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, 2010




 ̈ 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.)





405
114th Ave
S.E., Bellevue, WA 98004


(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  ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes  ̈ No  ̈





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
             ̈
            Accelerated
      filer  ̈Non-accelerated
      filer
             ̈
            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  ̈ No x





There
were 29,782,721 issued and outstanding shares of the registrant’s common stock,
par value $.001 per share, as of November 12, 2010.


1




RADIANT
LOGISTICS, INC.




TABLE
OF CONTENTS




PART
      I. FINANCIAL INFORMATIONItem
      1.
              Condensed
      Consolidated Financial Statements - UnauditedCondensed
      Consolidated Balance Sheets at September 30, 2010 and June 30,
      2010
              3Condensed
      Consolidated Statements of Operations for the three months ended September
      30, 2010 and 2009
              5Condensed
      Consolidated Statement of Stockholders’ Equity for the three months ended
      September 30, 2010
              6Condensed
      Consolidated Statements of Cash Flows for the three months ended September
      30, 2010 and 2009
              7Notes
      to Condensed Consolidated Financial Statements
              9Item
      2.
              Management’s
      Discussion and Analysis of Financial Conditions and Results of
      Operations
              20Item 4.
              Controls
      and Procedures
              29PART
      II OTHER INFORMATIONItem
      2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds
              29Item
      6.
              Exhibits
              30


2


RADIANT
LOGISTICS, INC.


Condensed
Consolidated Balance Sheets


(unaudited)





SEPTEMBER 30,
                  
                  
                  JUNE 30,2010
                  
                  
                  2010ASSETSCurrent
      assets:Cash
      and cash equivalents
                  
                  $
                  900,219
                  
                  
                  $
                  682,108Accounts
      receivable, net of allowance of $600,118 and $626,401,
      respectively
                  
                  
                  23,770,163
                  
                  
                  
                  21,442,023Current
      portion of employee loan receivable
                  
                  
                  13,600
                  
                  
                  
                  13,100Current
      portion of  station and other receivables
                  
                  
                  104,947
                  
                  
                  
                  195,289Prepaid
      expenses and other current assets
                  
                  
                  1,094,858
                  
                  
                  
                  1,104,211Deferred
      tax asset
                  
                  
                  373,791
                  
                  
                  
                  402,428Total
      current assets
                  
                  
                  26,257,578
                  
                  
                  
                  23,839,159Furniture
      and equipment, net
                  
                  
                  879,907
                  
                  
                  
                  881,416Acquired
      intangibles, net
                  
                  
                  1,774,374
                  
                  
                  
                  2,019,757Goodwill
                  
                  
                  1,011,310
                  
                  
                  
                  982,788Employee
      loan receivable, net of current portion
                  
                  
                  38,000
                  
                  
                  
                  38,000Station
      and other receivables, net of current portion
                  
                  
                  163,614
                  
                  
                  
                  151,160Investment
      in real estate
                  
                  
                  40,000
                  
                  
                  
                  40,000Deposits
      and other assets
                  
                  
                  183,134
                  
                  
                  
                  153,116Deferred
      tax asset – long term
                  
                  
                  253,099
                  
                  
                  
                  106,023Total
      long term assets
                  
                  
                  3,463,531
                  
                  
                  
                  3,490,844Total
      assets
                  
                  $
                  30,601,016
                  
                  
                  $
                  28,211,419LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable and accrued transportation costs
                  
                  $
                  16,951,221
                  
                  
                  $
                  16,004,814Commissions
      payable
                  
                  
                  2,681,013
                  
                  
                  
                  2,119,503Other
      accrued costs
                  
                  
                  661,335
                  
                  
                  
                  538,854Income
      taxes payable
                  
                  
                  308,090
                  
                  
                  
                  76,309Due
      to former Adcom shareholder
                  
                  
                  555,977
                  
                  
                  
                  603,205Total
      current liabilities
                  
                  
                  21,157,636
                  
                  
                  
                  19,342,685Long
      term debt
                  
                  
                  7,741,719
                  
                  
                  
                  7,641,021Other
      long term liabilities
                  
                  
                  487,965
                  
                  
                  
                  439,905Total
      long term liabilities
                  
                  
                  8,229,684
                  
                  
                  
                  8,080,926Total
      liabilities
                  
                  
                  29,387,320
                  
                  
                  
                  27,423,611


3


RADIANT
LOGISTICS, INC.


Condensed
Consolidated Balance Sheets (continued)


(unaudited)





SEPTEMBER 30,
                  
                  
                  JUNE 30,2010
                  
                  
                  2010Stockholders'
      equity:Radiant
      Logistics, Inc. stockholders' 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,  29,894,421 and 31,273,461 shares issued and
      outstanding, respectively
                  
                  
                  16,157
                  
                  
                  
                  16,157Additional
      paid-in capital
                  
                  
                  8,163,178
                  
                  
                  
                  8,108,239Treasury
      stock, at cost, 4,807,539 and 3,428,499 shares,
    respectively
                  
                  
                  (1,354,087
                  )
                  
                  
                  (936,190
                  )Retained
      deficit
                  
                  
                  (5,684,003
                  )
                  
                  
                  (6,466,946
                  )Total
      Radiant Logistics, Inc. stockholders’ equity
                  
                  
                  1,141,245
                  
                  
                  
                  721,260Non-controlling
      interest
                  
                  
                  72,451
                  
                  
                  
                  66,548
                  )Total
      stockholders’ equity
                  
                  
                  1,213,696
                  
                  
                  
                  787,808Total
      liabilities and stockholders’ equity
                  
                  $
                  30,601,016
                  
                  
                  $
                  28,211,419





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


4


RADIANT
LOGISTICS, INC.


Condensed
Consolidated Statements of Operations


(unaudited)





THREE MONTHS ENDED
                  SEPTEMBER 30,2010
                
                
                2009Revenue
                
                $
                46,361,057
                
                
                $
                34,028,336Cost
      of transportation
                
                
                32,242,361
                
                
                
                23,479,447Net
      revenues
                
                
                14,118,696
                
                
                
                10,548,889Agent
      commissions
                
                
                9,832,460
                
                
                
                7,455,206Personnel
      costs
                
                
                1,557,160
                
                
                
                1,422,397Selling,
      general and administrative expenses
                
                
                1,063,282
                
                
                
                1,096,273Depreciation
      and amortization
                
                
                325,258
                
                
                
                409,781Total
      operating expenses
                
                
                12,778,160
                
                
                
                10,383,657Income
      from operations
                
                
                1,340,536
                
                
                
                165,232Other
      income (expense):Interest
      income
                
                
                5,809
                
                
                
                1,184Interest
      expense
                
                
                (42,242
                )
                
                
                (56,508
                )Other
                
                
                26,286
                
                
                
                98,309Total
      other income (expense)
                
                
                (10,147
                )
                
                
                42,985Income
      before income tax expense
                
                
                1,330,389
                
                
                
                208,217Income
      tax expense
                
                
                (505,543
                )
                
                
                (71,127
                )Net
      income
                
                
                824,846
                
                
                
                137,090Less:
      Net income attributable to non-controlling interest
                
                
                (41,903
                )
                
                
                (21,040
                )Net
      income attributable to Radiant Logistics, Inc.
                
                $
                782,943
                
                
                $
                116,050Net
      income per common share – basic and diluted
                
                $
                .03
                
                
                $
                .00Weighted
      average shares outstanding:Basic
      shares
                
                
                30,471,061
                
                
                
                33,367,940Diluted
      shares
                
                
                30,723,861
                
                
                
                33,548,186





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


5


RADIANT
LOGISTICS, INC.


Condensed
Consolidated Statement of Stockholders’ Equity


(unaudited)





RADIANT LOGISTICS, INC. STOCKHOLDERSCOMMON STOCK
                          
                          
                          ADDITIONAL
                            PAID-IN
                          
                          
                          TREASURY
                          
                          
                          RETAINED
                          
                          
                          NONCONTROLLING
                          
                          
                          TOTAL
                            STOCKHOLDERS’SHARES
                          
                          
                          AMOUNT
                          
                          
                          CAPITAL
                          
                          
                          STOCK
                          
                          
                          DEFICIT
                          
                          
                          INTEREST
                          
                          
                          EQUITYBalance
      atJune
      30,2010
                          
                          
                          31,273,461
                          
                          
                          $
                          16,157
                          
                          
                          $
                          8,108,239
                          
                          
                          $
                          (936,190
                          )
                          
                          $
                          (6,466,946
                          )
                          
                          $
                          66,548
                          
                          
                          $
                          787,808Repurchase
      of common stock
                          
                          
                          (1,379,040
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (417,897
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (417,897
                          )Share-based
      compensation
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          54,939
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          54,939Distribution
      to non-controlling interest
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (36,000
                          )
                          
                          
                          (36,000
                          )Net
      income for the three months ended September 30, 2010
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          782,943
                          
                          
                          
                          41,903
                          
                          
                          
                          824,846Balance
      at September 30, 2010
                          
                          
                          29,894,421
                          
                          
                          $
                          16,157
                          
                          
                          $
                          8,163,178
                          
                          
                          $
                          (1,354,087
                          )
                          
                          $
                          (5,684,003
                          )
                          
                          $
                          72,451
                          
                          
                          $
                          1,213,696





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




6




RADIANT
LOGISTICS, INC.


