**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**




x
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
                1934




For
      the
      quarterly period ended: March 31, 2007




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




For
      the
      transition period from ___________ to  _____________




Commission
      File Number: 000-50283





**RADIANT
      LOGISTICS, INC.** ****


**(Exact
      Name of Registrant as Specified in Its Charter)**





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





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


(Address
      of Principal Executive Offices)


(425)
      943-4599 (Issuer’s
      Telephone Number, including Area Code)





N/A


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





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





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, 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 May 4, 2007.




1




**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 March 31, 2007 and June 30,
                2006
            
            
            3Condensed
                Consolidated Statements of Operations for the three and nine months
                ended
                March 31, 2007 and 2006
            
            
            4Condensed
                Consolidated Statement of Stockholders’ Equity for the nine months ended
                March 31, 2007
            
            
            5Condensed
                Consolidated Statements of Cash Flows for the nine months ended March
                31,
                2007 and 2006
            
            
            6-7Notes
                to Condensed Consolidated Financial Statements
            
            
            8Item
                2.
            
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            
            
            19Item
                3.
            
            Quantitative
                and Qualitative Disclosures about Market Risk
            
            
            33Item
                4.
            
            Controls
                and Procedures
            
            
            33PART
                II OTHER INFORMATIONItem
                1.
            
            Legal
                Proceedings
            
            
            34Item
                1A.
            
            Risk
                Factors
            
            
            34Item
                2.
            
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            
            34Item
                3.
            
            Defaults
                Upon Senior Securities
            
            
            34Item
                4.
            
            Submission
                of Matter to a Vote of Security Holders
            
            
            34Item
                5.
            
            Other
                Information
            
            
            34Item
                6.
            
            Exhibits
            
            
            34





2




**RADIANT
      LOGISTICS, INC.**


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


**Condensed
      Consolidated Balance Sheets**


March
                      31,
                    2007
                  
                  
                  June
                      30,
                    2006(unaudited)
                  
                  
                  (audited)ASSETSCurrent
                      assets -Cash
                      and cash equivalents
                  
                  $
                  321,216
                  
                  $
                  510,970Accounts
                      receivable, net of allowance for doubtfulaccounts
                      of $226,199 and $202,830 respectfully
                  
                  
                  11,647,432
                  
                  
                  8,487,899Other
                      receivables
                  
                  
                  41,600
                  
                  
                  40,329Prepaid
                      expenses and other current assets
                  
                  
                  74,019
                  
                  
                  93,087Deferred
                      tax asset
                  
                  
                  284,078
                  
                  
                  277,417Total
                      current assets
                  
                  
                  12,368,345
                  
                  
                  9,409,702Technology,
                      furniture and equipment, net (Note 7)
                  
                  
                  577,894
                  
                  
                  258,119Acquired
                      intangibles, net (Note 4)
                  
                  
                  1,942,729
                  
                  
                  2,401,600Goodwill
                  
                  
                  5,318,189
                  
                  
                  4,712,062Employee
                      loan receivable
                  
                  
                  80,000
                  
                  
                  120,000Investment
                      in real estate
                  
                  
                  40,000
                  
                  
                  40,000Deposits
                      and other assets
                  
                  
                  134,085
                  
                  
                  103,376Total
                      long term assets
                  
                  
                  7,515,003
                  
                  
                  7,377,038$
                  20,461,242
                  
                  $
                  17,044,859LIABILITIES
                      AND STOCKHOLDERS' EQUITYCurrent
                      liabilities -Notes
                      payable (Note 3)
                  
                  $
                  500,000
                  
                  $
                  -Accounts
                      payable
                  
                  
                  6,440,294
                  
                  
                  4,096,538Accrued
                      transportation costs
                  
                  
                  2,616,098
                  
                  
                  1,501,374Commissions
                      payable
                  
                  
                  976,479
                  
                  
                  429,312Other
                      accrued costs
                  
                  
                  154,356
                  
                  
                  303,323Income
                      taxes payable
                  
                  
                  213,432
                  
                  
                  1,093,996Total
                      current liabilities
                  
                  
                  10,900,659
                  
                  
                  7,424,543Long
                      term debt (Note 8)
                  
                  
                  1,810,489
                  
                  
                  2,469,936Deferred
                      tax liability
                  
                  
                  660,528
                  
                  
                  816,544Total
                      long term liabilities
                  
                  
                  2,471,017
                  
                  
                  3,286,480Total
                      liabilities
                  
                  
                  13,371,676
                  
                  
                  10,711,023Minority
                      interest
                  
                  
                  12,018
                  
                  
                  -Commitments
                      & contingencies (Note 9)
                  
                  
                  -
                  
                  
                  -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: 33,961,639 at March 31, 2007and
                      33,611,639 at June 30, 2006
                  
                  
                  15,417
                  
                  
                  15,067Additional
                      paid-in capital
                  
                  
                  7,085,381
                  
                  
                  6,590,355Accumulated
                      deficit
                  
                  
                  (23,250
                  )
                  
                  (271,586
                  )Total
                    stockholders’ equity
                  
                  
                  7,077,548
                  
                  
                  6,333,836$
                  20,461,242
                  
                  $
                  17,044,859
 
 The
        accompanying notes form an integral part of these condensed consolidated
        financial statements.


3


**RADIANT
      LOGISTICS, INC.**


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


**Consolidated
      Statements of Income (Operations)**


**(unaudited)**




THREE
                MONTHS ENDED
              MARCH
                31,
            
            
            NINE
                MONTHS ENDED
              MARCH
                31,2007
            
            
            2006
            
            
            2007
            
            
            2006Revenue
            
            $
            19,394,026
            
            $
            11,842,717
            
            $
            52,155,055
            
            $
            11,842,717Cost
                of transportation
            
            
            12,278,178
            
            
            7,479,707
            
            
            33,357,039
            
            
            7,479,707Net
                revenues
            
            
            7,115,848
            
            
            4,363,010
            
            
            18,798,016
            
            
            4,363,010Agent
                commissions
            
            
            5,419,646
            
            
            3,197,709
            
            
            14,389,716
            
            
            3,197,709Personnel
                costs
            
            
            659,130
            
            
            639,087
            
            
            1,747,252
            
            
            693,261Selling,
                general and administrative expenses
            
            
            742,061
            
            
            447,008
            
            
            1,760,558
            
            
            532,920Depreciation
                and amortization
            
            
            209,348
            
            
            206,103
            
            
            600,295
            
            
            206,103Total operating expenses
            
            
            7,030,185
            
            
            4,489,907
            
            
            18,497,821
            
            
            4,629,993Income
                (loss) from operations
            
            
            85,663
            
            
            (126,897
            )
            
            300,195
            
            
            (266,983
            )Other
                income (expense):Interest
                income
            
            
            2,490
            
            
            11,466
            
            
            6,801
            
            
            25,899Interest
                expense
            
            
            (5,397
            )
            
            (13,324
            )
            
            (15,849
            )
            
            (13,824
            )Other
            
            
            (21,783
            )
            
            -
            
            
            (24,466
            )
            
            -Total
                other income (expense)
            
            
            (24,690
            )
            
            (1,858
            )
            
            (33,514
            )
            
            12,075Income
                (loss) before income tax benefit and minority interest
            
            
            60,973
            
            
            (128,755
            )
            
            266,681
            
            
            (254,908
            )Income
                tax expense (benefit)
            
            
            37,449
            
            
            (101,645
            )
            
            18,327
            
            
            (101,645
            )Income
                before minority interest
            
            
            23,524
            
            
            (27,110
            )
            
            248,354
            
            
            (153,263
            )Minority
                Interest
            
            
            18
            
            
            -
            
            
            18
            
            
            -Net
                income (loss)
            
            $
            23,506
            
            $
            (27,110
            )
            $
            248,336
            
            $
            (153,263
            )Net
                income (loss) per common share - basic
            
            $
            -
            
            $
            -
            
            $
            .01
            
            $
            (.01
            )Net
                income (loss) per common share - diluted
            
            $
            -
            
            $
            -
            
            $
            .01
            
            $
            (.01
            )Weighted
                average shares outstanding:Basic
                shares
            
