property, plant and equipment and
      intangible assets subject to amortization. The Company reviews 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, 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 that no
      impairment of the respective carrying value has occurred as of September 30,
      2008.





**h)**
            **Commitments**





The
      Company has operating lease and capital lease commitments, some of which are
      for
      office and warehouse space and equipment rentals and are under non-cancelable
      operating leases expiring at various dates through December 2012. Future
      annual commitments for years ending June 30, 2009 through 2013 are,
      respectively, $518,022, $376,971, $144,627, $32,281, and $23,393.





**i)**
            **Income
                Taxes**





Taxes
      on income are provided in accordance with SFAS No. 109, “Accounting
      for 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 accounts for uncertain income tax positions in accordance with FAS
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an
      Interpretation of FASB Statement 109” (“FIN 48”), which was adopted by the
      Company on July 1, 2007. Accordingly, 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.




9




**j)**
            **Revenue
                Recognition and Purchased Transportation Costs**





The
      Company recognizes revenue on a gross basis, in accordance with Emerging Issues
      Task Force ("EITF") 91-9, "Reporting Revenue Gross versus Net," as a result
      of
      the following: 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. In accordance with EITF 91-9, revenue
      from freight forwarding and export services is recognized at the time the
      freight is tendered to the direct carrier at origin, and direct expenses
      associated with the cost of transportation are accrued concurrently. At the
      time
      when revenue is recognized on a transportation shipment, the Company records
      costs related to that shipment based on the estimate of total purchased
      transportation costs. The estimates are 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.





**k)**
            **Share
                based Compensation**





The
      Company follows the provisions of SFAS No. 123R, "Share Based Payment,” a
      revision of FASB Statement No. 123 ("SFAS 123R"). This statement requires that
      the cost resulting from all share-based payment transactions be recognized
      in
      the Company’s consolidated financial statements. In addition, the Company
      follows the guidance of the Securities and Exchange Commission ("SEC") Staff
      Accounting Bulletin No. 107, "Share-Based Payment" ("SAB 107"). SAB 107 provides
      the SEC’s staff’s position regarding the application of SFAS 123R and certain
      SEC rules and regulations, and also provides the staff’s views regarding the
      valuation of share-based payment arrangements for public companies. SFAS 123R
      requires all share-based payments to employees, including grants of employee
      stock options, to be recognized in the statement of operations based on their
      fair values.





For
      the
      three months ended September 30, 2008, the Company recorded a share based
      compensation expense of $47,913, which, net of income taxes, resulted in a
      $29,706 net reduction of net income. For the three months ended September 30,
      2007, the Company recorded a share based compensation expense of $61,258, which,
      net of income taxes, resulted in a $40,430 net reduction of net income.





**l)**
            **Basic
                and Diluted Income Per Share**





The
      Company uses SFAS No. 128, "Earnings Per Share" for calculating the basic and
      diluted income per share. Basic income per share is computed by dividing net
      income 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 September 30, 2008, the weighted average outstanding
      number of potentially dilutive common shares totaled 34,800,257 shares of common
      stock, including options to purchase 3,410,000 shares of common stock at June
      30, 2008, of which 2,985,000 were excluded as their effect would have been
      antidilutive. For the three months ended September 30, 2007, the weighted
      average outstanding number of potentially dilutive common shares totaled
      34,442,963 shares of common stock, including options to purchase 3,150,000
      shares of common stock at June 30, 2007, of which 1,145,000 were excluded as
      their effect would have been antidilutive.




10




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
              September
                30, 2008
            
            Three
                months ended
              September
                30,
              2007Weighted
                average basic shares outstanding
            
            
            34,695,166
            
            
            33,961,639Options
            
            
            105,091
            
            
            481,324Weighted
                average dilutive shares outstanding
            
            
            34,800,257
            
            
            34,442,963





**m)**
            **Reclassifications**




Certain
      amounts for prior periods have been reclassified in the consolidated financial
      statements to conform to the classification used in fiscal 2008.





**NOTE
      3 - ACQUISITION OF ASSETS - AUTOMOTIVE**





**** In
      May, 2007, the Company launched a new logistics service offering focused on
      the
      automotive industry through its wholly owned subsidiary, Radiant Logistics
      Global Services, Inc. (“RLGS”). The Company 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 “Purchased Assets”). The agreement of the transaction was valued at up to $2.75 million.





Concurrent
      with the execution of the APA, the Company also entered into a Management
      Services Agreement (“MSA”) with Mass, whereby it agreed to operate the Purchased
      Assets within its automotive services group during the interim period pending
      the closing under the APA. As part of the MSA, Mass agreed to indemnify the
      Company from and against any and all expenses, claims and damages arising out
      of
      or relating to any use by any of the Company’s subsidiaries or affiliates of the
      Purchased Assets and the operation of the business utilizing the Purchased
      Assets.





Shortly
      after commencing operation of the Purchased Assets pursuant to the MSA, a
      judgment creditor of Stonepath (the “Stonepath Creditor”) issued garnishment
      notices to the automotive customers being serviced by the Company disputing
      the
      priority and superiority of the underlying security interests of Mass in the
      Purchased Assets and asserting that the Company was in possession of certain
      accounts receivable of other assets covered by a garnishment notice. This
      resulted in a significant disruption to the automotive business and the Company
      exercised an indemnity claim against Mass resulting in a restructured
      transaction with Mass.





