**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**


**FORM
      10−Q**





( **Mark
      One)**





x
            **Quarterly
                report pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934**


**For
      the quarterly period ended March 31, 2007**





**or**





o
            **Transition
                report pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934**


**For
      the transition period from ________ to _____________**





**Commission
      file number:** **333-113564**





**Wako
      Logistics Group, Inc.**


(Exact
      name of registrant as specified in its charter)




**Delaware**
              **20-0262555**(State
                  or other jurisdiction of
              (IRS
                  Employer Identification No.)incorporation
                  or organization)
  **200
        E. Howard Avenue, Unit 232**


**Des
      Plaines, Illinois 60018**


(Address
      of principal executive offices with zip code)





**847-294-1600**


(Registrant’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 Securities Exchange Act of 1934 during
      the
      preceding 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. xYes  oNo





Indicate
      by check mark whether the Registrant is a large accelerated filer, an
      accelerated filer or a non−accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b−2 of the Exchange
      Act.


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.) o Yes  x No





As
      of May
      14, 2007, the registrant had 25,390,080 shares of its common stock
      outstanding. ****











**Wako
      Logistics Group, Inc.**





**TABLE
      OF CONTENTS**




Part
                  I:
              
              Financial
                  Information
              F-1Item
                  1:
              
              Financial
                  Statements
              F-1Condensed
                  Consolidated Statements of Operations for the Three Months Ended
                  March 31,
                  2007 and 2006
              F-1Condensed
                    Consolidated Balance Sheets as of March 31, 2007 and December
                    31,
                    2006
              F-3Condensed
                  Consolidated Statements of Cash Flows for the Three Months Ended
                  March 31,
                  2007 and 2006
              F-5Notes
                  to Condensed Consolidated Financial Statements
              F-6Item
                  2:
              
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              3Item
                  3:
              
              Quantitative
                  and Qualitative Disclosures About Market Risk
              12Item
                  4:
              
              Controls
                  and Procedures
              12Part
                  II:
              
              Other
                  Information
              14Item
                  1:
              
              Legal
                  Proceedings
              14Item
                  1A:
              
              Risk
                  Factors
              14Item
                  2:
              
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              16Item
                  3.
              
              Defaults
                  Upon Senior Securities
              16Item
                  4.
              
              Submission
                  of Matters to a Vote of Security Holders
              16Item
                  5.
              
              Other
                  Information
              16Item
                  6:
              
              Exhibits
              16Signatures
              
              
              17




**NOTE
      REGARDING FORWARD LOOKING STATEMENTS**




Certain
      statements in this report, including statements in the following discussion,
      may
      constitute forward-looking statements made pursuant to the Safe Harbor
      provisions of the Private Securities Litigation Reform Act of 1995. This report
      on Form 10-Q contains forward-looking statements concerning Wako Logistics
      Group, Inc. (“WLG,” the “Company” or the “Group”) and its future operations,
      plans and other matters. Any statements that involve discussions with respect
      to
      predictions, expectations, beliefs, plans, projections, objectives, assumptions
      or future events or performance (often, but not always, using phrases such
      as
“expects”, or “does not expect”, “is expected”, “anticipates” or “does not
      anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions,
      events or results “may”, “could”, “might”, or “will” be taken or occur or be
      achieved) are not statements of historical fact and may be “forward looking
      statements.”








The
      Company cautions readers regarding certain forward-looking statements in this
      document and in all of its communications to shareholders and others, including
      press releases, securities filings, and all other communications. WLG also
      cautions readers not to place undue reliance on any such forward-looking
      statements, which speak only as of the date made. Such forward-looking
      statements are based on the beliefs of WLG's management as well as on
      assumptions made by and information currently available to WLG at the time
      such
      statements were made. Forward-looking statements are subject to a variety of
      risks and uncertainties that could cause actual events or results to differ
      from
      those reflected in the forward-looking statements. Actual results could differ
      materially from those projected in the forward-looking statements, as a result
      of either the matters set forth or incorporated in this report generally or
      certain economic and business factors, some of which may be beyond the control
      of WLG. These factors include adverse economic conditions, entry of new and
      stronger competitors, inadequate capital, unexpected costs, failure to gain
      or
      maintain approvals for the sale and expansion of WLG's services in the
      jurisdictions where WLG conducts its business or the failure to capitalize
      upon
      access to new markets and those factors referred to or identified in Item 1
      of
      our Report on Form 10-KSB for the year ended December 31, 2006. WLG disclaims
      any obligation subsequently to revise any forward-looking statements to reflect
      events or circumstances after the date of such statements or to reflect the
      occurrence of anticipated or unanticipated events.





2


**Part
      I: Financial
      Information**





**Item
      1: Financial Statements**


**Wako
        Logistics Group, Inc.**
 
 **Consolidated
        Statements of Operations**
 3
        months
        ended March 31, 2006 and 2007
 (Dollars in thousands except share data and per share
        amounts)


**3
                  months ended**
                **March
                  31,****2006**
              
              **2007***(unaudited)*
              
              *(unaudited)**Note*
              
              *US$*
              
              *US$***Revenues:**Freight
              
              
              
              
              
              11,894
              
              
              15,975Agency
                  services
              
              
              
              
              
              543
              
              
              1,060Other
                  services
              
              
              
              
              
              7,245
              
              
              12,274**Total
                  revenues**
              
              
              
              
              
              19,682
              
              
              29,309**Operating
                  expenses**Cost
                  of forwarding
              
              
              
              
              
              (16,536
              )
              
              (24,561
              )Selling
                  and administrative expenses
              
              
              
              
              
              (3,217
              )
              
              (4,206
              )Depreciation
                  and amortization
              
              
              
              
              
              (144
              )
              
              (242
              )Total
                  operating expenses
              
              
              
              
              
              (19,897
              )
              
              (29,009
              )**(Loss)/Income
                  from operations**
              
              
              
              
              
              **(215**
              **)**
              
              **300**Other
                  income/
                  (expense)Interest
                  income
              
              
              
              
              
              6
              
              
              9Interest
                  expense
              
              
              
              
              
              (92
              )
              
              (118
              )Other
                  income, net
              
              
              
              
              
              72
              
              
              47******(Loss)/
                  Income before income taxes**
              
              
              
              
              
              (229
              )
              
              238Provision
                  for income taxes
              
              
              
              
              
              (26
              )
              
              (88
              )**Net
                  (Loss)/ Income**
              
              
              
              
              
              (255
              )
              
              150**Dividend
                  on preferred stock**
              
              
              
              
              
              (22
              )
              
              (22
              )**(Loss)/Income
                  applicable to common stock**
              
              
              
              
              
              (277
              )
              
              128Other
                  comprehensive income, net of taxes:Foreign
                  currency translation adjustment
              
              
              
              
              
              6
              
              
              28**Total
                  comprehensive income**
              
              
              
              
              
              (271
              )
              
              156
  The
        financial statements should be read in conjunction with the accompanying
        notes.
 F-1
 
 **Wako
        Logistics Group, Inc.**
 
 **Consolidated
        Statements of Operations**
 3
        months
        ended March 31, 2006 and 2007
 (Dollars in thousands except share data and per share
        amounts)
  **Net
                  (loss)****/ income per share:****Basic
                  earnings per share**
              
              
              *2*
              
              
              (0.01
              )
              
              0.00**Diluted
                  earnings per share**
              
              
              *2*
              
              
              (0.01
              )
              
              0.00**Weighted
                  average common shares outstanding****Basic**
              
              
              
              
              
              25,390,080
              
              
              26,690,080**Diluted**
              
              
              
              
              
              26,915,755
              
              
              26,833,422
  The
        financial statements should be read in conjunction with the accompanying
        notes.
 F-2
  **Wako
        Logistics Group, Inc.**
 
 **Consolidated
        Balance Sheets**
 At
        December 31, 2006 and March 31, 2007
 (Dollars in thousands except share data and per share
        amounts)
  **At**
                **December
                  31,**
                **2006**
              
              **At**
                **March
                  31,**
                **2007***(unaudited)**Note*
              
              *US$*
              
              *US$***ASSETS**Current
                  assetsCash
                  and cash equivalents
              
              
              
              
              
              1,528
              
              
              2,122Restricted
                  cash
              
              
              
              
              
              372
              
              
              508Certificates
                  of deposit
              
              
              
              
              
              245
              
              
              245Trade
                  receivables, net of allowance (2006-$520; 2007-$526)
              
              
              
              
              
              14,635
              
              
              12,222Deposits,
                  prepayments and other current assets
              
              
              
              
              
              687
              
              
              862Tax
                  prepaid
              
              
              
              
              
              108
              
              
              108Due
                  from related parties
              
              
              *5*
              
              
              198
              
              
              199**Total
                  current assets**
              
              
              
              
              
              17,773
              
              
              16,266Property,
                  plant and equipment, net
              
              
              
              
              
              927
              
              
              936Deposits
                  and other non-current assets
              
              
              
              
              
              216
              
              
              216Deferred
                  tax assets
              
              
              
              
              
              231
              
              
              254Intangible
                  assets, net
              
              
              
              
              
              4,052
              
              
              3,889Goodwill
              
              
              
              
              
              3,888
              
              
              3,888**Total
                  assets**
              
              
              
              
              
              27,087
              
              
              25,449**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  liabilitiesBank
                  overdrafts
              
              
              
              
              
              616
              
              
              478Trade
                  payables
              
              
              
              
              
              8,006
              
              
              7,374Accrued
                  charges and other creditors
              
              
              
              
              
              3,534
              
              
              3,635Bank
                  loans - maturing within one year
              
              
              *3*
              
              
              3,383
              
              
              2,428Current
                  portion of capital lease obligations
              
              
              
              
              
              138
              
              
              131Due
                  to directors
              
              
              *5*
              
              
              439
              
              
              374Income
                  tax payable
              
              
              
              
              
              287
              
              
              241Total
                  current liabilities
              
              
              
              
              
              16,403
              
              
              14,661Non-current
                  liabilitiesNon-current
                  portion of capital lease obligations
              
              
              
              
              
              38
              
              
              15Other
                  non-current liabilities
              
              
              
              
              
              28
              
              
              33Bank
                  loans - maturing after one year
              
              
              *3*
              
              
              800
              
              
              750866
              
              
              798Commitments
                  and contingencies
              
              
              *4*
              
              
              -
              
              
              -
  The
        financial statements should be read in conjunction with the accompanying
        notes.
 F-3
  **Wako
        Logistics Group, Inc.**
 
 **Consolidated
        Balance Sheets**
 At
        December 31, 2006 and March 31, 2007
 (Dollars in thousands except share data and per share
        amounts)
  **At**
                **December
                  31,**
                **2006**
              
              **At**
                **March
                  31,**
                **2007***(unaudited)**US$*
              
              *US$***Stockholders'
                  equity**Preferred
                  stock, US$0.001 par value, 5 million shares authorized and none
                  issued
              
              
              -
              
              
              -Convertible
                  redeemable preferred stock, $0.001 par value, 2.0 million shares
                  authorized and issued (Redemption and liquidation value of
                  $1,500)
              
              
              2
              
              
              2Common
                  stock, US$0.001 par value, 55 million shares authorized,
                  25,390,080 shares issued and outstanding
              
              
              25
              
              
              25Additional
                  paid-in capital
              
              
              8,014
              
              
              8,030Accumulated
                  other comprehensive income
              
              
              115
              
              
              143Retained
                  earnings
              
              
              1,662
              
              
              1,790**Total
                  stockholders' equity**
              
              
              9,818
              
              
              9,990**Total
                  liabilities and stockholders' equity**
              
              
              27,087
              
              
              25,449
  The
        financial statements should be read in conjunction with the accompanying
        notes.
 F-4
  **Wako
        Logistics Group, Inc.**
 
 **Consolidated
        Statements of Cash Flows**
 3
        months
        ended March 31, 2006 and 2007
 (Dollars in thousands except share data and per share
        amounts)
  **3
                  months ended**
                **March
                  31,****2006**
              
              **2007***(unaudited)*
              
              *(unaudited)**US$*
              
              *US$***Cash
                  flows from****operating
                  activities:**Net(loss)
                  / income
              
              
              (255
              )
              
              150**Adjustments
                  to reconcile net****(loss)
                  / income to net cash provided by operating
                  activities**Depreciation
              
              
              59
              
              
              79Amortization
              
              
              82
              
              
              163Bad
                  debts written off
              
              
              74
              
              
              4Other
                  non-cash items
              
              
              3
              
              
              16**Changes
                  in working capital:**Trade
                  receivables
              