            
            33,961,639
            
            
            32,754,957
            
            
            33,856,712
            
            
            28,895,750Diluted
                share
            
            
            34,162,532
            
            
            32,754,957
            
            
            34,363,106
            
            
            28,895,750





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







4




**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
              
              
              250
              
              
              252,250
              
              
              -
              
              
              252,500Issuance
                  of common stock as bonus compensation at $1.01 per share (October
                  2006)
                  (unaudited)
              
              
              100,000
              
              
              100
              
              
              100,900
              
              
              -
              
              
              101,000Share
                  based compensation (unaudited)
              
              
              -
              
              
              -
              
              
              141,876
              
              
              -
              
              
              141,876Net
                  income for the nine months endedMarch
                  31, 2007 (unaudited)
              
              
              -
              
              
              -
              
              
              -
              
              
              248,336
              
              
              248,336Balance
                  at March 31, 2007
              
              
              33,961,639
              
              $
              15,417
              
              $
              7,085,381
              
              $
              (23,250
              )
              $
              7,077,548




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


5




**RADIANT
      LOGISTICS, INC.**


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


**Condensed
      Consolidated Statements of Cash Flows**


**(unaudited)**


For
                  nine months ended March 31,2007
              
              2006CASH
                  FLOWS PROVIDED BY OPERATING ACTIVITIES:Net
                  income (loss)
              
              $
              248,336
              
              $
              (153,263
              )ADJUSTMENTS
                  TO RECONCILE NET INCOME (LOSS) TO NET CASHPROVIDED
                  (USED) BY OPERATING ACTIVITIES:non-cash
                  contribution to capital (rent)
              
              
              -
              
              
              300non-cash
                  compensation expense (stock options)
              
              
              141,876
              
              
              72,048non-cash
                  issuance of common stock (services)
              
              
              -
              
              
              29,500non-cash
                  issuance of common stock (interest)
              
              
              -
              
              
              3,500amortization
                  of intangibles
              
              
              458,871
              
              
              170,200amortization
                  of deferred tax
              
              
              (156,016
              )
              
              (57,868
              )depreciation
              
              
              119,964
              
              
              28,750minority
                  interest in income of subsidiaries
              
              
              12,018
              
              
              -amortization
                  of employee loan receivable
              
              
              40,000
              
              
              -amortization
                  of credit facility fees
              
              
              21,459
              
              
              7,153provision
                  for doubtful accounts
              
              
              23,369
              
              
              135,000change
                  in purchased accounts receivable
              
              
              (6,128
              )
              
              -CHANGE
                  IN ASSETS AND LIABILITIES -accounts
                  receivables
              
              
              (3,182,902
              )
              
              1,732,379other
                  receivables
              
              
              (1,271
              )
              
              3,028prepaid
                  expenses and other current assets
              
              
              (39,761
              )
              
              (88,279
              )accounts
                  payable
              
              
              2,343,756
              
              
              (2,160,243
              )accrued
                  transportation costs
              
              
              1,114,724
              
              
              1,062,362commission
                  payable
              
              
              547,167
              
              
              (512,006
              )other
                  accrued costs
              
              
              (47,966
              )
              
              50,011income
                  taxes payable
              
              
              (880,564
              )
              
              (518,233
              )Net
                  cash provided (used)by operating activities
              
              
              756,932
              
              
              (195,661
              )CASH
                  FLOWS USED FOR INVESTING ACTIVITIES:Acquisition
                  of Airgroup (Note 3)
              
              
              -
              
              
              (7,318,127
              )Proceeds
                  from restricted cash
              
              
              -
              
              
              208,236Purchase
                  of technology and equipment
              
              
              (187,239
              )
              
              -Net
                  cash (used) for investing activities
              
              
              (187,239
              )
              
              (7,109,891
              )CASH
                  FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:Net
                  proceeds from issuance of common stock
              
              
              -
              
              
              6,289,204Net
                  proceeds (payments) on long term debt
              
              
              (759,447
              )
              
              1,281,070Payment
                  of credit facility fees
              
              
              -
              
              
              (57,224
              )Note
                  payable for acquisition of Airgroup (Note 3)
              
              
              -
              
              
              500,000Net
                  cash provided (used) by financing activities
              
              
              (759,447
              )
              
              8,013,050NET
                  INCREASE (DECREASE) IN CASH
              
              
              (189,754
              )
              
              707,498CASH,
                  BEGINNING OF THE PERIOD
              
              
              510,970
              
              
              23,115CASH,
                  END OF PERIOD
              
              $
              321,216
              
              $
              730,613SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:Income
                  taxes paid
              
              $
              987,689
              
              $
              524,907Interest
                  paid
              
              $
              15,849
              
              $
              14,124




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


6




**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
      a
      market value of $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, and was included in the balance sheet
      as
      technology, furniture and equipment.





In
      October 2006, the Company issued 100,000 shares of common stock, at a market
      value of $1.01 a share, as incentive compensation to its senior managers which
      was recorded against other accrued costs.





In
      January 2007 the former shareholders of Airgroup agreed with the Company to
      make
      the first contingent payment of $600,000 payable in two installments with
      $300,000 payable on June 30, 2008 and $300,000 on January 1, 2009.




7




**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. 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 any acquired businesses,
      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.




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, originally, 34, and presently 40
      active, 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.




8





**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/T 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**





The
      consolidated financial statements include the accounts of Radiant
      Logistics, Inc. and its wholly-owned subsidiaries as well as a single
      variable interest entity whose
      accounts are included in the consolidated financial statements in accordance
      with Financial Accounting Standards Board (“FASB”) Interpretation No. 46(R)
      consolidation of “Variable Interest Entities” (See Note 5).  All
      significant inter-company balances and transactions have been
      eliminated.





Historically,
      the Company had a fiscal year that ended December 31. After acquiring Airgroup
      in January 2006, the Company changed its fiscal year to June 30. The income
      statement and cash flow for the nine months ended March 31, 2006 include
      only three months of Airgroup as it was acquired during January
      2006.





**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





**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)
      Technology, Furniture 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 to determine the fair value of each reporting unit,
      and compare the fair value to the reporting unit's carrying amount. To the
      extent a reporting unit's carrying amount exceeds its fair value, an indication
      exists that the reporting unit's goodwill may be impaired and the Company must
      perform a second more detailed impairment assessment. The second impairment
      assessment involves allocating the reporting unit’s fair value to all of its
      recognized and unrecognized assets and liabilities in order to determine the
      implied fair value of the reporting unit’s goodwill as of the assessment date.
      The implied fair value of the reporting unit’s goodwill is then compared to the
      carrying amount of goodwill to quantify an impairment charge as of the
      assessment date. 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 March 31,
      2007
      there are no indications of an impairment.





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





10




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 March 31, 2007.





**h)**  **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.





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





The
      Company recognizes revenue on a gross basis, in accordance with Emerging Issues
      Task Force ("EITF") 99-19, "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 99-19,
      revenue from freight forwarding and export services is recognized at the time
      the freight is tendered to the direct carrier at origin, and direct expenses
      associated with the cost of transportation are accrued concurrently. At
      the
      time when revenue is recognized on a transportation shipment, the Company
      records costs related to that shipment based on the estimate of total purchased
      transportation costs. The estimates are based upon anticipated margins,
      contractual arrangements with direct carriers and other known factors. The
      estimates are routinely monitored and compared to actual invoiced costs. The
      estimates are adjusted as deemed necessary by the Company to reflect differences
      between the original accruals and actual costs of purchased transportation.





11




**j)**  **Share
      based Compensation**





In
      December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
      No.
      123R, "Share Based Payment,” a revision of FASB Statements No. 123 ("SFAS
      123R"). This statement requires that the cost resulting from all share-based
      payment transactions be recognized in the Company’s consolidated financial
      statements. In addition, 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 March 31, 2007, the Company recorded a share based
      compensation expense of $49,255, which, net of income taxes, resulted in a
      $32,508 net reduction of net income. For the nine months ended March 31, 2007,
      the Company recorded a share based compensation expense of $141,876, which,
      net
      of income taxes, resulted in a $93,638 net reduction of net income. Prior to
      October 2005, the Company did not have a stock option plan therefore no expense
      was recorded. For the three and nine months ended March 31, 2006, the Company
      recorded a share based compensation expense of $42,810 and $72,048,
      respectively, which, net of taxes, resulted in reduction of net income by
      $28,255 and $47,552.





