Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 10-Q



ý

Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the quarterly period ended March 31, 2010o

Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the transition period
from                             toCommission File Number 001-34470




ECHO GLOBAL LOGISTICS, INC.(Exact Name of Registrant as Specified in its Charter)



Delaware

20-5001120(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer Identification No.)600 West Chicago Avenue
Suite 725
Chicago, Illinois
Phone: (800) 354-7993, 60654(Address (including zip code) and telephone number (including area code)
of registrant's principal executive offices)




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. Yes: ý    No: o

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

Indicate by check mark whether the Registrant is an a large accelerated filer, an accelerated filer, or non-accelerated filer. See definitions of
"large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer: o

Accelerated filer: o

Non-accelerated filer: ý (Do not check if a smaller reporting company)

Smaller reporting company o


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

As of May 14, 2010, the Registrant had 21,806,492 shares of Common Stock, par value $0.0001 per share, outstanding.



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Table of Contents



PagePART I. FINANCIAL INFORMATIONItem 1.

Consolidated Financial StatementsConsolidated Statements of Income for the three months ended March 31, 2009 and 2010 (Unaudited)

3Consolidated Balance Sheets as of December 31, 2009 and March 31, 2010 (Unaudited)

4Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2010 (Unaudited)

5Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2010 (Unaudited)

6Notes to Consolidated Financial Statements (Unaudited)

7Item 2.

Management's Discussion and Analysis of Financial Condition and
Results of Operations

18Item 3.

Quantitative and Qualitative Disclosures about Market
Risk

24Item 4.

Controls and Procedures

25PART II. OTHER INFORMATIONItem 1.

Legal Proceedings

26Item 1A.

Risk Factors

26Item 6.

Exhibits

26SIGNATURES

27EXHIBIT INDEX

28


2

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Table of Contents



PART I. FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements



Echo Global Logistics, Inc.

Consolidated Statements of Income

(Unaudited)

Three Months Ended
March 31,2009

2010REVENUES

$
49,063,748

$
89,104,024COSTS AND EXPENSES:Transportation costs


38,049,946

$
72,059,487Selling, general, and administrative expenses


9,851,945


13,335,117Depreciation and amortization


1,039,777


1,682,586INCOME FROM OPERATIONS


122,080


2,026,834Interest income





12,463Interest expense


(61,893
)

(22,842
)Other, net


(14,785
)

(39,337
)OTHER EXPENSE


(76,678
)

(49,716
)INCOME BEFORE PROVISION FOR INCOME TAXES


45,402


1,977,118INCOME TAX EXPENSE


(17,866
)

(741,147
)NET INCOME


27,536


1,235,971DIVIDENDS ON PREFERRED SHARES


(265,034
)

NET INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDERS

$
(237,498
)
$
1,235,971Basic net income (loss) per share

$
(0.02
)
$
0.06Diluted net income (loss) per share

$
(0.02
)
$
0.06


See
accompanying notes.

3

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Echo Global Logistics, Inc.

Consolidated Balance Sheets

December 31,
2009

March 31,
2010(Unaudited)AssetsCurrent assets:Cash and cash equivalents

$
47,803,704

$
41,772,416Accounts receivable, net of allowance for doubtful accounts of $1,323,916 and $1,423,916, respectively


43,689,684


49,626,355Income taxes receivable


344,117


337,069Prepaid expenses


6,420,750


7,129,591Other current assets


391,054


352,927Total current assets


98,649,309


99,218,358Property and equipment, net


8,153,741


8,699,432Intangible assets:Goodwill


18,651,496


22,697,658Intangible assets, net of accumulated amortization of $2,243,765 and $2,662,377, respectively


4,527,043


5,323,305Other assets


459,735


410,794Deferred income taxes


2,233,964


1,709,590Total assets

$
132,675,288

$
138,059,137Liabilities and stockholders' equityCurrent liabilities:Accounts payabletrade

$
27,039,510

$
30,181,493Current maturities of capital lease obligations


302,518


307,982Due to sellershort term


717,738


2,032,218Accrued expenses


3,058,102


2,377,439Deferred income taxes


1,894,204


2,090,952Total current liabilities


33,012,072


36,990,084Due to sellerlong term


5,452,303


5,475,536Capital lease obligations, net of current maturities


420,840


341,765Total liabilities


38,885,215


42,807,385Stockholders' equity:Common stock, par value $0.0001 per share, 100,000,000 shares authorized, 21,768,659 and 21,769,491 shares were issued and outstanding at
December 31, 2009 and March 31, 2010, respectively


2,177


2,177Additional paid-in capital


88,368,796


88,594,504Retained earnings


5,419,100


6,655,071Total stockholders' equity


93,790,073


95,251,752Total liabilities and stockholders' equity

$
132,675,288

$
138,059,137


See
accompanying notes.