              
              2,213
              
              
              2,409Deposits,
                  prepayments and other current assets
              
              
              (228
              )
              
              (174
              )Due
                  from related parties
              
              
              35
              
              
              -Trade
                  payables
              
              
              (889
              )
              
              (632
              )Accrued
                  charges and other creditors
              
              
              430
              
              
              123Due
                  from related parties
              
              
              (12
              )
              
              (1
              )Due
                  to directors
              
              
              (62
              )
              
              (65
              )Income
                  tax payable
              
              
              (76
              )
              
              (69
              )**Net
                  cash provided by operating activities**
              
              
              1,374
              
              
              2,003**Cash
                  flows from investing activities:**Acquisitions
                  of property, plant and equipment
              
              
              (25
              )
              
              (78
              )**Net
                  cash used in investing activities**
              
              
              (25
              )
              
              (78
              )**Cash
                  flows from financing activities:**Restricted
                  cash
              
              
              -
              
              
              (136
              )Bank
                  overdrafts
              
              
              (56
              )
              
              (138
              )Bank
                  loans
                  repaid
              
              
              (490
              )
              
              (1,005
              )Due
                  from related parties
              
              
              1
              
              
              -Capital
                  lease obligations paid
              
              
              (34
              )
              
              (30
              )Payment
                  of dividend to preference shareholder
              
              
              -
              
              
              (22
              )**Net
                  cash****used in financing activities**
              
              
              (579
              )
              
              (1,331
              )**Net
                  increase in cash and cash equivalents**
              
              
              770
              
              
              594**Cash
                  and cash equivalents at beginning of period**
              
              
              1,212
              
              
              1,528**Cash
                  and cash equivalents at end of period**
              
              
              1,982
              
              
              2,122
  The
        financial statements should be read in conjunction with the accompanying
        notes.
 F-5
  **Wako
        Logistics Group, Inc.**
 
 **Notes
        to the Consolidated Financial Statements**
 3
        months
        ended March 31, 2006 and 2007
 
  **1.**
              **ORGANIZATION
                  AND BASIS OF PRESENTATION**
 
 Wako
        Logistics Group, Inc. (“WLG,” the “Company” or together with its subsidiaries
        collectively, the “Group”) is an international, non-asset-based logistics
        company that provides air and ocean freight forwarding, contract logistics,
        customs brokerage and other supply chain management services from its offices
        in
        Hong Kong, the Peoples Republic of China (“PRC” or “China”), Australia, United
        States, United Kingdom and through a worldwide network of independent
        cargo agents.
 
 WLG’s
        business is conducted by its operating subsidiaries, which include the following
        entities: Wako Express (HK) Co. Ltd. (“WEHK”), Wako Air Express (HK) Co. Ltd.
 (“WAE”) , Wako Express (China) Co. Ltd. (“WE China”), a wholly-owned
        subsidiary of WEHK, WLG (USA) LLC (“WLG (USA)”) (formerly dba “Kay O’Neill”),
        Asean Cargo Services Pty Limited (“Asean”) and Asean Logistics, Inc. (“ALI”),
        Mares-Shreve & Associates, Inc (“MSA”) and its wholly owned subsidiary, Sea
        Systems Ocean Line, Inc. (“Sea Systems”) (collectively, “MSA Group”) and WLG
        (UK) Limited (“WLG (UK)”), which is wholly-owned by WLG (UK) Holdings Limited
        (“WLG UK Holdings”). With
        the
        exception of performing administrative, oversight and regulatory tasks, no
        other
        business activities are carried on by the Group's parent company, Wako Logistics
        Group, Inc.
 
 Wako
        Logistics Group, Inc. was incorporated on December 2, 2003, pursuant to the
        laws
        of Delaware in the United States of America. Pursuant to certain Share
        Exchange Agreements entered into on January 18, 2004, WLG consummated a
        combination with Wako Express (HK) Company Limited and Wako Air Express (HK)
        Company Limited by the issuance of 20,000,900 shares of common stock in WLG
        in
        exchange for 100% of the outstanding stock of WEHK and WAE.
 
 WEHK
        was
        incorporated in Hong Kong on June 4, 1982, and its principal activity is
        the
        provision of sea freight-forwarding services. WAE was incorporated in Hong
        Kong
        on February 24, 1989, to provide air freight-forwarding services.
 
 In
        July
        2004, the Group established WE China as a wholly owned subsidiary. WE China
        commenced business in February 2005 to provide sea and air freight forwarding
        and logistics services in China and to companies trading with
        China.
 
 On
        April
        1, 2005, WLG completed the acquisition of 100% of the voting interests in
        Kay
        O'Neill (USA) LLC, a company based in Chicago, Illinois. Kay O’Neill changed its
        name to WLG (USA) LLC in June 2005, and now operates as WLG (USA). WLG (USA)
        is
        a non-asset based freight forwarding company and provides freight forwarding
        and
        logistics services and oversees the Group’s business in the US.
 
 Effective
        October 1, 2005, WLG acquired all of the issued and outstanding shares of
        common
        stock of Asean Logistics, Inc., a California corporation, and made it a first
        tier subsidiary of WLG (USA). ALI is a non-asset based freight forwarding
        company and provides freight-forwarding services to its customers who ship
        products primarily between Asia and the United States. Substantially all
        of
        ALI’s administrative activities have been assumed by WLG (USA).
 
 On
        November 9, 2005, the Group acquired all of issued and outstanding common
        stock
        of Asean, which is a non-asset based freight forwarding and logistics provider.
        Based in Sydney, Australia, with offices in Melbourne and Brisbane, Asean
        provides freight-forwarding and logistics services, as well as customs brokerage
        services to its customers, who ship products primarily between Asia and
        Australia.
  F-6
  **Wako
        Logistics Group, Inc.**
 
 **Notes
        to the Consolidated Financial Statements**
 3
        months
        ended March 31, 2006 and 2007
 
  **1.**
              **ORGANIZATION
                  AND BASIS OF PRESENTATION
                  (CONTINUED)**
 
 On
        September 15, 2006, the Group’s UK subsidiary, WLG (UK) commenced business by
        acquiring the operating assets and assuming limited liabilities of a division
        of
        a UK freight forwarding and logistics company doing business in Manchester,
        England (“UK Division”). WLG
        (UK)
        is located in Manchester, England, and it now operates the former business
        of UK
        Division, which provides sea and air freight forwarding, warehousing and
        logistics services, mostly to UK based customers.
 
 The
        Group, effective December 1, 2006, acquired all of the voting shares of
        Mares-Shreve & Associates, Inc. and its wholly owned subsidiary, Sea Systems
        Ocean Line, Inc. MSA, which was incorporated on May 15, 1979, in Washington
        State, provides customs brokerage services, and Sea Systems, incorporated
        in
        Washington State on February 26, 1991, is a non-asset based freight forwarder
        and provides air and sea freight forwarding and related logistics services.
        The
        MSA Group mainly serves customers that ship products from Asia to the US.
 
 As
        of
        March 31, 2007, all subsidiaries are wholly-owned, and all material intercompany
        balances and transactions have been eliminated in consolidation.
 
 The
        accompanying financial data as of March 31, 2007, and for the 3 months ended
        March 31, 2007 and 2006, have been prepared by the Company, without
        audit.
 
 Certain
        information and footnote disclosures normally included in financial statements
        prepared in accordance with accounting principles generally accepted in the
        United States of America have been condensed or omitted pursuant to such
        rules
        and regulations. However, the Company believes that the disclosures herein
        are
        adequate to make the information presented not misleading. These financial
        statements should be read in conjunction with the Company’s audited consolidated
        financial statements and notes thereto for the year ended December 31,
        2006.
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates that affect the reported amounts of assets, liabilities, revenues
        and
        expenses and the disclosure of contingent assets and liabilities. Actual
        results
        could differ from these estimates.
 
 The
        unaudited, interim consolidated financial statements of the Company have
        been
        prepared in accordance with accounting principles generally accepted in the
        United States for interim financial information. In
        the
        opinion of the management, all adjustments (which include only normal recurring
        adjustments) necessary to present fairly the financial position as of March
        31,
        2007, and results of operations and cash flows for the 3 months ended March
        31,
        2007 and 2006, have been made. The results of operations for the 3 months
        ended
        March 31, 2007 and 2006, are not necessarily indicative of the operating
        results
        for the full year.
  F-7
  **Wako
        Logistics Group, Inc.**
 
 **Notes
        to the Consolidated Financial Statements**
 3
        months
        ended March 31, 2006 and 2007
 
  **2.**
              **EARNINGS
                  / (LOSS) PER SHARE**
 
 Earnings
        / (Loss) per share were computed as follows:
 
 **3
                  months ended March 31, 2006****Income
                  (Loss)**
              
              **Weighted
                  average number of shares**
              
              **Per
                  share amount***US$*Net
                  loss
              
              
              (255
              )Dividend
                  on convertible redeemable preferred stock
              
              
              (22
              )
              
              2,000,000
              
              
              0.01Basic
                  earnings per shareLoss
                  available to common stockholders
              
              
              (277
              )
              
              25,390,080
              
              
              (0.01
              )Effect
                  of dilutive securitiesWarrants
              
              
              -
              
              
              32,432Convertible
                  redeemable preferred stock
              
              
              -
              
              
              1,493,243Diluted
                  earnings per shareLoss
                  available to common stockholdersassuming
                  conversion
              
              
              (277
              )
              
              26,915,755
              
              
              (0.01
              )There
                  are no anti-dilutive shares.
 
 **3
                  months ended March 31, 2007****Income
                  (Loss)**
              
              **Weighted
                  average number of shares**
              
              **Per
                  share amount***US$*Net
                  Income
              
              
              150Dividend
                  on convertible redeemable preferred stock
              
              
              (22
              )
              
              2,000,000
              
              
              0.01Basic
                  earnings per shareIncome
                  available to common stockholders
              
              
              
              
              
              25,390,080Additional
                  common stock to be issued as earn-out
                  payment
              
              
              
              
              
              1,300,000128
              
              
              26,690,080
              
              
              0.00Effect
                  of dilutive securitiesWarrants
              
              
              -
              
              
              21,671Stock
                  option
              
              
              
              
              
              121,671Convertible
                  redeemable preferred stock (Note #)
              
              
              -
              
              
              -Diluted
                  earnings per shareIncome
                  available to common stockholdersassuming
                  conversion of Warrants
              
              
              128
              
              
              26,833,422
              
              
              0.00
 
 #:
                  Common
                      stock is not increased by 2,000,000 related to the convertible
                      preferred
                      stock because the effect would be
                      anti-dilutive.
 F-8
  **Wako
        Logistics Group, Inc.**
 
 **Notes
        to the Consolidated Financial Statements**
 3
        months
        ended March 31, 2006 and 2007
 
  **3.**
              **BANKING
                  FACILITIES**
 
 The
                  Group has obtained bank facilities from creditworthy commercial
                  banks as
                  follows:
 
 **At**
                **December
                  31,**
                **2006**
              
              **At**
                **March
                  31,**
                **2007***(unaudited)**US$*
              
              *US$***Facilities
                  granted**Committed
                  lines-
                  bank guarantees
              
              
              784
              
              
              918-
                  overdraft facilities
              
              
              459
              
              
              471-
                  bank loans
              
              
              5,266
              
              
              5,345Total
                  committed bank facilities
              
              
              6,509
              
              
              6,734
 
 The
        terms
        of the loan facilities, including the amounts and maturity dates, are agreed
        between the banks and the Group from time to time.
 
 Bank
        guarantees of $733 will expire within one year from March 31, 2007, but may
        be
        renewed provided the Group makes available sufficient
        cash required by the banks to collateralize each guarantee. The
        remaining bank guarantee of $185 and the overdraft facilities have no expiry
        date, but the bank or WLG may terminate either facility by giving 30 days
        notice
        to the other party. The bank loans mature on various dates as follows: (i)
        $114
        on October 17, 2007, (ii) $1,000 revolving line of credit in October 2007,
        and
        (iii) $1,000 term loan in November 2011. The remaining loan facility of $3,231
        is an ongoing facility that may be terminated by either the bank or WLG giving
        30 days notice to the other party.
 