**k)**  **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. For the three months ending March 31, 2007 and
      2006, there were 2,720,000 and 2,425,000, respectively, of options granted
      to
      purchase shares of common stock. For three months ended March 31, 2007 and
      2006,
      the outstanding number of potentially dilutive common shares totaled 34,162,532
      and 32,754,957 shares of common stock. Options to purchase 1,145,000 shares
      of
      common stock were not included in the diluted EPS computation for the three
      months ended March 31, 2007 as the exercise prices of those options were greater
      than the market price of the common shares and are thus anti-dilutive. Options
      to purchase 2,425,000 shares of common stock were not included in the diluted
      EPS computation for the three months ended March 31, 2006 as there was a loss
      in
      this period and thus the shares would be anti-dilutive.





For
      the
      nine months ended March 31, 2007 and 2006, the outstanding number of potentially
      dilutive common shares totaled 34,363,106 and 28,895,750 shares of common stock.
      For the nine months ended March 31, 2007, dilutive common shares included
      options to purchase shares of common stock computed by calculating the weighted
      average of the number of incremental dilutive shares added to each quarter.





Options
      to purchase 2,425,000 shares of common stock were not included in the diluted
      EPS computation for the nine months ended March 31, 2006 as the exercise prices
      of those options were greater than the market price of the common shares and
      thus are anti-dilutive. Options to purchase 2,425,000 shares of common stock
      were not included in the diluted EPS computation for the nine months ended
      March
      31, 2006 as there was a loss in this period and thus the shares would be
      anti-dilutive.





**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, originally, 34, and presently 40 active, 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.




12





The
      transaction was valued at up to $14.0
      million based on meeting all incentive and contingent factors. This consists
      of:
      (i) $9.5 million payable in cash at closing (before giving effect for $2.8
      million in acquired cash); (ii) a subsequent cash payment of $0.5 million in
      cash on the two-year anniversary; (iii) as recently amended, an additional
      base
      payment of $0.6 million payable in cash with $300,000 payable on June 30, 2008
      and $300,000 payable on January 1, 2009; (iv) a base earn-out payment of $1.9
      million payable in Company common stock over a three-year earn-out period based
      upon Airgroup achieving income from continuing operations of not less than
      $2.5
      million per year; and (v) as additional incentive to achieve future earnings
      growth, an opportunity to earn up to an additional $1.5 million payable in
      Company common stock at the end of a five-year earn-out period (the “Tier-2
      Earn-Out”). Under Airgroup’s Tier-2 Earn-Out, the former shareholders of
      Airgroup are entitled to receive 50% of the cumulative income from continuing
      operations in excess of $15,000,000 generated during the five-year earn-out
      period up to a maximum of $1,500,000. With respect to the base earn-out payment
      of $1.9 million, i n
      the
      event there is a shortfall in income from continuing operations, the earn-out
      payment will be reduced on a dollar-for-dollar basis to the extent of the
      shortfall. Shortfalls may be carried over or carried back to the extent that income
      from continuing operations in
      any
      other payout year exceeds the $2.5 million level.





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. The total purchase price, including acquisition expenses
      of
      $104,779, but excluding the contingent consideration, was $10,704,779. The
      following table summarizes the 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
              
              
              8,060,189Total
                  acquired assets
              
              
              20,160,240Current
                  liabilities assumed
              
              
              8,523,181Long
                  term deferred tax liability
              
              
              932,280Total
                  acquired liabilities
              
              
              9,455,461Net
                  assets acquired
              
              $
              10,704,779
 For
        the
        three and nine months ended March 31, 2007, the Company recorded an expense
        of
        $152,956 and $458,871, respectively, from amortization of intangibles and
        an
        income tax benefit of $52,005 and $156,016, respectively, from amortization
        of
        the long term deferred tax liability; both arising from the acquisition of
        Airgroup. For the three months ended March 31, 2006, the Company recorded
        an
        expense of $170,200 from amortization of intangibles and an income tax benefit
        of $57,868, respectively, 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 three and nine months ended March 31, 2007 (actual
      and unaudited) and three months ended March 31, 2006 (actual and unaudited)
      and
      nine months ended March 31, 2006 (pro forma and unaudited) is presented as
      if
      the acquisition of Airgroup had occurred on July 1, 2005 (in thousands, except
      earnings per share):





13




Three
                      Months endedMarch 31,
                
                
                Nine
                      Months EndedMarch 31,2007
                
                
                2006
                
                
                2007
                
                
                2006Total
                    revenue
                
                $
                19,394
                
                $
                11,843
                
                $
                52,155
                
                $
                39,954Income
                    from operations
                
                
                86
                
                
                (127
                )
                
                300
                
                
                45Net
                    income
                
                
                24
                
                
                (
                    27
                )
                
                248
                
                
                153Earnings
                    per share:Basic
                
                $
                0.00
                
                $
                0.00
                
                $
                0.01
                
                $
                0.00Diluted
                
                $
                0.00
                
                $
                0.00
                
                $
                0.01
                
                $
                0.00
  **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 nine months ended March 31,
      2007
      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.





Nine
                months ended
              March
                31, 2007
            
            Year
                ended June 30, 2006Gross
              carrying
              amount
            
            
            Accumulated
                Amortization
            
            Gross
              carrying
              amount
            
            AccumulatedAmortizationAmortizable
                intangible assets:Customer
                related
            $
            2,652,000
            
            $
            776,771
            
            $
            2,652,000
            
            $
            331,400Covenants
                not to compete
            
            90,000
            
            
            22,500
            
            
            90,000
            
            
            9,000Total
            $
            2,742,000
            
            $
            799,271
            
            $
            2,742,000
            
            $
            340,400Aggregate
                amortization expense:For
                three months ended March 31, 2007
            
            
            
            $
            152,956For
                three months ended March 31, 2006
            
            
            
            $
            170,200For
                nine months ended March 31, 2007
            
            
            
            $
            458,871For
                nine months ended March 31, 2006
            
            
            
            $
            170,200Aggregate
                amortization expense for the year ended June 30:2007
                - For the remainder of the year
            
            
            
            $
            152,9562008
            
            
            
            
            547,3592009
            
            
            
            
            597,0902010
            
            
            
            
            483,1242011
            
            
            
            
            162,200$
            1,942,729





**NOTE
      5 - VARIABLE INTEREST ENTITY**





In
      January 2003, the FASB issued FIN46, and revised it in December 2003 FIN46(R),
      which clarified the application of Accounting Research Bulletin No. 51
“Consolidated Financial Statements,” to certain entities in which equity
      investors do not have the characteristics of a controlling financial interest
      or
      do not have the sufficient equity at risk for the entity to finance its
      activities without additional subordinated financial support from other parties
      (“variable interest entities”). Radiant Logistics Partners is 40% owned by
      Airgroup Corporation and qualifies under FIN46(R) as a variable interest entity
      and is included in the Company’s consolidated financial statements.




14





**NOTE
      6 - RELATED PARTY**





Radiant
      Logistics Partners (RLP) is owned 40% by Airgroup and 60% by an affiliate of
      the
      Chief Executive Officer of the Company, Radiant Capital Partners (RCP). RLP
      is a
      certified minority business enterprise which was formed for the purpose of
      providing the Company with a national accounts strategy to pursue corporate
      and
      government accounts with diversity initiatives. As currently structured, RCP’s
      ownership interest entitles it to a majority of the profits and distributable
      cash, if any, generated by RLP. The operations of RLP are intended to provide
      certain benefits to the Company, including expanding the scope of services
      offered by the Company and participating in supplier diversity programs not
      otherwise available to the Company. As the RLP operations mature, the Company
      will evaluate and approve all related service agreements between the Company
      and
      RLP, including the scope of the services to be provided by the Company to RLP
      and the fees payable to the Company by RLP, in accordance with the Company’s
      corporate governance principles and applicable Delaware corporation law. This
      process may include seeking the opinion of a qualified third party concerning
      the fairness of any such agreement or the approval of the Company’s
      shareholders. Under FIN46(R), RLP is consolidated in the financial statements
      of
      the Company (see Note 5).