Condensed
Consolidated Statements of Cash Flows


(unaudited)





THREE
      MONTHS ENDED
                        SEPTEMBER
      30,2010
                      
                      
                      2009CASH
      FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES:Net
      income
                      
                      $
                      782,943
                      
                      
                      $
                      116,050ADJUSTMENTS
      TO RECONCILE NET INCOME TO NET CASH PROVIDED BY (USED FOR) OPERATING
      ACTIVITIES:non-cash
      compensation expense (stock options)
                      
                      
                      54,939
                      
                      
                      
                      54,207amortization
      of intangibles
                      
                      
                      245,383
                      
                      
                      
                      308,324deferred
      income tax benefit
                      
                      
                      (118,439
                      )
                      
                      
                      (60,063
                      )depreciation
      and leasehold amortization
                      
                      
                      79,875
                      
                      
                      
                      101,457change
      in non-controlling interest
                      
                      
                      41,903
                      
                      
                      
                      21,040provision
      for doubtful accounts
                      
                      
                      (26,283
                      )
                      
                      
                      105,413CHANGE
      IN OPERATING ASSETS AND LIABILITIES:accounts
      receivable
                      
                      
                      (2,301,857
                      )
                      
                      
                      (2,165,750
                      )employee
      loan receivable
                      
                      
                      (500
                      )
                      
                      
                      2,000station
      and other receivables
                      
                      
                      77,888
                      
                      
                      
                      172,947prepaid
      expenses and other assets
                      
                      
                      (20,665
                      )
                      
                      
                      (135,004
                      )accounts
      payable and accrued transportation costs
                      
                      
                      946,407
                      
                      
                      
                      821,616commissions
      payable
                      
                      
                      561,510
                      
                      
                      
                      441,713other
      accrued costs
                      
                      
                      122,481
                      
                      
                      
                      (209,450
                      )other
      long-term liabilities
                      
                      
                      48,060
                      
                      
                      
                      -income
      taxes payable
                      
                      
                      231,781
                      
                      
                      
                      -income
      tax deposit
                      
                      
                      -
                      
                      
                      
                      129,208Net
      cash provided by (used for) operating activities
                      
                      
                      725,426
                      
                      
                      
                      (296,292
                      )CASH
      FLOWS USED FOR INVESTING ACTIVITIES:Purchase
      of furniture and equipment
                      
                      
                      (78,366
                      )
                      
                      
                      (4,690
                      )Payments
      made to former Adcom shareholder
                      
                      
                      (75,750
                      )
                      
                      
                      (102,437
                      )Net
      cash used for investing activities
                      
                      
                      (154,116
                      )
                      
                      
                      (107,127
                      )CASH
      FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES:Proceeds
      from credit facility, net of credit fees
                      
                      
                      100,698
                      
                      
                      
                      713,261Distribution
      to non-controlling interest
                      
                      
                      (36,000
                      )
                      
                      
                      -Purchases
      of treasury stock
                      
                      
                      (417,897
                      )
                      
                      
                      (390,636
                      )Net
      cash provided by (used for) financing activities
                      
                      
                      (353,199
                      )
                      
                      
                      322,625NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                      
                      
                      218,111
                      
                      
                      
                      (80,794
                      )CASH
      AND CASH EQUIVALENTS, BEGINNING OF  PERIOD
                      
                      
                      682,108
                      
                      
                      
                      890,572CASH
      AND CASH EQUIVALENTS, END OF PERIOD
                      
                      $
                      900,219
                      
                      
                      $
                      809,778SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Income
      taxes paid
                      
                      $
                      433,360
                      
                      
                      $
                      1,983Interest
      paid
                      
                      $
                      40,330
                      
                      
                      $
                      55,200


7


RADIANT
LOGISTICS, INC.


Condensed
Consolidated Statements of Cash Flows (continued)


(unaudited)





Supplemental
disclosure of non-cash investing and financing activities:




In
September 2009, the Company finalized its purchase price allocation relating to
the acquisition of Adcom, resulting in an increase of net assets acquired by
$151,550 due to increased transaction costs and other adjustments to the fair
value of the acquired assets. The effect of this transaction was an increase to
goodwill of $157,291 with offsetting changes to other balance sheet amounts as
follows: a decrease to the allowance for doubtful accounts of $72,280, an
increase in other receivables of $11,831, an increase in accounts payable of
$4,275, an increase of other accrued costs of $279,488, and a decrease in the
amount due to the former Adcom shareholder of $42,361.




In
September 2010, the Company revised its estimate of the "Tier-One Earn-Out
Payment" (see Note 4) relating to the acquisition of Adcom for the year ending
June 30, 2010, resulting in an increase to goodwill and the amount due to the
former Adcom shareholder of $28,522.




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


8


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," "we" or "us") was incorporated in the State of
Delaware on March 15, 2001. Currently, we are executing a strategy to build
a global transportation and supply chain management company through organic
growth and the strategic acquisition of best-of-breed, non-asset based
transportation and logistics providers to offer our customers domestic and
international freight forwarding and an expanding array of value added supply
chain management services, including order fulfillment, inventory management and
warehousing.




We
completed the first step in our business strategy through the acquisition of
Airgroup Corporation ("Airgroup") effective as of January 1, 2006. Airgroup is a
Bellevue, Washington based non-asset based logistics company providing domestic
and international freight forwarding services through a network which includes a
combination of company-owned and exclusive agent offices across North
America.  Airgroup has a diversified account base including
manufacturers, distributors and retailers using a network of independent
carriers and international agents positioned strategically around the
world.




We
continue to identify a number of additional companies as suitable acquisition
candidates and have completed two material acquisitions since our acquisition of
Airgroup.  In November 2007, we acquired certain assets formerly used
in the operations of the automotive division of Stonepath Group, Inc., in
Detroit, Michigan to service the automotive industry. In September 2008, we
acquired Adcom Express, Inc. d/b/a Adcom Worldwide ("Adcom"), adding an
additional 30 locations across North America and augmenting our overall domestic
and international freight forwarding capabilities.




In
connection with the acquisition of Adcom, we changed the name of Airgroup
Corporation to Radiant Global Logistics, Inc. ("RGL") in order to better
position our centralized back-office operations to service both the Airgroup and
Adcom network brands.  RGL, through the Airgroup and Adcom network
brands, has a diversified account base including manufacturers, distributors and
retailers using a network of independent carriers and international agents
positioned strategically around the world.




Our
growth strategy will continue to focus on both organic growth and
acquisitions.  From an organic perspective, we will focus 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. Since our acquisition of Airgroup in January 2006,
we have focused our efforts on the build-out of our network of exclusive agency
offices, as well as enhancing our back-office infrastructure and transportation
and accounting systems.  We will continue to search for targets that
fit within our acquisition criteria. Our ability to secure additional financing
will rely upon the sale of debt or equity securities, and the development of an
active trading market for our securities.




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. Our acquisition strategy relies upon
two primary factors:  first, our ability to identify and acquire
target businesses that fit within our general acquisition criteria; and second,
the continued availability of capital and financing resources sufficient to
complete these acquisitions.




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.  Certain of
these business risks are identified in Item 1A of our 10K filing.




9


We will
continue to search for targets that fit within our acquisition criteria. Our
ability to secure additional financing will rely upon the sale of debt or equity
securities, and the development of an active trading market for our
securities.  Although we can make no assurance as to our long term
access to debt or equity securities or our ability to develop an active trading
market, in March of 2010, we were successful in increasing our credit facility
from $15.0 million to $20.0 million.




Interim
Disclosure




The
condensed consolidated financial statements included herein have been prepared,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC").  Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States have been
condensed or omitted pursuant to such rules and regulations. The Company’s
management believes that the disclosures are adequate to make the information
presented not misleading.  These condensed financial statements should
be read in conjunction with the financial statements and the notes thereto
included in the Company’s Annual Report on Form 10-K for the year ended June 30,
2010.




The
interim period information included in this Quarterly Report on Form 10-Q
reflects all adjustments, consisting of normal recurring adjustments, that are,
in the opinion of the Company’s management, necessary for a fair statement of
the results of the respective interim periods.  Results of operations
for interim periods are not necessarily indicative of results to be expected for
an entire year.




Basis
of Presentation




The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries as well as a single variable interest entity, Radiant
Logistics Partners LLC ("RLP"), which is 40% owned by Radiant Global Logistics
(f/k/a Airgroup Corporation), a wholly-owned subsidiary of the Company, and
whose accounts are included in the consolidated financial statements. All
significant intercompany balances and transactions have been
eliminated.




NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




a)           Use
of Estimates




The
preparation of financial statements and related disclosures in accordance with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Such estimates include revenue
recognition, accruals for the cost of purchased transportation, the fair value
of acquired assets and liabilities, accounting for the issuance of shares and
share based compensation, the assessment of the recoverability of long-lived
assets (specifically goodwill and acquired intangibles), the establishment of an
allowance for doubtful accounts and the valuation allowance for deferred tax
assets. Estimates and assumptions are reviewed periodically and the effects of
revisions are reflected in the period that they are determined to be necessary.
Actual results could differ from those estimates.




b)           Fair
Value Measurements




In
general, fair values determined by Level 1 inputs utilize quoted prices
(unadjusted) in active markets for identical assets or liabilities. Fair values
determined by Level 2 inputs utilize observable inputs other than Level 1
prices, such as quoted prices for similar assets or liabilities, quoted prices
in markets that are not active or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the
related assets or liabilities. Fair values determined by Level 3 inputs are
unobservable data points for the asset or liability, and include situations
where there is little, if any, market activity for the asset or
liability.