In
      November 2007 **,** the
      purchase price of the purchased assets was reduced to $1.56 million, consisting
      of cash of $560,000 and a $1.0 million credit in satisfaction of indemnity
      claims asserted by the Company arising from its interim operation of the
      Purchased Assets since May 22, 2007. Of the cash component of the transaction,
      $100,000 was paid in May of 2007, $265,000 was paid at closing and a final
      payment of $195,000 was to be paid in November of 2008, subject to off-set
      of up
      to $75,000 for certain qualifying expenses incurred by the Company. Net of
      qualifying expenses and a discount for accelerated payment, the final payment
      was reduced to $95,000 and paid in June of 2008.





The
      total purchase price of the acquired assets is $1.9 million, which is comprised
      of the $1.56 million purchase price less $25,000 for the early payment of note,
      and an additional $365,000 in acquisition expenses. The following table
      summarizes the preliminary allocation of the purchase price based on the
      estimated fair value of the acquired assets at November 1, 2007. No liabilities
      were assumed in connection with the transaction:





11




Furniture
                  and equipment
              
              $
              24,165Goodwill
                  and other intangibles
              
              
              1,875,835Total
                  acquired assets
              
              
              1,900,000Total
                  acquired liabilities
              
              
              -Net
                  assets acquired
              
              $
              1,900,000





The
      results of operations related to these assets are included in the Company’s
      statement of income from the date of acquisition in November 2007. The above
      allocation is still preliminary and the Company expects to finalize it prior
      to
      the November 2008 anniversary of the acquisition of Purchased Assets as required
      per SFAS 141.


**NOTE
        4 - ACQUISITION OF ADCOM**
 
 On
        September 5, 2008, the Company concurrently entered into and closed upon
        a Stock
        Purchase Agreement (the “Agreement”) pursuant to which it acquired 100 percent
        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 a maximum of $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 future 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.
 
 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
        acquisition was accounted for as a purchase and accordingly, the results
        of
        operations and cash flows of Adcom have been included in the Company’s condensed
        consolidated financial statements prospectively from the date of acquisition.
        At
        September 30, 2008, the total purchase price consisted of an initial payment
        of
        $4,750,000, an additional $136,796 in acquisition expenses and net of an
        offset
        of $110,000 for certain liabilities assumed in connection with the transaction.
        Also included in the acquisition is $1,250,000 in future integration payments
        (included in current liabilities), and $394,408 in working capital and other
        adjustments. The following table summarizes the preliminary allocation of
        the
        purchase price based on the estimated fair value of the acquired assets at
        August 31, 2008.
 
 Current
                  Assets
              
              $
              11,980,440Furniture
                  & Equipment
              
              
              291,862Notes
                  Receivable
              
              
              343,602Goodwill
                  and other intangibles
              
              
              6,255,932Other
                  Assets
              
              
              325,295Total
                  acquired assets
              
              
              19,197,131Current
                  Liabilities assumed
              
              
              11,559,927Long
                  Term Deferred Tax Liability
              
              
              1,216,000Total
                  acquired liabilities
              
              
              12,775,927Net
                  assets acquired
              
              $
              6,421,204




The
        above
        allocation is still preliminary and the Company expects to finalize it prior
        to
        the September 2009 anniversary of the acquisition as required per SFAS
        141.




12


The
        following information is based on estimated results for the three months
        ending
        September 30, 2008 and 2007 as if the acquisition of the Adcom had occurred
        as
        of July 1, 2007 (in thousands, except earnings per share):
 
 **Three
                  months ended September 30,**2008
              
              2007Total
                  revenue
              
              $
              49,242
              
              $
              39,948Net
                  income (loss)
              
              $
              178
              
              $
              (137
              )Earnings
                  per share:Basic
              
              $
              .01
              
              $
              .00Diluted
              
              $
              .01
              
              $
              .00





**NOTE
      5 - ACQUIRED INTANGIBLE ASSETS**





The
      table
      below reflects acquired intangible assets related to the acquisitions of
      Airgroup, Purchased Assets in Detroit and the acquisition of Adcom. The
      information is for the three months ended September 30, 2008 and year ended
      June
      30, 2008.


Three
                  months ended
                September
                  30, 2008
              
              Year
                  ended
                June
                  30, 2008Gross
                carrying
                amount
              
              Accumulated
                  Amortization
              
              Gross
                carrying
                amount
              
              Accumulated
                  AmortizationAmortizable
                  intangible assets:Customer
                  related
              
              $
              5,821,444
              
              $
              1,665,061
              
              $
              2,652,000
              
              $
              1,454,587Covenants
                  not to compete
              
              
              190,000
              
              
              51,541
              
              
              90,000
              
              
              45,000Total
              
              $
              6,011,444
              
              $
              1,716,602
              
              $
              2,742,000
              
              $
              1,499,587Aggregate
                  amortization expense:For
                  three months endedSeptember
                  30, 2008
              
              
              
              
              $
              217,015For
                  three months endedSeptember
                  30, 2007
              
              
              
              
              $
              136,840Aggregate
                  amortization expense for the year ended June 30:2009
                  - For the remainder of the year
              
              
              
              
              
              1,051,2182010
              
              
              
              
              
              1,164,2862011
              
              
              
              
              
              832,7622012
              
              
              
              
              
              774,7722013
              
              
              
              
              
              379,3442014
              
              
              
              
              
              52,880Thereafter
              
              
              
              
              
              39,580Total
              
              
              
              
              $
              4,294,842





For
      the
      three months ended September 30, 2008, the Company recorded an expense of
      $217,015 from amortization of intangibles and an income tax benefit of $76,495
      from amortization of the long term deferred tax liability; arising from the
      Airgroup and Adcom acquisitions. For the three months ended September 30, 2007,
      the Company recorded an expense of $136,840 from amortization of intangibles
      and
      an income tax benefit of $46,526; both arising from the acquisition of Airgroup.
      The Company expects the net reduction in income, from the combination of
      amortization of intangibles and long term deferred tax liability will be
      $671,091 for the remainder of 2009, $743,082 in 2010, $524,700 in 2011, $482,259
      in 2012, $237,093 in 2013 and $74,693 thereafter.