**NOTE
      7 - TECHNOLOGY, FURNITURE AND EQUIPMENT**





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





March 31, June 30,2007
            
            
            2006Vehicles
            
            $
            3,500
            
            $
            3,500Communication
                equipment
            
            
            1,353
            
            
            1,353Office
                equipment
            
            
            259,008
            
            
            6,023Furniture
                and fixtures
            
            
            22,575
            
            
            10,212Computer
                equipment
            
            
            185,106
            
            
            96,653Computer
                software
            
            
            284,377
            
            
            198,438Leasehold
                improvements
            
            
            10,699
            
            
            10,699766,618
            
            
            326,878Less:
                Accumulated depreciation and amortization
            
            
            (188,724)
            
            
            (68,759)Technology,
                furniture, and equipment - net
            
            $
            577,894
            
            $
            258,119




Depreciation
      and amortization expense for the three and nine months ended March 31, 2006
      was
      $49,239 and $119,964, respectively, and for year ended June 30, 2006 was
      $68,759.





**NOTE
      8 - LONG TERM DEBT**





The
      Company entered into a $10 million two year revolving credit facility with
      Bank
      of America, N.A. (the “Facility”) effective February 13, 2007. This replaces a
      January 2006 Facility with Bank of America, N.A. The Facility is collateralized
      by our accounts receivable and other assets of the Company, its subsidiaries
      and
      affiliates. Advances under the Facility are available to fund future
      acquisitions, capital expenditures or for other corporate purposes. Borrowings
      under the Facility bear interest, at the Company’s option, at the Bank’s prime
      rate minus .15% to 1.00% or LIBOR plus 1.55% to 2.25% and can be adjusted up
      or
      down during the term of the Facility based on the Company’s performance relative
      to certain financial covenants. The facility provides for advances of up to
      80%
      of the Company’s eligible accounts receivable.




15





The
      terms
      of the Facility are subject to certain financial and operational covenants
      which
      may limit the amount otherwise available under the Facility. The first covenant
      limits funded debt to a multiple of 3.00 times the Company’s consolidated EBITDA
      measured on a rolling four quarter basis (or a multiple of 3.25 at a reduced
      advance rate of 75.0%). The second financial covenant requires the Company
      to
      maintain a funded debt to EBDITA ratio of 3.25 to 1.0. The third financial
      covenant requires the Company to maintain a basic fixed charge coverage ratio
      of
      at least 1.1 to 1.0. The fourth financial covenant is a minimum profitability
      standard that requires the Company not to incur a net loss before taxes,
      amortization of acquired intangibles and extraordinary items in any two
      consecutive quarterly accounting periods.




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





The
      co-borrowers of the Facility include Radiant Logistics, Inc., Airgroup
      Corporation, Radiant Logistics Global Services Inc. (“RLGS”) and Radiant
      Logistics Partners, LLC (“RLP”). RLGS is a newly formed, wholly owned subsidiary
      of the Company that intends to focus on the Company’s agenda for international
      expansion. RLP is owned 40% by Airgroup and 60% by an affiliate of the Chief
      Executive Officer of the Company, Radiant Capital Parnters. RLP has been
      certified as a minority business enterprise, and intends to focus on corporate
      and government accounts with diversity initiatives. As a co-borrower under
      the
      Facility, the accounts receivable of RLP and RLGS are eligible for inclusion
      within the overall borrowing base of the Company and all borrowers will be
      responsible for repayment of the debt associated with advances under the
      Facility, including those advanced to RLP. At March 31, 2007, the Company was
      in
      compliance with all of its covenants.





As
      of
      March 31, 2007, the Company had advances of $34,828 under the Facility and
      $1,175,661 in outstanding checks, which had not yet been presented to the bank
      for payment, that together total $1,210,489. 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. The $1,210,489, in addition
      to
      a $600,000
      payable to the former shareholders of Airgroup, totals
      long term debt of $1,810,489 .





At March
      31,
      2007 ,
      based
      on available collateral and $305,000 in outstanding letter of credit
      commitments, there was $4,741,643 available for borrowing under the
      Facility.





**NOTE
      9 - COMMITMENTS AND CONTINGENCIES**





In
      December 2006, the Company entered into finders fee arrangements with third
      parties to assist the Company in locating logistics businesses that could become
      additional exclusive agent operations of the Company and/or candidates for
      acquisition. Any amounts due under these arrangements are payable as a function
      of the financial performance of any newly acquired operation and contingently
      payable upon, among other things, the retention of any newly acquired operations
      for a period of not less than 12 months. Payment of the finders fee may be
      paid
      in cash, Company shares, or a combination of cash and shares. For the three
      and
      nine months ended March 31, 2007 there was $11,025 recorded as an accrued
      liability and other services expense.




16





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, fiscal year 2007
      through 2011, respectively, are $258,804, $126,581, $111,341, $81,518, and
      $35,310.





**NOTE
      10 - PROVISION FOR INCOME TAXES**





Deferred
      income taxes are reported using the liability method. Deferred tax assets are
      recognized for deductible temporary differences and deferred tax liabilities
      are
      recognized for taxable temporary differences. Temporary differences are the
      differences between the reported amounts of assets and liabilities and their
      tax
      bases. Deferred tax assets are reduced by a valuation allowance when, in the
      opinion of management, it is more likely than not that some portion or all
      of
      the deferred tax assets will not be realized. Deferred tax assets and
      liabilities are adjusted for the effects of changes in tax laws and rates on
      the
      date of enactment.





The
      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
      three
      and nine months ended March 31, 2007, the Company recognized net
      income tax expense of $37,449 and $18,327 consisting of $52,005 and $156,016,
      respectively, of income tax benefit associated with the amortization of the
      deferred tax liability attributed to the acquisition of Airgroup, in accordance
      with FASB 109 offset by $89,459 and $174,343, respectively, of income tax
      expense. For
      three
      and nine months ended March 31, 2006, the Company recognized net
      income tax benefit of $101,645 consisting of $57,868 of income tax benefit
      associated with the amortization of the deferred tax liability attributed to
      the
      acquisition of Airgroup, in accordance with FASB 109, plus $43,777 of other
      income tax expense..





The
      Company’s consolidated effective tax rate during the nine month period ended March
      31,
      2007 was
      34.0%. No tax benefit was recorded during the six months ended December 31,
      2005
      due to the ongoing losses as discussed above.





**NOTE
      11 - STOCKHOLDERS’ EQUITY**





**Preferred
      Stock**





The
      Company is authorized to issue 5,000,000 shares of preferred stock, par value
      at
      $.001 per share. As of March 31, 2007, 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 a
      market value of $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.





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





**NOTE
      12 - 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.




17




For
      the
      three months ended March 31, 2007, the Company issued an employee options to
      purchase 150,000 shares of common stock at $0.55 per share in February 2007.
      During the nine months ended March 31, 2007, the Company issued employees
      options to purchase 150,000 shares of common stock at $0.55 per share in
      February 2007, 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 nine months ended March 31,
      2007,
      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 March 31, 2007.





For
      the
      nine months ended March 31, 2007, the weighted average fair value per share
      of
      employee options granted in August 2006 was $.60, $.81 in September 2006, and
      $.55 in February 2007. 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
              
              September
              
              March2006
              
              2006
              
              2007Dividend
                  yield
              
              
              None
              
              
              None
              
              
              NoneVolatility
              
              
              112.7
              %
              
              110.0
              %
              
              105.3
              %Risk
                  free interest rate
              
              
              3.73
              %
              
              3.73
              %
              
              4.68
              %Expected
                  lives
              
              
              5.0
                  years
              
              
              5.0
                  years
              
              
              5.0
                  years


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 March 31, 2007 and 2006, the Company recognized stock option
      compensation costs of $49,255 and $42,810, respectively, in accordance with
      SFAS
      123R. For the nine months ended March 31, 2007 and 2006, the Company recognized
      stock option compensation costs of $141,876 and $72,048, respectively, in
      accordance with SFAS 123R.




The
      following table summarizes activity under the plan for the nine months ended
      March 31, 2007.





