**Table
            of Contents**





**UNITED
      STATES**


**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, 2006




o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
                1934




For
      the
      transition period from ___________ to  _____________






Commission
      File Number: 000-50283




**RADIANT
        LOGISTICS, INC.**
 **(Exact
        Name of Registrant as Specified in Its Charter)**





Delaware
            
            04-3625550(State
                or Other Jurisdiction ofIncorporation
                or Organization)
            
            (IRS
                Employer Identification No.)





1227
      120 th Avenue
      N.E., Bellevue, WA 98005


(Address
      of Principal Executive Offices)





(425)
      943-4599


(Issuer’s
      Telephone Number, including Area Code)





N/A


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





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
      (or
      for such shorter period that the registrant was required to file such reports),
      and (2) has been subject to such filing requirements for the past 90 days.
      Yes x  No
o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definitions of "accelerated
      filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
      one):





Large
      accelerated filer o    Accelerated
      filer o    Non-accelerated
      filer x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o   No x





There
      were 33,961,639 issued and outstanding shares of the registrant’s common stock,
      par value $.001 per share, as of November 13, 2006.





**Table
        of Contents**




**RADIANT
      LOGISTICS, INC.**


**(f/k/a
      Golf Two, Inc.)**




**TABLE
      OF CONTENTS**




PART
                I. FINANCIAL INFORMATIONItem
                1.
            
            Condensed
                Consolidated Financial Statements -
                UnauditedCondensed
                Consolidated Balance Sheets at September 30, 2006 and
                June 30, 2006
            
            
            3Condensed
                Consolidated Statements of Operations for the three
                months ended September 30, 2006 and 2005
            
            
            4Condensed
                Consolidated Statements of Stockholders’ Equity at
                September 30, 2006
            
            
            5Condensed
                Consolidated Statements of Cash Flows for the three
                months ended September 30, 2006 and 2005
            
            
            6-7Notes
                to Condensed Consolidated Financial
                Statements
            
            
            8Item
                2.
            
            Management’s
                Discussion and Analysis of Financial Conditions
                and Results of Operations
            
            
            18Item
                3.
            
            Quantitative
                and Qualitative Disclosures about Market
                Risk
            
            
            29Item
                4.
            
            Controls
                and Procedures
            
            
            29PART
                II OTHER INFORMATIONItem
                1.
            
            Legal
                Proceedings
            
            
            30Item
                1A.
            
            Risk
                Factors
            
            
            30Item
                2.
            
            Unregistered
                Sales of Equity Securities and Use of
                Proceeds
            
            
            30Item
                3.
            
            Defaults
                Upon Senior Securities
            
            
            30Item
                4.
            
            Submission
                of Matter to a Vote of Security
                Holders
            
            
            30Item
                5.
            
            Other
                Information
            
            
            30Item
                6.
            
            Exhibits
            
            
            30




-2-
 **Table
          of Contents**
  **RADIANT
        LOGISTICS, INC.**


**(f/k/a
      Golf Two, Inc.)**


**Condensed
      Consolidated Balance Sheets**




September
                30,
              2006
            
            June
                30,
              2006(unaudited)ASSETSCurrent
                assets -Cash
                and cash equivalents
            
            $
            894,711
            
            $
            510,970Accounts
                receivable, net of allowance for doubtful accounts of $201,682 at
                September 30, 2006 and $202,830 at June 30, 2006
            
            
            8,290,692
            
            
            8,487,899Current
                portion of employee loan receivable and other receivables
            
            
            41,929
            
            
            40,329Prepaid
                expenses and other current assets
            
            
            12,276
            
            
            93,087Deferred
                tax asset
            
            
            232,864
            
            
            277,417Total
                current assets
            
            
            9,472,472
            
            
            9,409,702Furniture
                and equipment, net (Note 5)
            
            
            559,359
            
            
            258,119Acquired
                intangibles, net (Note 4)
            
            
            2,248,641
            
            
            2,401,600Goodwill
            
            
            4,718,189
            
            
            4,712,062Employee
                loan receivable
            
            
            120,000
            
            
            120,000Investment
                in real estate
            
            
            40,000
            
            
            40,000Deposits
                and other assets
            
            
            118,025
            
            
            103,376Total
                long term assets
            
            
            7,244,855
            
            
            7,377,038$
            17,276,686
            
            $
            17,044,859LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                liabilities -Accounts
                payable
            
            $
            4,680,473
            
            $
            4,096,538Accrued
                transportation costs
            
            
            1,562,873
            
            
            1,501,374Commissions
                payable
            
            
            506,976
            
            
            429,312Other
                accrued costs
            
            
            255,684
            
            
            303,323Income
                taxes payable
            
            
            847,450
            
            
            1,093,996Total
                current liabilities
            
            
            7,853,456
            
            
            7,424,543Long
                term debt (Note 6)
            
            
            1,867,838
            
            
            2,469,936Deferred
                tax liability
            
            
            764,538
            
            
            816,544Total
                long term liabilities
            
            
            2,632,376
            
            
            3,286,480Total
                liabilities
            
            
            10,485,832
            
            
            10,711,023Commitments
                & contingencies (Note 6)
            
            
            —
            
            
            —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; issued and
                outstanding: 33,861,639 at September 30, 2006 and 33,611,639 at June
                30,
                2006
            
            
            17,567
            
            
            15,067Additional
                paid-in capital
            
            
            6,885,347
            
            
            6,590,355Accumulated
                deficit
            
            
            (112,060
            )
            
            (271,586
            )Total
                Stockholders’ equity
            
            
            6,790,854
            
            
            6,333,836$
            17,276,686
            
            $
            17,044,859


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


-3-
 **Table
            of Contents**




**RADIANT
      LOGISTICS, INC.**


**(f/k/a
      Golf Two, Inc.)**


**Condensed
      Consolidated Statements of Operations**


**(unaudited)**




For
                three months ended
              September
                30,2006
            
            2005Revenue
            
            $
            14,417,101
            
            $
            —Cost
                of transportation
            
            
            9,423,319
            
            
            —Net
                revenues
            
            
            4,993,782
            
            
            —Agent
                Commissions
            
            
            3,727,317
            
            
            —Personnel
                costs
            
            
            507,032
            
            
            —Selling,
                general and administrative expenses
            
            
            405,905
            
            
            14,075Depreciation
                and amortization
            
            
            186,106
            
            
            —Total
                operating expenses
            
            
            4,826,360
            
            
            14,075Income
                (loss) from operations
            
            
            167,422
            
            
            (14,075
            )Other
                income (expense):Interest
                income
            
            
            1,805
            
            
            —Interest
                expense
            
            
            (7,491
            )
            
            (500
            )Other
            
            
            (402
            )
            
            —Total
                other income (expense)
            
            
            (6,088
            )
            
            (500
            )Income
                (loss) before income tax expense
            
            
            161,334
            
            
            (14,575
            )Income
                tax expense
            
            
            1,808
            
            
            —Net
                income (loss)
            
            $
            159,526
            
            $
            (14,575
            )Net
                income (loss) per common share - basic
            
            $
            0.00
            
            $
            0.00Net
                income per common share - basic and diluted
            
            $
            0.00
            
            $
            0.00Weighted
                average basic common shares outstanding
            
            
            33,652,400
            
            
            25,964,179Weighted
                average diluted common shares outstanding
            
            
            36,137,182
            
            
            25,964,179


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


-4-
 **Table
          of Contents**




**RADIANT
      LOGISTICS, INC.**


**(f/k/a
      Golf Two, Inc.)**


**Condensed
      Consolidated Statement of Stockholders’
Equity**




ADDITIONAL
            
            
            
            TOTALCOMMON
                STOCK
            
            PAID-IN
            
            ACCUMULATED
            
            STOCKHOLDERS'SHARES
            
            AMOUNT
            
            CAPITAL
            
            DEFICIT
            
            EQUITYBalance
                at July 1, 2006
            
            
            33,611,639
            
            $
            15,067
            
            $
            6,590,355
            
            $
            (271,586
            )
            $
            6,333,836Issuance
                of common stock for training materials at $1.01 per share (September
                2006)
                (unaudited)
            
            
            250,000
            
            
            2,500
            
            
            250,000
            
            
            —
            
            
            252,500Share
                based compensation (unaudited)
            
            
            —
            
            
            —
            
            
            44,992
            
            
            —
            
            
            44,992Net
                income for the three months ended September 30, 2006
                (unaudited)
            
            
            —
            
            
            —
            
            
            —
            
            
            159,526
            
            
            159,526Balance
                at September 30, 2006
            
            
            33,861,639
            
            $
            17,567
            
            $
            6,885,347
            
            $
            (112,060
            )
            $
            6,790,854


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


-5-
 **Table
            of Contents**




**RADIANT
      LOGISTICS, INC.**


**(f/k/a
      Golf Two, Inc.)**


**Condensed
      Consolidated Statements of Cash
      Flows**


**(unaudited)**




For
                three months ended
              September
                30,2006
            
            2005CASH
                FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES:Net
                income (loss)
            
            $
            159,526
            
            $
            (14,575
            )ADJUSTMENTS
                TO RECONCILE NET LOSS TO NET CASH PROVIDED BY (USED FOR) OPERATING
                ACTIVITIES:non-cash
                contribution to capital (rent)
            
            
            —
            
            
            300non-cash
                compensation expense (stock options)
            
            
            44,992
            
            
            —amortization
                of intangibles
            
            
            152,959
            
            
            —amortization
                of deferred tax
            
            
            (52,006
            )
            
            —depreciation
            
            
            25,994
            
            
            —amortization
            
            
            7,153
            
            
            —change
                in accounts receivable
            
            
            (6,128
            )
            
            —CHANGE
                IN ASSETS AND LIABILITIES -restricted
                cash
            