4

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Echo Global Logistics, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

Three Months
Ended March 31,2009

2010Operating activitiesNet income

$
27,536

$
1,235,971Adjustments to reconcile net income to net cash used in operating activities:Deferred income taxes


17,867


721,122Noncash stock compensation expense


191,391


207,918Reduction in contingent consideration due to seller





(1,264,798
)Depreciation and amortization


1,039,777


1,682,586Change in assets, net of acquisitions:Accounts receivable


(2,981,714
)

(5,574,680
)Prepaid expenses and other assets


(541,358
)

(842,004
)Change in liabilities, net of acquisitions:Accounts payable


1,771,287


2,978,168Accrued expenses and other


(648,674
)

(660,984
)Net cash used in operating activities


(1,123,888
)

(1,516,701
)Investing activitiesPurchases of property and equipment


(976,770
)

(1,574,746
)Payments for acquisitions, net of cash aquired


(350,000
)

(2,605,752
)Net cash used in investing activities


(1,326,770
)

(4,180,498
)Financing activitiesPrincipal payments on capital lease obligations


(49,697
)

(73,612
)Borrowings on credit line


2,135,109


Payment of costs associated with initial public offering


(961,200
)

(278,267
)Issuance of shares, net of issuance costs


51,996


17,790Net cash provided by (used in) financing activities


1,176,208


(334,089
)Decrease in cash and cash equivalents


(1,274,450
)

(6,031,288
)Cash and cash equivalents, beginning of period


1,872,922

$
47,803,704Cash and cash equivalents, end of period

$
598,472

$
41,772,416Supplemental disclosure of cash flow informationCash paid during the year for interest

$
61,893

$
22,842Cash paid for income taxes





18,396Noncash investing activityPurchase of furniture and equipment with capital lease


168,156


Noncash financing activityVesting of restricted shares


56,250


Due to seller





2,602,511


See
accompanying notes.

5

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Echo Global Logistics, Inc.

Consolidated Statements of Stockholders' Equity

(Unaudited)

Three months ended March 31, 2010

Common StockAdditional
Paid-In
Capital

Retained
EarningsShares

Amount

TotalBalance at December 31, 2009


21,768,659

$
2,177

$
88,368,796

$
5,419,100

$
93,790,073Share compensation expense








207,918





207,918Exercise of stock options


832





17,790





17,790Net income











1,235,971


1,235,971Balance at March 31, 2010


21,769,491

$
2,177

$
88,594,504

$
6,655,071

$
95,251,752


6

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Echo Global Logistics, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

Three Months Ended March 31, 2009 and 2010

1. Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements include the accounts of Echo Global Logistics, Inc. and its subsidiaries (the Company).
All significant intercompany accounts and transactions have been eliminated in the consolidation. The consolidated statements of income include the results of entities or assets acquired from the
effective date of the acquisition for accounting purposes.

The
preparation of the consolidated financial statements is in conformity with the rules and regulations of the Securities and Exchange Commission (SEC) and accounting principles
generally accepted in the United States for interim financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States (U.S. GAAP) have been condensed or omitted pursuant to such rules or regulations. In the opinion of management, the accompanying unaudited
financial statements reflect all adjustments considered necessary for a fair presentation of the results for the period and those adjustments are of a normal recurring nature. The operating results
for the three month period ended March 31, 2010 are not necessarily indicative of the results expected for the full year of 2010. These interim consolidated financial statements should be read
in conjunction with the financial statements and notes thereto included in the Company's most recent audited financial statements.

Preparation of Financial Statements and Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of
revenue and expenses during the reporting periods. Actual results can differ from those estimates.