10


c)           Fair
Value of Financial Instruments




The fair
values of the Company’s receivables, accounts payable and accrued transportation
costs, commissions payable, other accrued costs, income taxes payable and
amounts due to former Adcom shareholder approximate the carrying values dues to
the relatively short maturities of these instruments. The fair value of the
Company’s long-term debt, if recalculated based on current interest rates, would
not differ significantly from the recorded amount.




d)           Cash
and Cash Equivalents




For
purposes of the statements of cash flows, cash equivalents include all highly
liquid investments with original maturities of three months or less which are
not securing any corporate obligations.




e)           Concentrations




The
Company maintains its cash in bank deposit accounts, which, at times, may exceed
federally insured limits. The Company has not experienced any losses in such
accounts.




f)           Accounts
Receivable




The
Company’s receivables are recorded when billed and represent claims against
third parties that will be settled in cash. The carrying value of the Company’s
receivables, net of the allowance for doubtful accounts, represents their
estimated net realizable value. The Company evaluates the collectability of
accounts receivable on a customer-by-customer basis. The Company records a
reserve for bad debts against amounts due to reduce the net recognized
receivable to an amount the Company believes will be reasonably collected. The
reserve is a discretionary amount determined from the analysis of the aging of
the accounts receivable, historical experience and knowledge of specific
customers.




On
occasion the Company extends credit to agent-based stations.




g)           Furniture
& Equipment




Technology
(computer software, hardware, and communications), furniture, and equipment are
stated at cost, less accumulated depreciation. Depreciation is
computed over five to seven year lives for vehicles, communication, office,
furniture, and computer equipment using 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.




h)           Goodwill




The
Company performs an annual impairment test for goodwill. The first step of the
impairment test requires that the Company determine the fair value of its
reporting unit, and compare the fair value to the reporting unit's carrying
amount. The Company has only one reporting unit.  To the extent the
reporting unit's carrying amount exceeds its fair value, an indication exists
that the reporting unit's goodwill may be impaired and the Company must perform
a second more detailed impairment assessment. The second impairment assessment
involves allocating the reporting unit’s fair value to all of its recognized and
unrecognized assets and liabilities in order to determine the implied fair value
of the reporting unit’s goodwill as of the assessment date. The implied fair
value of the reporting unit’s goodwill is then compared to the carrying amount
of goodwill to quantify an impairment charge as of the assessment date. The
Company performs its annual impairment test effective as of April 1 of each
year, unless events or circumstances indicate impairment may have occurred
before that time.




11


i)           Long-Lived
Assets




Acquired
intangibles consist of customer related intangibles and non-compete agreements
arising from the Company’s acquisitions. Customer related intangibles are
amortized using accelerated methods over approximately 5 years and non-compete
agreements are amortized using the straight line method over the term of the
underlying agreements. See Notes 4 and 5.




The
Company reviews long-lived assets to be held-and-used for impairment whenever
events or changes in circumstances indicate the carrying amount of the assets
may not be recoverable. If the sum of the undiscounted expected future cash
flows over the remaining useful life of a long-lived asset is less than its
carrying amount, the asset is considered to be impaired. Impairment losses are
measured as the amount by which the carrying amount of the asset exceeds the
fair value of the asset. When fair values are not available, the Company
estimates fair value using the expected future cash flows discounted at a rate
commensurate with the risks associated with the recovery of the asset. Assets to
be disposed of are reported at the lower of carrying amount or fair value less
costs to sell. Management has performed a review of all long-lived assets and
has determined no impairment of the respective carrying value has occurred as of
September 30, 2010.




j)           Commitments




The
Company has operating lease commitments for equipment rentals, office space, and
warehouse space under non-cancelable operating leases expiring at various dates
through May 2021.  As of September 30, 2010 minimum future lease
payments under these non-cancelable operating leases for the next five fiscal
years and thereafter are as follows:




Fiscal
      Year Ending June 30
                
                Amount2011
      (remaining portion)
                
                $
                203,5862012
                
                
                229,5672013
                
                
                221,1582014
                
                
                230,9212015
                
                
                240,223Thereafter
                
                
                1,639,454Total
      minimum lease payments
                
                $
                2,764,909




Included
in these future commitments are upcoming rental lease payments pertaining to the
Company’s new corporate office location.  The initial term of this
lease commences on June 1, 2010, and is set to expire on May 31,
2021.  Rent for the first 12-month period has been abated by the
landlord and lease payments will begin on June 1, 2011.




Rent
expense amounted to $181,713 and $102,774 for the three months ended September
30, 2010 and 2009.




k)           Income
Taxes




Deferred
income tax assets and liabilities are recognized for the expected future tax
consequences of events that have been reflected in the consolidated financial
statements. Deferred tax assets and liabilities are determined based on the
differences between the book values and the tax bases of particular assets and
liabilities. Deferred tax assets and liabilities are measured using tax rates in
effect for the years in which the differences are expected to reverse. A
valuation allowance is provided to offset the net deferred tax assets if, based
upon the available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized.




The
Company reports a liability for unrecognized tax benefits resulting from
uncertain income tax positions taken or expected to be taken in an income tax
return.  Estimated interest and penalties are recorded as a component
of interest expense or other expense, respectively.




12


l)           Revenue
Recognition and Purchased Transportation Costs




The
Company is the primary obligor responsible for providing the service desired by
the customer and is responsible for fulfillment, including the acceptability of
the service(s) ordered or purchased by the customer. At the Company’s sole
discretion, it sets the prices charged to its customers, and is not required to
obtain approval or consent from any other party in establishing its prices. The
Company has multiple suppliers for the services it sells to its customers, and
has the absolute and complete discretion and right to select the supplier that
will provide the product(s) or service(s) ordered by a customer, including
changing the supplier on a shipment-by-shipment basis. In most cases, the
Company determines the nature, type, characteristics, and specifications of the
service(s) ordered by the customer. The Company also assumes credit risk for the
amount billed to the customer.




As a
non-asset based carrier, the Company does not own transportation assets. The
Company generates the major portion of its air and ocean freight revenues by
purchasing transportation services from direct (asset-based) carriers and
reselling those services to its customers. Based upon the terms in the contract
of carriage, revenues related to shipments where the Company issues a House
Airway Bill ("HAWB") or a House Ocean Bill of Lading ("HOBL") are recognized at
the time the freight is tendered to the direct carrier at origin. Costs related
to the shipments are also recognized at this same time based upon anticipated
margins, contractual arrangements with direct carriers, and other known factors.
The estimates are routinely monitored and compared to actual invoiced costs. The
estimates are adjusted as deemed necessary by the Company to reflect differences
between the original accruals and actual costs of purchased
transportation.




This
method generally results in recognition of revenues and purchased transportation
costs earlier than the preferred methods under GAAP which do not recognize
revenue until a proof of delivery is received or which recognize revenue as
progress on the transit is made. The Company’s method of revenue and cost
recognition does not result in a material difference from amounts that would be
reported under such other methods.




m)           Share-Based
Compensation




The
Company accounts for share-based compensation under the fair value recognition
provisions such that compensation cost is measured at the grant date based on
the value of the award and is expensed ratably over the vesting period.
Determining the fair value of share-based awards at the grant date requires
judgment, including estimating the percentage of awards which will be forfeited,
stock volatility, the expected life of the award, and other inputs. If actual
forfeitures differ significantly from the estimates, share-based compensation
expense and the Company's results of operations could be materially
impacted.




For the
three months ended September 30, 2010, the Company recorded share based
compensation expense of $54,939, which, net of income taxes, resulted in a
$34,062 reduction of net income. For the three months ended September 30, 2009,
the Company recorded share based compensation expense of $54,207, which, net of
income taxes, resulted in a $33,608 reduction of net income.




n)           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, 2010, the weighted average outstanding number
of potentially dilutive common shares totaled 30,723,861 shares of common stock,
including options to purchase 3,620,000 shares of common stock at September 30,
2010, of which 2,760,000 were excluded as their effect would have been
anti-dilutive.  For the three months ended September 30, 2009, the
weighted average outstanding number of potentially dilutive common shares
totaled 33,548,186 shares of common stock, including options to purchase
3,620,000 shares of common stock at September 30, 2009, of which 3,060,000 were
excluded as their effect would have been anti-dilutive.




13


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, 2010
                    
                    
                    Three months ended
                      September 30, 2009Weighted
      average basic shares outstanding
                    
                    
                    30,471,061
                    
                    
                    
                    33,367,940Options
                    
                    
                    252,800
                    
                    
                    
                    180,246Weighted
      average dilutive shares outstanding
                    
                    
                    30,723,861
                    
                    
                    
                    33,548,186





o)           Other
Comprehensive Income




The
Company has no components of Other Comprehensive Income and, accordingly, no
Statement of Comprehensive Income has been included in the accompanying
consolidated financial statements.




p)           Reclassifications


Certain
amounts for prior periods have been reclassified in the consolidated financial
statements to conform to the classification used in fiscal 2011.




NOTE
3 – RECENT ACCOUNTING PRONOUNCEMENTS




In
January 2010, the FASB issued ASU No. 2010-06, Improving Disclosures about Fair
Value Measurements. The guidance in ASU 2010-06 provides amendments to
literature on fair value measurements and disclosures currently within the
Accounting Standards Codification ("ASC") by clarifying certain existing
disclosures and requiring new disclosures for the various classes of fair value
measurements.   ASU 2010-06 is effective for interim and annual
periods beginning after December 15, 2009, except for the disclosures about
purchases, sales, issuances, and settlements in the roll forward of activity in
Level 3 fair value measurements, which are effective for fiscal years beginning
after December 15, 2010, and for interim periods within those fiscal
years.  The adoption of this guidance is not expected to have a
material impact on the Company’s financial position or results of
operations.




In April
2010, the FASB issued ASU No. 2010-13, Compensation – Stock Compensation (Topic
718): Effect of Denominating the Exercise Price of a Share-Based Payment Award
in the Currency of the Market in Which the Underlying Equity Security Trades.
The guidance in ASU 2010-13 provides amendments to clarify that an employee
share-based payment award with an exercise price denominated in the currency of
a market in which a substantial portion of the entity’s equity securities trades
should not be considered to contain a condition that is not a market,
performance, or service condition. Therefore, an entity would not classify such
an award as a liability if it otherwise qualifies as equity.  The
adoption of this guidance is not expected to have a material impact on the
Company’s financial position or results of operations.