13




**NOTE
      6 - VARIABLE INTEREST ENTITY**





FIN46(R)
      clarifies the application of Accounting Research Bulletin No. 51 “Consolidated
      Financial Statements,” to 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 (“variable interest
      entities”). Radiant Logistics Partners LLC (“RLP”) is 40% owned by Airgroup
      Corporation and qualifies under FIN46(R) as a variable interest entity and
      is
      included in the Company’s consolidated financial statements. RLP commenced
      operations in February 2007. Minority interest recorded on the income statement
      for the three months ending September 30, 2008 was a benefit of $9,990 and
      for
      the three months ending September 30, 2007 was a benefit of $17,612.




**NOTE
      7 - RELATED PARTY**





RLP
      is owned 40% by Airgroup and 60% by an affiliate of the Chief Executive Officer
      of the Company, Radiant Capital Partners (RCP). 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. 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. Under FIN46(R), RLP is
      consolidated in the financial statements of the Company (see Note 6).




**NOTE
      8 - PROPERTY AND EQUIPMENT**





Property
      and equipment consists of the following:




September
                  30,
              
              June
                  30,2008
              
              2008Vehicles
              
              $
              35,079
              
              $
              3,500Communication
                  equipment
              
              
              1,353
              
              
              1,353Office
                  equipment
              
              
              309,156
              
              
              261,633Furniture
                  and fixtures
              
              
              55,581
              
              
              47,191Computer
                  equipment
              
              
              527,953
              
              
              290,135Computer
                  software
              
              
              742,631
              
              
              738,566Leasehold
                  improvements
              
              
              43,488
              
              
              30,5261,715,241
              
              
              1,372,904Less:
                  Accumulated depreciation and amortization
              
              
              (753,703
              )
              
              (655,362
              )Property
                  and equipment - net
              
              $
              961,538
              
              $
              717,542




Depreciation
      and amortization expense for the three months ended September 30, 2008 was
      $98,341, and for the three months ended September 30, 2007 was
      $95,875.




**NOTE
      9 - LONG TERM DEBT**





In
      September 2008, the Company’s $10 million revolving credit facility (Facility)
      was increased from $10 million to $15 million. 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. Borrowings under the facility
      bear
      interest, at the Company’s option, at the Bank’s prime rate minus .15% to 1.00%
      or LIBOR plus 1.55% to 2.25%, 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 provides for advances of up to 80% of the Company’s
      eligible accounts receivable.




14




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 3.00 times the Company’s
      consolidated EBITDA measured on a rolling four quarter basis (or a multiple
      of
      3.25 at a reduced advance rate of 75.0%). 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.





The
      co-borrowers of the Facility include Radiant Logistics, Inc., Airgroup
      Corporation, Radiant Logistics Global Services Inc. (“RLGS”), Radiant Logistics
      Partners, LLC (“RLP”), and Adcom Express, Inc. (d/b/a Adcom Worldwide). RLP is
      owned 40% by Airgroup and 60% by an affiliate of the Chief Executive Officer
      of
      the Company, Radiant Capital Partners. 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 and RLGS 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 September 30, 2008, the Company was in compliance
      with
      all of its covenants.





As
      of September 30, 2008, the Company had $6,814,861 advances under the Facility
      and $1,762,574 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. These amounts total long term debt of $8,577,435.




At
      September 30, 2008, based on available collateral and $205,000 in outstanding
      letter of credit commitments, there was $7,245,814 available for borrowing
      under
      the Facility based on advances outstanding.





15





**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.





For
      the
      three months ended September 30, 2008, the Company recognized net
      income tax expense of $152,659 consisting of current income tax expense of
      $104,719 and deferred income tax expense of $47,940.





For
      the
      three months ended September 30, 2007, the Company recognized net
      income tax benefit of $7,731 consisting of current income tax expense of $60,607
      and deferred income tax benefit of $68,338.





The
      Company’s consolidated effective tax rate during the three month periods ended
      September 30, 2008 and September 30, 2007 was 38.0 %
      and
      34.0%, respectively. ****





**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 September 30, 2008, none of the shares were issued or
      outstanding.





**Common
      Stock**





In
      May
      2008, the Company issued 250,000 shares of common stock to a financial advisor
      who provided investor relations and financial advisory services to the Company.
      Shares issued were for services provided February 2008 through July 2008, and
      as
      such, only the value of 41,667 shares has been recorded during the quarter
      ended
      September 30, 2008.





**NOTE
      12 - SHARE BASED COMPENSATION**




For
      the
      three months ended September 30, 2008, the Company granted no
      options.




Share
      based compensation costs recognized during the three months ended September
      30,
      2008, includes compensation cost for all share-based payments granted to date,
      based on the grant-date fair value estimated in accordance with the provisions
      of SFAS 123R. No options have been exercised as of September 30,
      2008.





In
      accordance with SFAS123R, the Company is required to estimate the number of
      awards that are ultimately expected to vest.





For
      the
      three months ended September 30, 2008 and 2007, the Company recognized stock
      option compensation costs of $47,913 and $61,258, respectively, in accordance
      with SFAS 123R. The following table summarizes activity under the plan for
      the
      three months ended September 30, 2008.