Fair Value of Financial Instruments

The carrying value of the Company's financial investments, which consist of cash and cash equivalents, accounts receivable, accounts
payable, capital lease obligations, and a line
of credit, approximate their fair values due to their short term nature. The fair value of the due to seller obligation is determined based on the likelihood of contingent earn-out
payments.

Reverse Stock Split

As of September 24, 2009, the Company's Board of Directors approved a resolution to effect a one-for-two
reverse stock split of the Company's capital stock with a corresponding change to the par value of the capital stock. The reverse stock split became effective on September 25, 2009. Any
fractional shares resulting from the reverse stock split were rounded down to the nearest whole share and stockholders were entitled to cash in lieu of any fractional shares. All share numbers and per
share amounts for all periods presented have been adjusted retroactively to reflect the one-for-two reverse stock split.

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Echo Global Logistics, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

Three Months Ended March 31, 2009 and 2010

2. New Accounting Pronouncements

In October 2009, the FASB issued ASC Topic 605 (previously ASU No. 2009-13,Multiple Deliverable Revenue
Arrangementsa consensus of the FASB Emerging Issues Task Force (ASU 2009-13)). The guidance addresses the accounting for multiple-deliverable
arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. The guidance is effective prospectively for revenue arrangements entered
into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance
may have on the Company's consolidated financial statements.

In
January 2010, the FASB issued ASC 820 (previously "Improving Disclosures about Fair Value Measurements"
(ASU 2010-06). This guidance improves disclosures originally required under SFAS No. 157. ASU 2010-06 is effective for interim and annual periods beginning
after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those
disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those years. The Company is currently evaluating the impact that the adoption of
this guidance may have on the Company's consolidated financial statements.

In
February 2010, the FASB issued ASC 855 (previously "Amendments to Certain Recognition and Disclosure Requirements"
(ASU 2010-09)). ASU 2010-09 amended SFAS No. 165, "Subsequent Events" to resolve conflicts with SEC reporting requirements. The adoption of this guidance
did not have a material impact on the Company's consolidated results of operations and financial condition.

3. Acquisitions

Mountain Logistics Acquisition

For the year ended December 31, 2009 and three month period ended March 31, 2010 the Company paid $350,000 and
$1,350,000, respectively, in contingent consideration related to this 2007 acquisition. The contingent consideration paid was recorded as additional goodwill as December 31, 2009 and
March 31, 2010. In addition, the Company recorded $3.9 million increase in goodwill in 2009 as related to the vesting of 275,000 common shares associated with the acquisition as certain
performance measures were met effective October 1, 2009.

RayTrans Distribution Services, Inc. Acquisition

Effective June 1, 2009, the Company acquired RayTrans Distribution Services, Inc. (RDS), a non-asset based
third-party logistics provider with offices in Matteson, Illinois and the results of RDS have been included in the consolidated financial statements since that date. The acquisition provided the
Company with strategic growth of its presence in the truckload business and added an assembled workforce that has significant experience and knowledge of the industry.

8

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Echo Global Logistics, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

Three Months Ended March 31, 2009 and 2010

3. Acquisitions (Continued)

The
acquisition-date fair value of the consideration transferred totaled $9,226,511, which consisted of the following:

Fair value of consideration transferredCash

$
5,384,069Contingent consideration


3,842,442Total

$
9,226,511


The
contingent consideration arrangement requires the Company to pay an additional $6.5 million in cash if certain performance measures are achieved by or prior to May 31,
2012. The performance measures are based on both annual and cumulative targets of adjusted EBITDA. EBITDA relates to earnings before interest, taxes, depreciation and amortization. The fair value of
the contingent consideration arrangement at the acquisition date was $3.8 million. Pursuant to the adoption of ASC Topic 805 effective January 1, 2009, any changes to the
contingent consideration obligation will be recorded in selling, general and administrative expense. For the period ended March 31, 2010, the Company recorded a reduction of $639,645 to the
contingent consideration obligation as a result of reductions to RDS' forecasted financial performance resulting in a liability due to seller of $2.4 million at March 31, 2010. The
reduction in contingent consideration is included in general and administrative expenses in the consolidated income statement. The Company estimates these contingent payments to be approximately 37%
of total eligible payments due prior to May 31, 2012. The Company expects total undiscounted contingent consideration payments to RDS to be between $2.4 million and $4.0 million.
There were no other contingent liabilities assumed in the acquisition.