            
            —
            
            
            (9,340
            )accounts
                receivables
            
            
            197,207
            
            
            —employee
                receivable and other receivables
            
            
            (1,600
            )
            
            —prepaid
                expenses and other current assets
            
            
            103,562
            
            
            —accounts
                payable and accrued expenses
            
            
            583,935
            
            
            500accrued
                transportation costs
            
            
            61,499
            
            
            —commission
                payable
            
            
            77,664
            
            
            —other
                accrued costs
            
            
            (47,639
            )
            
            —income
                tax payable
            
            
            (246,546
            )
            
            —Net
                cash provided by (used for) operating activities
            
            
            1,060,572
            
            
            (23,115
            )CASH
                FLOWS PROVIDED BY (USED FOR) INVESTING ACTIVITIES:purchase
                of property and equipment
            
            
            (74,733
            )
            
            —Net
                cash (used for) investing
            
            
            (74,733
            )
            
            —CASH
                FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES:Net
                (payment) of credit facility
            
            
            (602,098
            )
            
            —Net
                cash (used for)financing activities
            
            
            (602,098
            )
            
            —NET
                INCREASE (DECREASE) IN CASH
            
            
            383,741
            
            
            (23,115
            )CASH,
                BEGINNING OF THE PERIOD
            
            
            510,970
            
            
            23,115CASH,
                END OF PERIOD
            
            $
            894,711
            
            $
            —SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION:Income
                taxes paid
            
            $
            187,023
            
            $
            800Interest
                paid
            
            $
            7,491
            
            $
            —


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


-6-
 **Table
            of Contents**




**RADIANT
      LOGISTICS, INC.**


**(f/k/a
      Golf Two, Inc.)**


**Condensed
      Consolidated Statements of Cash Flows**


**(unaudited)**






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





In
      September 2006, the Company issued 250,000 shares, of its common stock, at
      $1.01
      per share, in exchange for $252,500, in value, of domestic and international
      freight training materials for the development of its employees and exclusive
      agent offices.


-7-
 **Table
            of Contents**




**RADIANT
      LOGISTICS, INC.**


**(f/k/a
      Golf Two, Inc.)**


**Notes
      to Condensed Consolidated Financial
      Statements**


**(unaudited)**







**NOTE
      1 - NATURE OF OPERATION AND BASIS OF PRESENTATION**





**General**





Radiant
      Logistics, Inc. (formerly known as “Golf Two, Inc”) (the “Company”) was formed
      under the laws of the state of Delaware on March 15, 2001 and from inception
      through the third quarter of 2005, the Company's principal business strategy
      focused on the development of retail golf stores. In October 2005, the Company’s
      new management team, consisting of Bohn H. Crain and Stephen M. Cohen, completed
      a change of control transaction when they acquired a majority of the Company’s
      outstanding securities from the Company’s former officers and directors in
      privately negotiated transactions. In conjunction with the change of control
      transaction, management: (i) discontinued the business model; (ii) repositioned
      the Company as a global transportation and supply chain management company;
      and
      (iii) changed the Company’s name to
      “Radiant Logistics, Inc.” to, among other things, better align its name with its
      new business focus.




By
      implementing a growth strategy ,
      the
      Company intends to build a leading global transportation and supply-chain
      management company offering a full range of domestic and international freight
      forwarding and other value added supply chain management services, including
      order fulfillment, inventory management and warehousing.





The
      Company’s growth strategy will focus on organic, as well as acquisitive
      features. From an organic perspective, the Company will focus on strengthening
      existing and expanding new customer relationships. One of the drivers of the
      Company’s organic growth will be the retention of existing, and securing of new
      exclusive agency locations.





The
      Company’s acquisition strategy relies upon two primary factors: first, the
      Company’s ability to identify and acquire target businesses that fit within its
      general acquisition criteria, and second, the continued availability of capital
      and financing resources sufficient to complete these acquisitions. As to the
      first factor, following the recent acquisition of Airgroup Corporation
      (“Airgroup”), the Company has identified a number of additional companies that
      may be suitable acquisition candidates and is in preliminary discussions with
      a
      select number of them. As to the second factor, the Company’s ability to secure
      additional financing will rely upon the sale of debt or equity securities,
      and
      the development of an active trading market for the Company’s securities,
      neither of which can be assured.





The
      Company’s strategy
      has been designed to take advantage of shifting market dynamics. The third
      party
      logistics industry continues to grow as an increasing number of businesses
      outsource their logistics functions to more cost effectively manage and extract
      value from their supply chains. Also, the industry is positioned for further
      consolidation as it remains highly fragmented, and as customers are demanding
      the types of sophisticated and broad reaching service offerings that can more
      effectively be handled by larger more diverse organizations.





Successful
      implementation of the Company’s growth strategy will rely on a number of
      factors, including the ability to efficiently integrate the businesses of the
      companies acquired, generate the anticipated economies of scale from the
      integration, and maintain the historic sales growth of the acquired businesses
      in order to generate continued organic growth. There are a variety of risks
      associated with the Company’s ability to achieve its strategic objectives,
      including the ability to acquire and profitably manage additional businesses
      and
      the intense competition in the Company’s industry for customers and for the
      acquisition of additional businesses.  -8-
 **Table
            of Contents**


The
      Company accomplished the first step in its strategy by completing the
      acquisition of Airgroup effective as of January 1, 2006. Airgroup is a non-asset
      based logistics company that provides domestic and international freight
      forwarding services through a network of 34 exclusive agent offices across
      North
      America. Airgroup, a Seattle, Washington based company, services a diversified
      account base including manufacturers, distributors and retailers using a network
      of independent carriers and over 100 international agents positioned
      strategically around the world.




**Interim
      Disclosure**





The
      condensed consolidated financial statements included herein have been prepared,
      without audit, pursuant to the rules and regulations of the Securities and
      Exchange Commission. Certain information and footnote disclosures normally
      included in financial statements prepared in accordance with accounting
      principles generally accepted in the United States have been condensed or
      omitted pursuant to such rules and regulations, although the Company’s
      management believes that the disclosures are adequate to make the information
      presented not misleading. The Company’s management suggests that these condensed
      financial statements be read in conjunction with the financial statements and
      the notes thereto included in the Company’s Annual Report on Form 10-K for the
      year ended June 30, 2006.





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 Consolidation**





These
      consolidated financial statements include the accounts of Radiant
      Logistics, Inc. and its wholly-owned subsidiary, Airgroup Corporation.
      All significant inter-company 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 of America
      requires management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosure of contingent assets and
      liabilities at the date of the financial statements and the reported amounts
      of
      revenue and expenses during the reporting period. Such estimates include revenue
      recognition, accruals for the cost of purchased transportation, accounting
      for
      the issuance of shares and share based compensation, the assessment of the
      recoverability of long-lived assets (specifically goodwill and acquired
      intangibles), the establishment of an allowance for doubtful accounts and the
      valuation allowance for deferred tax assets. Estimates and assumptions are
      reviewed periodically and the effects of revisions are reflected in the period
      that they are determined to be necessary. Actual results could differ from
      those
      estimates.





**b)** **Cash
      and Cash Equivalents**





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





**c)** **Concentration**





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


-9-
 **Table
          of Contents**




**d)** **Accounts
      Receivable**





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





**e) Property
      and
      Equipment**





Technology
      (computer software, hardware, and communications), furniture, and equipment
      are
      stated at cost, less accumulated depreciation over the estimated useful lives
      of
      the respective assets. Depreciation is computed using five to seven year lives
      for vehicles, communication, office, furniture, and computer equipment and
      the
      double declining balance method. Computer software is depreciated over a three
      year life using the straight line method of depreciation. For leasehold
      improvements, the cost is depreciated over the shorter of the lease term or
      useful life on a straight line basis. Upon retirement or other disposition
      of
      these assets, the cost and related accumulated depreciation are removed from
      the
      accounts and the resulting gain or loss, if any, is reflected in other income
      or
      expense. Expenditures for maintenance, repairs and renewals of minor items
      are
      charged to expense as incurred. Major renewals and improvements are capitalized.




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





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





**f)** **Goodwill**





The
      Company follows the provisions of Statement of Financial Accounting Standards
      ("SFAS") No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 requires
      an annual impairment test for goodwill and intangible assets with indefinite
      lives. Under the provisions of SFAS No. 142, the first step of the impairment
      test requires the Company determines the fair value of each reporting unit,
      and
      compare the fair value to the reporting unit's carrying amount. To the extent
      a
      reporting unit's carrying amount exceeds its fair value, an indication exists
      that the reporting unit's goodwill may be impaired and the Company must perform
      a second more detailed impairment assessment. The second impairment assessment
      involves allocating the reporting unit’s fair value to all of its recognized and
      unrecognized assets and liabilities in order to determine the implied fair
      value
      of the reporting unit’s goodwill as of the assessment date. The implied fair
      value of the reporting unit’s goodwill is then compared to the carrying amount
      of goodwill to quantify an impairment charge as of the assessment date. In
      the
      future, the Company will perform its annual impairment test effective as of
      April 1 of each year, unless events or circumstances indicate an impairment
      may
      have occurred before that time. As of September 30, 2006 there are no
      indications of an impairment.


-10-
 **Table
          of Contents**




**g)** **Long-Lived
      Assets**




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





The
      Company follows the provisions of SFAS No. 144, “Accounting for the Impairment
      or Disposal of Long-Lived Assets,” which establishes accounting standards for
      the impairment of long-lived assets such as property, plant and equipment and
      intangible assets subject to amortization. The Company reviews long-lived assets
      to be held-and-used for impairment whenever events or changes in circumstances
      indicate that the carrying amount of the assets may not be recoverable. If
      the
      sum of the undiscounted expected future cash flows over the remaining useful
      life of a long-lived asset is less than its carrying amount, the asset is
      considered to be impaired. Impairment losses are measured as the amount by
      which
      the carrying amount of the asset exceeds the fair value of the asset. When
      fair
      values are not available, the Company estimates fair value using the expected
      future cash flows discounted at a rate commensurate with the risks associated
      with the recovery of the asset. Assets to be disposed of are reported at the
      lower of carrying amount or fair value less costs to sell. Management
      has performed a review of all long-lived assets and has determined that no
      impairment of the respective carrying value has occurred as of September 30,
      2006.