 For
        the
        total bank loans of $5,345 granted by various banks, (i) $114 is unsecured
        and
        repayable within one year by monthly installments, (ii) the $1,000 revolving
        line of credit and the $1,000 five year term loan are secured by a first
        position blanket lien on substantially all of the assets of WLG (USA) and
        MSA
        Group and a guarantee provided by the Group’s parent company, (iii) $3,231 is
        secured by Asean’s accounts receivable and a registered mortgage charge over the
        assets of Asean and personal guarantees from Asean’s former shareholders. As of
        March 31, 2007, these bank loans carried interest rates from 8.07% to 11.60%
        per
        annum.
 
 Certain
        of the bank guarantees, totaling $733, are collateralized by cash of $753.
        The
        remaining bank guarantee of $185 is secured by (i) a guarantee and indemnity
        provided by WLG (Aust) and various individuals and entities associated with
        Asean, (ii) a registered mortgage debenture over all of the assets of Asean
        and
        (iii) real estate owned by various individuals associated with Asean. The
        overdraft facility of $425 is secured by (i) a guarantee and indemnity from
        WLG
        (Aust) and personal guarantees provided by various individuals and entities
        associated with Asean, (ii) a registered mortgage debenture over all of Asean’s
        assets and (iii) real estate owned by various individuals associated with
        Asean.
 
 F-9
  **Wako
        Logistics Group, Inc.**
 
 **Notes
        to the Consolidated Financial Statements**
 3
        months
        ended March 31, 2006 and 2007
 
  **3.**
                **BANKING
                    FACILITIES
                    (CONTINUED)**
 
 **At**
                **December
                  31,**
                **2006**
              
              **At**
                **March
                  31,**
                **2007***(unaudited)**US$*
              
              *US$***Utilized**Committed
                  lines-
                  bank guarantees
              
              
              784
              
              
              918-
                  overdraft facilities
              
              
              459
              
              
              471-
                  bank loans
              
              
              4,183
              
              
              3,178Total
                  bank facilities utilized
              
              
              5,426
              
              
              4,567
  **4.**
              **COMMITMENTS
                  AND CONTINGENCIES**
 
 ***Commitments
        under operating leases***
 
 The
                  Group rents office space, staff quarters and certain office equipment
                  under non-cancellable operating leases. The following table summarizes
                  these approximate future minimum lease payments for operating leases
                  in
                  effect as of March 31, 2007, and December 31,
                  2006:
 
 **At**
                **December
                  31,**
                **2006**
              
              **At**
                **March
                  31,**
                **2007***(unaudited)**US$*
              
              *US$*Within
                  one year
              
              
              790
              
              
              747Over
                  one year but not exceeding two years
              
              
              543
              
              
              487Over
                  two years but not exceeding three years
              
              
              300
              
              
              251Over
                  three years but not exceeding four years
              
              
              122
              
              
              94Over
                  four years but not exceeding five years
              
              
              8
              
              
              5Total
                  operating lease commitments
              
              
              1,763
              
              
              1,584
 
 Rent
                  expense under operating leases for the 3 months ended March 31,
                  2006 and
                  2007, was $169 and $207,
                  respectively.
 
 ***Cargo
                  space commitments***
 
 The
                  Group in the course of its business enters into agreements with
                  various
                  air freight carriers pursuant to which the Group is committed to
                  utilize a
                  minimum amount of cargo space each year. As of March 31, 2007,
                  the
                  obligation for the minimum amount of cargo space to be used for
                  the
                  following twelve months is $4,036.
 
 F-10
 
 **Wako
        Logistics Group, Inc.**
 
 **Notes
        to the Consolidated Financial Statements**
 3
        months
        ended March 31, 2006 and 2007
 
  **4.**
              **COMMITMENTS
                  AND CONTINGENCIES
                  (CONTINUED)**
 
 ***Contingencies***
 
 The
        Group
        is subject to claims that arise primarily in the ordinary course of business.
        In
        general, such claims are covered by insurance policies
        issued to cover the Group’s businesses.
 
 As
        of
        March 31, 2007, the aggregate, outstanding amount of claims was approximately
        $34. Management
        believes that the disposition or ultimate resolution of such claims will
        not
        have a material adverse effect on the financial position of the Group.
  **5.**
              **RELATED
                  PARTY TRANSACTIONS**
 
 **Name
                  and relationship of related parties**Name
              
              Relationship
                  to the GroupChristopher
                  Wood (“CW”)
              
              Shareholder
                  and director of WLGYip
                  King Lin, Paul (“PY”)
              
              Director
                  of the Group’s subsidiaries until April 2006Paul
                  Pomroy (‘’PP’’)
              
              PP
                  is a director of Asean and WLG (Aust)Wako
                  Express (China) Company Limited (“WEC”)
              
              Common
                  shareholders and directorsAsean
                  Logistics, Inc.
              
              PY
                  was a shareholder of ALI until January 3, 2005. On October 1, 2005,
                  ALI
                  became a subsidiary of the GroupWako
                  Logistic (Thailand) Co. Ltd (“WLT”)
              
              CW
                  is a shareholder and director of WLTJoin
                  Wing Properties Limited (“JWP”)
              
              CW
                  is a shareholder and director of JWPAngus
                  International Freight Pty Limited (‘’AIFP’’)
              
              PP
                  was a director of AIFP until May 1, 2006Warehouse
                  Solutions International Pty Limited (‘’WSIP’’)
              
              PP
                  was a director of WSIP until May 1, 2006Asean
                  Cargo Services (Qld) Pty Limited (‘’ACSQ’’)
              
              PP
                  is a director of ACSQBettervale
                  Pty Limited (‘’BPL’’)
              
              PP
                  was a director of BPL until May 1,
                  2006
  F-11
  **Wako
        Logistics Group, Inc.**
 
 **Notes
        to the Consolidated Financial Statements**
 3
        months
        ended March 31, 2006 and 2007
 
  **5.**
              **RELATED
                  PARTY TRANSACTIONS
                  (CONTINUED)**
 
 **Details
                  of related parties**Name
              
              Principal
                  activities
              
              Ownership*Name
                  of owner*
              
              *%
                  held*WLT
              
              Provision
                  of sea and air freight forwarding services in Thailand #
              
              CW
                Others
              
              50%
                50%JWP
              
              Leases
                  property to CW
              
              CW
              
              100%
 
 #
        :
 In
        the
        normal course of business, the Group enters into agency agreements with various
        overseas agents so that both the Group and the overseas agents can jointly
        handle customer shipments on behalf of the other in both the port of loading
        and
        the port of destination.
  Under
        these agency agreements, the Group and the overseas agents are obliged to
        perform their respective services at their own places of business and, in
        return, earn their respective service fees from the other party and either
        the
        shipper or the consignee.
 
 In
        addition to the above, under theses agency agreements, sometimes either the
        Group or the overseas agent is obliged to act as a “collection agent” to collect
        the freight revenue from customers (either the shipper or the consignee).
        Since
        the decision as to who is to pay the freight cost is determined by either
        the
        shipper and / or the consignee, both the Group and the overseas agent only
        act
        in accordance with the customers’ instructions in the collection process. In
        case the collecting party is not the party who pays the freight cost to the
        carrier, the collecting party has to reimburse the other party to enable
        it to
        settle the freight cost.
  In
        both
        cases, either the Group or the overseas agent has to issue an invoice to
        the
        other party for an amount attributable to it. The amounts include the service
        fees earned and may also include the freight cost collected by the other
        party.
 
 During
        the periods indicated, one overseas agent is a related party. In
        identifying the related party transactions for accounting disclosure purposes,
        only the handling fee income earned by the Group from related party overseas
        agents and the handling fees paid by the Group to related party overseas
        agents
        are disclosed as related party transactions. The amounts that the Group billed
        to the related party overseas agents, who only acted as collection agents,
        are
        not shown as related party transactions. Similarly, the amounts that the
        related
        party overseas agents billed to the Group, who only acted as a collection
        agent,
        are not shown as related party transactions.
  F-12
  **Wako
        Logistics Group, Inc.**
 
 **Notes
        to the Consolidated Financial Statements**
 3
        months
        ended March 31, 2006 and 2007
 
  **5.**
              **RELATED
                  PARTY TRANSACTIONS
                  (CONTINUED)**
 
 The
        following is a summary of the amounts included in the accompanying balance
        sheets:
 
 **At**
                **December
                  31,**
                **2006**
              
              **At**
                **March
                  31,**
                **2007***(unaudited)**US$*
              
              *US$***Due
                  from related parties (Note (i))**WLT
              
              
              18
              
              
              14ACSQ
              
              
              169
              
              
              174PP
              
              
              11
              
              
              11198
              
              
              199**Due
                  to directors (Note (ii))**CW
              
              
              439
              
              
              374
 
 Notes :
 
 (i)
              With
                  the exception of amounts due to directors, the amounts due from
                  / to
                  related parties are unsecured, interest-free and repayable on demand.
                  Transactions in these accounts during the periods covered by these
                  financial statements represented
                  mainly:
 
 a)
              amounts
                  paid/ collected on behalf of related
                  parties;
 
 b)
              amounts
                  paid/ payable to and received/ receivable from directors, including
                  dividends; and
 
 c)
              handling
                  income receivable/ handling fee payable/ rental payable and related
                  settlements.
 
 (ii)
              Amounts
                  due to directors are unsecured, interest free and repayable on
                  demand.
  F-13
  **Wako
        Logistics Group, Inc.**
 
 **Notes
        to the Consolidated Financial Statements**
 3
        months
        ended March 31, 2006 and 2007
 
  **5.**
              **RELATED
                  PARTY TRANSACTIONS
                  (CONTINUED)**
 
 **Summary
        of transactions with related entities (unaudited):**
 
 **WSIP**
              
              **BPL**
              
              **PP**
              
              **ACSQ**
              
              **AIFP**
              
              **WLT**
              
              **Total***US$*
              
              *US$*
              
              *US$*
              
              *US$*
              
              *US$*
              
              *US$*
              
              *US$*January
                  1, 2006
              
              
              124
              
              
              7
              
              
              7
              
              
              155
              
              
              190
              
              
              13
              
              
              496Trade
                  transactions
              
              
              (42
              )
              
              (24
              )
              
              -
              
              
              2
              
              
              -
              
              
              22
              
              
              (42
              )Net
                  settlements
              
              
              28
              
              
              18
              
              
              2
              
              
              (4
              )
              
              (13
              )
              
              (12
              )
              
              19March
                  31, 2006
              
              
              110
              
              
              1
              
              
              9
              
              
              153
              
              
              177
              
              
              23
              
              
              473January
                  1, 2007
              
              
              -
              
              
              -
              
              
              11
              
              
              169
              
              
              -
              
              
              18
              
              
              198Net
                  settlements
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (4
              )
              
              (4
              )Exchange
                  alignment
              
              
              -
              
              
              -
              
              
              -
              
              
              5
              
              
              -
              
              
              -
              
              
              5March
                  31, 2007
              
              
              -
              
              
              -
              
              
              11
              
              
              174
              
              
              -
              
              
              14
              
              
              199
  F-14
 
 **Wako
        Logistics Group, Inc.**
 
 **Notes
        to the Consolidated Financial Statements**
 3
        months
        ended March 31, 2006 and 2007
 
  **5.**
              **RELATED
                  PARTY TRANSACTIONS
                  (CONTINUED)**
 
 **Additional
        details of transactions**
  **3
                  months ended**
                **March
                  31,****2006**
              
              **2007***(unaudited)*
              
              *(unaudited)**US$*
              
              *US$***Handling
                  fee paid/payable**WEC
              
              
              1
              
              
              -**Rental
                  paid/payable**JWP
              
              
              27
              
              
              27
 
 **Summary
        of transactions during the periods with directors /
        shareholders:**
 
 **CW***(unaudited)**US$*January
                  1, 2006
              
              
              325Expenses
                  paid
              
              
              (62
              )March
                  31, 2006
              
              
              263January
                  1, 2007
              
              
              439Expenses
                  paid
              
              
              (65
              )March
                  31, 2007
              
              
              374
 
 Notes :
 
 Expenses/
        loan repayment include amounts that were paid either directly to or for the
        benefit of CW.
  **6.**
              **SUPPLEMENTAL
                  DISCLOSURES OF CASH FLOW
                  INFORMATION**
 
 **3
                  months ended**
                **March
                  31,****2006**
              
              **2007***(unaudited)*
              
              *(unaudited)**US$*
              
              *US$***Cash
                  paid for:**Interest
                  expense
              
              
              92
              
              
              118Income
                  taxes
              
              
              58
              
              
              156
 
 F-15
 
 **Wako
        Logistics Group, Inc.**
 
 **Notes
        to the Consolidated Financial Statements**
 3
        months
        ended March 31, 2006 and 2007
 
  **7.**
              **STOCK
                  OPTION**
  In
          April
          2005, the board and stockholders of the Company approved the Wako Logistics
          Group, Inc. 2005 Stock Incentive Plan (the “Plan”). The Plan, which is effective
          until April 19, 2015, provides for awarding stock options, stock appreciation
          rights and restricted stock to our officers, employees, directors and
          consultants, as well as to officers, employees, directors and consultants
          who
          provide services for any of the Group’s subsidiaries or affiliates. The Plan is
          administered by our board, provided that the board in the future may appoint
          a
          committee to administer the Plan. At the inception of the Plan, 4,000,000
          shares
          of common stock were approved for the issuance of awards under the Plan,
          which
          amount shall be automatically increased (but not decreased) to 20% of the
          total
          number of the Company’s shares of common stock issued and outstanding on January
          1st of each year beginning on January 1, 2006. Based on shares outstanding
          as of
          January 1, 2007, the number of shares reserved under the Plan was increased
          to
          5,078,016.
 