NOTE
4 – ACQUISITION OF ADCOM EXPRESS, INC.




On
September 5, 2008, the Company entered into and closed a Stock Purchase
Agreement (the "Agreement") pursuant to which it acquired 100% of the issued and
outstanding stock of Adcom Express, Inc., d/b/a Adcom Worldwide ("Adcom"), a
privately-held Minnesota corporation. 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.




Contingent
consideration associated with the acquisition of Adcom included "Tier-1 Earn-Out
Payments" of up to $700,000 annually, 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); and a "Tier-2
Earn-Out Payment" of up to $2,000,000, equal to 20% of the amount by which the
Adcom cumulative Gross Profit Contribution exceeds $16,560,000 during the four
year earn-out period. The Tier-1 Earn-Out Payments and certain amounts of the
Tier-2 Payments may be subject to acceleration upon occurrence of a "Corporate
Transaction" (as defined in the Agreement), which includes a sale of Adcom or
the Company, or certain changes in corporate control.




14


Mr.
Friedman, the sole shareholder of Adcom, earned $517,019 in Tier-1 earnout
payment for the year ended June 30, 2010.  This amount is
included in the amount due to former Adcom shareholder as of September 30,
2010.




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 achieving gross profit contributions (in
thousands):




Estimated payment anticipated for fiscal year(1):
                          
                          2012
                          
                          
                          2013Earn-out
      period:
                          
                          7/1/2010 –6/30/2011
                          
                          
                          7/1/2011 – 6/30/2012Earn-out
      payments:Cash
                          
                          $
                          350
                          
                          
                          $
                          350Equity
                          
                          
                          350
                          
                          
                          
                          350Total
      potential earn-out payments
                          
                          $
                          700
                          
                          
                          $
                          700Total
      gross margin targets
                          
                          $
                          4,320
                          
                          
                          $
                          4,320




(1)
Earn-out payments are paid October 1 following each fiscal year end in a
combination of cash and Company common stock.




NOTE
5 – ACQUIRED INTANGIBLE ASSETS




The table
below reflects acquired intangible assets related to the acquisitions of
Airgroup, Automotive Services Group and Adcom:




15




As of
                  September 30, 2010
                
                
                As of
                  June 30, 2010Gross
                  Carrying
                  Amount
                
                
                Accumulated
                  Amortization
                
                
                Gross
                  Carrying
                  Amount
                
                
                Accumulated
                  AmortizationAmortizable
      intangible assets:Customer
      related
                
                $
                5,752,000
                
                
                $
                4,031,100
                
                
                $
                5,752,000
                
                
                $
                3,796,340Covenants
      not to compete
                
                
                190,000
                
                
                
                136,526
                
                
                
                190,000
                
                
                
                125,903Total
                
                $
                5,942,000
                
                
                $
                4,167,626
                
                
                $
                5,942,000
                
                
                $
                3,922,243Aggregate
      amortization expense:For
      three months endedSeptember
      30, 2010
                
                
                
                
                
                $
                245,383For
      three months endedSeptember
      30, 2009
                
                
                
                
                
                $
                308,324Aggregate
      amortization expense for the years ending June 30:2011
      – For the remainder of the year
                
                
                
                
                
                $
                582,3782012
                
                
                
                
                
                
                769,7722013
                
                
                
                
                
                
                374,3442014
                
                
                
                
                
                
                47,880Total
                
                
                
                
                
                $
                1,774,374


NOTE
6 – VARIABLE INTEREST ENTITY




Certain
entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have the sufficient equity at risk for
the entity to finance its activities without additional subordinated financial
support from other parties are considered "variable interest entities". RLP is
40% owned by Radiant Global Logistics ("RGL"), qualifies as a variable interest
entity and is included in the Company’s consolidated financial statements (see
Note 7). RLP commenced operations in February 2007. Non-controlling interest
recorded on the statements of operations was an expense of $41,903 and
$21,040 for the three months ended September 30, 2010 and 2009,
respectively.




The
following table summarizes the balance sheets of RLP:




September 30,
                  
                  
                  June 30,2010
                  
                  
                  2010ASSETSAccounts
      receivable
                  
                  $
                  3,530
                  
                  
                  $
                  15,910Accounts
      receivable – Radiant Logistics
                  
                  
                  123,482
                  
                  
                  
                  110,336Prepaid
      expenses and other current assets
                  
                  
                  811
                  
                  
                  
                  950Total
      assets
                  
                  $
                  127,823
                  
                  
                  $
                  127,196LIABILITIES
      AND PARTNERS' CAPITALOther
      accrued costs
                  
                  $
                  7,072
                  
                  
                  $
                  16,284Total
      liabilities
                  
                  $
                  7,072
                  
                  
                  $
                  16,284Partners'
      capital
                  
                  
                  120,751
                  
                  
                  
                  110,912Total
      liabilities and partners' capital
                  
                  $
                  127,823
                  
                  
                  $
                  127,196


16


NOTE
7 – RELATED PARTY




RLP is
owned 40% by RGL and 60% by Radiant Capital Partners, LLC ("RCP"), a company for
which the Chief Executive Officer of the Company is the sole member. RLP is a
certified minority business enterprise which was formed for the purpose of
providing the Company with a national accounts strategy to pursue corporate and
government accounts with diversity initiatives. As currently structured, RCP’s
ownership interest entitles it to a majority of the profits and distributable
cash, if any, generated by RLP. The operations of RLP are intended to provide
certain benefits to the Company, including expanding the scope of services
offered by the Company and participating in supplier diversity programs not
otherwise available to the Company. RGL currently provides administrative
services necessary to operate RLP while RLP continues to develop. As the RLP
operations mature, the Company will evaluate and approve all related service
agreements between the Company and RLP, including the scope of the services to
be provided by the Company to RLP and the fees payable to the Company by RLP, in
accordance with the Company’s corporate governance principles and applicable
Delaware corporation law. This process may include seeking the opinion of a
qualified third party concerning the fairness of any such agreement or the
approval of the Company’s shareholders. RLP is consolidated in the financial
statements of the Company (see Note 6).




NOTE
8 – FURNITURE AND EQUIPMENT




Furniture
and equipment consists of the following:




September 30,
                  
                  
                  June 30,2010
                  
                  
                  2010Vehicles
                  
                  $
                  33,788
                  
                  
                  $
                  33,788Communication
      equipment
                  
                  
                  31,359
                  
                  
                  
                  31,359Office
      equipment
                  
                  
                  311,191
                  
                  
                  
                  311,191Furniture
      and fixtures
                  
                  
                  149,504
                  
                  
                  
                  149,504Computer
      equipment
                  
                  
                  607,118
                  
                  
                  
                  606,405Computer
      software
                  
                  
                  962,005
                  
                  
                  
                  884,352Leasehold
      improvements
                  
                  
                  439,197
                  
                  
                  
                  439,1972,534,162
                  
                  
                  
                  2,455,796Less:  Accumulated
      depreciation and amortization
                  
                  
                  (1,654,255
                  )
                  
                  
                  (1,574,380
                  )Furniture
      and equipment – net
                  
                  $
                  879,907
                  
                  
                  $
                  881,416




Depreciation
and amortization expense related to furniture and equipment was $79,875 and
$101,457 for the three months ended September 30, 2010 and 2009,
respectively.




NOTE
9 – LONG TERM DEBT




In March
2010, the Company’s $15.0 million revolving credit facility, including a $0.5
million sublimit to support letters of credit (collectively, the "Facility"),
was increased to $20.0 million with a maturity date of March 31, 2012. The
Facility is collateralized by accounts receivable and other assets of the
Company and its subsidiaries. Advances under the Facility are available to fund
future acquisitions, capital expenditures or for other corporate purposes,
including the repurchase of the Company’s stock. Borrowings under the facility
bear interest, at the Company’s option, at the bank’s prime rate minus 0.75% to
plus 0.50% or LIBOR plus 1.75% to 3.00%, and can be adjusted up or down during
the term of the Facility based on the Company’s performance relative to certain
financial covenants. The Facility is collateralized by accounts receivable and
other assets of the Company and its subsidiaries and provides for advances of up
to 80% of eligible domestic accounts receivable and for advances of up to 60% of
eligible foreign accounts receivable.




The terms
of the Facility are subject to certain financial and operational covenants which
may limit the amount otherwise available under the Facility. The first covenant
limits funded debt to a multiple of 4.00 times the Company’s consolidated EBITDA
(as adjusted) measured on a rolling four quarter basis. The second financial
covenant requires the Company to maintain a basic fixed charge coverage ratio of
at least 1.1 to 1.0. The third financial covenant is a minimum profitability
standard that requires the Company not to incur a net loss before taxes,
amortization of acquired intangibles and extraordinary items in any two
consecutive quarterly accounting periods.




17




Under the
terms of the Facility, the Company is permitted to make additional acquisitions
without the lender's consent only if certain conditions are satisfied. The
conditions imposed by the Facility include the following: (i) the absence of an
event of default under the Facility; (ii) the company to be acquired must be in
the transportation and logistics industry; (iii) the purchase price to be paid
must be consistent with the Company’s historical business and acquisition model;
(iv) after giving effect for the funding of the acquisition, the Company must
have undrawn availability of at least $1.0 million under the Facility; (v) the
lender must be reasonably satisfied with projected financial statements the
Company provides covering a 12 month period following the acquisition; (vi) the
acquisition documents must be provided to the lender and must be consistent with
the description of the transaction provided to the lender; and (vii) the number
of permitted acquisitions is limited to three per calendar year and shall not
exceed $7.5 million in aggregate purchase price financed by funded debt. In the
event that the Company is not able to satisfy the conditions of the Facility in
connection with a proposed acquisition, it must either forego the acquisition,
obtain the lender's consent, or retire the Facility. This may limit or slow the
Company’s ability to achieve the critical mass it may need to achieve its
strategic objectives.