16




Number
                of shares
            
            Weighted
                Average
              exercise
              price
                per share
            
            Weighted
                average
              remaining
              contractual
              life
            
            Aggregate
              intrinsic
              valueOutstanding
                at June 30, 2008
            
            
            3,410,000
            
            $
            0.539
            
            
            7.97
                years
            
            $
            -Options
                granted
            
            
            -
            
            
            -
            
            
            -
            
            
            -Options
                exercised
            
            
            -
            
            
            -
            
            
            -
            
            
            -Options
                forfeited
            
            
            -
            
            
            -
            
            
            -
            
            
            -Options
                expired
            
            
            -
            
            
            -
            
            
            -
            
            
            -Outstanding
                at September 30, 2008
            
            
            3,410,000
            
            $
            0.539
            
            
            7.72
                years
            
            $
            -Exercisable
                at September 30, 2008
            
            
            1,036,000
            
            $
            0.603
            
            
            7.20
                years
            
            $
            -




The
      aggregate intrinsic value for all outstanding options as of September 30, 2008
      was $29,750. The aggregate intrinsic value for all vested options was $0 due
      to
      the strike price of all vested options exceeding the market price of the
      Company’s stock.




**NOTE
      13 - RECENT ACCOUNTING PRONOUNCEMENTS**





None





**NOTE
      14 - SUBSEQUENT EVENTS**





In
      November 2008, the Company amended the Airgroup Stock Purchase Agreement dated
      January 11, 2006 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 and to be paid 100% by delivery
      of shares of the common stock of the Company. In consideration for the certainty
      of the Earn-Out payment, the former Airgroup shareholders have agreed to waive
      and release the Company from any and all further obligations to the former
      Airgroup shareholders of any and all Earn-Outs Payments on account of Shortfall
      Amounts, if any, that may have accumulated prior to June 30, 2009; (ii) to
      waive and release the Company from any and all further obligation to account
      for
      and pay to former Airgroup shareholders the Tier-2 Earn-Out Payment; and (iii)
      that the Earn-Out Payment to be made for the Earn-Out Period ending June 30,
      2009 shall reflect 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.




17





**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**





***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.***




**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
        the
        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, 2008. 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.





**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 and Adcom
      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 have completed
      two
      material acquisitions over the past twelve months. In November 2007, we
      purchased certain assets in Detroit, Michigan to service the automotive
      industry. In September 2008, we acquired Adcom Express, Inc. d/b/a Adcom
      Worldwide (“Adcom”). Adcom is a Minneapolis, Minnesota based logistics company
      contributing an additional 30 locations across North America and augmenting
      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 and resell services
      provided by third parties, and is considered by management to be a key
      performance measure. In addition, management believes 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, or 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. Accordingly, we intend
      to
      employ EBITDA and adjusted EBITDA as a management tools to measure our
      historical financial performance and as a benchmark for future financial
      flexibility.




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
      that historical seasonal patterns will continue in future periods.




19




**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 recently
      completed acquisition of Adcom. The pro forma information has been presented
      for
      three months ended September 30, 2008 and 2007 as if we had acquired Adcom
      as of
      July 1, 2007. The pro forma results are also adjusted to reflect a consolidation
      of the historical results of operations of Airgroup and the Company as adjusted
      to reflect the amortization of acquired intangibles and are also provided in
      the
      condensed consolidated financial statements included within this
      report.





The
      pro
      forma financial data are not necessarily indicative of results of operations
      that would have occurred had this acquisition been consummated at the beginning
      of the periods presented or that might be attained in the future.




***For
      the three months ended September 30, 2008 (actual and unaudited) and September
      30, 2007 (actual and unaudited)***




We
      generated transportation revenue of $32.4 million and $25.6 million and net
      transportation revenue of $11.2 million and $8.4 million for the three months
      ended September 30, 2008 and 2007 respectively. Net income was $250,000 for
      the
      three months ended September 30, 2008 compared to net income of $88,000 for
      the
      three months ended September 30, 2007.





We
      had
      adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)
      of $806,000 and $427,000 for three months ended September 30, 2008 and 2007,
      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 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 September 30, 2008 and 2007.





Three
                months ended September 30,
            
            Change2008
            
            2007
            
            Amount
            
            PercentNet
                income
            
            $
            250
            
            $
            88
            
            $
            162
            
            
            184.1%Income
                tax expense (benefit)
            
            
            153
            
            
            (8
            )
            
            161
            
            
            NMInterest
                expense - net
            
            
            25
            
            
            25
            
            
            -
            
            
            0%Depreciation
                and amortization
            
            
            315
            
            
            240
            
            
            75
            
            
            31.3%EBITDA
                (Earnings before interest, taxes, depreciation and
                amortization)
            
            $
            743
            
            $
            345
            
            $
            398
            
            
            115.4%Share
                based compensation and other non-cash costs
            
            
            63
            
            
            82
            
            
            (19
            )
            
            (23.2%)Adjusted
                EBITDA
            
            $
            806
            
            $
            427
            
            $
            379
            
            
            88.8%




20




***The
      following table summarizes September 30, 2008 (actual and unaudited) and
      September 30, 2007 (actual and unaudited) transportation revenue, cost of
      transportation and net transportation revenue (in
      thousands):***




Three
                months ended September 30,
            
            Change2008
            
            2007
            
            Amount
            
            PercentTransportation
                revenue
            
            $
            32,403
            
            $
            25,557
            
            $
            6,846
            
            
            26.8%Cost
                of transportation
            
            
            21,219
            
            
            17,116
            
            
            4,103
            
            
            24.0%Net
                transportation revenue
            
            $
            11,184
            
            $
            8,441
            
            $
            2,743
            
            
            32.5%*Net
                transportation margins*
            
            
            34.5
            %
            
            33.0
            %





Transportation
      revenue was $32.4 million for the three months ended September 30, 2008, an
      increase of 26.8% over transportation revenue of $25.6 million for the three
      months ended September 30, 2007. Domestic transportation revenue increased
      by
      19.5% to $20.5 million for the three months ended September 30, 2008 from $17.1
      million for the three months ended September 30, 2007. The increase was
      primarily due to increased volume handled by us in 2008, and the domestic
      revenues from Adcom. International transportation revenue increased by 41.5%
      to
      $11.9 million for the three months ended September 30, 2008 from $8.4 million
      for the comparable prior year period, mainly attributed to increased air and
      ocean export freight volume and the addition of Adcom sales for the month of
      September.