Number
                of shares
            
            Weighted
                Average
              exercise
                price per share
            
            Weighted
                average
              remaining
              contractual
              life
            
            Aggregate
              intrinsic
              valueOutstanding
                at June 30, 2006
            
            
            2,425,000
            
            $
            0.593
            
            
            9.38
                years
            
            $
            1,109,250Options
                granted
            
            
            295,000
            
            
            0.685
            
            
            -
            
            
            -Options
                exercised
            
            
            -
            
            
            -
            
            
            -
            
            
            -Options
                forfeited
            
            
            -
            
            
            -
            
            
            -
            
            
            -Options
                expired
            
            
            -
            
            
            -
            
            
            -
            
            
            -Outstanding
                at March 31, 2007
            
            
            2,720,000
            
            $
            0.605
            
            
            8.76
                years
            
            $
            141,900Exercisable
                at March 31, 2007
            
            
            485,000
            
            $
            0.593
            
            
            8.63
                years
            
            $
            33,600





**NOTE
      13 - RECENT ACCOUNTING PRONOUNCEMENTS**




18





In
      February 2007 the Financial Accounting Standards Board ("FASB") issued SFAS
      159
“The Fair Value Option for Financial Assets and Financial Liabilities.” The
      statement permits entities to choose to measure many financial instruments
      and
      certain other items at fair value. The objective is to improve financial
      reporting by providing entities with the opportunity to mitigate volatility
      in
      reported earnings caused by measuring related assets and liabilities differently
      without having to apply complex hedge accounting provisions. This Statement
      is
      expected to expand the use of fair value measurement, which is consistent with
      the Board’s long-term measurement objectives for accounting for financial
      instruments. This
      Statement is effective as of the beginning of an entity’s first fiscal year that
      begins after November 15, 2007. We
      are
      currently evaluating the impact this interpretation will have on our
      consolidated financial statements.





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
      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.




**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.***




19





**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 objectives
      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 expanding our network of exclusive agents and implementation
      of a successful acquisition strategy, neither of which can be assured; (ii)
      our
      dependence upon our network of exclusive agents; (iii) our ability to at least
      maintain historical levels of transportation revenue, net 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, originally, 34, and presently 40 active,
      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.




20





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





Our
      principal source of income is derived from freight forwarding services provided
      through a network of exclusive agent offices. Through our agents, we arrange
      for
      the shipment of customers' freight from point of origin to point of destination,
      and provide 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 through our network of exclusive agents. Our cost of
      transportation includes direct costs of transportation, including motor carrier,
      air, ocean and rail services. We act principally as the service provider to
      add
      value in the execution and procurement of these services to our customers.
      Our
      net transportation revenue (gross transportation revenue less the direct cost
      of
      transportation) is the primary indicator of our ability to source, add value
      and
      resell services provided by third parties, and is considered by management
      to be
      a key performance measure. In addition, management believes measuring its
      operating costs as a function of net transportation revenue provides a useful
      metric, as our ability to control costs as a function of net transportation
      revenue directly impacts operating earnings.




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




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




21





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: (i) equity
      offerings completed during 2005 and 2006; 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 and nine months ended March 31, 2007
      and 2006 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.





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 March 31, 2007 (actual and unaudited) and March 31,
      2006
      (actual and unaudited)***




We
      generated transportation revenue of $19.4 million and $11.8 million and net
      transportation revenue of $7.1 million and $4.4 million for the three months
      ended March 31, 2007 and 2006 respectively. Net income was $24,000 for the
      three
      months ended March 31, 2007 compared to a net loss of $27,000 for the three
      months ended March 31, 2006.





We
      had
      adjusted earnings (loss) before interest, taxes, depreciation and amortization
      (EBITDA) of $328,000 and $122,000 for three months ended March 31, 2007 and
      2006, 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 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 March 31,
              
              
              Change2007
              
              
              2006
              
              
              Amount
              
              
              PercentNet
                  income (loss)
              
              $
              24
              
              $
              (27
              )
              $
              51
              
              
              188.9
              %Income
                  tax expense (benefit)
              
              
              37
              
              
              (102
              )
              
              139
              
              
              136.3
              %Interest
                  expense (income) - net
              
              
              3
              
              
              2
              
              
              1
              
              
              50.0
              %Depreciation
                  and amortization
              
              
              209
              
              
              206
              
              
              3
              
              
              1.5
              %EBITDA
                  (Earnings before interest, taxes, depreciation and
                  amortization)
              
              $
              273
              
              $
              79
              
              $
              194
              
              
              245.6
              %Share
                  based compensation and other non-cash costs
              
              
              55
              
              
              43
              
              
              12
              
              
              27.9
              %Adjusted
                  EBITDA
              
              $
              328
              
              $
              122
              
              $
              206
              
              
              168.8
              %




22




*The
      following table summarizes March 31, 2007 (actual and unaudited) and March
      31,
      2006 (actual and unaudited) transportation revenue, cost of transportation
      and
      net transportation revenue (in thousands):*




Three
                months ended March 31,
            
            Change2007
            
            2006
            
            Amount
            
            PercentTransportation
                revenue
            
            $
            19,394
            
            $
            11,843
            
            $
            7,551
            
            
            63.8
            %Cost
                of transportation
            
            
            12,278
            
            
            7,480
            
            
            4,798
            
            
            64.1
            %Net
                transportation revenue
            
            $
            7,116
            
            $
            4,363
            
            $
            2,753
            
            
            63.1
            %*Net
                transportation margins*
            
            
            36.7
            %
            
            36.8
            %





Transportation
      revenue was $19.4 million for the three months ended March 31, 2007, an increase
      of 63.8% over total transportation revenue of $11.8 million for the three months
      ended March 31, 2006. Domestic transportation revenue increased by 64.9% to
      $12.4 million for the three months ended March 31, 2007 from $7.5 million for
      the three months ended March 31, 2007. The increase was primarily due to
      increased volume handled by the Company over 2006. International transportation
      revenue increased by 61.8% to $7.0 million for the three months ended March
      31,
      2006 from $4.3 million for the comparable prior year period, mainly attributed
      to increased air and ocean import freight volume.





Cost
      of
      transportation as a percentage of transportation revenue for the three months
      ended March 31, 2007 remained unchanged when compared to the three months ended
      March 31, 2006.





Net
      transportation margins as a percentage of transportation revenue for the three
      months ended March 31, 2007 remained unchanged when compared to the three months
      ended March 31, 2006.


*The
      following table compares certain March 31, 2007 (actual and unaudited) and
      March
      31, 2006 (actual and unaudited) condensed consolidated statement of income
      data
      as a percentage of our net transportation revenue (in
      thousands):*





Three
                months ended March 31,2007
            
            2006
            
            ChangeAmount
            
            Percent
            
            Amount
            
            Percent
            
            Amount
            
            PercentNet
                transportation revenue
            
            $
            7,116
            
            
            100.0
            %
            $
            4,363
            
            
            100.0
            %
            $
            2,753
            
            
            63.1
            %Agent
                commissions
            
            
            5,420
            
            
            76.2
            %
            
            3,198
            
            
            73.3
            %
            
            2,222
            
            
            69.5
            %Personnel
                costs
            
            
            659
            
            
            9.3
            %
            
            639
            
            
            14.7
            %
            
            20
            
            
            3.1
            %Other
                selling, general and administrative
            
            
            742
            
            
            10.4
            %
            
            447
            
            
            10.3
            %
            
            295
            
            
            66.0
            %Depreciation
                and amortization
            
            
            209
            
            
            2.9
            %
            
            206
            
            
            4.7
            %
            
            3
            
            
            1.6
            %Total
                operating costs
            
            
            7,030
            
            
            98.8
            %
            
            4,490
            
            
            102.9
            %
            
            2,540
            
            
            56.6
            %Income
                (loss) from operations
            
            
            86
            
            
            1.2
            %
            
            (127
            )
            
            -2.9
            %
            
            213
            
            
            167.7
            %Other
                income (expense) - net
            
            
            (25
            )
            
            -0.4
            %
            
            (2
            )
            
            -
            
            
            (23
            )
            
            NMIncome
                (loss) before income taxes and minority interest
            
            
            61
            
            
            0.8
            %
            
            (129
            )
            
            -2.9
            %
            
            190
            
            
            147.3
            %Income
                tax expense (benefit)
            
            
            37
            
            
            0.3
            %
            
            (102
            )
            
            2.3
            %
            
            139
            
            
            -136.3
            %Income
                (loss) before minority interest
            
            
            24
            
            
            .5
            %
            
            (27
            )
            
            -.6
            %
            
            51
            
            
            188.9
            %Minority
                interest
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            NMNet
                income (loss)
            
            $
            24
            
            
            .5
            %
            $
            (27
            )
            
            -.6
            %
            $
            51
            
            
            188.9
            %






23




Agent
      commissions were $5.4 million for the three months ended March 31, 2007, an
      increase of 69.5% from $3.2 million for the three months ended March 31, 2006.
      Agent commissions as a percentage of net transportation revenue increased to
      76.2% for three months ended March 31, 2007 from 73.3% when compared to the
      same
      period last year as both grew at the same rate except for concessions incurred
      for new agent offices for three months ended March 31, 2007.