 In
          general, stock options awarded under the Plan vest over three years and
          expire
          in a maximum of ten years from the effective date. However, the Plan permits
          significant latitude to allow the board to grant options with varying terms,
          such as changing the vesting period, the term and exercise price. Once
          the
          board, under provisions of the Plan, grants an option, the Company will
          estimate
          the fair value of the option, and the compensation expense will be recognized
          over the vesting period of the option.
 As
            of
            August 2005, the Company had committed to award 200,000 options to purchase
            common stock to one of its officers, and as of that date, all substantial
            terms
            and conditions for the option were communicated to and agreed with the
            officer.
            To date, the board has not yet formally approved the award, but it has
            approved
            the employment agreement containing the terms of the option commitment.
            As such,
            the Company views approval of this option to be a formality and has established
            August 2005 as the grant date for this option. Effective January 15,
            2007, the
            board approved and awarded options to three employees to purchase 20,000
            shares
            of the Company’s common stock.
 
 The
            fair
            value of each option granted during the three months ended March 31,
            2007, and
            the option granted in August 2005, was estimated as of the grant date
            for each
            option using the Black-Scholes option-pricing model. The assumptions
            used for
            the model were as follows: (1) expected life of 2 and 3 years for the
            August
            2005 and January 2007 options, respectively; (2) zero dividend yield;
            (3)
            volatility of 45% and 57.7% for the August 2005 and January 2007 options,
            respectively; (4) no post vesting terminations; and (5) a risk free interest
            rate of 4.6%. The weighted average grant-date fair value of the options
            granted
            in August 2005 and January 2007 was $0.28 and $1.22 per share,
            respectively.
 
 Effective
            January 1, 2006, the Company adopted the fair value recognition provisions
            of SFAS No. 123(R) using the modified prospective transition method.
            As a
            result, the compensation expense related to the fair value of stock options
            charged to income for the period ended March 31, 2007, was $16. As of
            March 31,
            2007, the compensation expense related to non-vested options totaled
            $42 and is
            expected to be recognized over 2.75 years. The total intrinsic value
            of the
            options outstanding and options exercisable as of March 31, 2007, was
            $120 and
            $105, respectively. No tax benefit was recognized for the stock option
            expense
            recorded for the three months ended March 31, 2007.
 The
        following table shows the outstanding options granted under the
        Plan:
  Shares
              
              Weighted
                  Ave.
                exercise
                  price
              
              Weighted
                  Ave.
                Remaining
                  Contractual
                Term
                  (years)Outstanding
                  at April 30, 2005 (inception of Plan)
              
              
              -
              
              
              -Granted
                  in 2005
              
              
              200,000
              
              
              1.00Outstanding
                  at December 31, 2005
              
              
              200,000
              
              
              1.00
              
              9.58Granted
                  in 2006
              
              
              -Outstanding
                  at December 31, 2006
              
              
              200,000
              
              
              1.00
              
              8.58Granted
                  during the three months ended March 31, 2007
              
              
              20,000
              
              
              2.85Outstanding
                  at March 31, 2007
              
              
              220,000
              
              
              1.17
              
              8.46Exercisable
                  at March 31, 2007
              
              
              176,667
              
              
              1.17
              
              8.35
 
 The
        following schedule presents shares of common stock issued and outstanding
        and
        reserved for future issuance as of March 31, 2007:
 
 Shares
                  of common stock outstanding
              
              
              25,390,080Reserved
                  for future issuanceOptions
                  granted to employees and officer
              
              
              220,000Earn-Out
                  shares earned but not issued
              
              
              1,300,000Warrants
              
              
              100,0001,620,000Total
                  shares issued and outstanding and reserved for future issuance
                  at March
                  31, 2007
              
              
              27,010,080
  F-16
  **Wako
        Logistics Group, Inc.**
 
 **Notes
        to the Consolidated Financial Statements**
 3
        months
        ended March 31, 2006 and 2007
 
  **8.**
              **INCOME
                  TAX**
 
 In
        July
        2006, the Financial Accounting Standards Board (FASB) issued Interpretation
        No.
        48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB
        Statement No. 109 (FIN 48), which clarifies the accounting and disclosure
        for
        uncertainty in tax positions, as defined, and prescribes the measurement
        process
        and a minimum recognition threshold for a tax position, taken or expected
        to be
        taken in a tax return, that is required to be met before being recognized
        in the
        financial statements. Under FIN 48, the Company must recognize the tax benefit
        from an uncertain position only if it is more likely than not the tax position
        will be sustained on examination by the taxing authority, based on the technical
        merits of the position. The tax benefits recognized in the financial statements
        attributable to such position are measured based on the largest benefit that
        has
        a greater than 50% likelihood of being realized upon the ultimate resolution
        of
        the tax position.
 
 As
        of
        January 1, 2007, the Company is subject to the provisions of FIN 48, and
        has
        analyzed its filing positions in all of the federal, state and foreign
        jurisdictions where it is required to file income tax returns, as well as
        for
        all open years for those jurisdictions. As of December 31, 2006, and March
        31,
        2007, the Company has identified the following jurisdictions as “major” tax
        jurisdictions, as defined, in which it is required to file income tax returns:
        United States; United Kingdom; Hong Kong; Australia and China. Based on the
        evaluations noted above, the Company has concluded that there are no significant
        uncertain tax positions requiring recognition in its consolidated financial
        statements. The evaluations were performed for the tax years that remain
        open
        for examination which are the following: (1) United States - December 31,
        2003
        through 2006; (2) United Kingdom - December 31, 2006; (3) Hong Kong - April
        30,
        2001 to December 31, 2006; (4) Australia - June 30, 2003, through December
        31,
        2006 and (5) China - calendar years 2005 and 2006. Based on a review of tax
        positions for all open years, the Company did not record a cumulative effect
        adjustment related to the adoption of FIN 48. No reserves for uncertain income
        tax positions have been recorded pursuant to FIN 48 during the three months
        ended March 31, 2007, and the Company does not anticipate that it is reasonably
        possible that any material increase or decrease in its unrecognized tax benefits
        will occur within twelve months.
 
 Upon
        adoption of FIN 48 on January 1, 2007, and as of March 31, 2007, the Company
        had
        no unrecognized tax benefits or accruals for the potential payment of interest
        and penalties. The Company’s policy for recording interest and penalties
        associated with unrecognized tax benefits and tax audits is to record such
        items
        as a component of the provision for income tax expense. For the three months
        ended March 31, 2007, no interest or penalties were recorded relating to
        the
        settlement of any income tax audits.
 
 F-17
  **Wako
        Logistics Group, Inc.**
 
 **Notes
        to the Consolidated Financial Statements**
 For
        the 3
        months ended March 31, 2006 and 2007
 
  **9.**
              **SEGMENTS
                  OF THE BUSINESS**
 
 **(a)**
              **Business
                  segments**
 
 The
        Group
        operates mainly in three business segments, being the provision of (i) air
        forwarding, (ii) sea forwarding and (iii) customs brokerage services. The Group ’s
        operations for the air,
        sea
        and customs brokerage segments are
        summarized in the following table:
  **(i)**
              **During
                  the 3 months ended March 31, 2006 and 2007
                  (unaudited)**
 
 **Air
                  forwarding**
              
              **Sea
                  forwarding**
              
              **Customs
                  brokerage**
              
              **Total****2006**
              
              **2007**
              
              **2006**
              
              **2007**
              
              **2006**
              
              **2007**
              
              **2006**
              
              **2007***US$*
              
              *US$*
              
              *US$*
              
              *US$*
              
              *US$*
              
              *US$*
              
              *US$*
              
              *US$*Revenue
              
              
              6,497
              
              
              7,248
              
              
              7,591
              
              
              14,027
              
              
              5,594
              
              
              8,034
              
              
              19,682
              
              
              29,309Cost
                  of forwarding
              
              
              (5,458
              )
              
              (6,015
              )
              
              (5,753
              )
              
              (11,128
              )
              
              (5,325
              )
              
              (7,418
              )
              
              (16,536
              )
              
              (24,561
              )Depreciation
              
              
              (19
              )
              
              (24
              )
              
              (35
              )
              
              (106
              )
              
              (5
              )
              
              (8
              )
              
              (59
              )
              
              (138
              )Interest
                  income
              
              
              3
              
              
              4
              
              
              3
              
              
              5
              
              
              -
              
              
              -
              
              
              6
              
              
              9Interest
                  expense
              
              
              (23
              )
              
              (25
              )
              
              (46
              )
              
              (66
              )
              
              (23
              )
              
              (27
              )
              
              (92
              )
              
              (118
              )Other
                  segment income
              
              
              12
              
              
              11
              
              
              57
              
              
              25
              
              
              1
              
              
              11
              
              
              70
              
              
              47Other
                  segment expenses
              
              
              (964
              )
              
              (1,101
              )
              
              (1,815
              )
              
              (2,386
              )
              
              (310
              )
              
              (555
              )
              
              (3,089
              )
              
              (4,042
              )Taxation
              
              
              (9
              )
              
              -
              
              
              (31
              )
              
              (80
              )
              
              14
              
              
              (8
              )
              
              (26
              )
              
              (88
              )39
              
              
              98
              
              
              (29
              )
              
              291
              
              
              (54
              )
              
              29
              
              
              (44
              )
              
              418Corporate
                  expenses
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (211
              )
              
              (268
              )Segment
                  income from continuing operation before minority interest
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (255
              )
              
              150Segment
                  assets
              
              
              5,137
              
              
              5,576
              
              
              6,516
              
              
              9,828
              
              
              1,331
              
              
              2,264
              
              
              12,984
              
              
              17,668Unallocated
                  assets
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              4,644
              
              
              7,781Total
                  assets
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              17,628
              
              
              25,449Property,
                  plant and equipment - additions
              
              
              10
              
              
              8
              
              
              12
              
              
              58
              
              
              3
              
              
              12
              
              
              25
              
              
              78
  F-18
  **Wako
        Logistics Group, Inc.**
 
 **Notes
        to the Consolidated Financial Statements**
 For
        the 3
        months ended March 31, 2006 and 2007
 
  **9.**
              **SEGMENTS
                  OF THE BUSINESS
                  (CONTINUED)**
 
 (b)
              The
                  table below summarizes the percentage of the Group’s revenues during the
                  three months ended March 31, 2006 and 2007, analyzed by geographical
                  locations :
 
 **3
                  months ended**
                **March
                  31,****2006**
              
              **2007***(unaudited)*
              
              *(unaudited)**%*
              
              *%***Revenues**Americas
              
              
              20
              
              
              15Asia
                  and others
              
              
              33
              
              
              53Australia
              
              
              30
              
              
              20Europe
              
              
              17
              
              
              12100
              
              
              100
 
 (c)
              The
                  Group made no sales during the three months ended March 31, 2006
                  and 2007,
                  which qualified as sales to a major customer (defined as a customer
                  for
                  which sales to it represent 10% or more of total revenues).


F-19





**Item
      2: Management’s Discussion and Analysis of Financial Condition and Results of
      Operations**





**General**





Wako
      Logistics Group, Inc. (“WLG,” the “Company,” or the “Group”) is an
      international, non-asset-based logistics company that provides air and ocean
      freight forwarding, contract logistics, customs brokerage and other supply
      chain
      management services to its customers from its offices in Hong Kong, the Peoples
      Republic of China (“PRC” or “China”), Australia, United States (“US”), United
      Kingdom (“UK”) and through a worldwide network of independent
      cargoagents.