Cost
      of
      transportation increased to $21.2 million for the three months ended September
      30, 2008 compared to $17.1 million for the three months ended September 30,
      2007
      as a result of the increased transportation volumes described above.





Net
      transportation margins increased to 34.5% of transportation revenue for the
      three months ended September 30, 2008 as compared to 33.0% of transportation
      revenue for the three months ended September 30, 2007.





***The
      following table compares certain September 30, 2008 (unaudited) and September
      30, 2007 (unaudited) condensed consolidated statement of income data as a
      percentage of our net transportation revenue (in
      thousands):***





Three
                months ended September 30,2008
            
            2007
            
            ChangeAmount
            
            Percent
            
            Amount
            
            Percent
            
            Amount
            
            PercentNet
                transportation revenue
            
            $
            11,184
            
            
            100.0%
            
            $
            8,441
            
            
            100.0%
            
            $
            2,743
            
            
            32.5%Agent
                commissions
            
            
            7,553
            
            
            67.5%
            
            
            5,852
            
            
            69.3%
            
            
            1,701
            
            
            29.1%Personnel
                costs
            
            
            1,614
            
            
            14.4%
            
            
            1,547
            
            
            18.3%
            
            
            67
            
            
            4.3%Other
                selling, general and administrative
            
            
            1,117
            
            
            10.0%
            
            
            695
            
            
            8.2%
            
            
            422
            
            
            60.7%Depreciation
                and amortization
            
            
            315
            
            
            2.8%
            
            
            240
            
            
            2.8%
            
            
            75
            
            
            31.3%Restructuring
                charge
            
            
            220
            
            
            2.0%
            
            
            -
            
            
            0.0%
            
            
            220
            
            
            NMTotal
                operating costs
            
            
            10,819
            
            
            96.7%
            
            
            8,334
            
            
            98.7%
            
            
            2,485
            
            
            29.8%Income
                from operations
            
            
            365
            
            
            3.3%
            
            
            107
            
            
            1.3%
            
            
            258
            
            
            241.1%Other
                income (expense)
            
            
            28
            
            
            0.3%
            
            
            (45
            )
            
            (0.4%)
            
            
            73
            
            
            NMIncome
                before income taxes and
              minority
                interests
            
            
            393
            
            
            3.5%
            
            
            62
            
            
            0.7%
            
            
            331
            
            
            533.9%Income
                tax (expense) benefit
            
            
            (153
            )
            
            1.4%
            
            
            8
            
            
            (0.1%)
            
            
            (161
            )
            
            NMIncome
                before minority interests
            
            
            240
            
            
            2.2%
            
            
            70
            
            
            0.8%
            
            
            170
            
            
            242.9%Minority
                interests
            
            
            10
            
            
            0.1%
            
            
            18
            
            
            0.2
                %
            
            
            (8
            )
            
            (44.4%)Net
                income
            
            $
            250
            
            
            2.2%
            
            $
            88
            
            
            1.0%
            
            $
            162
            
            
            184.1%




21




Agent
      commissions were $7.5 million for the three months ended September 30, 2008,
      an
      increase of 29.1% from $5.9 million for the three months ended September 30,
      2007. Agent commissions as a percentage of net transportation revenue decreased
      to 67.5% for three months ended September 30, 2008 from 69.3% for the comparable
      prior year period as a result of the introduction of Company owned operations
      in
      Detroit, and Newark, NJ as well as three Company owned stores within the Adcom
      network where operations were not subject to agent commissions.





Personnel
      costs were $1.6 million for the three months ended September 30, 2008, an
      increase of 4.3% from $1.5 million for the three months ended September 30,
      2007. Personnel costs as a percentage of net transportation revenue decreased
      to
      14.4% for three months ended September 30, 2008 from 18.3% for the comparable
      prior year period primarily as a result reduced head count in the Detroit
      operations from the prior year offset by increased head count of the Adcom
      transaction completed in September, 2008.





Other
      selling, general and administrative costs were $1,117,000 for the three months
      ended September 30, 2008, an increase of 60.7% from $695,000 for the three
      months ended September 30, 2007, relating primarily to the increase in Company
      owned stations and the acquisition of Adcom. As a percentage of net
      transportation revenue, other selling, general and administrative costs
      increased to 10.0% for three months ended September 30, 2008 from 8.2% for
      the
      comparable prior year period.





Depreciation
      and amortization costs were approximately $315,000 and $240,000 for the three
      months ended September 30, 2008 and 2007, respectively. Depreciation and
      amortization as a percentage of net transportation revenue remained constant
      at
      2.8%.





Restructuring
      cost incurred in the three months ending September 30, 2008 were $220,000 as
      a
      result of the Adcom acquisition and relate to the elimination of redundant
      International personnel and facilities costs. These restructuring charges will
      be paid out over a one year period. There were no similar costs for the
      comparable prior year.





Income
      from operations was $365,000 for the three months ended September 30, 2008
      compared to income from operations of $107,000 for the three months ended
      September 30, 2007.