Personnel
      costs were $659,000 for the three months ended March 31, 2007, a increase of
      3.1% from $639,000 for the three months ended March 31, 2006. Personnel costs
      as
      a percentage of net transportation revenue decreased to 9.3% for three months
      ended March 31, 2007 from 14.7% for the comparable prior year period as a result
      of increased net revenue over the prior year causing the percent relative to
      net
      transportation revenue to be lower. The increase in costs over the same period
      last year reflects a modest increase in headcount.





Other
      selling, general and administrative costs were $742,000 for the three months
      ended March 31, 2007, an increase of 66.0% from $447,000 for the three months
      ended March 31, 2006. As a percentage of net transportation revenue, other
      selling, general and administrative costs for three months ended March 31,
      2007
      remained unchanged when compared to the comparable prior year period. The
      increased costs, compared to the same period last year, are a result of
      professional fees associated with operating as a public company as well as
      increased expenses in temporary help for back office services, legal, and
      marketing costs.





Depreciation
      and amortization costs were approximately $209,000 and $206,000 for the three
      months ended March 31, 2007 and 2006 respectively. Depreciation and amortization
      as a percentage of net transportation revenue decreased for three months ended
      March 31, 2007 to 2.9% from 4.7% for the same period last year.





Income
      from operations was $86,000 for the three months ended March 31, 2007 compared
      to loss from operations of $127,000 for the three months ended March 31,
      2006.





Net
      income was $24,000 for the three months ended March 31, 2007, compared to net
      loss of $27,000 for the three months ended March 31, 2006.





***For
      the nine months ended March 31, 2007 (actual and unaudited) and March 31, 2006
      (actual and unaudited)***




We
      generated transportation revenue of $52.2 million and net transportation revenue
      of $18.8 million for the nine months ended March 31, 2007. For the nine months
      ended March 31, 2006, we generated transportation revenue of $11.8 million
      and
      net transportation revenue of $4.4 million as we were in the developmental
      stage
      for six months prior to the acquiring Airgroup during January 2006. Net income
      was $248,000 for the nine months ended March 31, 2007 compared to a net loss
      of
      $153,000 for the nine months ended March 31, 2006.




24





We
      had
      adjusted earnings (loss) before interest, taxes, depreciation and amortization
      (EBITDA) of $1,063,000 and $11,000 for nine months ended March 31, 2007 and
      2006, 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.


Nine
                  months ended March 31,
              
              Change2007
              
              2006
              
              Amount
              
              PercentNet
                  income (loss)
              
              $
              248
              
              $
              (153
              )
              $
              401
              
              
              NMIncome
                  tax expense (benefit)
              
              
              19
              
              
              (102
              )
              
              121
              
              
              NMInterest
                  expense (income)- net
              
              
              9
              
              
              (12
              )
              
              21
              
              
              NMDepreciation
                  and amortization
              
              
              600
              
              
              206
              
              
              394
              
              
              NMEBITDA
                  (Earnings before interest, taxes, depreciation and
                  amortization)
              
              $
              876
              
              $
              (61
              )
              $
              937
              
              
              NMShare
                  based compensation and other non-cash costs
              
              
              187
              
              
              72
              
              
              115
              
              
              NMAdjusted
                  EBITDA
              
              $
              1,063
              
              $
              11
              
              $
              1,052
              
              
              NM




*The
      following table summarizes March 31, 2007 (actual and unaudited) and March
      31,
      2006 (actual and unaudited) transportation revenue, cost of transportation
      and
      net transportation revenue (in thousands):*




Nine
                months ended March 31,
            
            Change2007
            
            2006
            
            Amount
            
            PercentTransportation
                revenue
            
            $
            52,155
            
            $
            11,843
            
            $
            40,312
            
            
            NMCost
                of transportation
            
            
            33,357
            
            
            7,480
            
            
            25,877
            
            
            NMNet
                transportation revenue
            
            $
            18,798
            
            $
            4,363
            
            $
            14,435
            
            
            NM*Net
                transportation margins*
            
            
            36.0
            %
            
            36.8
            %


Transportation
      revenue was $52.2 million for nine months ended March 31, 2007. Domestic and
      International transportation revenue was $32.7 million and $19.5 million,
      respectively. For the nine months ended March 31, 2006, transportation revenue
      was $11.8 million comprised of $7.5 million of domestic and $4.3 million of
      international transportation revenue, reflecting only three months of Airgroup
      operations.




Cost
      of
      transportation was 64.0% of transportation revenue for nine months ended March
      31, 2007 and 63.2% for the nine months ended March 31, 2007.




Net
      transportation margins were 36.0% and 36.8% of transportation revenue for ended
      nine months ended March 31, 2007 and 2006 respectively.




25





*The
      following table compares certain March 31, 2007 (actual and unaudited) and
      March
      31, 2006 (actual and unaudited) condensed consolidated statement of income
      data
      as a percentage of our net transportation revenue (in
      thousands):*





Nine
                months ended March 31,2007
            
            2006
            
            ChangeAmount
            
            Percent
            
            Amount
            
            Percent
            
            Amount
            
            PercentNet
                transportation revenue
            
            $
                18,798
            
            100.0%
            
            $
                4,363
            
            100.0%
            
            $
                14,435
            
            NMAgent
                commissions
            
            
            14,390
            
            
            76.5
            %
            
            3,198
            
            
            73.3
            %
            
            11,192
            
            
            NMPersonnel
                costs
            
            
            1,747
            
            
            9.3
            %
            
            693
            
            
            15.9
            %
            
            1,054
            
            
            NMOther
                selling, general and administrative
            
            
            1,761
            
            
            9.4
            %
            
            533
            
            
            12.2
            %
            
            1,228
            
            
            NMDepreciation
                and amortization
            
            
            600
            
            
            3.2
            %
            
            206
            
            
            4.7
            %
            
            394
            
            
            NMTotal
                operating costs
            
            
            18,498
            
            
            98.4
            %
            
            4,630
            
            
            106.1
            %
            
            13,868
            
            
            NMIncome
                (loss) from operations
            
            
            300
            
            
            1.6
            %
            
            (267
            )
            
            -6.1
            %
            
            567
            
            
            NMOther
                (expense) income - net
            
            
            (33
            )
            
            -0.2
            %
            
            12
            
            
            0.3
            %
            
            (45
            )
            
            NMIncome
                (loss) before income taxes
            
            
            267
            
            
            1.4
            %
            
            (255
            )
            
            -5.8
            %
            
            522
            
            
            NMIncome
                tax expense (benefit)
            
            
            19
            
            
            -0.1
            %
            
            (102
            )
            
            -2.3
            %
            
            121
            
            
            NMIncome
                before minority interest
            
            
            248
            
            
            1.3
            %
            
            (153
            )
            
            -3.5
            %
            
            401Minority
                interest
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            NMNet
                income (loss)
            
            $
            248
            
            
            1.3
            %
            $
            (153
            )
            
            -3.5
            %
            $
            401
            
            
            NM




Agent
      commissions were $14.4 million and $3.2 million for the nine months ended March
      31, 2007 and 2006, respectively, or 76.5% and 73.3% of net transportation
      revenue. There was only three months of Airgroup’s operations included in the
      nine months ended March 31, 2006 as the Company acquired Airgroup in January
      2006.





Personnel
      costs were $1.7 million for the nine months ended March 31, 2007, or 9.3% of
      net
      transportation revenue, and $693,000, or 15.9% of net transportation revenue,
      for the nine months ended March 31, 2006.





Other
      selling, general and administrative costs were $1.7 million and 9.4% of net
      transportation revenues for the nine months ended March 31, 2007, compared
      to
      $533,000, or 12.2% of net transportation revenue, for the nine months ended
      March 31, 2006.





Depreciation
      and amortization costs were $600,000 and 3.2% of net transportation revenues
      for
      the nine months ended March 31, 2007, compared to $206,000, or 4.7% of net
      transportation revenue, for the nine months ended March 31, 2006.