**h)** **Commitments**





The
      Company has operating lease commitments some of which are for office and
      warehouse space and are under non-cancelable operating leases expiring at
      various dates through December 2010. Annual commitments, 2007 through 2011,
      respectively, are $242,929, $87,122, $86,498, $78,008, and $31,800.





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




Taxes
      on
      income are provided in accordance with SFAS No. 109, “Accounting for
      Income Taxes.” ** Deferred
      income tax assets and liabilities are recognized for the expected future tax
      consequences of events that have been reflected in the consolidated financial
      statements. Deferred tax assets and liabilities are determined based on the
      differences between the book values and the tax bases of particular assets
      and
      liabilities and the tax effects of net operating loss and capital loss
      carryforwards. 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.





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





The
      Company recognizes revenue on a gross basis, in accordance with Emerging Issues
      Task Force ("EITF") 91-9, "Reporting Revenue Gross versus Net," as a result
      of
      the following: The Company is the primary obligor responsible for providing
      the
      service desired by the customer and is responsible for fulfillment, including
      the acceptability of the service(s) ordered or purchased by the customer. At
      the
      Company’s sole discretion, it sets the prices charged to its customers, and is
      not required to obtain approval or consent from any other party in establishing
      its prices. The Company has multiple suppliers for the services it sells to
      its
      customers, and has the absolute and complete discretion and right to select
      the
      supplier that will provide the product(s) or service(s) ordered by a customer,
      including changing the supplier on a shipment-by-shipment basis. In most cases,
      the Company determines the nature, type, characteristics, and specifications
      of
      the service(s) ordered by the customer. The Company also assumes credit risk
      for
      the amount billed to the customer.




As
      a
      non-asset based carrier, the Company does not own transportation assets. The
      Company generates the major portion of its air and ocean freight revenues by
      purchasing transportation services from direct (asset-based) carriers and
      reselling those services to its customers. In accordance with EITF 91-9, revenue
      from freight forwarding and export services is recognized at the time the
      freight is tendered to the direct carrier at origin, and direct expenses
      associated with the cost of transportation are accrued concurrently. At
      the
      time when revenue is recognized on a transportation shipment, the Company
      records costs related to that shipment based on the estimate of total purchased
      transportation costs. The estimates are based upon  -11-
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            of Contents**


anticipated
      margins, contractual arrangements with direct carriers and other known factors.
      The estimates are routinely monitored and compared to actual invoiced costs.
      The
      estimates are adjusted as deemed necessary by the Company to reflect differences
      between the original accruals and actual costs of purchased transportation.





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





In
      December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
      No.
      123R, "Share Based Payment,” an Amendment of FASB Statements No. 123 and 95"
      ("SFAS 123R"). This statement requires that the cost resulting from all
      share-based payment transactions be recognized in the Company’s consolidated
      financial statements. In addition, in March 2005 the Securities and Exchange
      Commission ("SEC") released SEC Staff Accounting Bulletin No. 107, "Share-Based
      Payment" ("SAB 107"). SAB 107 provides the SEC’s staff’s position regarding the
      application of SFAS 123R and certain SEC rules and regulations, and also
      provides the staff’s views regarding the valuation of share-based payment
      arrangements for public companies. Generally, the approach in SFAS 123R is
      similar to the approach described in SFAS 123. However, SFAS 123R requires
      all
      share-based payments to employees, including grants of employee stock options,
      to be recognized in the statement of operations based on their fair values.
      Pro
      forma disclosure of fair value recognition, as prescribed under SFAS 123, is no
      longer an alternative. The Company adopted Statement 123R in October 2005 using
      the modified prospective approach.





For
      the
      three months ended September 30, 2006, the Company recorded a share based
      compensation expense of $44,992, which, net of income taxes, resulted in a
      $29,695 net reduction of net income. Prior to October 2005 the Company did
      not
      have a stock option plan therefore no expense was recorded.





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





The
      Company uses SFAS No. 128, Earnings Per Share for calculating the basic and
      diluted income (loss) per share. Basic income (loss) per share is computed
      by
      dividing net income (loss) attributable to common stockholders by the weighted
      average number of common shares outstanding. Diluted income per share is
      computed similar to basic income (loss) 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 had been issued and if the additional
      common shares were dilutive. At September 30, 2006 and 2005, the outstanding
      number of potentially dilutive common shares totaled 36,137,182 and 25,964,179
      shares of common stock, including options to purchase 2,570,000 shares of common
      stock at September 30, 2006. There were no options outstanding at September
      30,
      2005.





**NOTE
      3 - ACQUISITION OF AIRGROUP**





In
      January of 2006, the Company acquired 100 percent of the outstanding stock
      of
      Airgroup Corporation (“Airgroup”). Airgroup is a non-asset based logistics
      company that provides domestic and international freight forwarding services
      through a network of 34 exclusive agent offices across North America. Airgroup,
      a Seattle, Washington based company, services a diversified account base
      including manufacturers, distributors and retailers using a network of
      independent carriers and over 100 international agents positioned strategically
      around the world. See the Company’s Form 8-K filed on January 18, 2006 for
      additional information.





The
      transaction was valued at up to $14.0
      million. This consists of: (i) $9.5 million payable in cash at closing (before
      giving effect for $2.8 million in acquired cash); (ii) an additional base
      payment of $0.6 million payable in cash on the one-year anniversary of the
      closing, provided at least 90% of Airgroup’s locations remain operational
      through the first anniversary of the closing (the “Additional Base Payment”);
      (iii) a subsequent cash payment of $0.5 million in cash on the two-year
      anniversary of the closing; (iv) a base earn-out payment of $1.9 million payable
      in Company common stock over a three-year earn-out period based upon Airgroup
      achieving income from continuing operations of not less than $2.5 million per
      year; and (v) as additional incentive to achieve future earnings growth, an
      opportunity to earn up to an additional $1.5 million payable in Company common
      stock at the end of a five-year earn-out period (the “Tier-2 Earn-Out”). Under
      Airgroup’s Tier-2 Earn-Out, the former shareholders of Airgroup are entitled
      to  -12-
 **Table
            of Contents**


receive
      50% of the cumulative income from continuing operations in excess of $15,000,000
      generated during the five-year earn-out period up to a maximum of $1,500,000.
      With respect to the base earn-out payment of $1.9 million, i n
      the
      event there is a shortfall in income from continuing operations, the earn-out
      payment will be reduced on a dollar-for-dollar basis to the extent of the
      shortfall. Shortfalls may be carried over or carried back to the extent that income
      from continuing operations in
      any
      other payout year exceeds the $2.5 million level.





The
      acquisition, which provided the platform operation for the Company’s
      consolidation strategy, was accounted for as a purchase and accordingly, the
      results of operations and cash flows of Airgroup have been included in the
      Company’s condensed consolidated financial statements prospectively from the
      date of acquisition. At September 30, 2006 the total purchase price,
      including acquisition expenses of $104,779, but excluding the contingent
      consideration, was $10,104,779. The following table summarizes the preliminary
      allocation of the purchase price based on the estimated fair value of the assets
      acquired and liabilities assumed at January 1, 2006:





Current
                assets
            
            $
            11,671,691Furniture
                and equipment
            
            
            231,726Other
                assets
            
            
            196,634Goodwill
                and other intangibles
            
            
            7,460,189Total
                acquired assets
            
            
            19,560,240Current
                liabilities assumed
            
            
            8,523,181Long
                term deferred tax liability
            
            
            932,280Total
                acquired liabilities
            
            
            9,455,461Net
                assets acquired
            
            $
            10,104,779





The
      above
      allocation is still preliminary and the Company expects to finalize it prior
      to
      the January 2007 anniversary of the acquisition of Airgroup as required per
      SFAS
      141.




For
      the
      three months ended September 30, 2006, the Company recorded an expense of
      $152,959 from amortization of intangibles and an income tax benefit of $52,005
      from amortization of the long term deferred tax liability; both arising from
      the
      acquisition of Airgroup. The Company expects the net reduction in income, from
      the combination of amortization of intangibles and long term deferred tax
      liability, will be $403,806 in fiscal year 2007, $361,257 in 2008, $394,079
      in
      2009, $318,862 in 2010, and $107,052 in 2011. Also see Note 4.





The
      following information for the quarters ended September 30, 2006 (actual and
      unaudited) and September 30, 2005 (pro forma and unaudited) is presented as
      if
      the acquisition of Airgroup had occurred on January 1, 2005 (in thousands,
      except earnings per share):





Three
                Months ended
              September
                30,2006
            
            2005Total
                revenue
            
            $
            14,417
            
            $
            13,433Income
                from operations
            
            
            167
            
            
            317Net
                income
            
            
            160
            
            
            204Earnings
                per share:Basic
            
            $
            0.00
            
            $
            0.01Diluted
            
            $
            0.00
            
            $
            0.01





-13-
 **Table
          of Contents**


**NOTE
      4 - ACQUIRED INTANGIBLE ASSETS**





The
      table
      below reflects acquired intangible assets related to the acquisition of Airgroup
      on January 1, 2006. The information is for the three months ended September
      30,
      2006 and the year ended June 30, 2006. Prior to the Company’s acquisition of
      Airgroup, there were no intangible assets for prior years as this is the
      Company’s first acquisition.