The
following table summarizes the fair values of the assets acquired and the liabilities assumed at the date of acquisition.

Accounts receivable

$
3,314,551Other assets


244,595Goodwill


7,488,042Customer relationships


2,820,000Non-compete agreements


70,000Internally developed software


170,000Accounts payable


(4,007,612
)Other current liabilities


(873,065
)Net assets acquired

$
9,226,511


Goodwill
of $7.5 million represents the premium the Company paid over the fair value of the net tangible and intangible assets it acquired. The Company paid this premium for a
number of reasons, including expanding its presence in the flatbed, over-sized, auto-haul and other specific services as well as traditional dry van brokerage, and adding more
than 400 transactional clients, which expands its pipeline of clients to which the Company can market its transportation and supply chain management services. In addition, the Company gained
approximately 1,500 new carriers that provide specialized transportation services to its existing clients. The amount of goodwill deductible for U.S. income tax purposes is $3.0 million,
excluding future contingent consideration payments.

9

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Echo Global Logistics, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

Three Months Ended March 31, 2009 and 2010

3. Acquisitions (Continued)

The
customer relationships have a life of seven years and the non-compete agreements have a life of five years.

The
following unaudited pro forma information presents a summary of the Company's consolidated statements of operations for the three month period ended March 31, 2009 as if the
Company had acquired RDS as of January 1, 2009.

March 31, 2009Revenue

$
56,831,445Income from operations


463,695Net income


52,505Net income (loss) applicable to common shareholders


(212,529
)Basic net income (loss) per share

$
(0.02
)Diluted net income (loss) per share

$
(0.02
)


Freight Management Inc.

Effective July 1, 2009, the Company acquired Freight Management Inc. (FMI), a non-asset based third-party
logistics provider with offices in Buffalo, Minnesota and the results of FMI have been included in the consolidated financial statements since that date. The
Company agreed to purchase the assets and assume certain liabilities of FMI for $1.4 million. An additional $4.6 million in cash consideration may become payable upon achievement of
certain performance measures by or prior to July 31, 2012. As a result of the acquisition, the Company recorded $4.6 million of goodwill, of which $3.3 million related to
contingent consideration. Pursuant to the adoption of ASC Topic 805 effective January 1, 2009, any changes to the contingent consideration obligation will be recorded in selling, general
and administrative expense. For the three month period ended March 31, 2010, the Company recorded a reduction of $630,626 to the contingent consideration obligation as a result of reductions to
the forecasted financial performance of FMI resulting in a liability and due to seller of $2.5 million at March 31, 2010. The reduction in contingent consideration is included in general
and administrative expenses in the consolidated income statement. The Company expects total undiscounted contingent consideration payments to FMI to be between $3.0 million and
$4.1 million. Pro forma results of the acquisition have been not been included as the acquisition does not have a material impact on the Company's financial statements

Distribution Services Inc.

Effective January 1, 2010, the Company acquired Distribution Services Inc. (DSI), a non-asset based third-party
logistics provider with offices in Coon Rapids, Minnesota and the results of DSI have been included in the unaudited consolidated financial statements since that date. The Company agreed to purchase
the assets and assume certain liabilities of DSI for $0.8 million. An additional $2.6 million in cash consideration may become payable upon achievement of certain performance measures by
or prior to December 31, 2014. As a result of the acquisition, the Company recorded $1.8 million of goodwill, of which $1.8 million related to contingent consideration. Pursuant
to the adoption of ASC Topic 805 effective January 1, 2009, any changes to the contingent consideration obligation will be recorded in selling, general and administrative expense. For
the three month period ended March 31,

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Echo Global Logistics, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

Three Months Ended March 31, 2009 and 2010

3. Acquisitions (Continued)

2010,
the Company recorded a reduction of $9,208 to the contingent consideration obligation as a result of adjustments to the forecasted financial performance of DSI resulting in a liability due to
seller of $1.8 million at March 31, 2010. The reduction in contingent consideration is included in general and administrative expenses in the consolidated income statement. The Company
expects total undiscounted contingent consideration payments to DSI to be between $2.0 million and $2.6 million. Pro forma results of the acquisition have been not been included as the
acquisition does not have a material impact on the Company's financial statements.