Income
      from operations was $300,000 for the nine months ended March 31, 2007, compared
      to a loss from operations of $267,000 for the nine months ended March 31,
      2006.





Net
      income was $248,000 for nine months ended March 31, 2007, compared to a net
      loss
      of $153,000 for the nine months ended March 31, 2006.




26





***Supplemental
      pro forma information for the nine months ended March 31, 2007 (actual and
      unaudited) compared to nine months ended March 31, 2006 (pro forma and
      unaudited)***





We
      generated transportation revenue of $52.2 million and $40.0 million and net
      transportation revenue of $18.8 million and $14.2 million for the nine months
      ended March 31, 2007 and 2006, respectively. Net income was $248,000 for the
      nine months ended March 31, 2007, compared to a net income of $153,000 for
      the
      nine months ended March 31, 2006.





We
      had
      adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)
      of $1,063,000 and $690,000 for the nine months ended March 31, 2007 and 2006,
      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 March 31, 2007 (actual and
      unaudited) and March 31, 2006 (pro forma and unaudited) adjusted EBITDA to
      net
      income, the most directly comparable GAAP measure in accordance with SEC
      Regulation G (in thousands):*





Nine
                months ended March 31,
            
            Change2007
            
            2006
            
            Amount
            
            PercentNet
                income
            
            $
            248
            
            $
            153
            
            $
            95
            
            
            62.1
            %Income
                tax expense (benefit)
            
            
            19
            
            
            (96
            )
            
            115
            
            
            119.8
            %Interest
                expense (income) - net
            
            
            9
            
            
            (20
            )
            
            29
            
            
            145.0
            %Depreciation
                and amortization
            
            
            600
            
            
            581
            
            
            19
            
            
            3.2
            %EBITDA
                (Earnings before interest, taxes, depreciation and
                amortization)
            
            $
            876
            
            $
            618
            
            $
            258
            
            
            41.7
            %Share
                based compensation and other non-cash costs
            
            
            187
            
            
            72
            
            
            115
            
            
            159.7
            %Adjusted
                EBITDA
            
            $
            1,063
            
            $
            690
            
            $
            373
            
            
            54.1
            %





*The
      following table summarizes March 31, 2007 (actual and unaudited) and March
      31,
      2006 (pro forma and unaudited) transportation revenue, cost of transportation
      and net transportation revenue (in thousands):*





Nine
                months ended March 31,
            
            Change2007
            
            2006
            
            Amount
            
            PercentTransportation
                revenue
            
            $
            52,155
            
            $
            39,954
            
            $
            12,201
            
            
            30.5
            %Cost
                of transportation
            
            
            33,357
            
            
            25,706
            
            
            7,651
            
            
            29.8
            %Net
                transportation revenue
            
            $
            18,798
            
            $
            14,248
            
            $
            4,550
            
            
            31.9
            %*Net
                transportation margins*
            
            
            36.0
            %
            
            35.7
            %





27




Transportation
      revenue was $52.2 million for the nine months ended March 31, 2007, an increase
      of 30.5% over total transportation revenue of $40.0 million for the nine months
      ended March 31, 2006. Domestic transportation revenue increased by 34.6% to
      $32.7 million for the nine months ended March 31, 2007 from $24.3 million for
      the nine months ended March 31, 2006. The increase was primarily due to
      increased volume handled by the Company over 2006. International transportation
      revenue increased by 24.3% to $19.5 million for the nine months ended March
      31,
      2007 from $15.7 million for the comparable prior year period, mainly attributed
      to increased air and ocean import freight volume.





Cost
      of
      transportation decreased to 64.0% of transportation revenue for the nine months
      ended March 31, 2007 from 64.3% of transportation revenue for the nine months
      ended March 31, 2006. This reflects increased domestic volume over international
      volume which historically has higher transportation cost as a percentage of
      sales.





Net
      transportation margins increased to 36.0% of transportation revenue for the
      nine
      months ended March 31, 2007 from 35.7% of transportation revenue for the nine
      months ended March 31, 2006 as a result of factors described above.





*The
      following table compares certain March 31, 2007 (actual and unaudited) and
      March
      31, 2006 (pro forma and unaudited) condensed consolidated statement of income
      data as a percentage of our net transportation revenue (in
      thousands):*





Nine
                months ended March 31,2007
            
            2006
            
            ChangeAmount
            
            Percent
            
            Amount
            
            Percent
            
            Amount
            
            PercentNet
                transportation revenue
            
            $
                18,798
            
            100.0%
            
            $
                14,248
            
            100.0%
            
            $
                4,550
            
            31.9%Agent
                commissions
            
            
            14,390
            
            
            76.5
            %
            
            10,502
            
            
            73.7
            %
            
            3,888
            
            
            37.0
            %Personnel
                costs
            
            
            1,747
            
            
            9.3
            %
            
            1,922
            
            
            13.5
            %
            
            (175
            )
            
            -9.1
            %Other
                selling, general and administrative
            
            
            1,761
            
            
            9.4
            %
            
            1,198
            
            
            8.4
            %
            
            563
            
            
            47.0
            %Depreciation
                and amortization
            
            
            600
            
            
            3.2
            %
            
            581
            
            
            4.1
            %
            
            19
            
            
            3.3
            %Total
                operating costs
            
            
            18,498
            
            
            98.4
            %
            
            14,203
            
            
            99.7
            %
            
            4,295
            
            
            30.2
            %Income
                from operations
            
            
            300
            
            
            1.6
            %
            
            45
            
            
            .3
            %
            
            255
            
            
            NMOther
                income (expense) - net
            
            
            (33
            )
            
            -0.2
            %
            
            12
            
            
            .1
            %
            
            (45
            )
            
            NMIncome
                before income taxes
            
            
            267
            
            
            1.4
            %
            
            57
            
            
            .4
            %
            
            210
            
            
            NMIncome
                tax expense (benefit)
            
            
            19
            
            
            .1
            %
            
            (96
            )
            
            -.7
            %
            
            115
            
            
            119.8
            %Income
                before minority interest
            
            
            248
            
            
            1.3
            %
            
            153
            
            
            1.1
            %
            
            95
            
            
            62.1
            %Minority
                Interest
            
            
            -
            
            
            
            
            
            -
            
            
            -
            
            
            
            
            
            -Net
                income
            
            $
            248
            
            
            1.3
            %
            $
            153
            
            
            1.1
            %
            $
            95
            
            
            62.1
            %




Agent
      commissions were $14.4 million for the nine months ended March 31, 2007, an
      increase of 37.0% from $10.5 million for the nine months ended March 31, 2006.
      Agent commissions as a percentage of net transportation revenue increased to
      76.5% for nine months ended March 31, 2007 from 73.7% for the comparable prior
      year period as a result of concessions incurred for new agent offices for nine
      months ended March 31, 2007.




28





Personnel
      costs were $1.7 million for the nine months ended March 31, 2007, a decrease
      of
      9.1% from $1.9 million for the nine months ended March 31, 2006. Personnel
      costs
      as a percentage of net transportation revenue decreased to 9.3% for nine months
      ended March 31, 2007 from 13.5% for the comparable prior year period as a result
      of lower average headcount and compensation costs for the nine months ended
      March 31, 2007.





Other
      selling, general and administrative costs were $1.7 million for the nine months
      ended March 31, 2007, an increase of 45.2% from $1.2 million for the nine months
      ended March 31, 2006. As a percentage of net transportation revenue, other
      selling, general and administrative costs increased to 9.3% for nine months
      ended March 31, 2007 from 8.4% for the same period last year, are a result
      of
      professional fees associated with operating as a public company as well as
      increased expenses in temporary help for back office services, legal, and
      marketing costs.





Depreciation
      and amortization costs were approximately $600,000 and $581,000 for the nine
      months ended March 31, 2007 and 2006, respectively. Depreciation and
      amortization as a percentage of net transportation revenue decreased for nine
      months ended March 31, 2007 to 3.2% from 4.1% for the same period last year
      due
      to lower amortization of intangibles.





Income
      from operations was $300,000 for the nine months ended March 31, 2007, compared
      to income from operations of $45,000 for the nine months ended March 31,
      2006.





Net
      income was $248,000 for the nine months ended March 31, 2007, compared to net
      income of $153,000 for the nine months ended March 31, 2006.