Three
                months ended
              September
                30, 2006
            
            Year
                ended
              June
                30, 2006Gross
              carrying
              amount
            
            Accumulated
              Amortization
            
            Gross
              carrying
              amount
            
            Accumulated
              AmortizationAmortizable
                intangible assets:Customer
                related
            
            $
            2,652,000
            
            $
            479,859
            
            $
            2,652,000
            
            $
            331,400Covenants
                not to compete
            
            
            90,000
            
            
            13,500
            
            
            90,000
            
            
            9,000Total
            
            $
            2,742,000
            
            $
            493,359
            
            $
            2,742,000
            
            $
            340,400Aggregate
                amortization expense:For
                the three months ended September 30, 2006
            
            
            
            
            $
            152,959For
                the three months ended September 30, 2005
            
            
            
            
            $
            —Aggregate
                amortization expense for the year ended June 30:2007
                - For the remainder of the year
            
            
            
            
            $
            458,8682008
            
            
            
            
            
            547,3592009
            
            
            
            
            
            597,0902010
            
            
            
            
            
            483,1242011
            
            
            
            
            
            162,200$
            2,248,641


**NOTE
      5 - PROPERTY AND EQUIPMENT**





The
      Company, prior to acquiring Airgroup, did not carry any fixed assets since
      its
      inception. Property and equipment consists of the following:





September
                30,
            
            June
              30,2006
            
            2006Vehicles
            
            $
            3,500
            
            $
            3,500Communication
                equipment
            
            
            1,353
            
            
            1,353Office
                equipment
            
            
            258,523
            
            
            6,023Furniture
                and fixtures
            
            
            10,212
            
            
            10,212Computer
                equipment
            
            
            137,436
            
            
            96,653Computer
                software
            
            
            232,389
            
            
            198,438Leasehold
                improvements
            
            
            10,699
            
            
            10,699654,112
            
            
            326,878Less:
                Accumulated depreciation and amortization
            
            
            (94,753
            )
            
            (68,759
            )Property
                and equipment - net
            
            $
            559,359
            
            $
            258,119





-14-
 **Table
            of Contents**




Depreciation
      and amortization expense for the three months ended September 30, 2006 was
      $25,994 and for year ended June 30, 2006 was $68,759.





**NOTE
      6 - LONG TERM DEBT**





To
      complete the Airgroup acquisition and ensure adequate financial flexibility,
      the
      Company secured a $10,000,000 revolving credit facility (the "Facility") in
      January 2006. The
      Facility is collateralized by our accounts receivable and other assets of the
      Company and its subsidiary. Advances under the Facility are available to fund
      future acquisitions, capital expenditures or for other corporate purposes.
      Borrowings under the facility bear interest, at the Company’s option, at prime
      minus 1.00% or LIBOR plus 1.55% and can be adjusted up or down during the term
      of the Facility based on the Company’s performance relative to certain financial
      covenants. The facility provides for advances of up to 75% of the Company’s
      eligible accounts receivable.





As
      of
      September 30, 2006, the Company had no amounts outstanding under the Facility
      and had eligible accounts receivable sufficient to support approximately $3.7
      million in borrowings. The terms of the Facility are subject to certain
      financial and operational covenants which may limit the amount otherwise
      available under the Facility. The first covenant limits funded debt to a
      multiple of 3.00 times the Company’s consolidated EBITDA measured on a rolling
      four quarter basis (or a multiple of 3.25 at a reduced advance rate of 70.0%).
      The second financial covenant requires the Company to maintain a basic fixed
      charge coverage ratio of at least 1.1 to 1.0. The third financial covenant
      is a
      minimum profitability standard that requires the Company not to incur a net
      loss
      before taxes, amortization of acquired intangibles and extraordinary items
      in
      any two consecutive quarterly accounting periods.




Under
      the
      terms of the Facility, the Company is permitted to make additional acquisitions
      without the lender's consent only if certain conditions are satisfied. The
      conditions imposed by the Facility include the following: (i) the absence of
      an
      event of default under the Facility, (ii) the company to be acquired must be
      in
      the transportation and logistics industry, (iii) the purchase price to be paid
      must be consistent with the Company’s historical business and acquisition model,
      (iv) after giving effect for the funding of the acquisition, the Company must
      have undrawn availability of at least $2.0 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 our
      strategic objectives. At September 30, 2006, the Company was in compliance
      with
      all of its covenants.





As
      of
      September 30, **** 2006,
      the
      Company had no advances under the Facility but has $1,367,838 in outstanding
      checks which has not yet been presented to the bank for payment. The outstanding
      checks have been reclassed from our cash accounts, as they will be advanced
      from, or against, our Facility when presented for payment to the bank. This
      amount, in addition to a $500,000
      payable to the former shareholders of Airgroup, totals
      long term debt of $1,867,838 .





At September
      30, **** 2006,
      based on available collateral and $205,000 in outstanding letter of credit
      commitments, there was $3,705,276 available for borrowing under the
      Facility.





**NOTE
      7 - PROVISION FOR INCOME TAXES**





Deferred
      income taxes are reported using the liability method. Deferred tax assets are
      recognized for deductible temporary differences and deferred tax liabilities
      are
      recognized for taxable temporary differences. Temporary differences are the
      differences between the reported amounts of assets and liabilities and their
      tax
      bases. Deferred tax assets are reduced by a valuation allowance when, in
      the  -15-
 **Table
            of Contents**


opinion
      of management, it is more likely than not that some portion or all of the
      deferred tax assets will not be realized. Deferred tax assets and liabilities
      are adjusted for the effects of changes in tax laws and rates on the date of
      enactment.





The
      Company accumulated a net federal operating loss carryforward of $342,272 from
      inception though its transition into the logistics business in January of 2006
      which expires in 2025. Utilization of the net operating loss and tax credit
      carryforwards is subject to significant limitations imposed by the change in
      control under I.R.C. 382, limiting its annual utilization to the value of the
      Company at the date of change in control times the federal discount rate. A
      significant portion of the NOL may expire before it can be utilized. The
      Company is maintaining a valuation allowance of approximately $116,000 to
      off-set the deferred tax asset associated with these net operating losses until
      when, in the opinion of management, utilization is reasonably
      assured.





For
      thee
      months ended September 30, 2006, the Company recognized net
      income tax expense of $1,808 consisting of $53,814 in income tax expense offset
      by the amortization of the deferred tax liability, $52,006, associated with
      the
      acquisition of Airgroup, in accordance with FASB 109.





The
      Company consolidated effective tax rate during the three month period ended
      September 30, 2006 was 34.0%. No tax benefit was recorded in September 30,
      2005
      due to the ongoing losses as discussed above.





**NOTE
      8 - 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, 2006, none of the shares were issued or
      outstanding (unaudited).





**Common
      Stock**





In
      September 2006, the Company issued 250,000 shares of our common stock, at $1.01
      per share, in exchange for $252,500, in value, of domestic and international
      freight training materials for the development of its employees and exclusive
      agent offices.





**NOTE
      9 - SHARE BASED COMPENSATION**





The
      Company issued its first employee options in October of 2005 and adopted the
      fair value recognition provisions of SFAF123R concurrent with this initial
      grant.




During
      the quarter ended September 30, 2006 the Company issued employees options to
      purchase 100,000 shares of common stock at $0.74 per share in August 2006 and
      45,000 shares of common stock at $1.01 per share in September 2006. The options
      vest 20% a year over a five year term.




Share
      based compensation costs recognized during the three months ended September
      30,
      2006, includes compensation cost for all share-based payments granted to date,
      based on the grant-date fair value estimated in accordance with the provisions
      of SFAS 123R. No options have been exercised as of September 30,
      2006.





For
      the
      quarter ended September 30, 2006, the weighted average fair value of employee
      options granted in August 2006 was $.60 and $.81 in September 2006. The fair
      value of options granted were estimated on the date of grant using the
      Black-Scholes option pricing model, with the following assumptions for each
      issuance of options:





August
            
            September2006
            
            2006Dividend
                yield
            
            
            None
            
            
            NoneVolatility
            
            
            112.7
            %
            
            110.0
            %Risk
                free interest rate
            
            
            3.73
            %
            
            3.73
            %Expected
                lives
            
            
            5.0
                years
            
            
            5.0
                years


-16-
 **Table
          of Contents**


In
      accordance with SFAS123R, the Company is required to estimate the number of
      awards that are ultimately expected to vest. Due to the lack of historical
      information, the Company has not reduced its share based compensation costs
      for
      any estimated forfeitures. Estimated forfeitures will be reassessed in
      subsequent periods and may change based on new facts and
      circumstances.





For
      the
      three months ended September 30, 2006, the Company recognized stock option
      compensation costs of $44,992, in accordance with SFAS 123R.




The
      following table summarizes activity under the plan for the three months ended
      September 30, 2006.




Number
                of
              shares
            
            Weighted
                Average
              exercise
                price
              pershare
            
            Weighted
                average
              remaining
              contractuallife
            
            Aggregate
              intrinsic
              valueOutstanding
                at June 30, 2006
            
            
            2,425,000
            
            $
            0.593
            
            
            9.38
                years
            
            $
            1,109,250Options
                granted
            
            
            145,000
            
            
            0.824
            
            
            —
            
            
            —Options
                exercised
            
            
            —
            
            
            —
            
            
            —
            
            
            —Options
                forfeited
            
            
            —
            
            
            —
            
            
            —
            
            
            —Options
                expired
            
            
            —
            
            
            —
            
            
            —
            
            
            —Outstanding
                at September 30, 2006
            
            
            2,570,000
            
            $
            0.606
            
            
            9.17
                years
            
            $
            1,039,250Exercisable
                at September 30, 2006
            
            
            —
            
            $
            —
            
            
            —
            
            
            —


**NOTE
      10 - RECENT ACCOUNTING PRONOUNCEMENTS**





In
      September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS
      158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement
      Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R).” This
      Statement improves financial reporting by requiring an employer to recognize
      the
      over funded or under funded status of a defined benefit postretirement plan
      (other than a multiemployer plan) as an asset or liability in its statement
      of
      financial position and to recognize changes in that funded status in the year
      in
      which the changes occur through comprehensive income of a business entity or
      changes in unrestricted net assets of a not-for-profit organization. This
      Statement also improves financial reporting by requiring an employer to measure
      the funded status of a plan as of the date of its year-end statement of
      financial position, with limited exceptions. The
      Company does not expect the adoption of SFAS 158 to have any impact on its
      financial position, results of operations or cash flows.