The
co-borrowers of the Facility include Radiant Logistics, Inc., RGL (f/k/a
Airgroup Corporation), Radiant Logistics Global Services, Inc. ("RLGS"), RLP,
and Adcom Express, Inc. (d/b/a Adcom Worldwide). RLP is owned 40% by RGL and 60%
by RCP, an affiliate of the Company’s Chief Executive Officer. RLP has been
certified as a minority business enterprise, and focuses on corporate and
government accounts with diversity initiatives. As a co-borrower under the
Facility, the accounts receivable of RLP are eligible for inclusion within the
overall borrowing base of the Company and all borrowers will be responsible for
repayment of the debt associated with advances under the Facility, including
those advanced to RLP.  At September 30, 2010, the Company was in
compliance with all of its covenants.




As of
September 30, 2010, the Company had $5,706,586 in advances under the Facility
and $2,035,133 in outstanding checks, which had not yet been presented to the
bank for payment. The outstanding checks have been reclassified from our cash
accounts, as they will be advanced from, or against, our Facility when presented
for payment to the bank.  The forgoing results in total long term debt
of $7,741,719.




At
September 30, 2010, based on available collateral and $205,000 in outstanding
letter of credit commitments, there was $6,176,798 available for borrowing under
the Facility based on advances outstanding.




NOTE
10 – PROVISION FOR INCOME TAXES




The
acquisitions of Airgroup and Adcom resulted in $2,148,280 of long term deferred
tax liability resulting from certain amortizable intangibles identified during
the Company’s purchase price allocation which are not deductible for tax
purposes. The long term deferred tax liability will be reduced as the
non-deductible amortization of the intangibles is recognized. See Note
5.




For the
three months ended September 30, 2010, the Company recognized net income tax
expense of $505,543 which consisted of current income tax expense of $623,982
and deferred income tax benefit of $118,439.  For the three months
ended September 30, 2009, the Company recognized net income tax expense of
$71,127 which consisted of current income tax expense of $131,190, and deferred
income tax benefit of $60,063.




Tax years
which remain subject to examination by state authorities are the years ended
June 30, 2007, 2008, 2009 and 2010.  Tax years which remain subject to
examination by Federal authorities are the years ended June 30, 2007, 2008, 2009
and 2010.




18


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, 2010 and 2009, none of the shares were
issued or outstanding.




Common
Stock Repurchase Program




During
2009, the Company's Board of Directors approved a stock repurchase program,
pursuant to which up to 5,000,000 shares of its common stock could be
repurchased under the program through December 31, 2010.  During the
three months ended September 30, 2010, the Company purchased 1,379,040 shares of
its common stock under this repurchase program at a cost of
$417,897.




Subsequent
to quarter end through the date of this report, the Company purchased an
additional 111,700 shares at a cost of $53,398.




NOTE
12 – SHARE-BASED COMPENSATION




For the
three months ended September 30, 2010 the Company granted no
options.




Share
based compensation costs recognized during the three months ended September 30,
2010, include compensation costs based on the fair value estimated on the
grant-date for all share based payments granted to date. No options have been
exercised as of September 30, 2010.




During
the three months ended September 30, 2010 and 2009, the Company recognized stock
option compensation expense of $54,939 and $54,207, respectively.  The
following table summarizes activity under the plan for the three months ended
September 30, 2010.




Number of
                                Shares
                              
                              
                              Weighted
                                Average
                                Exercise Price
                              
                              
                              Weighted
                                Average
                                Remaining
                                Contractual
                                Life - Years
                              
                              
                              Aggregate
                                Intrinsic
                                ValueOutstanding
      at June 30, 2010
                              
                              
                              3,620,000
                              
                              
                              $
                              0.503
                              
                              
                              6.29
      years
                              
                              
                              $
                              50,400Granted
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -Exercised
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -Forfeited
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -Expired
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -Outstanding
      at September 30, 2010
                              
                              
                              3,620,000
                              
                              
                              $
                              0.503
                              
                              
                              6.04 years
                              
                              
                              $
                              149,600Exercisable
      at September 30, 2010
                              
                              
                              2,344,000
                              
                              
                              $
                              0.556
                              
                              
                              5.55 years
                              
                              
                              $
                              45,040




NOTE
13 – OPERATING AND GEOGRAPHIC SEGMENT INFORMATION




Operating
segments are identified as components of an enterprise about which separate
discrete financial information is available for evaluation by the chief
operating decision-maker, or decision-making group, in making decisions
regarding allocation of resources and assessing performance. The Company's chief
decision-maker is the Chief Executive Officer. The Company continues to operate
in a single operating segment.




The
Company’s geographic operations outside the United States include shipments to
and from Canada, Central America, Europe, Africa, Asia and Australia. The
following data presents the Company’s revenue generated from shipments to and
from these locations for the United States and all other countries, which is
determined based upon the geographic location of a shipment's initiation and
destination points (in thousands):




19




United States
                  
                  
                  Other Countries
                  
                  
                  Total2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009Three
      months ended September 30:Revenue
                  
                  $
                  24,250
                  
                  
                  $
                  18,110
                  
                  
                  $
                  22,111
                  
                  
                  $
                  15,918
                  
                  
                  $
                  46,361
                  
                  
                  $
                  34,028Cost
      of transportation
                  
                  
                  14,623
                  
                  
                  
                  10,889
                  
                  
                  
                  17,619
                  
                  
                  
                  12,590
                  
                  
                  
                  32,242
                  
                  
                  
                  23,479Net
      revenue
                  
                  $
                  9,627
                  
                  
                  $
                  7,221
                  
                  
                  $
                  4,492
                  
                  
                  $
                  3,328
                  
                  
                  $
                  14,119
                  
                  
                  $
                  10,549




ITEM
2.   Management’s Discussion and Analysis of Financial Condition
and Results of Operations




CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS




This
report includes forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, regarding future operating performance,
events, trends and plans. All statements other than statements of historical
fact contained herein, including, without limitation, statements regarding our
future financial position, business strategy, budgets, projected revenues and
costs, and plans and objectives of management for future operations, are
forward-looking statements. Forward-looking statements generally can be
identified by the use of forward-looking terminology such as "may," "will,"
"expects," "intends," "plans," "projects," "estimates," "anticipates," or
"believes" or the negative thereof or any variation thereon or similar
terminology or expressions. We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements are not guarantees and are subject to known and
unknown risks, uncertainties and assumptions about us that may cause our actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. While it
is impossible to identify all of the factors that may cause our actual operating
performance, events, trends or plans to differ materially from those set forth
in such forward-looking statements, such factors include the inherent risks
associated with our ability to: (i) use our current infrastructure 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) continue growing our business and maintain historical or
increased gross profit margins; (v) locate suitable acquisition opportunities;
(vi) secure the financing necessary to complete any acquisition opportunities we
locate; (vii) assess and respond to competitive practices in the industries in
which we compete; (viii) mitigate, to the best extent possible, our dependence
on current management and certain of our larger exclusive agency locations; (ix)
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 (x) 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 below under the
caption “Risk Factors” in Part 1 Item 1A of this report. 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.




The
following discussion and analysis of our financial condition and result of
operations should be read in conjunction with the financial statements and the
related notes and other information included elsewhere in this
report.




Overview




We are a
Bellevue, Washington based non-asset based logistics company providing domestic
and international freight forwarding services through a network which includes a
combination of company-owned and exclusive agent offices across North
America.  Operating under the Airgroup, Adcom & RLP brands, we
service a diversified account base including manufacturers, distributors and
retailers using a network of independent carriers and international agents
positioned strategically around the world.




20


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.




We
continue to identify a number of additional companies as suitable acquisition
candidates and have completed two material acquisitions since our initial
acquisition of Airgroup in January of 2006.  In November 2007, we
acquired certain assets formerly used in the operations of the automotive
division of Stonepath Group, Inc. in Detroit, Michigan to service the automotive
industry. In September 2008, we acquired Adcom Express, Inc. d/b/a Adcom
Worldwide ("Adcom"), adding an additional 30 locations across North America and
augmenting our overall domestic and international freight forwarding
capabilities. We have built a global transportation and supply chain management
company offering our customers domestic and international freight forwarding
services and an expanding array of value added supply chain management services,
including order fulfillment, inventory management, and warehousing.




Our
growth strategy will continue to focus on both organic growth and
acquisitions.  From an organic perspective, we will focus 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. Since our acquisition of Airgroup, we have focused
our efforts on the build-out of our network of exclusive agency offices, as well
as enhancing our back-office infrastructure and transportation and accounting
systems.  We will continue to search for targets that fit within its
acquisition criteria. Our ability to secure additional financing will rely upon
the sale of debt or equity securities, and the development of an active trading
market for our securities.




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. Our acquisition strategy relies upon
two primary factors:  first, our ability to identify and acquire
target businesses that fit within our general acquisition criteria; and second,
the continued availability of capital and financing resources sufficient to
complete these acquisitions.




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 its strategic objectives, including the ability to acquire and
profitably manage additional businesses and the intense competition in the
industry for customers and for acquisition candidates.




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
turnkey 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.




21




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, extraordinary items and other
non-cash charges.




Our
compliance with the financial covenants of our credit facility is particularly
important given the materiality of the credit facility to our day-to-day
operations and overall acquisition strategy. Our debt capacity, subject to the
requisite collateral at an advance rate of 80% of eligible domestic accounts
receivable and up to 60% of eligible foreign receivables, is limited to a
multiple of 4.00 times our consolidated EBITDA (as adjusted) as measured on a
rolling four quarter basis. If we fail to comply with the covenants in our
credit facility and are unable to secure a waiver or other relief, our financial
condition would be materiality weakened and our ability to fund day-to-day
operations would be materially and adversely affected.  Accordingly,
we intend to employ EBITDA and adjusted EBITDA as management tools to measure
our historical financial performance and as a benchmark for future financial
flexibility.