Resource Group and Associates

Effective January 1, 2010, the Company acquired Resource Group and Associates (RGA), a non-asset based third-party
logistics provider with offices in Andover, Minnesota and the results of RGA have been included in the unaudited consolidated financial statements since that date. The Company agreed to purchase the
assets and assume certain liabilities of RGA for $0.5 million. An additional $1.5 million in cash consideration may become payable upon achievement of certain performance measures by or
prior to December 31, 2012. As a result of the acquisition, the Company recorded $0.9 million of goodwill, of which $0.8 million related to contingent consideration. Pursuant to
the adoption of ASC Topic 805 effective January 1, 2009, any changes to the contingent consideration obligation will be recorded in selling, general and administrative expense. For the
period ended March 31, 2010, the Company recorded an increase of $22,566 to the contingent consideration obligation as a result of adjustments to the forecasted financial performance of RGA
resulting in a liability due to seller of $0.8 million at March 31, 2010. The reduction in contingent consideration is included in general and administrative expenses in the consolidated
income statement. The Company expects total undiscounted contingent consideration payments to RGA to be between $0.6 million and $1.0 million. Pro forma results of the acquisition have
been not been included as the acquisition does not have a material impact on the Company's financial statements.

4. Fair Value Measurement

The Company applies ASC Topic 820 (previously SFAS No. 157,Fair Value Measurements) for its financial assets and financial
liabilities. The guidance requires disclosures about assets and liabilities measured at fair value. The Company's financial assets primarily relate to money market funds and financial liabilities
primarily relate to contingent earn-out payments of $7.5 million.

ASC
Topic 820 includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value
hierarchy is based on observable or unobservable inputs to valuation techniques that are used to measure fair value. Observable inputs
reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity's pricing
based upon its own market assumptions. The fair value hierarchy consists of the following three levels:



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Echo Global Logistics, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

Three Months Ended March 31, 2009 and 2010

4. Fair Value Measurement (Continued)



The
significant inputs used to derive the fair value due to seller include financial forecasts of future operating results, the probability of reaching the forecast and the associated
discount rate. The probability of the contingent consideration ranges from 5% to 55% with a discount rate of 12%. The following table sets forth the Company's financial liabilities measured at fair
value on a recurring basis and the basis of measurement at March 31, 2010:

Total Fair Value Measurement

Level 1

Level 2

Level 3Assets:Money market funds

$
32,532,387

$
32,532,387

$


$
Liabilities:Due to seller

$
(7,507,754
)
$


$


$
(7,507,754
)


The
following table provides a reconciliation of the beginning and ending balances for the assets measured at fair value using significant unobservable inputs (Level 3):

Due to SellerBalance at December 31, 2009

$
(6,170,041
)Contingent earnout paymentsAcquisitions


(2,602,511
)Contingent earnout paymentschange in fair value


1,264,798Balance at March 31, 2010

$
(7,507,754
)


For
the three month period ended March 31, 2010, the Company recorded an adjustment to the original contingent consideration obligations recorded upon the acquisitions of RDS,
FMI, DSI and RGA. The adjustments were the result of using revised forecasts and updated fair value measurements that adjusted the Company's potential earnout payments related to the purchase of RDS,
FMI, DSI and RGA.

For
the three month period ended March 31, 2010, the Company recognized a benefit of $1,264,798 in selling, general, and administrative expenses in the statement of income due to
the change in fair value measurements using a level three valuation technique.

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Echo Global Logistics, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

Three Months Ended March 31, 2009 and 2010

5. Intangible assets

The following is a summary of goodwill as of March 31, 2010:

Balance as of December 31, 2009


18,651,496Additional purchase price related to the purchase of Mountain Logistics, Inc.


1,350,000Goodwill acquired related to the purchase of DSI


1,817,265Goodwill acquired related to the purchase of RGA


878,897Balance as of March 31, 2010

$
22,697,658


The
following is a summary of amortizable intangible assets as of December 31, 2009 and March 31, 2010:

December 31, 2009

March 31, 2010

Weighted-
Average LifeCustomer relationships

$
6,441,808

$
7,656,682

6.4 yearsNoncompete agreements


139,000


139,000

2.9 yearsTrade names


190,000


190,000

3.0 years6,770,808


7,985,682

6.2 yearsLess accumulated amortization


(2,243,765
)

(2,662,377
)Intangible assets, net

$
4,527,043

$
5,323,305


Amortization
expense related to intangible assets was $172,683 and $418,612 for the three months ended March 31, 2009 and 2010, respectively.