In September
      2006, the Financial Accounting Standards Board ("FASB") issued SFAS No. 157
      “Fair Value Measurements” which relate to the definition of fair value, the
      methods used to estimate fair value, and the requirement of expanded disclosures
      about estimates of fair value. SFAS No. 157 is effective for financial
      statements issued for fiscal years beginning after November 15, 2007, and
      interim periods within those fiscal years. We are currently evaluating the
      impact this interpretation will have on our consolidated financial
      statements.





In July
      2006, the Financial Accounting Standards Board ("FASB") issued FASB
      Interpretation ("FIN") No. 48, “ Accounting
      for Uncertainty in Income Taxes ,”
with
      respect to FASB Statement No. 109, “ Accounting
      for Income Taxes ,”
      regarding accounting for and disclosure of uncertain tax positions. FIN No.
      48 is intended to reduce the diversity in practice associated with the
      recognition and measurement related to accounting for uncertainty in income
      taxes. This interpretation is effective for fiscal years beginning
      after  -17-
 **Table
            of Contents**


December
      15, 2006. The
      Company does not expect the adoption of FIN 48 to have any impact on its
      financial position, results of operations or cash flows.





In
      February 2006, the FASB has issued FASB Statement No. 155, “Accounting for
      Certain Hybrid Instruments.” This standard amends the guidance in FASB
      Statements No. 133, “Accounting for Derivative Instruments and Hedging
      Activities,” and No. 140, Accounting for “Transfers and Servicing of Financial
      Assets and Extinguishments of Liabilities.” Statement 155 allows financial
      instruments that have embedded derivatives to be accounted for as a whole
      (eliminating the need to bifurcate the derivative from its host) if the holder
      elects to account for the whole instrument on a fair value basis. Statement
      155
      is effective for all financial instruments acquired or issued after the
      beginning of an entity’s first fiscal year that begins after September 15, 2006. The
      Company does not expect the adoption of SFAS 155 to have any impact on its
      financial position, results of operations or cash flows.





**NOTE
      11 - SUBSEQUENT EVENTS**





In
      October 2006, the Company issued of 100,000 shares of common stock, at a fair
      value of $1.01 a share, as bonus compensation to its senior managers.





In
      October 2006, Radiant Logistics Partners, LLC was certified by the Northwest
      Minority Business Council as a minority owned business enterprise meeting the
      criteria of the National Minority Supplier Development Council. On June 28,
      2006, the Company joined Radiant Capital, an affiliate of Bohn H. Crain (and
      an
      entity qualified as a minority business enterprise by the Northwest Minority
      Business Council) to form Radiant Logistics Partners LLC (“Logistics Partners”).
      Radiant Capital and the Company contributed $12,000 and $8,000, for their
      respective 60% and 40% interests in Logistics Partners. The Company intends
      to
      work through Logistics Partners as one element of its planned national accounts
      sales strategy to pursue corporate and government accounts with diversity
      initiatives.





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





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





**CAUTIONARY
      STATEMENT REGARDING FORWARD-LOOKING STATEMENTS**





This
      report includes forward-looking statements within the meaning of Section 27A
      of
      the Securities Act of 1933, as amended, and Section 21E of the Securities
      Exchange Act of 1934, as amended, regarding future operating performance,
      events, trends and plans. All statements other than statements of historical
      facts included or incorporated by reference in this report, including, without
      limitation, statements regarding our future financial position, business
      strategy, budgets, projected revenues, projected costs and plans and objective
      of management for future operations, are forward-looking statements. In
      addition, 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, projections
      and assumptions about future events. These forward-looking statements are not
      guarantees and are subject to known and unknown risks, uncertainties and
      assumptions about us that, if not realized, 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: (i) our ability to use Airgroup as a “platform” upon which we can build a
      profitable global transportation and supply chain management company, which
      itself relies upon securing significant additional funding, as to which we
      have
      no present assurances; (ii) our dependence upon our network of exclusive agents;
      (iii) our ability to at least maintain historical levels of transportation
      revenue, net  -18-
 **Table
            of Contents**


transportation
      revenue (gross profit margins) and related operating expenses at Airgroup;
      (iv)
      competitive practices in the industries in which we compete, (v) our dependence
      on current management; (vi) the impact of current and future laws and
      governmental regulations affecting the transportation industry in general and
      our operations in particular; and (vii) other factors which may be identified
      from time to time in our Securities and Exchange Commission (SEC) filings and
      other public announcements. Furthermore, the general business assumptions used
      for purposes of the forward-looking statements included within this report
      represent estimates of future events and are subject to uncertainty as to
      possible changes in economic, legislative, industry, and other circumstances.
      As
      a result, the identification and interpretation of data and other information
      and their use in developing and selecting assumptions from and among reasonable
      alternatives require the exercise of judgment. To the extent that the assumed
      events do not occur, the outcome may vary substantially from anticipated or
      projected results, and, accordingly, no opinion is expressed on the
      achievability of those forward-looking statements. We undertake no obligation
      to
      publicly release the result of any revision of these forward-looking statements
      to reflect events or circumstances after the date they are made or to reflect
      the occurrence of unanticipated events.





**Overview**





In
      conjunction with a change of control transaction completed during October 2005,
      we have recently: (i) discontinued our former business model; (ii) adopted
      a new
      business strategy focused on building a global transportation and supply chain
      management company; (iii) changed our name to
      “Radiant Logistics, Inc.” to, among other things, better align our name with our
      new business focus; and (iv) completed our first acquisition within the
      logistics industry.




We
      accomplished the first step in our new business strategy by completing the
      acquisition of Airgroup effective as of January 1, 2006. Airgroup is a non-asset
      based logistics company providing domestic and international freight forwarding
      services through a network of 34 exclusive agent offices across North America.
      Airgroup, a Seattle-Washington based company, services a diversified account
      base including manufacturers, distributors and retailers using a network of
      independent carriers and over 100 international agents positioned strategically
      around the world.





By
      implementing a growth strategy, we intend to build a leading global
      transportation and supply-chain management company offering a full range of
      domestic and international freight forwarding and other value added supply
      chain
      management services, including order fulfillment, inventory management and
      warehousing.





As
      a
      non-asset based provider of third-party logistics services, we seek to limit
      our
      investment in equipment, facilities and working capital through contracts and
      preferred provider arrangements with various transportation providers who
      generally provide us with favorable rates, minimum service levels, capacity
      assurances and priority handling status. Our non-asset based approach allows
      us
      to maintain a high level of operating flexibility and leverage a cost structure
      that is highly variable in nature while the volume of our flow of freight
      enables us to negotiate attractive pricing with our transportation
      providers.





Our
      principal source of income is derived from freight forwarding services. As
      a
      freight forwarder, we arrange for the shipment of our customers' freight from
      point of origin to point of destination. Generally, we quote our customers
      a
      turn key cost for the movement of their freight. Our price quote will often
      depend upon the customer's time-definite needs (first day through fifth day
      delivery), special handling needs (heavy equipment, delicate items,
      environmentally sensitive goods, electronic components, etc.) and the means
      of
      transport (truck, air, ocean or rail). In turn, we assume the responsibility
      for
      arranging and paying for the underlying means of transportation.




Our
      transportation revenue represents the total dollar value of services we sell
      to
      our customers. Our cost of transportation includes direct costs of
      transportation, including motor carrier, air, ocean and rail services. We act
      principally as the service provider to add value in the execution and
      procurement of these services to our customers. Our net transportation revenue
      (gross transportation revenue less the direct cost of transportation) is the
      primary indicator of our ability to source, add value and resell services
      provided by third parties, and is considered by management to be a key
      performance measure. In addition, management  -19-
 **Table
            of Contents**


believes
      measuring its operating costs as a function of net transportation revenue
      provides a useful metric, as our ability to control costs as a function of
      net
      transportation revenue directly impacts operating earnings.




Our
      operating results will be affected as acquisitions occur. Since all acquisitions
      are made using the purchase method of accounting for business combinations,
      our
      financial statements will only include the results of operations and cash flows
      of acquired companies for periods subsequent to the date of
      acquisition.




Our
      GAAP
      based net income will be affected by non-cash charges relating to the
      amortization of customer related intangible assets and other intangible assets
      arising from completed acquisitions. Under applicable accounting standards,
      purchasers are required to allocate the total consideration in a business
      combination to the identified assets acquired and liabilities assumed based
      on
      their fair values at the time of acquisition. The excess of the consideration
      paid over the fair value of the identifiable net assets acquired is to be
      allocated to goodwill, which is tested at least annually for impairment.
      Applicable accounting standards require that we separately account for and
      value
      certain identifiable intangible assets based on the unique facts and
      circumstances of each acquisition. As a result of our acquisition strategy,
      our
      net income will include material non-cash charges relating to the amortization
      of customer related intangible assets and other intangible assets acquired
      in
      our acquisitions. Although these charges may increase as we complete more
      acquisitions, we believe we will be actually 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 and other non-cash charges. Accordingly, we intend to employ
      EBITDA and adjusted EBITDA as a management tools to measure our historical
      financial performance and as a benchmark for future financial
      flexibility.