Our
operating results are also subject to seasonal trends when measured on a
quarterly basis. The impact of seasonality on our business will depend on
numerous factors, including the markets in which we operate, holiday seasons,
consumer demand and economic conditions. Since our revenue is largely derived
from customers whose shipments are dependent upon consumer demand and
just-in-time production schedules, the timing of our revenue is often beyond our
control. Factors such as shifting demand for retail goods and/or manufacturing
production delays could unexpectedly affect the timing of our revenue. As we
increase the scale of our operations, seasonal trends in one area of our
business may be offset to an extent by opposite trends in another area. We
cannot accurately predict the timing of these factors, nor can we accurately
estimate the impact of any particular factor, and thus we can give no assurance
any historical seasonal patterns will continue in future periods.




Results
of Operations




Three
months ended September 30, 2010 (actual and unaudited) and September 30, 2009
(actual and unaudited)




We
generated transportation revenue of $46.4 million and $34.0 million and net
transportation revenue of $14.1 million and $10.5 million for the three months
ended September 30, 2010 and 2009, respectively.  Net income was $0.8
million for the three months ended September 30, 2010, compared to net income of
$0.1 million for the three months ended September 30, 2009.




22


We had
adjusted EBITDA of $1.7 million and $0.7 million for three months ended
September 30, 2010 and 2009, respectively. EBITDA is a non-GAAP measure of
income and does not include the effects of interest and taxes and excludes the
"non-cash" effects of depreciation and amortization on current assets. Companies
have some discretion as to which elements of depreciation and amortization are
excluded in the EBITDA calculation. We exclude all depreciation charges related
to property, plant and equipment, and all amortization charges, including
amortization of leasehold improvements and other intangible assets. We then
further adjust EBITDA to exclude extraordinary items and costs related to share
based compensation expense, goodwill impairment charges and other non-cash
charges consistent with the financial covenants of our credit facility. As
explained above, we believe that EBITDA is useful to us and to our investors in
evaluating and measuring our financial performance.  While management
considers EBITDA and adjusted EBITDA useful in analyzing our results, it is not
intended to replace any presentation included in our consolidated financial
statements.  Set forth below is a reconciliation of EBITDA and
adjusted EBITDA to net income, the most directly comparable GAAP measure for the
three months ended September 30, 2010 and 2009.




The
following table provides a reconciliation of adjusted EBITDA to net income, the
most directly comparable GAAP measure in accordance with SEC Regulation G (in
thousands), for the three months ended September  30, 2010 and
2009:




Three months ended September 30,
                
                
                Change2010
                
                
                2009
                
                
                Amount
                
                
                PercentNet
      income
                
                $
                783
                
                
                $
                116
                
                
                $
                667
                
                
                
                575.0
                %Income
      tax expense
                
                
                506
                
                
                
                71
                
                
                
                435
                
                
                
                612.7
                %Net
      interest expense
                
                
                36
                
                
                
                55
                
                
                
                (19
                )
                
                
                (34.5
                )%Depreciation
      and amortization
                
                
                325
                
                
                
                410
                
                
                
                (85
                )
                
                
                (20.7
                )%EBITDA
                
                $
                1,650
                
                
                $
                652
                
                
                $
                998
                
                
                
                153.1
                %Share
      based compensation and other non-cash costs
                
                
                59
                
                
                
                70
                
                
                
                (11
                )
                
                
                (15.7
                )%Adjusted
      EBITDA
                
                $
                1,709
                
                
                $
                722
                
                
                $
                987
                
                
                
                136.7
                %





The
following table summarizes transportation revenue, cost of transportation and
net transportation revenue (in thousands) for the three months ended September
30, 2010 and 2009 (actual and unaudited):




Three months ended September 30,
                          
                          
                          Change2010
                          
                          
                          2009
                          
                          
                          Amount
                          
                          PercentTransportation
      revenue
                          
                          $
                          46,361
                          
                          
                          $
                          34,028
                          
                          
                          $
                          12,333
                          
                          
                          
                          36.2
                          %Cost
      of transportation
                          
                          
                          32,242
                          
                          
                          
                          23,479
                          
                          
                          
                          8,763
                          
                          
                          
                          37.3
                          %Net
      transportation revenue
                          
                          $
                          14,119
                          
                          
                          $
                          10,549
                          
                          
                          $
                          3,570
                          
                          
                          
                          33.8
                          %Net
      transportation margins
                          
                          
                          30.5
                          %
                          
                          
                          31.0
                          %




Transportation
revenue was $46.4 million for the three months ended September 30, 2010, an
increase of 36.2% over transportation revenue of $34.0 million for the three
months ended September 30, 2009.  Domestic transportation revenue
increased by 33.9% to $24.3 million for the three months ended September 30,
2010, from $18.1 million for the three months ended September 30,
2009.  International transportation revenue increased by 38.9% to
$22.1 million for the three months ended September 30, 2010, from $15.9 million
for the comparable prior year period.   These increases in
revenue were due to a stronger demand for our services.




Cost of
transportation increased to $32.2 million for the three months ended September
30, 2010, compared to $23.5 million for the three months ended September 30,
2009 as a result of increased transportation revenues.




23




Net
transportation margins decreased to 30.5% of transportation revenue for the
three months ended September 30, 2010, as compared to 31.0% of transportation
revenue for the three months ended September 30, 2009.  The margin
regression was attributed to proportionately higher international sales, which
typically yield lower margins.




The
following table compares certain condensed consolidated statement of operations
data as a percentage of our net transportation revenue (in thousands) for the
three months ended September 30, 2010 and 2009 (actual and
unaudited):




Three months ended September 30,2010
                          
                          
                          2009
                          
                          
                          ChangeAmount
                          
                          
                          Percent
                          
                          
                          Amount
                          
                          
                          Percent
                          
                          
                          Amount
                          
                          
                          PercentNet
      transportation revenue
                          
                          $
                          14,119
                          
                          
                          
                          100.0
                          %
                          
                          $
                          10,549
                          
                          
                          
                          100.0
                          %
                          
                          $
                          3,570
                          
                          
                          
                          33.8
                          %Agent
      commissions
                          
                          
                          9,833
                          
                          
                          
                          69.7
                          %
                          
                          
                          7,455
                          
                          
                          
                          70.7
                          %
                          
                          
                          2,378
                          
                          
                          
                          31.9
                          %Personnel
      costs
                          
                          
                          1,557
                          
                          
                          
                          11.0
                          %
                          
                          
                          1,422
                          
                          
                          
                          13.5
                          %
                          
                          
                          135
                          
                          
                          
                          9.5
                          %Selling,
      general and administrative
                          
                          
                          1,063
                          
                          
                          
                          7.5
                          %
                          
                          
                          1,097
                          
                          
                          
                          10.4
                          %
                          
                          
                          (34
                          )
                          
                          
                          (3.1
                          )%Depreciation
      and amortization
                          
                          
                          325
                          
                          
                          
                          2.3
                          %
                          
                          
                          410
                          
                          
                          
                          3.9
                          %
                          
                          
                          (85
                          )
                          
                          
                          (20.7
                          )%Total
      operating expenses
                          
                          
                          12,778
                          
                          
                          
                          90.5
                          %
                          
                          
                          10,384
                          
                          
                          
                          98.4
                          %
                          
                          
                          2,394
                          
                          
                          
                          23.1
                          %Income
      from operations
                          
                          
                          1,341
                          
                          
                          
                          9.5
                          %
                          
                          
                          165
                          
                          
                          
                          1.6
                          %
                          
                          
                          1,176
                          
                          
                          
                          712.7
                          %Other
      income (expense)
                          
                          
                          (10
                          )
                          
                          
                          (0.1
                          )%
                          
                          
                          43
                          
                          
                          
                          0.4
                          %
                          
                          
                          (53
                          )
                          
                          
                          (123.3
                          )%Income
      before income taxes and non-controlling interest
                          
                          
                          1,331
                          
                          
                          
                          9.4
                          %
                          
                          
                          208
                          
                          
                          
                          2.0
                          %
                          
                          
                          1,123
                          
                          
                          
                          539.9
                          %Income
      tax expense
                          
                          
                          (506
                          )
                          
                          
                          (3.6
                          )%
                          
                          
                          (71
                          )
                          
                          
                          (0.7
                          )%
                          
                          
                          (435
                          )
                          
                          
                          (612.7
                          )%Income
      before non-controlling interest
                          
                          
                          825
                          
                          
                          
                          5.8
                          %
                          
                          
                          137
                          
                          
                          
                          1.3
                          %
                          
                          
                          688
                          
                          
                          
                          502.2
                          %Non-controlling
      interest
                          
                          
                          (42
                          )
                          
                          
                          (0.3
                          )%
                          
                          
                          (21
                          )
                          
                          
                          (0.2
                          )%
                          
                          
                          (21
                          )
                          
                          
                          (100.0
                          )%Net
      income
                          
                          $
                          783
                          
                          
                          
                          5.5
                          %
                          
                          $
                          116
                          
                          
                          
                          1.1
                          %
                          
                          $
                          667
                          
                          
                          
                          575.0
                          %




Agent
commissions were $9.8 million for the three months ended September 30, 2010, an
increase of 31.9% from $7.5 million for the three months ended September 30,
2009.  Agent commissions as a percentage of net transportation revenue
decreased to 69.7% for the three months ended September 30, 2010, from 70.7% for
the comparable prior year period as a result of the proportional increase in
international revenues which typically yield lower margins than our domestic
revenues.