Other
      income was $28,000 for the three months ended September 30, 2008 compared to
      other expense of $45,000 for the three months ended September 30, 2007.





Net
      income was $250,000 for the three months ended September 30, 2008, compared
      to
      net income of $88,000 for the three months ended September 30,
      2007.




22




**Supplemental
      Proforma Information**




***The
      following table provides a reconciliation of September 30, 2008 (pro forma
      and
      unaudited) and September 30, 2007 (pro forma and unaudited) adjusted EBITDA
      to
      net income, the most directly comparable GAAP measure in accordance with SEC
      Regulation G (in thousands):***





Three
                months ended September 30,
            
            Change2008
            
            2007
            
            Amount
            
            PercentNet
                income (loss)
            
            $
            178
            
            $
            (137
            )
            $
            315
            
            
            229.9%Income
                tax expense (benefit)
            
            
            109
            
            
            (84
            )
            
            193
            
            
            NMInterest
                expense - net
            
            
            100
            
            
            85
            
            
            15
            
            
            17.6%Depreciation
                and amortization
            
            
            469
            
            
            478
            
            
            (9
            )
            
            (1.9%)EBITDA
                (Earnings before interest, taxes, depreciation and
                amortization)
            
            $
            856
            
            $
            342
            
            $
            514
            
            
            150.3%Share
                based compensation and other non-cash costs
            
            
            63
            
            
            82
            
            
            (19
            )
            
            (23.2%)Adjusted
                EBITDA
            
            $
            919
            
            $
            424
            
            $
            495
            
            
            116.7%





***The
      following table summarizes September 30, 2008 (pro forma and unaudited) and
      September 30, 2007 (pro formal and unaudited) transportation revenue, cost
      of
      transportation and net transportation revenue (in
      thousands):***




Three
                months ended September 30,
            
            Change2008
            
            2007
            
            Amount
            
            PercentTransportation
                revenue
            
            $
            49,242
            
            $
            39,948
            
            $
            9,294
            
            
            23.3%Cost
                of transportation
            
            
            32,458
            
            
            26,222
            
            
            6,236
            
            
            23.8%Net
                transportation revenue
            
            $
            16,784
            
            $
            13,726
            
            $
            3,058
            
            
            22.3%*Net
                transportation margins*
            
            
            34.1
            %
            
            34.4
            %





Pro
      forma
      transportation revenue was $49.2 million for the three months ended September
      30, 2008, an increase of 23.3% over pro forma transportation revenue of $39.9
      million for the three months ended September 30, 2007.





Pro
      forma
      cost of transportation increased to $32.5 million for the three months ended
      September 30, 2008 an increase of 23.8% over pro forma costs of transportation
      of $26.2 million for the three months ended September 30, 2007.





Pro
      forma
      net transportation margins remained relatively unchanged at 34.1% for the three
      months ended September 30, 2008 compared to pro forma transportation margins
      of
      34.4% for the three months ended September 30, 2007.





***The
      following table compares certain September 30, 2008 (unaudited) and September
      30, 2007 (unaudited) condensed consolidated statement of income data as a
      percentage of our net transportation revenue (in
      thousands):***





Three
                months ended September 30,2008
            
            2007
            
            ChangeAmount
            
            Percent
            
            Amount
            
            Percent
            
            Amount
            
            PercentNet
                transportation revenue
            
            $
            16,784
            
            
            100%
            
            $
            13,726
            
            
            100.0%
            
            $
            3,058
            
            
            22.3%Agent
                commissions
            
            
            11,913
            
            
            71.0%
            
            
            9,761
            
            
            71.1%
            
            
            2,152
            
            
            22.0%Personnel
                costs
            
            
            2,259
            
            
            13.5%
            
            
            2,184
            
            
            15.9%
            
            
            75
            
            
            3.4%Other
                selling, general and administrative
            
            
            1,484
            
            
            8.8%
            
            
            1,113
            
            
            8.1%
            
            
            371
            
            
            33.3%Depreciation
                and amortization
            
            
            469
            
            
            2.8%
            
            
            478
            
            
            3.5%
            
            
            (9
            )
            
            (1.9%)Restructuring
                charge
            
            
            220
            
            
            1.3%
            
            
            -
            
            
            0.0%
            
            
            220
            
            
            NMTotal
                operating costs
            
            
            16,345
            
            
            97.4%
            
            
            13,536
            
            
            98.6%
            
            
            2,809
            
            
            20.8%Income
                from operations
            
            
            439
            
            
            2.6%
            
            
            190
            
            
            1.4%
            
            
            249
            
            
            131.1%Other
                income (expense)
            
            
            (162
            )
            
            (1.0%)
            
            
            (429
            )
            
            (3.1%)
            
            
            267
            
            
            (62.2%)Income
                before income taxes andminority
                interests
            
            
            277
            
            
            1.7%
            
            
            (239
            )
            
            (1.7%)
            
            
            516
            
            
            (215.9%)Income
                tax expense
            
            
            109
            
            
            0.6%
            
            
            (84
            )
            
            (0.6%)
            
            
            193
            
            
            (229.8%)Income
                before minority interests
            
            
            168
            
            
            1.0%
            
            
            (155
            )
            
            1.1%
            
            
            323
            
            
            (208.4%)Minority
                interests
            
            
            10
            
            
            0.1%
            
            
            18
            
            
            0.1%
            
            
            (8
            )
            
            (44.4%)Net
                income (loss)
            
            $
            178
            
            
            1.1%
            
            
            (137
            )
            
            (1.0%)
            
            $
            315
            
            
            (229.9%)




23




Agent
      commissions were $11.9 million for the three months ended September 30, 2008,
      an
      increase of 22.0% from $9.8 million for the three months ended September 30,
      2007. Agent commissions as a percentage of net transportation revenue were
      relatively unchanged, at 71.0% for three months ended September 30, 2008
      compared to 71.1% for the comparable prior year period as a result of the
      introduction of Company owned operations in Detroit, and Newark NJ as well
      as
      three Company owned stores within the Adcom network where operations were not
      subject to agent commissions.