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




**Results
      of Operations**





*Basis
      of Presentation*





The
      results of operations discussion that appears below has been presented utilizing
      a combination of historical and, where relevant, pro forma information to
      include the effects on our consolidated financial statements of our recently
      completed: (i) equity offerings; and (ii) acquisition of Airgroup Corporation.
      Historical financial data has been supplemented, where appropriate, with pro
      forma financial data since historical data which merely reflects the prior
      period results of the Company on a stand-alone basis, would provide no
      meaningful data with respect to our ongoing operations since we were in the
      development stage prior to our acquisition of Airgroup. The pro forma
      information has been presented for three months ended September 30, 2006 and
      2005 as if we had completed our equity offerings and acquired Airgroup as of
      July 1, 2005. The pro forma results are also adjusted to reflect a consolidation
      of the historical results of operations of Airgroup and the Company as adjusted
      to reflect the amortization of acquired intangibles and are also provided in
      the
      condensed consolidated financial statements included within this
      report.  -20-
 **Table
            of Contents**


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





***For
      the three months ended September 30, 2006 (actual and unaudited) and September
      30, 2005 (actual and unaudited)***




We
      generated transportation revenue of $14.4 million and net transportation revenue
      of $5.0 million for the three months ended September 30, 2006. This reflects
      the
      revenues derived from the operation of Airgroup, as of January 1, 2006. We
      had
      no revenues for the comparative prior year period as we remained in the
      developmental stage prior to the acquisition of Airgroup. Net income was
      $160,000 for the three months ended September 30, 2006 compared to a net loss
      of
      $15,000 for the three months ended September 30, 2005.





We
      had
      adjusted earnings (loss) before interest, taxes, depreciation and amortization
      (EBITDA) of $398,000 and ($14,000) for three months ended September 30, 2006
      and
      2005, 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 goodwill,
      leasehold improvements and other intangible assets. We then further adjust
      EBITDA to exclude costs related to share based compensation expense and other
      non-cash charges consistent with the financial covenants of our credit facility.
      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.


Three
                months ended
              September
                30,
            
            Change2006
            
            2005
            
            Amount
            
            PercentNet
                income(loss)
            
            $
            160
            
            $
            (15
            )
            $
            175
            
            
            NMIncome
                tax expense (benefit)
            
            
            2
            
            
            —
            
            
            2
            
            
            NMInterest
                expense - net
            
            
            5
            
            
            1
            
            
            4
            
            
            NMDepreciation
                and amortization
            
            
            186
            
            
            —
            
            
            (14
            )
            
            NMEBITDA
                (Earnings before interest, taxes, depreciation and
                amortization)
            
            $
            353
            
            $
            (14
            )
            $
            367
            
            
            NMShare
                based compensation and other non-cash costs
            
            
            45
            
            
            —
            
            
            45
            
            
            NMAdjusted
                EBITDA
            
            $
            398
            
            $
            (14
            )
            $
            412
            
            
            NM





*The
      following table summarizes September 30, 2006 (actual and unaudited) and
      September 30, 2005 (actual and unaudited) transportation revenue, cost of
      transportation and net transportation revenue (in thousands):*


Three
                months ended
              September
                30,
            
            Change2006
            
            2005
            
            Amount
            
            PercentTransportation
                revenue
            
            $
            14,417
            
            $
            —
            
            $
            14,417
            
            
            NMCost
                of transportation
            
            
            9,423
            
            
            —
            
            
            9,423
            
            
            NMNet
                transportation revenue
            
            $
            4,994
            
            $
            —
            
            $
            4,994
            
            
            NM*Net
                transportation margins*
            
            
            34.6
            %
            
            —





-21-
 **Table
            of Contents**




Transportation
      revenue was $14.4 million for three months ended September 30, 2006. Domestic
      and International transportation revenue was $8.5 million and $5.9 million,
      respectively. There were no revenues for the comparable prior year
      period.




Cost
      of
      transportation was 65.4% of transportation revenue for three months ended
      September 30, 2006 with no comparable data for the prior year
      period.




Net
      transportation margins were 34.6% of transportation revenue for three months
      ended September 30, 2006 with no comparable data for the prior year
      period.





*The
      following table compares certain September 30, 2006 (actual and unaudited)
      and
      September 30, 2005 (actual and unaudited) condensed consolidated statement
      of
      income data as a percentage of our net transportation revenue (in
      thousands):*


Three
                months ended
              September
                30,2006
            
            2005
            
            ChangeAmount
            
            Percent
            
            Amount
            
            Percent
            
            Amount
            
            PercentNet
                transportation revenue
            
            $
            4,994
            
            
            100.0
            %
            $
            —
            
            
            —
            
            $
            4,994
            
            
            NMAgent
                commissions
            
            
            3,727
            
            
            74.6
            %
            
            
            
            
            —
            
            
            3,727
            
            
            NMPersonnel
                costs
            
            
            507
            
            
            10.1
            %
            
            
            
            
            —
            
            
            507
            
            
            NMOther
                selling, general and administrative
            
            
            406
            
            
            8.1
            %
            
            14
            
            
            —
            
            
            392
            
            
            NMDepreciation
                and amortization
            
            
            186
            
            
            3.8
            %
            
            
            
            
            —
            
            
            186
            
            
            NMTotal
                operating costs
            
            
            4,826
            
            
            96.6
            %
            
            14
            
            
            —
            
            
            4,812
            
            
            NMIncome
                from operations
            
            
            168
            
            
            3.4
            %
            
            (14
            )
            
            —
            
            
            182
            
            
            NMOther
                expense - net
            
            
            (6
            )
            
            -0.2
            %
            
            (1
            )
            
            —
            
            
            (5
            )
            
            NMIncome
                before income taxes
            
            
            162
            
            
            .3.2
            %
            
            (15
            )
            
            —
            
            
            (177
            )
            
            NMIncome
                tax expense
            
            
            2
            
            
            0.0
            %
            
            —
            
            
            —
            
            
            2
            
            
            NMNet
                income
            
            $
            160
            
            
            3.2
            %
            $
            (15
            )
            
            —
            
            $
            175
            
            
            NM




Agent
      commissions were $3.7 million for the three months ended September 30, 2006,
      or
      74.6% of net transportation revenue. There were no similar comparable costs
      for
      the comparable prior year period.





Personnel
      costs were $507,000 for the three months ended September 30, 2006, or 10.1%
      of
      net transportation revenue. There were no similar comparable costs for the
      comparable prior year period.





Other
      selling, general and administrative costs were $406,000 and 8.1% of net
      transportation revenues for the three months ended September 30, 2006 compared
      to $14,000 for the three months ended September 30, 2005.  -22-
 **Table
            of Contents**


Depreciation
      and amortization costs were approximately $186,000 for the three months ended
      September 30, 2006. There were no similar comparable costs for the comparable
      prior year period.





Income
      from operations was $168,000 for the three months ended September 30, 2006
      compared to a loss from operations of $14,000 for the three months ended
      September 30, 2005.





Net
      income was $160,000 for three months ended September 30, 2006, compared to
      a net
      loss of $15,000 for the three months ended September 30, 2005.





***Supplemental
      pro forma information for the three months ended September 30, 2006 (actual
      and
      unaudited) compared to three months ended September 30, 2005 (pro forma and
      unaudited)***





We
      generated transportation revenue of $14.4 million and $13.4 million and net
      transportation revenue of $5.0 million and $4.8 million for the three months
      ended September 30, 2006 and 2005 respectively. Net income was $160,000 for
      the
      three months ended September 30, 2006 compared to a net income of $204,000
      for
      the three months ended September 30, 2005.





We
      had
      adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)
      of $398,000 and $517,000 for three months ended September 30, 2006 and 2005,
      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 goodwill,
      leasehold improvements and other intangible assets. We then further adjust
      EBITDA to exclude costs related to share based compensation expense and other
      non-cash charges consistent with the financial covenants of our credit facility.
      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.





*The
      following table provides a reconciliation of September 30, 2006 (actual and
      unaudited) and September 30, 2005 (pro forma and unaudited) adjusted EBITDA
      to
      net income, the most directly comparable GAAP measure in accordance with SEC
      Regulation G (in thousands):*


Three
                months ended
              September
                30,
            
            Change2006
            
            2005
            
            Amount
            
            PercentNet
                income
            
            $
            160
            
            $
            204
            
            $
            (44
            )
            
            -21.6
            %Income
                tax expense (benefit)
            
            
            2
            
            
            113
            
            
            (111
            )
            
            -98.2
            %Interest
                expense - net
            
            
            5
            
            
            —
            
            
            5
            
            
            nmDepreciation
                and amortization
            
            
            186
            
            
            200
            
            
            (14
            )
            
            -7.0
            %EBITDA
                (Earnings before interest, taxes, depreciation and
                amortization)
            
            $
            353
            
            $
            517
            
            $
            (164
            )
            
            -31.7
            %Share
                based compensation and other non-cash costs
            
            
            45
            
            
            —
            
            
            45
            
            
            100.0
            %Adjusted
                EBITDA
            
            $
            398
            
            $
            517
            
            $
            (119
            )
            
            -23.0
            %




-23-
 **Table
          of Contents**


*The
      following table summarizes September 30, 2006 (actual and unaudited) and
      September 30, 2005 (pro forma and unaudited) transportation revenue, cost of
      transportation and net transportation revenue (in thousands):*




Three
                months ended
              September
                30,
            
            Change2006
            
            2005
            
            Amount
            
            PercentTransportation
                revenue
            
            $
            14,417
            
            $
            13,433
            
            $
            984
            
            
            7.3
            %Cost
                of transportation
            
            
            9,423
            
            
            8,664
            
            
            759
            
            
            8.8
            %Net
                transportation revenue
            
            $
            4,994
            
            $
            4,769
            
            $
            225
            
            
            4.7
            %*Net
                transportation margins*
            
            
            34.6
            %
            
            35.5
            %





Transportation
      revenue was $14.4 million for the three months ended September 30, 2006, an
      increase of 7.3% over total transportation revenue of $13.4 million for the
      three months ended September 30, 2005. Domestic transportation revenue increased
      by 7.9% to $8.5 million for the three months ended September 30, 2006 from
      $7.8
      million for the three months ended September 30, 2005. The increase was
      primarily due to increased volume handled by the Company over 2005.
      International transportation revenue increased by 5.4% to $5.9 million for
      the
      three months ended September 30, 2006 from $5.6 million for the comparable
      prior
      year period, mainly attributed to increased air and ocean import freight
      volume.