The
estimated amortization expense for the next five years and thereafter is as follows:

2010

$
1,213,3142011


1,497,6422012


993,6172013


600,7012014


468,256Thereafter


549,775$
5,323,305


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Echo Global Logistics, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

Three Months Ended March 31, 2009 and 2010

6. Accrued Expenses

The components of accrued expenses at December 31, 2009 and March 31, 2010 are as follows:

December 31, 2009

March 31, 2010Accrued compensation

$
384,526

$
368,162Accrued rebates


943,446


1,008,316Deferred rent


784,674


794,461Other


945,456


206,500Total accrued expenses

$
3,058,102

$
2,377,439


7. Income Taxes

The following table shows the Company's effective income tax rate for the three months ended March 31, 2009 and 2010:

Three months ended
March 31,2009

2010Income before taxes

$
45,402

$
1,977,118Income tax expense


17,866


741,147Effective tax rate


39.4
%

37.5
%


The
Company's effective tax rate decreased from 39.4% to 37.5% for the three months ended March 31, 2009 and 2010, respectively.

8. Earnings Per Share

Basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per
share is calculated by dividing net income by the weighted average shares outstanding plus share equivalents that would arise from the exercise of share options and the conversion of preferred shares.
Conversion of 3,191,996 of Series B and D preferred shares were excluded from the calculation for the three month period ended March 31, 2009 as they were anti-dilutive. The
Series B and Series D preferred shares converted to common stock effective September 24, 2009. Employee stock options totaling 287,827 and 86,500 for the three month periods
ending March 31, 2009 and 2010, respectively, were excluded from the calculation of diluted earnings per share, as they were anti-dilutive. The

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Echo Global Logistics, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

Three Months Ended March 31, 2009 and 2010

8. Earnings Per Share (Continued)

computation
of basic and diluted earnings per common share for the three month periods ended March 31, 2009 and 2010 are as follows:

March 31, 2009

March 31, 2010Numerator:Net income

$
27,536

$
1,235,971Preferred stock dividends


(265,034
)

Net income (loss) applicable to common shareholders

$
(237,498
)
$
1,235,971Denominator:Denominator for basic earnings per shareweighted-average shares


12,456,478


21,768,661Effect of dilutive securities:Employee stock options





401,895Denominator for dilutive earnings per share


12,456,478


22,170,556Basic net income per common share

$
(0.02
)
$
0.06Diluted net income per common share

$
(0.02
)
$
0.06


9. Stock-Based Compensation Plans

Using the Black-Scholes-Merton option valuation model and the assumptions listed below, the Company recorded $191,391 and $207,918 in compensation expense with corresponding tax benefits
of $74,642 and $81,088 for the three month periods ended March 31, 2009 and 2010, respectively. During the three month periods ended March 31, 2009 and 2010, the Company granted 40,000
and 440,000 options, respectively, to various employees.

The
following assumptions were utilized in the valuation for options granted during the three months ended March 31, 2009 and 2010:

2009

2010Dividend yield



Risk-free interest rate

2.28%-3.39%

3.05%Weighted-average expected life

7.1 years

6.6 yearsVolatility

33.5%

36.0%


10. Related Parties

Certain stockholders and directors of the Company have a direct and/or indirect ownership interest in InnerWorkings, Inc. (InnerWorkings), a publicly traded company that provides print
procurement services. InnerWorkings is one of the Company's stockholders. As of March 31, 2010, InnerWorkings owned 577,778 shares of the Company's common stock, or 2.7% of total shares
outstanding on a fully-diluted basis.

For
the three months ended March 31, 2009 and 2010 Innerworkings has also provided print procurement services to the Company. As consideration for these services, the Company
incurred

15

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Table of Contents

Echo Global Logistics, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

Three Months Ended March 31, 2009 and 2010

10. Related Parties (Continued)

expenses
of $14,829 and $17,388 for the three month periods ended March 31, 2009 and 2010, respectively.