Personnel
      costs were $2.3 million for the three months ended September 30, 2008, an
      increase of 3.4% from $2.2 million for the three months ended September 30,
      2007. Personnel costs as a percentage of net transportation revenue decreased
      to
      13.5% for three months ended September 30, 2008 from 15.9% for the comparable
      prior year period primarily as a result of reduced head count in the Detroit
      operations from the prior year offset by increased head count of the Adcom
      transaction completed in September.





Other
      selling, general and administrative costs were $1,484,000 for the three months
      ended September 30, 2008, an increase of 33.3% from $1,113,000 for the three
      months ended September 30, 2007. As a percentage of net transportation revenue,
      other selling, general and administrative costs increased to 8.8% for three
      months ended September 30, 2008 from 8.1% for the comparable prior year period.





Depreciation
      and amortization costs were approximately $469,000 and $478,000 for the three
      months ended September 30, 2008 and 2007, respectively. Depreciation and
      amortization as a percentage of net transportation revenue decreased to 2.8%
      for
      the three months ended September 30, 2008 from 3.5% for the comparable prior
      year period.





Income
      from operations was $439,000 for the three months ended September 30, 2008
      compared to income from operations of $190,000 for the three months ended
      September 30, 2007.





Other
      expense was $162,000 for the three months ended September 30, 2008 compared
      to
      other expense of $429,000 for the three months ended September 30, 2007.





Net
      income was $178,000 for the three months ended September 30, 2008, compared
      to
      net loss of $137,000 for the three months ended September 30, 2007.






**Liquidity
        and Capital Resources**
 
 Net
        cash
        provided by operating activities for the three months ended September 30,
        2008
        was $1,078,000 compared to net cash used by operating activities for the
        three
        months ended September 30, 2007 of $2.5 million. The change was principally
        driven by growth resulting in an increase in working capital and offset by
        the
        absence of a garnishment proceeding against our Detroit customers associated
        with an Asset Purchase Agreement with Mass Financial that negatively impacted
        the quarter ending September 30, 2007.
 
 Net
        cash
        used for investing was $4,854,000 for the three months ended September 30,
        2008
        compared to net cash used of $169,000 for the three months ended September
        30,
        2007. Use of cash for the three months ended September 30, 2008 consisted
        primarily approximately $4.8 million spent on the acquisition of Adcom in
        September 2008, and an additional $50,000 spent for technology and equipment.
        Use of cash for the three months ended September 30, 2007 related primarily
        to
        the upgrade of our SAP accounting system.
 
 Net
        cash
        provided by financing activities for the three months ended September 30,
        2008
        was $4,282,000 compared to net cash provided by financing activities of
        $2,340,000 for the three months ended September 30, 2007. The $4,282,000
        of cash
        provided in 2008 consisted primarily of borrowings from our credit facility
        for
        the acquisition of Adcom in September 2008. The $2,340,000 for the three
        months
        ended September 30, 2007 primarily reflects advances under our credit
        facility.




24




***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. 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 in cash which was paid on December
      31,
      2007; (iii) as amended, an additional base payment of $0.6 million payable
      in
      cash, $300,000 of which was paid on June 30, 2008 and $300,000 is payable 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”). Under Airgroup’s Tier-2
      Earn-Out, the former shareholders of Airgroup are entitled to receive 50% of
      the
      cumulative income from continuing operations in excess of $15,000,000 generated
      during the five-year earn-out period up to a maximum of $1,500,000. With respect
      to the base earn-out payment of $1.9 million, i n
      the
      event there is a shortfall in income from continuing operations, the earn-out
      payment will be reduced on a dollar-for-dollar basis to the extent of the
      shortfall. Shortfalls may be carried over or carried back to the extent that income
      from continuing operations in
      any
      other payout year exceeds the $2.5 million level. For the year ending June
      30,
      2007, the former shareholders of Airgroup earned $214,000 in base earn-out
      payments. For the year ended June 30, 2008, the former shareholders of Airgroup
      earned and additional $417,000 in base earn-out payments.




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 $487,000 associated 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, the Company 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 and to be paid 100% by delivery of shares of the common
      stock of the Company. In consideration for the certainty of the Earn-Out
      payment, the former Airgroup shareholders have agreed to waive and release
      the
      Company from any and all further obligations to the former Airgroup shareholders
      of any and all Earn-Outs Payments on account of Shortfall Amounts, if any,
      that
      may have accumulated prior to June 30, 2009; (ii) to waive and release the
      Company from any and all further obligation to account for and pay to former
      Airgroup shareholders the Tier-2 Earn-Out Payment; and (iii) that the Earn-Out
      Payment to be made for the Earn-Out Period ending June 30, 2009 shall reflect
      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.





25





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 “Purchased Assets”). The original agreement of the transaction was valued at 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 $1.56 million, consisting of cash of $560,000
      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,, $100,000 was paid in May of 2007, $265,000 was paid at closing,
      and a final payment of $195,000 was to be paid in November of 2008, subject
      to
      off-set of up to $75,000 for certain qualifying expenses incurred by us. Net
      of
      qualifying expenses and a discount for accelerated payment, the final payment
      was reduced to $95,000 and paid in June of 2008. For more information, see
      Note
      3 to our consolidated financial statement included elsewhere herein.