Cost
      of
      transportation increased to 65.4% of transportation revenue for the three months
      ended September 30, 2006 from 64.5% of transportation revenue for the three
      months ended September 30, 2005. This reflects increased international ocean
      import freight volume which historically has a higher transportation cost as
      a
      percentage of sales.





Net
      transportation margins decreased to 34.6% of transportation revenue for the
      three months ended September 30, 2006 from 35.5% of transportation revenue
      for
      the three months ended September 30, 2005 as a result of factors described
      above.





*The
      following table compares certain September 30, 2006 (actual and unaudited)
      and
      September 30, 2005 (pro forma and unaudited) condensed consolidated statement
      of
      income data as a percentage of our net transportation revenue (in
      thousands):*


Three
                months ended
              September
                30,2006
            
            2005
            
            ChangeAmount
            
            Percent
            
            Amount
            
            Percent
            
            Amount
            
            PercentNet
                transportation revenue
            
            $
            4,994
            
            
            100.0
            %
            $
            4,769
            
            
            100.0
            %
            $
            225
            
            
            4.7
            %Agent
                commissions
            
            
            3,727
            
            
            74.6
            %
            
            3,466
            
            
            72.7
            %
            
            261
            
            
            7.5
            %Personnel
                costs
            
            
            507
            
            
            10.1
            %
            
            506
            
            
            10.6
            %
            
            1
            
            
            0.2
            %Other
                selling, general and administrative
            
            
            406
            
            
            8.1
            %
            
            280
            
            
            5.9
            %
            
            126
            
            
            45.0
            %Depreciation
                and amortization
            
            
            186
            
            
            3.8
            %
            
            200
            
            
            4.2
            %
            
            (14
            )
            
            -7.0
            %Total
                operating costs
            
            
            4,826
            
            
            96.6
            %
            
            4,452
            
            
            93.4
            %
            
            374
            
            
            8.4
            %Income
                from operations
            
            
            168
            
            
            3.4
            %
            
            317
            
            
            6.6
            %
            
            (149
            )
            
            -47.0
            %Other
                expense - net
            
            
            (6
            )
            
            -0.2
            %
            
            0
            
            
            0.0
            %
            
            (6
            )
            
            NMIncome
                before income taxes
            
            
            162
            
            
            .3.2
            %
            
            317
            
            
            6.6
            %
            
            (155
            )
            
            48.9
            %Income
                tax expense
            
            
            2
            
            
            0.0
            %
            
            113
            
            
            2.3
            %
            
            (111
            )
            
            -98.2
            %


Net
                income
            
            $
            160
            
            
            3.2
            %
            $
            204
            
            
            4.3
            %
            $
            (44
            )
            
            -21.6
            %




-24-
 **Table
          of Contents**




Agent
      commissions were $3.7 million for the three months ended September 30, 2006,
      an
      increase of 7.5% from $3.4 million for the three months ended September 30,
      2005. Agent commissions as a percentage of net transportation revenue increased
      to 74.6% for three months ended September 30, 2006 from 72.7% for the comparable
      prior year period as a result of increased domestic revenue and lower margins
      on
      international transportation revenue.





Personnel
      costs were $507,000 for the three months ended September 30, 2006, an increase
      of .2% from $506,000 for the three months ended September 30, 2005. Personnel
      costs as a percentage of net transportation revenue decreased to 10.2% for
      three
      months ended September 30, 2006 from 10.6% for the comparable prior year period
      as a result of lower headcount which is offset by stock option compensation
      expense.





Other
      selling, general and administrative costs were $406,000 for the three months
      ended September 30, 2006, an increase of 45.0% from $280,000 for the three
      months ended September 30, 2005. As a percentage of net transportation revenue,
      other selling, general and administrative costs increased to 8.1% for three
      months ended September 30, 2006 from 5.9% for the comparable prior year period
      as a result of professional fees incurred by the Company associated with
      operating as a public company.





Depreciation
      and amortization costs were approximately $186,000 and $200,000 for the three
      months ended September 30, 2006 and 2005 respectively. Depreciation and
      amortization as a percentage of net transportation revenue decreased for three
      months ended September 30, 2006 to 3.8% from 4.2% for the same period last
      year
      due to lower amortization of intangibles.





Income
      from operations was $168,000 for the three months ended September 30, 2006
      compared to income from operations of $317,000 for the three months ended
      September 30, 2005.





Net
      income was $160,000 for the three months ended September 30, 2006, compared
      to
      net income of $204,000 for the three months ended September 30,
      2005.




**Liquidity
      and Capital Resources**




Effective
      On January 1, 2006, we acquired 100 percent of the outstanding stock of
      Airgroup. The transaction was valued at up to $14.0
      million. This consists of: (i) $9.5 million payable in cash at closing; (ii)
      an
      additional base payment of $0.6 million payable in cash on the one-year
      anniversary of the closing, provided at least 90% of Airgroup’s locations remain
      operational through the first anniversary of the closing (the “Additional Base
      Payment”); (iii) a subsequent cash payment of $0.5 million in cash on the
      two-year anniversary of the closing; (iv) a base earn-out payment of $1.9
      million payable in Company common stock over a three-year earn-out period based
      upon Airgroup achieving income from continuing operations of not less than
      $2.5
      million per year; and (v) as additional incentive to achieve future earnings
      growth, an opportunity to earn up to an additional $1.5 million payable in
      Company common stock at the end of a five-year earn-out period (the “Tier-2
      Earn-Out”). Under Airgroup’s Tier-2 Earn-Out, the former shareholders of
      Airgroup are entitled to receive 50% of the cumulative income from continuing
      operations in excess of $15,000,000 generated during the five-year earn-out
      period up to a maximum of $1,500,000. With respect to the base earn-out payment
      of $1.9 million, i n
      the
      event there is a shortfall in income from continuing operations, the earn-out
      payment will be reduced on a dollar-for-dollar basis to the extent of the
      shortfall. Shortfalls may be carried over or carried back to the extent that income
      from continuing operations in
      any
      other payout year exceeds the $2.5 million level.




In
      preparation for, and in conjunction with, the Airgroup transaction, we secured
      financing proceeds through several private placements to a limited number of
      accredited investors as follows:  -25-
 **Table
            of Contents**


**Date**
            
            **Shares
                Sold**
            
            **Gross
                Proceeds**
            
            **Price
                Per Share**●
                October 2005
            
            2,272,728
            
            $1.0
                million
            
            $0.44●
                December 2005
            
            10,098,934
            
            $4.4
                million
            
            $0.44●
                January 2006
            
            1,009,093
            
            $444,000
            
            $0.44●
                February 2006
            
            1,446,697
            
            $645,000
            
            $0.44





In
      January 2006, we entered into a $10.0 million secured credit facility with
      Bank
      of America, N.A with a term of two years (the “Facility”). The Facility is
      collateralized by our accounts receivable and other assets of the Company and
      our subsidiaries. Advances under the Facility are available to fund future
      acquisitions, capital expenditures or for other corporate purposes. Borrowings
      under the facility bear interest, at our option, at prime minus 1.00% or LIBOR
      plus 1.55% and can be adjusted up or down during the term of the Facility based
      on our performance relative to certain financial covenants. The facility
      provides for advances of up to 75% of our eligible accounts
      receivable.





As
      of
      October 31, 2006, we had no amounts outstanding under the Facility and we had
      eligible accounts receivable sufficient to support approximately $3.7 million
      in
      borrowings. The terms of our Facility are subject to certain financial and
      operational covenants which may limit the amount otherwise available under
      the
      Facility. The first covenant limits our funded debt to a multiple of 3.00 times
      our consolidated EBITDA measured on a rolling four quarter basis (or a multiple
      of 3.25 at a reduced advance rate of 70.0%). The second financial covenant
      requires that we maintain a basic fixed charge coverage ratio of at least 1.1
      to
      1.0. The third financial covenant is a minimum profitability standard that
      requires us 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 $2.0 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 would either forego the acquisition, obtain the
      lender's consent or retire the Facility. This may limit or slow our ability
      to
      achieve the critical mass we may need to achieve our strategic
      objectives.


-26-
 **Table
          of Contents**





The
      following table summarizes our contingent base earn-out payments for the fiscal
      years indicated based on results of the prior year (in thousands) (1) :




Fiscal
                  Year Ended
                June
                  30,2007
              
              2008
              
              2009
              
              2010
              
              2011
              
              TotalEarn-out
                payments:Cash
              
              $
              600
              (2)
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              600Equity
              
              
              
              
              
              633
              
              
              633
              
              
              634
              
              
              
              
              
              1,900Total
                  earn-outPayments
              
              $
              600
              
              $
              633
              
              $
              633
              
              $
              634
              
              $
              —
              
              $
              2,500
  Prior
                  year earnings targets (income from continuing operations)(3)Total
                  earnings targets
              
              $
              —
              
              $
              2,500
              
              $
              2,500
              
              $
              2,500
              
              $
              —
              
              $
              7,500Earn-outs
                as a percentage of prior year earnings targets:Total
              
              
              —
              
              
              25.3
              %
              
              25.3
              %
              
              25.3
              %
              
              —
              
              
              33.3
              %





(1)
            During
                the fiscal year 2007-2011 earn-out period, there is an additional
                contingent obligation related to tier-two earn-outs that could be
                as much
                as $1.5 million if Airgroup generates at least $18.0 million in income
                from continuing operations during the period.(2)
            Payable
                in cash on the one-year anniversary of the closing, so long as at
                least 31
                of Airgroup’s agent operations remain operational through the first
                anniversary of the closing.(3)
            Income
                from continuing operations as presented here identifies the uniquely
                defined earnings targets of Airgroup and should not be interpreted
                to be
                the consolidated income from continuing operations of the Company
                which
                would give effect for, among other things, amortization or impairment
                of
                intangible assets or various other expenses which may not be charged
                to
                Airgroup for purposes of calculating earn-outs. Net
      cash
      provided by operating activities for three months ended September 30, 2006
      was
      $1.0 million compared to net cash used by operating activities of $.02 million
      at September 30, 2005. The change was driven by improved profitability of the
      business and further enhanced by a greater reduction in accounts receivable
      and
      a greater increase in accounts payable.