Personnel
costs were $1.6 million for the three months ended September 30, 2010, an
increase of 9.5% from $1.4 million for the three months ended September 30,
2009.  Personnel costs as a percentage of net transportation revenue
decreased to 11.0% for the three months ended September 30, 2010, from 13.5% for
the comparable prior year period primarily as a result of increased net
transportation revenues due to strong demand for our services, without the need
to increase corporate personnel proportionately.




Selling,
general and administrative costs were $1.1 million for the three months ended
September 30, 2010 and 2009.  As a percentage of net transportation
revenue, other selling, general and administrative costs decreased to 7.5% for
the three months ended September 30, 2010, from 10.4% for the comparable prior
year period.




Depreciation
and amortization costs for the three months ended September 30, 2010, were
approximately $0.3 million, a decrease of 20.7% from $0.4 million for the three
months ended September 30, 2009.  Depreciation and amortization as a
percentage of net transportation revenue decreased to 2.3% for the three months
ended September 30, 2010, from 3.9% for the comparable prior year period,
primarily due to lower amortization costs associated with the Airgroup &
Adcom acquisitions.




Income
from operations was $1.3 million for the three months ended September 30, 2010,
compared to income from operations of $0.2 million for the three months ended
September 30, 2009.




24


Other
expense was less than $0.1 million for the three months ended September 30,
2010, compared to other income of less than $0.1 million for the three months
ended September 30, 2009.




Net
income was $0.8 million for the three months ended September 30, 2010, compared
to net income of $0.1 million for the three months ended September 30,
2009.




Liquidity
and Capital Resources




Net cash
provided by operating activities was $0.7 million for the three months ended
September 30, 2010, compared to net cash used of $0.3 million for the three
months ended September 30, 2009.  The change was principally driven by
a decrease in net collections on outstanding receivables, partially offset by a
decrease in net payments on outstanding payables, positive cash flows from
amortization of intangibles and income taxes attributable to current year net
income.




Net cash
used in investing activities was $0.2 million for the three months ended
September 30, 2010, compared to $0.1 million for the three months ended
September 30, 2009.  Use of cash for the three months ended September
30, 2010, consisted of the purchase of $0.1 million of fixed assets and payments
made to the former Adcom shareholder totaling $0.1 million. Use of cash for the
three months ended September 30, 2009 consisted of the purchase of less than
$0.1 million in fixed assets and payments made to the former Adcom shareholder
totaling $0.1 million.




Net cash
used in financing activities was $0.4 million for the three months ended
September 30, 2010, compared to net cash provided of $0.3 million for the three
months ended September 30, 2009.  The cash used for financing
activities for the three months ended September 30, 2010, consisted primarily of
$0.4 million of treasury stock purchases and a distribution to the
non-controlling interest of a subsidiary of less than $0.1 million, offset by
net proceeds from our credit facility of $0.1 million.  The cash
provided by financing activities for the three months ended September 30, 2009,
consisted of borrowings from our credit facility of $0.7 million, offset by $0.4
million of treasury stock purchases.




Acquisitions




Below are
descriptions of material acquisitions made since 2006 including a breakdown of
consideration paid at closing and future potential earn-out payments. We define
"material acquisitions" as those with aggregate potential consideration of $1.0
million or more.




Effective
January 1, 2006, we acquired all of the outstanding stock of Airgroup. The
transaction was valued at up to $14.0 million. This consisted of: (i) $9.5
million payable in cash at closing; (ii) a subsequent cash payment of $0.5
million, which was paid on December 31, 2007; (iii) as amended, an additional
base payment of $0.6 million payable in cash, $0.3 million of which was paid on
June 30, 2008 and $0.3 million was paid on January 1, 2009; (iv) a base earn-out
payment of $1.9 million payable in Company common stock over a three year
earn-out period based upon Airgroup achieving income from continuing operations
of not less than $2.5 million per year; and (v) as additional incentive to
achieve future earnings growth, an opportunity to earn up to an additional $1.5
million payable in Company common stock at the end of a five-year earn-out
period (the "Tier-2 Earn-Out"). For the years ended June 30, 2009 and 2008, the
former shareholders of Airgroup earned $633,000 and $417,000 in base earn-out
payments, respectively.




During
the quarter ended December 31, 2007, we adjusted the estimate of accrued
transportation costs assumed in the acquisition of Airgroup which resulted in
the recognition of approximately $1.4 million in non-recurring
income.  Pursuant to the acquisition agreement, the former
shareholders of Airgroup have indemnified us for taxes of $0.5 million
associated with the income recognized in connection with this change in
estimate, which has been reflected as a reduction of the additional base payment
otherwise payable to the former shareholders of Airgroup.




25


In
November 2008, we amended the Airgroup Stock Purchase Agreement and agreed to
unconditionally pay the former Airgroup shareholders an earn-out payment of
$633,333 for the earn-out period ending June 30, 2009, to be paid on or about
October 1, 2009 by delivery of shares of common stock of the Company. In
consideration for the certainty of the earn-out payment, the former Airgroup
shareholders agreed (i) to waive and release us from any and all further
obligations to pay any earn-outs payments on account of shortfall amounts, if
any, which may have accumulated prior to June 30, 2009; (ii) to waive and
release us from any and all further obligation to account for and pay the Tier-2
Earn-Out payment; and (iii) that the earn-out payment to be paid for the
earn-out period ended June 30, 2009 would constitute a full and final payment to
the former Airgroup shareholders of any and all amounts due to the former
Airgroup shareholders under the Airgroup Stock Purchase Agreement. In March
2009, Airgroup shareholders agreed to receive $0.4 million in cash on an
accelerated basis rather than the $0.6 million in Company shares due in October
of 2009. No further payments of purchase price are due in connection with this
acquisition.




In May
2007, we launched a new logistics service offering focused on the automotive
industry through our wholly owned subsidiary, Radiant Logistics Global Services,
Inc. ("RLGS"). We entered into an Asset Purchase Agreement (the “APA”) with Mass
Financial Corporation ("Mass") to acquire certain assets formerly used in the
operations of the automotive division of Stonepath Group, Inc. The original
agreement provided for a purchase price of up to $2.75 million, and was later
reduced due to indemnity claims asserted against Mass.




In
November 2007, the purchase price was reduced to $1.6 million, consisting of
cash of $0.6 million and a $1.0 million credit in satisfaction of indemnity
claims asserted by us arising from our interim operation of the Purchased Assets
since May 22, 2007. Of the cash component, $0.1 million was paid in May of 2007,
$0.3 million was paid at closing, and a final payment of $0.2 million was to be
paid in November of 2008, subject to off-set of up to $0.1 million for certain
qualifying expenses incurred by us. Net of qualifying expenses and a discount
for accelerated payment, the final payment was reduced to $0.1 million and paid
in June of 2008. No further payments of purchase price are due in connection
with this acquisition.




Effective
September 5, 2008, we acquired all of the outstanding stock of Adcom Express,
Inc. The transaction was valued at up to $11.05 million, consisting of: (i)
$4.75 million in cash paid at the closing; (ii) $250,000 in cash payable shortly
after the closing, subject to adjustment, based upon the working capital of
Adcom as of August 31, 2008; (iii) up to $2.8 million in four "Tier-1 Earn-Out
Payments" of up to $700,000 each, covering the four year earn-out period through
2012, based upon Adcom achieving certain levels of "Gross Profit Contribution"
(as defined in the stock purchase agreement), payable 50% in cash and 50% in
shares of our common stock (valued at delivery date); (iv) a "Tier-2 Earn-Out
Payment" of up to a maximum of $2.0 million, equal to 20% of the amount by which
the Adcom cumulative Gross Profit Contribution exceeds $16.56 million during the
four year earn-out period; and (v) an "Integration Payment" of $1.25 million,
payable (a) on the earlier of the date certain integration targets are achieved
or 18 months after the closing, and (b) payable 50% in cash and 50% in our
shares of our common stock (valued at delivery date).




As of
September 30, 2010, we owe Mr. Friedman $297,468 in cash and $258,509 in Company
stock, which includes the Tier-1 earnout payment for the year
ended June 30, 2010.





Assuming
minimum targeted earnings levels are achieved, the following table summarizes
our contingent base earn-out payments related to the acquisition of Adcom, for
the fiscal years indicated based on results of the prior year (in
thousands):




Estimated payment anticipated for fiscal year(1):
                  2012
                  
                  2013Earn-out period:
                  7/1/2010 –6/30/2011
                  
                  7/1/2011 –
                    6/30/2012Earn-out
      payments:Cash
                  
                  $
                  350
                  
                  
                  $
                  350Equity
                  
                  
                  350
                  
                  
                  
                  350Total
      potential earn-out payments
                  
                  $
                  700
                  
                  
                  $
                  700Total
      gross margin targets
                  
                  $
                  4,320
                  
                  
                  $
                  4,320




(1)
Earn-out payments are paid October 1 following each fiscal year end in a
combination of cash and Company common stock.




26


Credit
Facility




In March
2010, our $15.0 million revolving credit facility, including a $0.5 million
sublimit to support letters of credit (collectively, the "Facility"), was
increased to $20.0 million with a maturity date of March 31, 2012. The Facility
is collateralized by accounts receivable and other assets of the Company and our
subsidiaries. Advances under the Facility are available to fund future
acquisitions, capital expenditures or for other corporate purposes, including
the repurchase of the Company’s stock. Borrowings under the facility bear
interest, at our option, at the bank’s prime rate minus 0.75% to plus 0.50% or
LIBOR plus 1.75% to 3.00%, and can be adjusted up or down during the term of the
Facility based on the Company’s performance relative to certain financial
covenants. The Facility is collateralized by accounts receivable and other
assets of the Company and our subsidiaries and provides for advances of up to
80% of eligible domestic accounts receivable and for advances of up to 60% of
eligible foreign accounts receivable.