WLG's
      business is conducted by its operating subsidiaries, which include the following
      entities: Wako Express (HK) Co. Ltd. (“WEHK”), Wako Air Express (HK) Co. Ltd.
      (“WAE”), Wako Express (China) Co. Ltd. (“WE China”), WLG (USA) LLC (“WLG (USA)”)
      (formerly dba “Kay O'Neill”), Mares-Shreve & Associates, Inc. (“MSA”), Sea
      Systems Ocean Line, Inc. (“Sea Systems”), Asean Cargo Services Pty Limited
      (“Asean”), Asean Logistics, Inc. (“ALI”) and WLG (UK) Limited (“WLG
      (UK)”).





Wako
      Logistics Inc. was incorporated in Delaware on December 2, 2003, and, on January
      8, 2004, changed its name to Wako Logistics Group, Inc. Immediately following
      the formation of Wako Logistics Group, Inc., Mr. Christopher Wood (“Mr. Wood”)
      became its sole shareholder. Pursuant
      to certain Share Exchange Agreements entered into on January 18, 2004, between
      us and Mr. Wood (and his nominee), we consummated a combination with WEHK
      and WAE by issuing 20,000,900 shares of our common stock to Mr. Wood  in
      exchange for 100% of the outstanding shares of common stock of WEHK and WAE.





WEHK, incorporated
      in Hong Kong on September 4, 1982, carries on the business of handling sea
      freight for its customers, both export and import, between Hong Kong and the
      rest of the world, with a particular concentration, historically, on the
      Asia-Australian trade lanes and, more recently, on the trade lanes running
      from
      Asia to the US and Europe. WAE
      was
      incorporated in Hong Kong on February 24, 1989. Its business is dedicated to
      handling air freight, both export and import, between Hong Kong and the rest
      of
      the world, particularly to Australia, but also to the US and
      Europe.




On
      April
      1, 2005, we completed the acquisition of all of the voting interests in Kay
      O'Neill (USA) LLC (“Kay O'Neill”), an Illinois limited liability company. Kay
      O'Neill was a US based logistics business, and, at the date of
      acquisition, had an office in Des Plaines, Illinois, which primarily served
      US
      based customers by providing services similar to those offered by the Group
      in
      Asia and elsewhere. As part of the process of creating brand identity for the
      Group in the United States, Kay O'Neill, on June 29, 2005, changed its name
      to
      WLG (USA) LLC and began immediately to operate as WLG (USA). In June of 2005,
      WLG (USA) opened an office in Taylor, Michigan, and at the beginning of 2006,
      it
      registered to do business in Texas to provide services for contract logistics
      projects.





Pursuant
      to the Closer Economic Partnership Agreement (“CEPA”) signed in September 2003,
      between Hong Kong and the PRC, Hong Kong incorporated companies were permitted
      to establish wholly-owned enterprises in China to provide a full-range of
      logistics services. In July 2004, WEHK, which qualified under the provisions
      of
      the CEPA, formed WE China, a wholly-owned subsidiary in the PRC. WE China began
      operations in February 2005, and now provides freight forwarding services for
      exports and imports between China and the rest of the world. WE China has eight
      offices in China, including offices in what we believe are China's three most
      important commercial centers: Beijing; Shanghai and Guangzhou.





3




Effective
      October 1, 2005, WLG acquired all of the voting stock of ALI, a company
      incorporated in California in September 1999. ALI, based in Torrance,
      California, is a non-asset based freight forwarding company and provides
      traditional freight-forwarding services to its customers, who ship products
      primarily between Asia and the United States. Prior to the acquisition, WLG
      and
      ALI worked closely together pursuant to the terms of an agency
      agreement.





On
      November 9, 2005, WLG, through a newly formed and wholly-owned Australian
      subsidiary, WLG (Australia) Pty. Ltd., completed the acquisition of all of
      the
      issued and outstanding common stock of Asean, a non-asset based freight
      forwarding and logistics company. Asean, incorporated in March 1984, and based
      in Sydney, Australia, has offices in Melbourne and Brisbane and maintains agency
      relationships with other freight and logistics companies in all of Australia's
      mainland states. Asean provides a full range of transportation, logistics and
      customs brokerage services to its customers, with an emphasis on shipments
      in
      the Asia-Australian trade lanes. Prior to WLG's acquisition of Asean, both
      companies had worked closely with each other for over 20 years, providing
      transportation and logistics services to the customers of the other through
      an
      agency agreement.





In
      February 2006, WLG formed two United Kingdom (“UK”) subsidiaries, WLG (UK)
      Holdings as a first tier subsidiary and WLG (UK) as a second tier subsidiary,
      to
      use to make acquisitions and conduct business in the UK. Effective September
      15,
      2006, WLG (UK) acquired the operating assets and assumed limited liabilities
      of
      a division (“UK Division”) of a UK freight forwarding and logistics company (“UK
      Co.”). At the date of this acquisition, UK Co. was in bankruptcy proceedings in
      the United Kingdom. WLG (UK) purchased for cash the operating assets of UK
      Division on an “as is” and “where is” basis from the Administrators acting on
      behalf of the UK Co. UK Division, which operated in Manchester, UK, provided
      sea
      and air freight forwarding, warehouse logistics and customs brokerage services,
      mostly to UK based customers. These activities are now carried on by WLG (UK).
      Prior to the acquisition, the Group and UK Co. had worked together in a limited
      capacity on several mutual customers.





On
      December 1, 2006, we acquired all of the voting shares of MSA and its wholly
      owned subsidiary, Sea Systems, (collectively, "MSA Group”). MSA, which was
      incorporated on May 15, 1979, in Washington State, provides customs brokerage
      services to its customers. Sea Systems, incorporated in Washington State on
      February 26, 1991, is a non-asset based freight forwarder and provides air
      and
      sea freight forwarding and related logistics services to its customers. The
      MSA
      Group mainly serves customers that ship products from Asia to the United States.
      Traditionally, the business of the MSA Group has been more focused on its
      customs brokerage practice than its freight forwarding operations. Prior to
      the
      acquisition, the MSA Group and WLG had not worked together.




With
      the
      exception of performing administrative, oversight and regulatory tasks, no
      other
      business activities are carried on by the Group's parent company, Wako Logistics
      Group, Inc.





**Overview**





WLG
      is an
      international, non-asset-based logistics company that provides air and ocean
      freight forwarding, contract logistics, customs clearances and other supply
      chain management services to its customers throughout the world. We do not
      own
      or operate any transportation assets such as aircraft, ships, trucks, river
      barges or railroads. Instead, we contract with companies that own
      and operate commercial transportation assets of all types to provide both
      regional and international freight forwarding services to our customers. Our
      revenues are generated from the air, sea and local freight transportation
      services that we arrange, customs brokerage services we perform and other valued
      added services such as price ticketing and warehousing provided by us. We
      believe that our customers benefit from the extensive experience we have in
      arranging the transportation of freight and performing customs clearance
      services in the many countries in which we operate. For our freight forwarding
      business, this experience allows us to focus on large cargo shipments, as the
      shipment of large cargos usually requires sophisticated logistical networks
      in
      many countries.








4




**Freight-Forwarding
      and Related Services**





Due
      to
      the volume of shipments we arrange, we are generally able to negotiate rates
      that are better than the rates our customers could negotiate directly with
      transportation providers. Often, the shipping rates we negotiate may be reduced
      due to the increase in the freight volumes that we arrange to have shipped.
      As a
      result, our customers, by placing their freight shipments through us, benefit
      from theses lower rates, and we, in turn, benefit by increasing our
      revenues.





A
      significant portion of the expenses for our freight business are variable and
      relate directly to the amount and volume of shipments we book. Direct
      transportation costs are our largest variable expense. Personnel costs represent
      the second largest expense for our freight operations. Due to the nature of
      our
      business, we have gained the necessary experience to be able to project our
      staffing needs based on the number of customer orders we fulfill. Nonetheless,
      staff costs are less flexible than other variable costs, and, in the short
      term,
      we may not be able to alter our staff levels to adjust for unexpected peaks
      and
      downturns in our business.





We
      derive
      a significant portion of our air freight revenues from the consolidation of
      cargo. In this part of our business, we always seek to combine a mix of light
      and heavy cargo in order to optimize the ratios of weight and cubic capacity
      for
      all of our shipments. In general, this improves our profitability on these
      shipments.





A
      substantial portion of our direct freight costs are incurred pursuant to
      contracts for the advance purchase of cargo space from air carriers for which
      we
      guarantee a minimum volume of shipments. Under these contracts, we are required
      to pay for the minimum amount of space we guarantee, even if we do not use
      the
      guaranteed amount. In the normal course of business, we seek to minimize our
      risk of loss by carefully gauging customer demand, and by entering into
      arrangements with other freight forwarders whereby they take and pay for the
      excess cargo space that we are unable to fill. However, we do not have the
      opportunity to require our customers to ship minimum amounts, and, as such,
      we
      are not able to pass this risk on to our customers.





As
      part
      of our freight forwarding business, we often provide related logistics services
      to our customers. Within our industry, such services are known as Value Added
      Services (“VAS”). The provision of VAS is becoming a necessary and important
      part of our business and may cover a wide range of supply chain services. As
      an
      example, we may provide some or all of the following VAS to our customers:
      pick
      and scan, pick and pack, co-packing, bar code printing and labeling and price
      tagging at both the carton and item levels. At the carton level, each carton
      remains unopened, which makes this a simpler service. At the item level, each
      individual item is processed - for example by size and color for apparel -
      which
      requires advanced information technology capabilities.





The
      VAS
      that we provide may also involve receiving goods from one or multiple factories
      on behalf of the customer - often an overseas retail buyer - and warehousing
      such goods prior to packing the goods in individual containers for shipment
      to
      the customer’s distribution centers or retail outlets. Goods are often shipped
“store ready”, meaning they are sorted and are price-tagged, ready for sale in
      each retail location. We see the demand for these kinds of services increasing
      because a large portion of the retailer’s higher labor and storage costs may be
“exported” to lower cost environments, such as China, thus bypassing costly
      de-consolidation and distribution centers in the customer’s home country.
      Performance of VAS relies on the application of a wide range of information
      technologies, and requires an ability to receive, process and provide shipping
      and inventory information from and to our customers. Our billings for VAS may
      vary with the type of service performed, but they are often based on a per
      piece
      basis measured by the actual number of units we store and prepare for
      shipment.





**Customs
      Brokerage Operations**





We
      have
      customs brokerage practices in our offices in Sydney, Australia, Manchester,
      England, Seattle, Washington, and Long Beach, California. In each case, we
      acquired an existing business. The revenue and expense streams for this segment
      of our business tend to be more predictable than those of our freight-forwarding
      operations. However, customs brokerage is a commodity type business and pricing
      is very competitive. Consequently, operating margins in this business are often
      small, and are less than those in our freight operations. In some cases, we
      accept low margin brokerage business as a strategic decision to obtain
      additional freight-forwarding customers or to retain the ones we have. Also,
      due
      to competitive factors, we often advance funds on behalf of our brokerage
      customers to pay the duty on their freight imports, and, as a result, we do
      incur credit risk, which may be substantial, particularly as measured against
      the profit from a specific job or customer. Because the return on an individual
      account may be small and the credit risk large, we exercise a heightened degree
      of oversight in accepting and retaining customs brokerage clients.





5




Generally,
      billings for customs services are based on the number of freight clearances
      for
      a particular customer and may often include the costs and mark-up for ancillary
      services such as arranging for the local delivery of goods and the
      preparation and pick-up of documentation for the shipments. The specific amounts
      we bill are normally similar to what other brokerage companies charge in a
      specific geographical area. Because this business tends to be stable and
      recurring, we are able to estimate with a degree of certainty what our personnel
      needs are, with personnel costs being the largest expense for this
      business.





**Global
      Agency Network**





We
      work
      with approximately 525 overseas agents, many of whom have offices in strategic
      cities in Europe, North and South America, Africa and the Middle East. As a
      result, we may be represented by more than one agent in many cities so that
      we
      generally do not have to rely on a single agent in any one city.





All
      of
      our arrangements with overseas agents are on a non-exclusive basis. Under these
      arrangements, the agents are not authorized to make any commitments or to
      execute any contracts on our behalf. The fees payable to and received from
      these
      agents are usually shared 50:50, and may include additional charges for specific
      services.





By
      working with these independent cargo agents, we may be able to expand our
      business without the costs typically associated with the ownership and
      maintenance of company-owned branch offices. Given the importance of overseas
      cargo agents to our business, we believe it is essential that senior management
      be involved on a regular basis to maintain and strengthen these working
      relationships. Our mutual goal is to provide and receive increased business
      through our network of cargo agents.