Cash
      used
      for investing for three months ended September 30, 2006, see note 6, was $.07
      million for the purchase of equipment. There was no cash used or provided for
      during the same comparable time frame in 2005.





Net
      cash
      used by financing activity for three months ended September 30, 2006, was $.6
      million compared to no activity for the same period in 2005. Financing
      activities in 2006 consisted of the Company’s paying down the credit facility.





Non-cash
      financing activities for the three months ended September 30, 2006, consisted
      of
      the Company issuing 250,000 shares of our common stock, at $1.01 per share,
      in
      exchange for training materials - see Note 8.





We
      believe that our current working capital and anticipated cash flow from
      operations are adequate to fund existing operations. However, our ability to
      finance further acquisitions is limited by the availability of additional
      capital. We may, however, finance acquisitions using our common stock as all
      or
      some portion of the consideration. In the event that our common stock does
      not
      attain or maintain a sufficient market value or potential acquisition candidates
      are otherwise unwilling to accept our securities as part of the purchase price
      for the sale of their businesses, we may be required to utilize more of our
      cash
      resources, if available, in order to continue our acquisition program. If we
      do
      not have sufficient cash resources through either operations or from debt
      facilities, our growth could be limited unless we are able to obtain such
      additional capital. In this regard and in the course of executing our
      acquisition strategy, we expect to pursue an additional equity offering within
      the next twelve months.





We
      have
      used a significant amount of our available capital to finance the acquisition
      of
      Airgroup. We expect to structure acquisitions with certain amounts paid at
      closing, and the balance paid over a number of years in the form of earn-out
      installments which are payable based upon the future earnings of the acquired
      businesses payable in cash, stock or some combination thereof. As we 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  -27-
 **Table
            of Contents**


any
      cash-based the earn-out payments as they become due. This presents us with
      certain business risks relative to the availability of capacity under our
      Facility, the availability and pricing of future fund raising, as well as the
      potential dilution to our stockholders to the extent the earn-outs are satisfied
      directly, or indirectly, from the sale of equity.




The
      Company’s principal source of liquidity is cash generated from operating
      activities. The business is subject to seasonal fluctuations and the third
      quarter is typically slower than the remaining quarters. The cash flows reflect
      the first quarter of Airgroup operating as a wholly owned subsidiary of the
      Company.




**Critical
      Accounting Policies**





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





We
      follow
      the provisions of Statement of Financial Accounting Standards ("SFAS") No.
      142,
      Goodwill and Other Intangible Assets. SFAS No. 142 requires an annual impairment
      test for goodwill and intangible assets with indefinite lives. Under the
      provisions of SFAS No. 142, the first step of the impairment test requires
      that
      we determine the fair value of each reporting unit, and compare the fair value
      to the reporting unit's carrying amount. To the extent a reporting unit's
      carrying amount exceeds its fair value, an indication exists that the reporting
      unit's goodwill may be impaired and we must perform a second more detailed
      impairment assessment. The second impairment assessment involves allocating
      the
      reporting unit’s fair value to all of its recognized and unrecognized assets and
      liabilities in order to determine the implied fair value of the reporting unit’s
      goodwill as of the assessment date. The implied fair value of the reporting
      unit’s goodwill is then compared to the carrying amount of goodwill to quantify
      an impairment charge as of the assessment date. In the future, we will perform
      our annual impairment test during our fiscal fourth quarter 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 acquisitions. Customer related intangibles will be amortized
      using accelerated methods over approximately 5 years and non-compete agreements
      will be amortized using the straight line method over a 5 year
      period.





We
      follow
      the provisions of SFAS No. 144, Accounting for the Impairment or Disposal of
      Long-Lived Assets, which establishes accounting standards for the impairment
      of
      long-lived assets such as property, plant and equipment and intangible assets
      subject to amortization. We review long-lived assets to be held-and-used for
      impairment whenever events or changes in circumstances indicate that the
      carrying amount of the assets may not be recoverable. If the sum of the
      undiscounted expected future cash flows over the remaining useful life of a
      long-lived asset is less than its carrying amount, the asset is considered
      to be
      impaired. Impairment losses are measured as the amount by which the carrying
      amount of the asset exceeds the fair value of the asset. When fair values are
      not available, we 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.





As
      a
      non-asset based carrier, we do not own transportation assets. We generate the
      major portion of our air and ocean freight revenues by purchasing transportation
      services from direct (asset-based) carriers and reselling those services to
      our
      customers. In accordance with Emerging Issues Task Force ("EITF") 91-9 "Revenue
      and Expense Recognition for Freight Services in Process", revenue from freight
      forwarding and export services is recognized at the time the freight is tendered
      to the direct carrier at origin, and direct  -28-
 **Table
            of Contents**


expenses
      associated with the cost of transportation are accrued concurrently. These
      accrued purchased transportation costs are estimates based upon anticipated
      margins, contractual arrangements with direct carriers and other known factors.
      The estimates are routinely monitored and compared to actual invoiced costs.
      The
      estimates are adjusted as deemed necessary to reflect differences between the
      original accruals and actual costs of purchased transportation.





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




**Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk.**




The
      Company’s exposure to market risk for changes in interest rates relates
      primarily to the Company’s short-term cash investments and its line of credit.
      The Company is averse to principal loss and ensures the safety and preservation
      of its invested funds by limiting default risk, market risk and reinvestment
      risk. The Company invests its excess cash in institutional money market
      accounts. The Company does not use interest rate derivative instruments to
      manage its exposure to interest rate changes. If market interest rates were
      to
      change by 10% from the levels at September 30, 2006, the change in interest
      expense would have had an immaterial impact on the Company’s results of
      operations and cash flows.




**Item
      4.****Controls
      and Procedures.**




**Evaluation
      of disclosure controls and procedure**





Our
      Chief
      Executive Officer/Principal Financial Officer evaluated the effectiveness of
      the
      design and operation of the Company's disclosure controls and procedures as
      of
      September 30, 2006. Based on that evaluation, he concluded that, as of the
      end
      of the period covered by this quarterly report, the Company's disclosure
      controls and procedures are designed to and are effective to give reasonable
      assurance that the information the Company must disclose in reports filed with
      the Securities and Exchange Commission is properly recorded, processed,
      summarized, and reported as required.





**Changes
      in internal controls**





There
      were no changes in the Company’s internal control over financial reporting in
      connection with this evaluation that occurred during the fiscal quarter ended
      September 30, 2006 that have materially affected, or are reasonably likely
      to materially affect, our internal controls over financial reporting.


-29-
 **Table
            of Contents**




**PART
      II. OTHER INFORMATION**




**Item
      1. Legal Proceedings.**




From
      time
      to time, our operating subsidiary, Airgroup, is involved in legal matters or
      named as a defendant in legal actions arising in the normal course of
      operations. Management believes that these matters will not have a material
      adverse effect on our financial position or results.




**Item
      1A. Risk Factors**




**None**




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




In
      September 2006, we issued 250,000 shares of our common stock to an accredited
      investor valued at $1.01 per share in exchange for us to acquire $252,500,
      in
      value, of domestic and international freight training materials for the
      development of the Company’s employees and exclusive agent offices. The shares
      were issued in a transaction exempt from registration under the Securities
      Act
      of 1933, as amended (the “Securities Act”), in reliance on Section 4(2) of the
      Securities Act and the safe-harbor private offering exemption provided by Rule
      506 promulgated under the Securities Act, without the payment of underwriting
      discounts or commissions to any person.




**Item
      3. Defaults Upon Senior Securities.**




**None**




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




**None**




**Item
      5. Other Information.**




**None**




**Item
      6. Exhibits**




**Exhibit
                No.**
            
            **Exhibit**
            
            **Method
                of Filing**31.1
            
            Certification
                by Principal Executive Officer and Principal Financial Officer 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 14, 2006
            
            Filedherewith





-30-
 **Table
            of Contents**




**SIGNATURES**




In
      accordance with the requirements of the Securities Exchange Act of 1934, as
      amended, the registrant caused this report to be signed on its behalf by the
      undersigned, thereunto duly authorized.




RADIANT
                LOGISTICS, INC.Date:
                November 14, 2006
            
            /s/
                Bohn H. CrainBohn
              H. Crain
              Chief
                Executive OfficerDate:
                November 14, 2006
            
            /s/
                Rodney EatonRodney
              Eaton
              Vice
                President, Chief Accounting Officer and
                Controller





-31-
 **Table
            of Contents**




**EXHIBIT
      INDEX**




**Exhibit
                No.**
            
            **Exhibit**31.1
            
            Certification
                by Principal Executive Officer and Principal Financial Officer pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 200232.1
            
            Certification
                by Principal Executive Officer/Principal Financial Officer pursuant
                to
                Section 906 of the Sarbanes-Oxley Act of 200299.1
            
            Press
                Release dated November 14 , 2006


-32-