Effective
      September 1, 2008, we acquired all of the outstanding stock of Adcom Express,
      Inc. The transaction was valued at up to $11,050,000, consisting of: (i)
      $4,750,000.00 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 our common stock (valued at delivery date); (iv) a “Tier-2 Earn-Out
      Payment” of up to a maximum of $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 our shares of our
      common stock (valued at delivery date).





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:
            
            2010
            
            2011
            
            2012
            
            2013Earn-out
                period:
            
            9/1/2008
                - 6/30/2009
            
            7/1/2009
                - 6/30/2010
            
            7/1/2010
                - 6/30/2011
            
            7/1/2011
                - 6/30/2012Earn-out
                payments:Cash
            
            $
            350
            
            $
            350
            
            $
            350
            
            $
            350Equity
            
            
            350
            
            
            350
            
            
            350
            
            
            350Total
                potential earn-out payments
            
            $
            700
            
            $
            700
            
            $
            700
            
            $
            700Total
                gross margin targets
            
            $
            3,600
            
            $
            4,320
            
            $
            4,320
            
            $
            4,320





(1)
            Earn-out
                payments are paid October 1 following each fiscal year end.




***Credit
      Facility***





We
      currently have a $15 million revolving credit facility (“Facility”) with Bank of
      America, NA that expires in 2011.  The
      Facility is collateralized by accounts receivable and other assets of the
      Company and our subsidiaries. Advances under the Facility are available to
      fund
      future acquisitions, capital expenditures or for other corporate purposes.
      Borrowings under the facility bear interest, at our option, at the Bank’s prime
      rate minus .15% to 1.00% or LIBOR plus 1.55% to 2.25%, and can be adjusted
      up or
      down during the term of the Facility based on our performance relative to
      certain financial covenants. The Facility provides for advances of up to 80%
      of
      our eligible accounts receivable.




26




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 3.00 times our consolidated EBITDA measured
      on a rolling four quarter basis (or a multiple of 3.25 at a reduced advance
      rate
      of 75.0%). The second financial covenant requires that we 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 that we not 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, we are 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 our historical business and acquisition model, (iv)
      after
      giving effect for the funding of the acquisition, we must have undrawn
      availability of at least $1.0 million under the Facility, (v) the lender must
      be
      reasonably satisfied with projected financial statements that we provide
      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 we are not able to satisfy the conditions of the Facility in
      connection with a proposed acquisition, we must either, forego the acquisition,
      obtain the lender's consent, or retire the Facility. This may limit or slow
      our
      ability to achieve the critical mass we may need to achieve our strategic
      objectives.





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 as 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.
      In
      this regard and in the course of executing our acquisition strategy, we expect
      to pursue an additional equity offering within the next twelve
      months.





We
      have
      used a significant amount of our available capital to finance the acquisition
      of
      Adcom. We currently have approximately $7.0 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. 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 of equity.




**Off
      Balance Sheet Arrangements**





As
      of
      September 30, 2008, 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.




27




**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.





We
      follow
      the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 142,
      Goodwill and Other Intangible Assets. SFAS No. 142 requires an annual impairment
      test for goodwill and intangible assets with indefinite lives. Under the
      provisions of SFAS No. 142, 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 perform our annual impairment
      test during our fiscal fourth quarter unless events or circumstances indicate
      an
      impairment may have occurred before that time, and we have found no
      impairment.





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 a 5 year
      period.





We
      follow
      the provisions of SFAS No. 144, Accounting for the Impairment or Disposal of
      Long-Lived Assets, which establishes accounting standards for the impairment
      of
      long-lived assets such as property, plant and equipment and intangible assets
      subject to amortization. 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 estimated 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
      our
      customers. In accordance with Emerging Issues Task Force (“EITF”) 91-9 “Revenue
      and Expense Recognition for Freight Services in Process”, revenue from freight
      forwarding and export services is recognized at the time the freight is tendered
      to the direct carrier at origin, and direct expenses associated with the cost
      of
      transportation are accrued concurrently. These accrued purchased transportation
      costs are estimates 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 to reflect differences between the original accruals and actual
      costs of purchased transportation.





We
      recognize revenue on a gross basis, in accordance with EITF 99-19, "Reporting
      Revenue Gross versus Net", as a result of the following: We are the primary
      obligor responsible for providing the service desired by the customer and are
      responsible for fulfillment, including the acceptability of the service(s)
      ordered or purchased by the customer. We, at our sole discretion, set the prices
      charged to our customers, and are not required to obtain approval or consent
      from any other party in establishing our prices. We have multiple suppliers
      for
      the services we sell to our customers, and have 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, we determine the nature, type,
      characteristics, and specifications of the service(s) ordered by the customer.
      We also assume credit risk for the amount billed to the customer.




28




**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 September 30, 2008 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
      September 30, 2008, 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. There were no changes to our internal
      control over financial reporting during the fiscal quarter ended September
      30,
      2008 that materially affected, or are reasonably likely to materially affect,
      our internal control over financial reporting.





29




**PART
      II. OTHER INFORMATION**




**Item
      6. Exhibits**




**Exhibit
                No.**
            
            **Exhibit**
            
            **Method
                of Filing**31.1
            
            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 November 17, 2008
            
            Filed
              Herewith




30




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:
                  November 17, 2008
              
              /s/
                  Bohn H. CrainBohn
                  H. CrainChief
                  Executive Officer and Chief Financial Officer(Principle
                  Accounting Officer)






31




**EXHIBIT
      INDEX**




**Exhibit
                No.**
            
            **Exhibit**31.1
            
            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 November 17, 2008




32