**Results
      of Operations**





THREE
      MONTHS ENDED MARCH 31, 2007, COMPARED WITH THREE MONTHS ENDED MARCH 31,
      2006.





Total
      revenue for the three months ended March 31, 2007, increased approximately
      49%,
      compared with total revenue for the three months ended March 31, 2006, growing
      from approximately $19.68 million to $29.31 million. Of this increase, revenues
      from our existing business grew by $3.64 million, and the two companies acquired
      in the fourth quarter of 2006 added $5.99 million in revenues.





From
      our
      existing businesses, approximately $0.74 million, or 20% of the increase, is
      attributable to revenues from our Hong Kong operations. Revenues from our
      operations in China grew by $0.29 million over the same period last year, adding
      approximately 8% to the total increase. The operations of WLG (USA) and ALI
      in
      the US added revenues of approximately $1.04 million, or 29% of the total
      increase. Approximately $1.57 million, or 43% of the increase in revenues,
      is
      from Asean, our subsidiary in Australia. Our
      two
      acquisitions in 2006 added revenues of $5.99 million. The UK
      acquisition, which we completed in September 2006, added $3.30 million, and
      the
      MSA Group, which we acquired on December 1, 2006, increased reported revenues
      by
      $2.69 million.





Gross
      profit rose from $3.15 million in the three months ended March 31, 2006, to
      $4.75 million for the same period in 2007, for an increase of $1.60 million,
      or
      51%. Of this increase, our Hong Kong and China operations contributed $0.21
      million; our US operations, WLG (USA) and ALI, added $0.11 million, and Asean
      added $0.39 million. WLG (UK) and MSA, our two acquisitions completed in 2006,
      added $0.68 million and $0.21 million, respectively. The Group's overall gross
      margin increased slightly, from 16.0% for the three months ended March 31,
      2006,
      to 16.2% for the three month ended March 31, 2007.




6




During
      the three months ended March 31, 2007, total operating expenses increased to
      about $4.45 million, as compared to approximately $3.36 million for the same
      period in 2006, for an increase of 32%. Of this increase, salaries and related
      personnel costs increased nearly 44% from $2.01 million to $2.91 million. Other
      selling and administrative costs grew by approximately 7% from $1.21 million
      to
      $1.30 million, which, when combined with the increase in personnel costs,
      results in a total increase of almost $1.0 million.  Amortization and
      depreciation expense increased from $0.14 million to $0.24 million, or
      71%.  Of the total increase in operating costs of $1.09 million,
      approximately $0.91 million is attributable to WLG (UK) and MSA, the two
      acquisitions completed in 2006. The remaining increase of about $0.18 million,
      which is attributable to our existing businesses, represents a 5% increase
      in
      operating expenses, compared to a sales increase reported by our existing
      operations of 18% for this same period.  See *discussion of Operating Expenses* below.





After
      the
      provision for income taxes, the Group's net income for the three months ended
      March 31, 2007, was $150,000, compared to a net loss of $255,000 for the same
      period in 2006. MSA, ALI and WE China incurred losses of $19,000, $20,000 and
      $3,000 during the three months ended March 31, 2007, respectively. Theses losses
      were offset by the growth in net income from our other operating subsidiaries
      including WAE, WEHK, WLG (USA) and Asean. Together these companies reported
      a
      profit of $415,000, representing an increase of $412,000, compared with net
      income of $3,000 for these entities for the same period in 2006. The improvement
      in their net incomes is mainly due to an increase in revenues and a slower
      growth in overhead expenses. In addition, WLG (UK) contributed net income of
      $16,000 for the three months ended March 31, 2007.





**Segment
      Information**





***Air
      freight operations*** :
      Revenue
      from air freight operations for the three months ended March 31, 2007, increased
      to about $7.25 million from approximately $6.50 million, or approximately 12%,
      when compared to the same period in 2006.   Revenues from Hong Kong
      operations accounted for 6% of the total growth of this segment, mainly due
      to
      an increase in shipments to the US. WLG (USA) and Asean’s operations both
      reported substantial increases in air-freight revenue, contributing 18% and
      28%
      of the overall growth, respectively. MSA and WLG (UK) accounted for 3% and
      45%
      of the growth. WE China reported a decrease of about $109,000 in its air freight
      revenues for the three months ended March 31, 2007, or 6%, when compared to
      its
      revenue for same period in 2006.





Cost
      of
      sales for our air freight operations increased by approximately 10%, from about
      $5.46 million to $6.02 million. This increase was due to higher volumes of
      freight traffic arranged by us, but, this increase as a percentage, was
      less than the percentage increase in revenues for this segment. In general,
      the
      rates we obtained from co-loaders for shipments in the first quarter of 2007
      were lower than the rates obtained for shipments during the first three months
      of 2006, and this helped to hold down our costs.





Gross
      profit margins increased from 16.0% for the three months ended March 31, 2006,
      to 17.0% for the same period in 2007. This increase in gross profit margins
      was
      primarily attributable to the gross profit margins for WLG (UK)'s air freight
      business, which reported a gross margin of 19.4%, and to improvements in the
      profit margins of WAE and WLG (USA).





Total
      segment overhead attributable to our air freight operations increased by
      approximately $0.14 million, or 14%, from approximately $1.00 million for the
      three months ended March 31, 2006, to $1.14 million, for the same period in
      2007. Substantially all of the increase, or approximately $0.13 million, is
      attributable to the overhead costs of WLG (UK) and MSA, which were acquired
      near
      the end of 2006. There was almost no change in the segment overhead incurred
      by
      our other subsidiaries for the three months ended March 31, 2007, compared
      to
      the same period in 2006.




Net
      segment income for our air freight operations is approximately $98,000 for
      the
      three months ended March 31, 2007, compared to net income of $39,000 for the
      same period in 2006, for an increase of $59,000. The growth was mainly
      contributed by Asean, which experienced a loss of approximately $46,000 for
      the
      three months ended March 31, 2006, and reported a profit of $10,000 for the
      same
      period in 2007. In addition, Hong Kong’s air freight operations added $27,000,
      mainly as a result of an increase in freight volumes and an improvement in
      its
      profit margin. The increase in income posted by Hong Kong offset a decrease
      in income of about $29,000 in the air freight operations reported by WE
      China.





7




***Sea
      freight operations:*** Revenues
      from sea freight operations for the three months ended March 31, 2007, increased
      approximately 85%, when compared to the same period in 2006, growing from
      approximately $7.59 million to $14.03 million. Much of this improvement is
      a
      result of the internal growth of our existing operations, which showed an
      increase in revenues of nearly 48% over last year. Our Hong Kong business
      accounted for 16% of the increase, and revenues generated by WE China's
      operations accounted for 6% of the growth.  WLG (USA) and ALI, our US
      subsidiaries, contributed revenues accounting for 13% of the growth.  In
      addition, revenues from Asean's sea freight business contributed 13% of the
      growth. The two acquisitions completed in 2006 accounted for the remaining
      increase of revenues, or about 52%. Of this increase, the MSA Group contributed
      17% and WLG (UK) contributed 35%.




Cost
      of
      sales for our sea freight operations increased 93% from $5.75 million for the
      three months ended March 31, 2006, to $11.13 million for the same period in
      2007. This increase is mainly attributable to a corresponding increase in sea
      freight revenues and increased ocean rates, and to the additional costs of
      WLG
      (UK) and MSA.





Gross
      profit margins decreased from approximately 24.2% for the three months ended
      March 31, 2006, to 20.7% for the same period in 2007. The decrease is due to
      increasing freight rates charged by the shipping lines and lower profit margins
      attributable to MSA and WLG (USA), which recorded gross margins of 9.2% and
      15.4%, respectively, for the three months ended March 31, 2007.  The lower
      margins attributable to WLG (USA) are due to our decision to aggressively grow
      WLG (USA)’s
      import business from Asia to the US. Previously WLG (USA) had focused more
      on
      exports than imports. We were not able to pass on to our customers all of
      the increases in freight rates that we were charged by the shipping
      lines.





Total
      segment overhead attributable to our sea freight business increased by $0.74
      million, or 40%, from approximately $1.87 million for the three months ended
      March 31, 2006, to $2.61 million for the same period in 2007. The increase
      is
      partially attributable to the acquisitions of WLG (UK) and MSA, which together,
      added overhead expenses of $0.56 million during the three months ended March
      31,
      2007. The overhead expense of ALI decreased by $120,000, from $0.14 million
      to
      $0.02 million, because most of its administrative operations were taken over
      by
      WLG (USA). The remaining increase in overhead expense of $0.30 million
      is attributable to our other operating subsidiaries and was incurred by
      them to cope with increases in their businesses.




Net
      segment income for our sea freight operations is approximately $291,000 for
      the
      three months ended March 31, 2007, compared to a net loss of $29,000
      for the same period in 2006. The improvement in net income is mainly
      attributable to increases in the net incomes of WEHK, Asean and WLG (USA),
      which reported increases of $107,000, $104,000 and $37,000,
      respectively. In addition, WLG (UK), which was not part of the Group during
      the
      first quarter of 2006, contributed $39,000 to the net income of this
      segment.





***Customs
      brokerage services:*** Asean,
      MSA and WLG (UK)'s operations each include a division that provides customs
      brokerage services. For the three months ended March 31, 2007, revenue from
      customs brokerage services totaled approximately $8.03 million, compared with
      $5.59 million for the same period in 2006, for an increase of approximately
      $2.44 million. The increase is mainly attributable to revenues of $1.67 million
      and $0.39 million, respectively, generated by WLG (UK) and MSA, Asean’s customs
      revenues increased by about $0.38 million in the first quarter of 2007, compared
      to 2006, or about 6%. Direct and administrative costs totaled about $8.00
      million, producing net income of $29,000 for the three months ended March 31,
      2007, compared to a net loss of $54,000 for Asean’s custom brokerage business
      for the three months ended March 31, 2006. Asean’s customs practice reported a
      net income of $15,000 for the three months ended March 31, 2007.




8




**Other
      Operating Expenses**





*Salaries
      and allowances*




Salaries
      and related allowances increased by $0.90 million, or 44%, from $2.01 million
      for the three months ended March 31, 2006, to $2.91 million for the same period
      in 2007. This increase was attributable to several factors, including normal
      increments in employee salaries given at the beginning of 2007, increases in
      the
      number of operational staff and management personnel during the period, and
      to
      the effect of the two acquisitions completed in the last quarter of 2006. 
WLG (UK) and MSA increased our employee count by 35 and added personnel costs
      of
      $0.56 million in the first quarter. The remaining increase of $0.34 million
      in
      salaries is attributable to salary increases in our existing operations and
      to the recognition of stock option expense, as well as an increase in headcount
      of 16 personnel. As of March 31, 2007, the Group's employee headcount was 260,
      compared to 209 employees at March 31, 2006.




*Rent*




Rent
      expense for our facilities increased 85% from $155,000 for the three months
      ended March 31, 2006, to $287,000 for the same period in 2007, for an overall
      increase of $132,000. WLG (UK) and MSA, the two acquisitions completed in 2006,
      added rent expense of $95,000 and $11,000, respectively. In addition, the Hong
      Kong air freight and sea freight operations moved to a common office near the
      end of 2006, which added $21,000 to our rent expense.





*Other
      selling and administrative expenses*





Other
      SG&A expenses for the three months ended March 31, 2007, totaled about $1.01
      million compared to $1.05 million for the same period in 2006, for a slight
      decrease of about $0.04 million.  While the acquisitions of WLG (UK) and
      MSA added Other SG&A costs of $130,000 and $21,000, respectively, for the
      three months ended March 31, 2007, ALI and WLG (USA) reduced their combined
      Other SG&A costs by $74,000 by merging their administrative operations. In
      addition, we have also reduced corporate legal and consulting fees by about
      $77,000 during the three months ended March 31, 2007, compared to the same
      period in 2006.




*Depreciation
      and Amortization*




Depreciation
      expense for property, plant and equipment increased from $59,000 for the three
      months ended March 31, 2006, to $79,000 for the same period in 2007. This
      increase of $20,000 is partially due to the aggregate depreciation expense
      of $12,000 for WLG (UK) and MSA, which were not part of the group until the
      last
      quarter of 2006. The remaining increase of $8,000 in depreciation expense is
      attributable to the additions of office and computer equipment and to leasehold
      improvements for our new Hong Kong office.