The terms
of the Facility are subject to certain financial and operational covenants which
may limit the amount otherwise available under the Facility. The first covenant
limits funded debt to a multiple of 4.00 times the Company’s consolidated EBITDA
(as adjusted) measured on a rolling four quarter basis. The second financial
covenant requires the Company to maintain a basic fixed charge coverage ratio of
at least 1.1 to 1.0. The third financial covenant is a minimum profitability
standard that requires the Company not to incur a net loss before taxes,
amortization of acquired intangibles and extraordinary items in any two
consecutive quarterly accounting periods.




Under the
terms of the Facility, 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 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 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 it may need to achieve its 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 in payment of all or some portion of the
consideration. In the event that our common stock does not attain or maintain a
sufficient market value or potential acquisition candidates are otherwise
unwilling to accept our securities as part of the purchase price for the sale of
their businesses, we may be required to utilize more of our cash resources, if
available, in order to continue our acquisition program. If we do not have
sufficient cash resources through either operations or from debt facilities, our
growth could be limited unless we are able to obtain such additional
capital.




Advances
made under our $20.0 million facility are limited to the eligible accounts
receivable available to support our borrowings.  As of September 30,
2010, we have approximately $12.1 in eligible accounts receivable and, net of
advances outstanding, approximately $6.2 million in remaining availability under
the Facility to support future acquisitions and our on-going working capital
requirements. We expect to structure acquisitions with certain amounts paid at
closing, and the balance paid over a number of years in the form of earn-out
installments which are payable based upon the future earnings of the acquired
businesses payable in cash, stock or some combination thereof. Except for the
acquisition of our agent based stations, we would generally expect our
acquisitions to contribute additional eligible accounts receivable to our
borrowing base and create capacity for additional borrowings under our Facility.
As we continue to execute our acquisition strategy, we will be required to make
significant payments in the future if the earn-out installments under our
various acquisitions become due. While we believe that a portion of any required
cash payments will be generated by the acquired businesses, we may have to
secure additional sources of capital to fund the remainder of any cash-based
earn-out payments as they become due. This presents us with certain business
risks relative to the availability of capacity under our Facility, the
availability and pricing of future fund raising, as well as the potential
dilution to our stockholders to the extent the earn-outs are satisfied directly,
or indirectly, from the sale or issuance of equity.




27


Off
Balance Sheet Arrangements




As of
September 30, 2010, we did not have any relationships with unconsolidated
entities or financial partners, such as entities often referred to as structured
finance or special purpose entities, which had been established for the purpose
of facilitating off-balance sheet arrangements or other contractually narrow or
limited purposes. As such, we are not materially exposed to any financing,
liquidity, market or credit risk that could arise if we had engaged in such
relationships.




Critical
Accounting Policies




Accounting
policies, methods and estimates are an integral part of the consolidated
financial statements prepared by management and are based upon management’s
current judgments. Those judgments are normally based on knowledge and
experience with regard to past and current events and assumptions about future
events. Certain accounting policies, methods and estimates are particularly
sensitive because of their significance to the financial statements and because
of the possibility that future events affecting them may differ from
management’s current judgments. While there are a number of accounting policies,
methods and estimates that affect our financial statements, the areas that are
particularly significant include the assessment of the recoverability of
long-lived assets, specifically goodwill, acquired intangibles, and revenue
recognition.




We
perform an annual impairment test for goodwill. The first step of the impairment
test requires that we determine the fair value of each reporting unit, and
compare the fair value to the reporting unit’s carrying amount. To the extent a
reporting unit’s carrying amount exceeds its fair value, an indication exists
that the reporting unit’s goodwill may be impaired and we must perform a second
more detailed impairment assessment. The second impairment assessment involves
allocating the reporting unit’s fair value to all of its recognized and
unrecognized assets and liabilities in order to determine the implied fair value
of the reporting unit’s goodwill as of the assessment date. The implied fair
value of the reporting unit’s goodwill is then compared to the carrying amount
of goodwill to quantify an impairment charge as of the assessment date. We
typically perform our annual impairment test effective as of April 1 of each
year, unless events or circumstances indicate, an impairment may have occurred
before that time.




Acquired
intangibles consist of customer related intangibles and non-compete agreements
arising from our acquisition. Customer related intangibles will be amortized
using accelerated methods over approximately 5 years and non-compete agreements
will be amortized using the straight line method over the term of the underlying
agreement.




We review
long-lived assets to be held-and-used for impairment whenever events or changes
in circumstances indicate that the carrying amount of the assets may not be
recoverable. If the sum of the undiscounted expected future cash flows over the
remaining useful life of a long-lived asset is less than its carrying amount,
the asset is considered to be impaired. Impairment losses are measured as the
amount by which the carrying amount of the asset exceeds the fair value of the
asset. When fair values are not available, we estimate fair value using the
expected future cash flows discounted at a rate commensurate with the risks
associated with the recovery of the asset. Assets to be disposed of are reported
at the lower of carrying amount or fair value less costs to sell.




As a
non-asset based carrier, we do not own transportation assets. We generate the
major portion of our air and ocean freight revenues by purchasing transportation
services from direct (asset-based) carriers and reselling those services to our
customers. Based upon the terms in the contract of carriage, revenues related to
shipments where we issue a House Airway Bill ("HAWB") or a House Ocean Bill of
Lading ("HOBL") are recognized at the time the freight is tendered to the direct
carrier at origin. Costs related to the shipments are also recognized at this
same time based upon anticipated margins, contractual arrangements with direct
carriers, and other known factors. The estimates are routinely monitored and
compared to actual invoiced costs. The estimates are adjusted as deemed
necessary by us to reflect differences between the original accruals and actual
costs of purchased transportation.




28


This
method generally results in recognition of revenues and purchased transportation
costs earlier than the preferred methods under generally accepted accounting
principles ("GAAP") which do not recognize revenues until a proof of delivery is
received or which recognize revenues as progress on the transit is made. Our
method of revenue and cost recognition does not result in a material difference
from amounts that would be reported under such other methods.




Item
4.                    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, 2010, was
carried out by our management under the supervision and with the participation
of our Chief Executive Officer ("CEO") who also serves as our Chief Financial
Officer ("CFO"). Based upon that evaluation, our CEO/CFO concluded that, as of
September30, 2010, our disclosure controls and procedures were effective to
provide reasonable assurance that information we are required to disclose in
reports that we file or submit under the Exchange Act is (i) recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission rules and forms and (ii) accumulated and
communicated to our management, including our CEO/CFO, as appropriate to allow
timely decisions regarding disclosure.




There have not been any changes in our
internal control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended
September 30, 2010, which have materially affected, or are reasonably likely to
materially affect, our internal control over financial
reporting.




PART
II. OTHER INFORMATION




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




We have a
share repurchase program that authorizes us to purchase up to 5,000,000 shares
of common stock through December 31, 2010.  The share repurchases may
occur from time-to-time through open market purchases at prevailing market
prices or through privately negotiated transactions as permitted by securities
laws and other legal requirements.  The following table sets forth
information regarding our repurchases or acquisitions of common stock during the
three month period ended September 30, 2010:





Period
                        
                        Total
                          Number of
                          Shares (or
                          Units)
                          Purchased
                        
                        
                        Average
                          Price Paid
                          per Share
                          (or Unit)
                        
                        
                        Total Number
                          of Shares
                          Purchased as Part
                          of Publicly
                          Announced Plans
                          or Programs
                        
                        
                        Maximum Number
                          (or Approximate
                          Dollar
                          Value) of Shares
                          that May Yet Be
                          Purchased Under
                          the
                          Plans or Programs
                          (1)Repurchases
      fromJuly 1, 2010through July 31,2010
                        
                        
                        558,740
                        
                        
                        $
                        0.280
                        
                        
                        
                        558,740
                        
                        
                        
                        1,012,761Repurchases
      from August 1, 2010 through August 31, 2010
                        
                        
                        587,800
                        
                        
                        $
                        0.307
                        
                        
                        
                        1,146,540
                        
                        
                        
                        424,961Repurchases
      from September 1, 2010 through September 30, 2010
                        
                        
                        232,500
                        
                        
                        $
                        0.348
                        
                        
                        
                        1,379,040
                        
                        
                        
                        192,461Total
                        
                        
                        1,379,040
                        
                        
                        $
                        0.303
                        
                        
                        
                        1,379,040
                        
                        
                        
                        192,461





(1)
            In
      May 2009, our Board of Directors authorized the repurchase of up to
      5,000,000 shares of our common stock through December 31,
      2010.


29


Item
6. Exhibits




Exhibit
                    No.
                  
                  Exhibit
                  
                  Method of Filing31.1
                  
                  Certification
      by Principal Executive Officer and Principal Financial Officer pursuant
      to  Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act
      of 1934, as amended, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
                  
                  Filed
      herewith32.1
                  
                  Certification
      by the Principal Executive Officer and Principal Financial Officer
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002
                  
                  Filed
      herewith99.1
                  
                  Press
      Release dated November 11, 2010
                  
                  FiledHerewith


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 12, 2010
            
            /s/ Bohn H. CrainBohn
      H. CrainChief
      Executive Officer and Chief Financial
Officer




Date:
      November 12, 2010
            
            /s/ Todd E. MacomberTodd
      E. MacomberSenior
      Vice President and Chief Accounting
Officer


31




EXHIBIT
INDEX




Exhibit
      No.
                
                Exhibit31.1
                
                Certification
      by Principal Executive Officer and Principal Financial Officer pursuant to
      Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as
      amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      200232.1
                
                Certification
      by Principal Executive Officer/Principal Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 200299.1
                
                Press
      Release dated November 11,
2010


32