**Liquidity
      and Capital Resources**





Effective
      January 1, 2006, we acquired 100 percent of the outstanding stock of Airgroup.
      The transaction was valued at up to $14.0
      million. This consisted of: (i) $9.5 million payable in cash at closing; (ii)
      a
      subsequent cash payment of $0.5 million in cash due on the two-year anniversary
      of the closing; (iii) as recently amended, an additional base payment of $0.6
      million payable in cash with $300,000 payable on June 30, 2008 and $300,000
      payable on January 1, 2009; (iv) a base earn-out payment of $1.9 million payable
      in Company common stock over a three-year earn-out period based upon Airgroup
      achieving income from continuing operations of not less than $2.5 million per
      year; and (v) as additional incentive to achieve future earnings growth, an
      opportunity to earn up to an additional $1.5 million payable in Company common
      stock at the end of a five-year earn-out period (the “Tier-2 Earn-Out”). Under
      Airgroup’s Tier-2 Earn-Out, the former shareholders of Airgroup are entitled to
      receive 50% of the cumulative income from continuing operations in excess of
      $15,000,000 generated during the five-year earn-out period up to a maximum
      of
      $1,500,000. With respect to the base earn-out payment of $1.9 million,
      i n
      the
      event there is a shortfall in income from continuing operations, the earn-out
      payment will be reduced on a dollar-for-dollar basis to the extent of the
      shortfall. Shortfalls may be carried over or carried back to the extent that income
      from continuing operations in
      any
      other payout year exceeds the $2.5 million level.




29




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 30,2008
              
              2009
              
              2010
              
              2011
              
              TotalEarn-out
                  payments:Cash
              
              $
              --
              
              $
              --
              
              $
              --
              
              $
              --
                  $
              
              
              --Equity
              
              
              633
              
              
              633
              
              
              634
              
              
              
              
              
              1,900Total
                  earn-outPayments
              
              $
              633
              
              $
              633
              
              $
              633
              
              $
              --
                  $
              
              
              1,900Prior
                  year earnings targets (income from continuing operations)(2)Total
                  earningstargets
              
              $
              2,500
              
              $
              2,500
              
              $
              2,500
              
              $
              --
                  $
              
              
              7,500Total
              
              
              25.3
              %
              
              25.3
              %
              
              25.3
              %
              
              --
              
              
              25.3
              %




(1)
            During
                the fiscal year 2008-2011 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)
            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.


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:





**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
      February 2007, the
      Company’s $10 million revolving credit facility (Facility) was extended into
      2009 with more favorable terms to the Company. The
      Facility is collateralized by our accounts receivable and other assets of the
      Company and its subsidiaries. Advances under the Facility are available to
      fund
      future acquisitions, capital expenditures or for other corporate purposes.
      Borrowings under the facility bear interest, at the Company’s option, at the
      Bank’s prime rate minus .15% to 1.00% or LIBOR plus 1.55% to 2.25%, and can be
      adjusted up or down during the term of the Facility based on the Company’s
      performance relative to certain financial covenants. The Facility provides
      for
      advances of up to 80% of the Company’s eligible accounts
      receivable.





The
      terms
      of the Facility are subject to certain financial and operational covenants
      which
      may limit the amount otherwise available under the Facility. The first covenant
      limits funded debt to a multiple of 3.00 times the Company’s consolidated EBITDA
      measured on a rolling four quarter basis (or a multiple of 3.25 at a reduced
      advance rate of 75.0%). The second financial covenant requires the Company
      to
      maintain a funded debt to EBDITA ratio of 3.25 to 1.0. The third financial
      covenant requires the Company to maintain a basic fixed charge coverage ratio
      of
      at least 1.1 to 1.0. The fourth financial covenant is a minimum profitability
      standard that requires the Company not to incur a net loss before taxes,
      amortization of acquired intangibles and extraordinary items in any two
      consecutive quarterly accounting periods.




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




30





As
      of
      March 31, 2007, the Company had advances of $34,828 against the Facility. Our
      eligible accounts receivable, net of $305,000
      in outstanding letter of credit commitments, were sufficient to support
      $4,741,643 of available borrowing under the Facility.





Net
      cash
      provided by operating activities for the nine months ended March 31, 2007 was
      $757,000 compared to net cash used by operating activities of $195,000 for
      nine
      months ended March 31, 2006. The change was driven by improved profitability
      of
      the business and the increase in commission payable for the nine months ended
      March 31, 2007 when compared to the same period for the prior year.





Cash
      used
      for investing for the nine months ended March 31, 2007, see Note 3 and Note
      7 to
      our financial statements, was $187,000 compared to $7.1 million for nine months
      ended March 31, 2006. For the nine months ended March 31, 2006 there was $7.3
      million, net of cash, for acquiring Airgroup in January 2006; See Note 3 to
      our
      financial statements.





Net
      cash
      used by financing activity for the nine months ended March 31, 2007 was $759,000
      for advances against our Facility compared to $8.0 million of cash proceeds
      from
      issuance of stock and long term debt for the nine months ended March 31, 2006.





Non-cash
      financing activities for the nine months ended March 31, 2007 consisted of
      the
      Company issuing 250,000 shares of our common stock, at a market value of $1.01
      per share, in exchange for training materials and 100,000 shares of common
      stock, at a market value of $1.01 a share, as incentive compensation to its
      senior managers; see Note 11 to our financial statements. Also, i n
      January
      2007 the former shareholders of Airgroup agreed with the Company to make the
      first contingent payment of $600,000 payable in two installments with $300,000
      payable on June 30, 2008 and $300,000 on January 1, 2009; see
      Note
      3 to our financial statements





We
      believe that our current working capital and anticipated cash flow from
      operations are adequate to fund existing operations and our organic growth
      strategy. 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 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.




31




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 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.




32





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 March 31, 2007, 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
      March 31, 2007. 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
      March 31, 2007 that have materially affected, or are reasonably likely to
      materially affect, our internal controls over financial reporting.


33




**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.




*Team
      Air Express Proceeding*




On
      or
      about February 21, 2007, Team Air Express, Inc. d/b/a Team Worldwide ("Team")
      commenced an action against the Company, as well as Texas Time Express, Inc.,
      Douglas K. Tabor, and Michael E. Staten, in the District Court of the State
      of
      Texas, Tarrant County (the “Court”) captioned Cause No. 017 222706 07; *Team
      Air Express, Inc. d/b/a Team Worldwide v. Airgroup Corporation, Texas Time
      Express, Inc., Douglas K. Tabor, individually and as officer of Texas Time
      Express, Inc., and Michael E. Staten, individually and as officer of Texas
      Time
      Express, Inc.*




In
      its
      complaint, Team alleges that the Company, in conjunction with the other named
      Defendants, tortiously interfered with an existing contract Team had in place
      with VRC Express, Inc. ("VRC"), its then existing Chicago, Illinois station
      location.  In their petition, Team alleges that the Company and other
      Defendants caused VRC to leave the Team network of companies, and become a
      branch office of Airgroup Corporation.  The suit seeks damages for the loss
      of business opportunity and profits as a result of VRC leaving the Team system.




The
      Company has tentatively concluded that no interference of the VRC contract
      occurred, and it intends to vigorously defend the matter. In that regard, the
      Company notes, among other things, that Team voluntarily terminated VRC, and
      that the contract under which VRC provided transportation services as an agent
      of Team, was terminable at will and contained no post-termination restriction
      on
      affiliation.




Since
      the
      Company’s investigation of the matter has not yet been completed, and since no
      assurances can be provided as to the ultimate outcome of litigation,
      particularly where fact-based disputes may arise, the Company cannot assure
      that
      it will not be subject to any liability thereunder. In the event that it is
      successful in asserting its claims, Team may be awarded relief consisting of,
      among others, the right to collect monetary damages from the Company.  Due
      to the initial stage of the proceedings, neither the Company nor its legal
      representatives are able to provide any definitive guidance on this matter.




**Item
      1A. Risk Factors**




**None**




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




**None**




**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**




34




**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 May 14, 2007
            
            Filed
                herewith





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:
                May 14, 2007
            
            /s/ Bohn
              H.
              CrainBohn
                H. Crain
              Chief
                Executive Officer


Date:
                May 14, 2007
            
            /s/ Rodney
              EatonRodney
                Eaton
              Vice
                President, Chief Accounting Officer and Controller


35




**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 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 200299.1
            
            Press
                Release dated May 14, 2007






36