Amortization
      expense is attributable to the customer lists acquired in the acquisitions
      of
      WLG (USA), ALI, Asean, WLG (UK) and MSA.  In connection with the
      acquisition of WLG (USA), we recorded a customer list asset of $512,000, which
      is being amortized on a straight-line basis over 5 years. Asean's customer
      list
      was valued at $1.56 million and is being amortized on a straight-line basis
      over
      8 years. A five-year life and a value of $164,000 were assigned to ALI's
      customer list, which will be fully amortized by the end of 2007. WLG (UK)'s
      customer list was valued at $833,268 and is being amortized over five years.
      A
      cost of $1.55 million was assigned to the customer lists of MSA and Sea
      Systems, which are being amortized over a 10-year life. During the three
      months ended March 31, 2007, amortization expense totaled $162,655. This sum
      is
      attributable to WLG (USA), Asean, ALI, WLG (UK) and MSA Group in the
      amounts of $25,614, $48,832, $7,796, $41,663 and $38,750, respectively. Total
      amortization expense in 2006 was $82,653 and related to WLG (USA), Asean and
      ALI
      in the amounts of $25,614, $48,832 and $8,207, respectively. MSA Group and
      the UK business of WLG (UK) were acquired in the fourth quarter of 2006,
      and no amortization expense was recorded for the customer lists of these two
      companies until the end of 2006.





*Interest
      Expense*




Interest
      expense increased from $92,000 for the three months ended March 31, 2006, to
      $118,000 for the same period in 2007. This increase is mainly attributable
      to
      additional interest expense of approximately $23,000 for WLG (USA), which
      increased its revolving line of credit by $250,000 to $1 million and to a five
      year $1.0 million term loan used to acquire the MSA Group.




9




*Provision
      for Income Taxes*





The
      provision for income taxes increased from $26,000 for the three months ended
      March 31, 2006, to $88,000 for the same period in 2007, mainly attributable
      to
      income recorded by our Hong Kong, Australian and new UK operations. Income
      tax
      of $78,000 was provided on the combined net income of $392,000 attributable
      to
      Hong Kong's sea freight's business, Asean's operations and the UK operations,
      for an effective tax rate of 20%. The US operations of ALI and WLG (USA) are
      included in a US consolidated income tax return with the Group's parent company,
      and, together, these companies reported a consolidated loss.  As such, no
      provision for US federal or state income taxes is required for the three months
      ended March 31, 2007, and no income tax benefit, was given for their losses,
      which totaled $130,000. In addition, the income tax provision provided for
      the
      income of Hong Kong's air freight operations was fully offset by an operating
      loss carried forward from 2006. After consideration of all losses and
      amortization expense, for which no income tax benefit is provided, the effective
      tax rate on the Group's income of $238,000 reported for the three months ended
      March 31, 2007, is approximately 37%.





**LIQUIDITY
      AND CAPITAL RESOURCES**




For
      the
      three months ended March 31, 2007, our operations provided net cash of
      approximately $2.00 million, compared with cash of $1.37 million provided by
      our
      operations for the same period in 2006. In 2007, cash was provided by the
      following sources: decrease of trade receivables of $2.41 million, increase
      in
      accrued charges of $123,000, amortization and depreciation expense of $245,000,
      provision for bad debts of $4,000, net income of $150,000 and other non-cash
      items of $16,000. Major components that used cash for operations in 2007
      included a decrease in trade payables of $632,000, an increase in deposits
      and
      prepayments of $174,000, a decrease in income tax payable of $69,000 and the
      repayment of $65,000 to a director.




Net
      cash
      used by financing activities totaled about $1.33 million for the three months
      ended March 31, 2007, compared to net cash of about $0.58 million used in 2006.
      Cash used by financing activities in 2006 consisted primarily of the repayment
      of bank debts and capital lease obligations of $546,000 and $34,000,
      respectively. Cash used by financing activities in 2007 consists of the
      repayment of bank debt of $1.14 million and the repayment of capital lease
      obligations totaling $30,000. In addition, we paid dividends of $22,000 on
      our
      preferred stock. We also increased restricted cash and pledged deposits by
      $136,000 for bank guarantees to support our airfreight business.




As
      of
      March 31, 2007, we had given bank guarantees of $733,000 to certain
      airlines to support bank credit facilities provided to one of our
      subsidiaries.  These guarantees provide credit support to the airlines,
      which in turn grant credit terms to our subsidiary.  In general, we must
      make freight payments to the airlines prior to receiving payment from our
      customers. These guarantees are secured by restricted cash deposited in separate
      bank accounts, along with certificates of deposit, which, in the aggregate,
      total approximately $617,000. We have also given a bank guarantee of
      approximately $185,000 in favor of the owner of the premises occupied by our
      subsidiary in Australia.




In
      October 2004, WEHK and WAE (the “Hong Kong Subsidiaries”) obtained a bank loan
      of $449,000, which was used to pay income taxes and for general working capital
      needs. This loan is repayable in 24 equal monthly installments, with interest
      at
      the best rate charged by the lending bank, less one percent. The interest rate
      on this loan was 7% per annum and the loan was repaid in full by October 2006.
      In October 2005, the Hong Kong Subsidiaries obtained an additional loan of
      approximately $129,000, and used the loan proceeds to pay income taxes and
      for
      general working capital purposes. This loan was repaid by November, 2006.
 During 2006, the Hong Kong Subsidiaries borrowed approximately $114,000 to
      pay income taxes and to use as working capital.  At March 31, 2007, the
      principal amount of this loan was approximately $67,000 and carried a variable
      interest rate of 7.25%, which is indexed to the bank’s prime rate.




10




As
      of
      March 31, 2007, WLG (USA) owed $537,696 under a $1.0 million revolving line
      of
      credit and $949,999 on a five year $1.0 million term loan pursuant to loan
      facilities granted by a bank in the last quarter of 2006.  The revolving
      line of credit expires in October 2007, and the term loan matures in November
      2011. Both loans carry interest at LIBOR plus 2.75%, which at March 31,
      2007, was 8.1%. In addition, the term loan calls for monthly principal
      payments of $16,667, plus accrued interest.  Principal payments of $200,000
      are due in 2007 and in each of the following four years until maturity
      at November 31, 2011.  Total borrowings under the revolving line of
      credit and the term loan are limited to 75% of the eligible trade receivables,
      as defined in the loan agreement, of WLG (USA) and the MSA Group.  All
      borrowings under these loan facilities are secured by a first position blanket
      lien on substantially all of WLG (USA)'s and the MSA Group's assets and are
      guaranteed by the Group's parent company.  The loan agreement calls for the
      maintenance of certain financial covenant ratios, including minimum cash flow
      coverage and maximum funded debt to earnings before taxes, interest and non-cash
      items, all of which are to be applied on a rolling basis at the end of each
      calendar quarter.  In addition, WLG (USA) may not pay dividends without
      approval from its bank. WLG (USA) was in compliance with all covenants as of
      March 31, 2007.




Asean
      has
      a receivables loan facility in the face amount of approximately $3.23 million,
      which is secured by and based on 100% and 80% of its accounts receivable,
      respectively. It also has an overdraft facility with a limit of about $471,000.
      At March 31, 2007, Asean's bank debt under its receivables line and overdraft
      facility was $1.62 million and $471,000, respectively, with
      interest rates of approximately 11.6% for the receivables line and 9.15% for
      the
      overdraft facility. In addition to a charge over all of Asean's accounts
      receivable, the bank holds a first registered mortgage over all of Asean's
      assets. The bank also has personal guarantees from each of the former
      shareholders of the company to secure both the trade receivables and overdraft
      facility.




In
      2006,
      we completed the acquisitions of two freight forwarding and customs brokerage
      businesses. As part of our business plan, we expect to make additional strategic
      acquisitions as a means of expanding our business to provide services on a
      global scale. To the extent that we are unable to use our common stock in the
      acquisitions of other companies, we will likely need to raise additional capital
      if we are to be successful in executing our business plan. At this point, we
      are
      not certain of the amount of capital we may need because the amount will vary
      with the size, type and nature of consideration required for the prospective
      acquisitions. However, there can be no assurance that we will be successful
      in
      identifying suitable acquisition targets and, if we are, there can be no
      certainty that we will be able to complete the acquisitions. Nor can there
      be
      any assurance that we would be successful in our efforts to raise additional
      capital, either in the form of long-tem debt and/or equity.




Our
      approximate contractual cash obligations as of March 31, 2007, are outlined
      in
      the table below, which includes our equipment lease and office rental
      obligations, as well as payments due under our cargo space commitments. These
      cash obligations are expected to equal approximately $399,000 per month over
      the
      following twelve months.




Payments
                Due by Period (in thousands)Contractual
                Obligations
            
            Total
            
            Less
                than
              1
                year
            
            1-3
                years
            
            4-5
                years
            
            After
              5
                yearsFacilities
                rental and equipment lease obligations
            
            $
            1,584
            
            $
            747
            
            $
            738
            
            $
            99
            
            $
            —Other
                obligations: Cargo space commitment
            
            $
            4,036
            
            $
            4,036
            
            
            —
            
            
            —
            
            
            —Total
                contractual cash obligations
            
            $
            5,620
            
            $
            4,783
            
            $
            738
            
            $
            99
            
            $
            —


****


During
      the three months ended March 31, 2007 and 2006, we have not engaged in
      any:





·
            material
                off-balance sheet activities, including the use of structured finance
                or
                special purpose entities;





·
            trading
                activities in non-exchange traded
                contracts.




11




**Item
      3 Quantitative And Qualitative Disclosure About Market Risk**


The
        Company is exposed to market risk in the ordinary course of its business.
        These
        risks are primarily related to foreign exchange rate risk arising from making
        sales and incurring expenses in currencies other than the US dollar, incurring
        debt denominated in foreign currencies and to changes in short-term interest
        rates. The potential impact on the Company for these risks is presented
        below:
  **FOREIGN
        EXCHANGE RISK**
  We
        conduct business in many different countries and currencies. As such, we
        routinely issue invoices for our services in a currency different from the
        currency used to pay expenses related to the services. Billing in one currency
        and incurring expenses in a different currency results in a foreign exchange
        rate risk to us. In these cases, the market risk associated with doing business
        in foreign currencies may be quantified by a foreign exchange rate sensitivity
        analysis that estimates the impact of a hypothetical change in the value
        of our
        functional currency , the US Dollar (“USD”), relative to the other currencies in
        which we transact business. Our subsidiaries transact business mostly in
        the
        following foreign currencies: Hong Kong Dollars (“HKD”); British Pounds (“GBP”);
        Australian Dollars (“AUD”); and the Chinese Yuan (“CNY”). Two of our major
        subsidiaries use the HKD as their functional currency. The HKD has long been
        pegged to the USD at a rate of HKD 7.80 to USD 1.00. Because of the peg,
        there
        has been, and is no material change in the foreign exchange risk for
        transactions denominated in HKD’s. All of the other currencies in which we
        transact business float freely against the USD, with the possible exception
        of
        the CNY. The value of the CNY is believed to be controlled to a large extent
        by
        the Chinese government.
  Assuming
        that the HKD peg to the USD was terminated and taking all other currencies
        in
        which we conduct business into consideration, an average, hypothetical 10%
        weakening of the USD against all other currencies for the three months ended
        March 31, 2007, would have had the effect of decreasing our net income by
        approximately $210,000. An average, hypothetical 10% strengthening of the
        USD
        for the same period would have had the effect of increasing our net income
        by
        approximately $172,000. Currently, we do not use any techniques, such as
        derivative financial instruments or hedging transactions, as a means to limit
        our exposure to foreign currency exchange rate risks.
  We
        also
        incur funded debt that is denominated in foreign currencies, which,
        historically, has been in AUD and HKD. For Hong Kong funded debt, which is
        not
        material in amount, as long as the HKD remains linked to the USD, we will
        not
        incur any foreign exchange rate risk for this debt. We do incur foreign exchange
        rate risk for debt denominated in AUD. If there was an average, hypothetical
        10%
        weakening of the USD against the AUD, our financial position as of March
        31,
        2007, would have decreased by $269,000. If there was a an average, hypothetical
        10% strengthening of the USD against the AUD, our financial position as of
        March
        31, 2007, would have been improved by $220,000. To date, we have not utilized
        any type of derivative financial instruments to protect against our exposure
        to
        foreign currency exchange rate risks for funded debt.
  **INTEREST
        RATE RISK**
  As
        of
        March 31, 2007, the Company had cash and cash equivalents and restricted
        cash of
        $2.87 million and bank debt of approximately $3.66 million, all subject to
        variable interest rates tied to indexes such as Libor or to a bank’s prime
        lending rate. An average, hypothetical change in interest rates of 10%
        would have had an insignificant impact on our earnings for the three months
        ended March 31, 2007. We do not use derivative financial instruments of any
        type
        to hedge against changes in interest rates.
  In
        management's view, there has been no material change in Company's market
        exposure to interest rate risks or foreign currency exchange rate risks between
        December 31, 2006, and March 31, 2007.


**Item
      4 Controls and Procedures**




Our
      Chief
      Executive Officer and Chief Financial Officer are responsible for establishing
      and maintaining “disclosure controls and procedures” as such term is defined in
      Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act
      of
      1934, as amended (the “Exchange Act”). Accordingly, our Company's Chief
      Executive Officer and Chief Financial Officer designed such disclosure controls
      and procedures, or caused such disclosure controls and procedures to be designed
      under their supervision, to ensure that material information relating to the
      Company, including its consolidated subsidiaries, is made known to them by
      others within those entities. Our Chief Executive Officer and our Chief
      Financial Officer have evaluated the effectiveness of our disclosure controls
      and procedures as of the end of the period covered by this Report on Form 10-Q.
      Based on this evaluation and, subject to the deficiencies described below,
      they
      have concluded that the Company's disclosure controls and procedures were
      effective, as of the end of the period covered by this Report on Form 10-Q,
      in
      ensuring that material information relating to the Company required to be
      disclosed by the Company in reports that it files or submits under the Exchange
      Act is recorded, processed, summarized and reported on a timely basis.
      Notwithstanding the deficiencies described below, our management has concluded
      that the consolidated financial statements included in this Report on Form
      10-Q
      fairly state, in all material respects, our financial condition, results of
      operations and cash flows for the periods presented in conformity with generally
      accepted accounting principles.





12




At
      the
      conclusion of the audit of the Group’s consolidated financial statements for the
      year ended December 31, 2006, the Company’s management and Board of Directors
      were notified by Blackman Kallick Bartelstein, LLP, (“BKB”), the auditor for the
      Company's subsidiary, WLG (USA) LLC and its subsidiaries (collectively “WLG
      (USA) Group”), that during the course of their audit of WLG (USA) Group's
      consolidated financial statements for the year ended December 31, 2006,
      they identified deficiencies in WLG (USA) Group's internal control over
      financial reporting (“internal control”) that they considered to be significant
      deficiencies. The deficiencies related to the following: (1) with respect to
      related party transactions with the Company and the Company's other
      subsidiaries, a lack of regular reconciliation of inter-company account
      balances; (2) a lack of regular review and reconciliation of WLG (USA) Group’s
      general ledgers and financial statements and failure to maintain proper
      segregation of accounting duties; (3) WLG (USA) Group's year-end closing
      procedures did not include developing estimates to state accounts receivable
      at
      net realizable value or properly adjust revenues for subsequent adjustments
      to
      sales; and (4) WLG (USA)'s chief executive officer's ability to record
      transactions in the general ledger. In addition to the forgoing, BKB identified
      certain control deficiencies in WLG (USA) Group's IT security policies and
      procedures that they did not consider to be significant
      deficiencies.





CHANGES
      IN INTERNAL CONTROL OVER FINANCIAL REPORTING.





The
      Company is working to address the deficiencies identified by BKB and will
      implement and test the necessary controls and procedures to remediate the
      deficiencies in the internal control of WLG (USA) Group. As
      part
      of this work, we intend to evaluate the internal control of WLG (USA) Group
      using the guidance provided by COSO in “Internal Control over Financial
      Reporting - Guidance for Smaller Public Companies” and “Enterprise Risk
      Management - Integrated Framework.” The
      forgoing notwithstanding, there was no change in the Company's internal control
      identified in connection with the evaluation required by Rule 13a-15(d) and
      Rule
      15d-15(d) of the Exchange Act that occurred during the period covered by this
      Report on Form 10-Q and that has materially affected, or is reasonably likely
      to
      materially affect, the Company's internal control over financial
      reporting.




The
      Company is currently in the process of reviewing and formalizing its internal
      control and procedures for financial reporting in accordance with the Securities
      and Exchange Commission's rules implementing the internal control reporting
      requirements included in Section 404 of the Sarbanes Oxley Act. The Company
      has
      not completed this process, and this process will require significant amounts
      of
      management time and resources. In the course of evaluation and testing,
      management may identify deficiencies that will need to be addressed and
      remediated




13




**Part
      II: Other Information**




**Item
      1: Legal Proceedings:** **** None





**Items
      1A: Risk Factors**


In
        addition to the risk factors previously disclosed under the caption “Risk
        Factors” in Part I, Item I, Description of Business, in our Report on Form
        10-KSB for the year ended December 31, 2006, we have identified the following
        risk factors:
 
 **It
        is essential that the PRC continue to maintain free and fair trade policies
        towards its trading partners around the world. Failure to do so may cause
        a
        reduction in our revenues and profits** .
 
 In
        February 2005, our business in China increased significantly as a result
        of the
        commencement of operations in the PRC by WE China. We were able to take
        advantage of the Closer Economic Partnership Agreement between the PRC and
        Hong
        Kong permitting Hong Kong companies to set up wholly owned enterprises in
        the
        PRC to provide freight forwarding and logistics services in the country.
        Our
        ability to conduct and grow our business in China is dependent on China's
        continued willingness to provide business and trading opportunities to foreign
        businesses as well as an undertaking by it to ensure the presence of a stable
        and suitable legal and economic environment for foreign businesses. Any change
        in China's legal and political environment that negatively influences its
        trading policies may reduce our revenues and operating profits.
  **Part
        of our business plan calls for continued growth by making acquisitions. Failure
        to identify, acquire and successfully integrate companies into the Group
        may
        reduce our growth rate, use valuable resources and reduce our
        profitability**
 
 As
        part
        of our business plan, we intend to make strategic acquisitions to expand
        our
        global reach, widen our service capabilities, improve our competitive position
        and increase our revenues and profits. There is no certainty that we may
        be able
        to execute our growth strategy by acquisition, including identifying suitable
        targets, raising capital, avoiding acquisitions that have undisclosed costs
        and
        operating problems, all of which may require excessive amounts of management
        time and Group resources. In addition, we may encounter problems to integrate
        the companies and their management personnel into the Group, or it may take
        longer to do so than planned. A strategy of growth by acquisition carries
        a
        variety of risks, including taking on debt, diluting existing ownership,
        and
        integration issues with the risk that any one acquisition, if not successful,
        may adversely affect the operations and financial position of the Group.
  **The
        PRC could alter its laws and regulations governing foreign investments in
        the
        country with the possibility that it may levy burdensome taxes or expropriate
        foreign owned businesses.** **
 
 Since
        2005, we have made substantial investments in the PRC and carry on a significant
        part of our business in China. This has been made possible by China adopting
        and
        following open trade policies along with promoting stable legal and political
        reforms. If
        the
        PRC changes its laws and regulations or applies them in ways that are
        detrimental for foreign trade and investment, our business and investments
        in
        China could be adversely affected.
 
 **The
        PRC and the United States have on-going disputes over trade balances, currency
        rates and other economic matters, all of which might result in the imposition
        of
        trade sanctions against China by the United States. If trade sanctions were
        imposed by the United States, it is likely that our China business and
        investments would be adversely affected.** **
 
 China
        and
        the US are substantial trading partners, and this trend continues to grow.
        However, disputes have arisen in the past and may arise in the future in
        the
        China - US relationship. These disputes are wide ranging, covering political,
        economic and social issues. On the economic front, the US questions the
        control by China of its currency and the reluctance of the PRC
        government to allow its currency to flow freely with other major currencies.
        The
        US has challenged the PRC to purchase more US goods to reduce the trade
        imbalance and has criticized China over the working conditions of its workers.
        In addition, there are questions concerning the human rights and military
        motives of the Chinese government. Any of these issues could erupt into major
        political confrontations between the US and the PRC, with the effect that
        business between the two countries could be disrupted. If this were to happen,
        our investments in and revenues and profits from China could be adversely
        affected.
 
 **We
        must continue to make investments in technology. If we do not develop and
        deploy
        state of the art tracking and logistics technologies and train our employees
        to
        use these new technologies, we may lose customers and fail to attract new
        ones.** **
 
 Today,
        the use of sophisticated tracking and information technologies is a prerequisite
        to provide efficient and effective freight forwarding and logistics services
        on
        a global scale. Technology is playing a greater role in tracking shipments,
        managing inventories and reducing distribution costs. International logistics
        companies must expand and upgrade their service capabilities to meet these
        needs. To do so, it will be necessary for us to continue to purchase hardware,
        improve information systems and train our workforce to market and use
        information systems. If we are unsuccessful in doing so, our customer base
        may
        be reduced, our growth may be limited and our revenues and profits may decrease.
  14
 
 **The
        Group is subject to governmental regulations in jurisdictions around the
        world
        that specify rules for the freight forwarding and customs industries. Our
        failure to comply with all required governmental rules and regulations may
        subject the Group to sanctions, which could include monetary penalties and
        the
        loss of the right to conduct business in a particular country.**
  The
        U.S. Federal Maritime Commission regulates ocean
        freight forwarding and non-vessel operating common carrier operations to
        and
        from the United States, and licenses intermediaries (combined ocean freight
        forwarders and non-vessel operating common carrier operators). In
        the
        US, we are licensed as an ocean freight forwarder and are registered as an
        ocean transportation intermediary with the Federal Maritime Commission. The
        Federal Maritime Commission has established qualifications for shipping agents,
        including surety-bonding requirements. To comply with these regulations,
        vessel
        operators and non-vessel operating common carriers are required to file tariffs
        that establish the rates for the movement of specified commodities into and
        out
        of the United States. The Federal Maritime Commission has the power to enforce
        its regulations by assessing penalties.
 
 We
        are
        licensed by the International Air Transport Association as an airfreight
        forwarder in the countries in which we have operations. Our air freight business
        in the United States is subject to regulation, as an indirect air carrier,
        under
        the Federal Aviation Act by the Department of Transportation, and we are
        also
        subject to regulation by the Transportation Security Administration. Our
        indirect air carrier status is registered with the Indirect Air Carrier Standard
        Security Program Change 3 mandated by Federal Aviation Administration's
        regulations. The air freight forwarding industry is subject to regulatory
        and
        legislative changes that can affect the economics of the industry by requiring
        changes in operating practices or influencing the demand for, and the costs
        of
        providing, services to customers.
 
 We
        must
        comply with export regulations of the United States Department of State,
        including the International Traffic in Arms Regulations, the United States
        Department of Commerce and the U.S. Customs and Border Protection of the
        Department of Homeland Security (“CBP”) regarding the type of commodities
        shipped, the applicable destinations, the persons to whom and for what end-use,
        as well as statistical reporting requirements.
 
 We
        cannot
        predict what impact future regulations may have on our business. Our failure
        to
        maintain required permits or licenses, or to comply with applicable regulations,
        could result in substantial fines or revocation of our operating
        rights.




15




**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.**





Exhibits
      (filed herewith)





31.1
            Certification
                of the Chief Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002 (Rule
                13a-4(a)).





31.2
            Certification
                of the Chief Financial Officer to Section 302 of the Sarbanes-Oxley
                Act of
                2002 (Rule 13a-4(a)).




32.1
            Certification
                of the Chief Executive Officer and Chief Financial Officer pursuant
                to 18
                U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002 (Rule
                13a-14(b)).





16





**SIGNATURES**





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




WAKO
                LOGISTICS GROUP, INC.Date: May
                15, 2007
            By:
            /s/ Christopher
                WoodChristopher
                WoodChief
                Executive Officer, ( Principal Executive Officer) and
                Director





Date: May
                15, 2007
            By:
            /s/ David
                L. KoontzDavid
                L. KoontzChief
                Financial Officer, (Principal Financial Officer and Accounting
                Officer)










17




**EXHIBIT
      INDEX**






**Exhibit**
              **Number**
            
            **Description
                of Exhibit**31.1
            
            Certification
                of the Chief Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002 (Rule 13a-4(a)).31.2
            
            Certification
                of the Chief Financial Officer to Section 302 of the Sarbanes-Oxley
                Act of
                2002 (Rule 13a-4(a)).32.1
            
            Certification
                of the Chief Executive Officer and Chief Financial Officer pursuant
                to 18
                U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002 (Rule
                13a-14(b)).








18