The
Company provided transportation and logistics services to InnerWorkings and recognized $910,235 and $1,658,787 for such services during the three month periods ended March 31,
2009 and 2010, respectively.

In
June 2006, the Company entered into a supplier rebate program with InnerWorkings, pursuant to which the Company provides InnerWorkings with an annual rebate on all freight
expenditures in an amount equal to 5% of revenue received from InnerWorkings. In April 2008, this rebate program was amended to provide InnerWorkings with an annual rebate on all freight expenditures
in an amount equal to 3% of revenue received from InnerWorkings, plus an additional 2% of revenue for amounts paid within 15 days. Total supplier rebates to InnerWorkings were $25,619 and
$16,112 for the three month periods ended March 31, 2009 and 2010, respectively.

As
of December 31, 2009 and March 31, 2010, the Company had a net receivable due from InnerWorkings of $1,168,538 and $1,293,593, respectively, of which $1,313,014 is
included in accounts receivable and $19,421 is included in accounts payable in the balance sheet as of March 31, 2010. The Company had no accounts payables due to InnerWorkings as of
December 31, 2009.

During
2009, one of the Company's stockholders who is a director of the Company became a director of Manpower Inc., a publicly traded company that serves the employment services
industry. For the three month period ended March 31, 2010, the Company provided transportation and logistics services to Manpower and recognized $34,001 for such services. As of
December 31, 2009 and March 31, 2010, the Company had a net receivable due from Manpower of $7,883 and $13,475, respectively.

In
January 2009, the Company entered into an Independent Contract Referral Services Agreement with Holden Ventures, LLC. Under the terms of the agreement, the Company will pay Holden
Ventures 10% of the gross margin, or the actual payments received minus actual expenses that the Company receives from clients referred by Holden Ventures. This agreement may be terminated by either
party upon 15 days written notice and prohibits Holden Ventures from competing with the Company's business and soliciting its clients and employees for one year following the termination of the
agreement. As of March 31, 2010, no payments have been made to Holden Ventures under the terms of this agreement.

The
Company subleases a portion of its office space to Groupon, LLC (Groupon), a web-based collective buying power organization whose investors include certain stockholders
and directors of the Company. The sublease agreement was entered into on May 1, 2009, which was subsequently amended effective November 1, 2009. The agreement requires the Company to
provide 30-days notice in advance of cancelling the sublease. For the three months ended March 31, 2010, the Company received sublease rental income of $18,825. The Company did not
receive sublease rental income for the three months ended March 31, 2009. The Company had no amounts due to or from Groupon as of December 31, 2009 and March 31, 2010.

16

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Table of Contents

Echo Global Logistics, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

Three Months Ended March 31, 2009 and 2010

11. Legal Matters

In the normal course of business, the Company is subject to potential claims and disputes related to its business, including claims for freight lost or damaged in transit. Some of these
matters may be covered by the Company's insurance and risk management programs or may result in claims or adjustments with our carriers. Management does not believe that the outcome of such matters
will have a materially adverse effect on its financial position or results of operations.

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Table of Contents

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are a leading provider of technology enabled transportation and supply chain management services, delivered on a proprietary
technology platform serving the transportation and logistics needs of our clients. Our proprietary web-based technology platform compiles and analyzes data from our network of over 24,000
transportation providers to serve our clients' shipping and freight management needs. Our technology platform, composed of web-based software applications and a proprietary database,
enables us to identify excess transportation capacity, obtain competitive rates and execute thousands of shipments every day while
providing high levels of service and reliability. We focus primarily on arranging transportation across the major modes, including truckload (TL), less than truck load (LTL) and small parcel, and we
also offer inter-modal (which involves moving a shipment by rail and truck), domestic air, expedited and international transportation services.

We
procure transportation and provide logistics services for more than 15,600 clients across a wide range of industries, such as manufacturing, construction, consumer products and
retail. Our clients fall into two categories, enterprise and transactional. We typically enter into multi-year contracts with our enterprise clients, which are often on an exclusive basis
for a specific transportation mode or point of origin. As part of our value proposition, we also provide core logistics services to these clients. We provide transportation and logistics services to
our transactional clients on a shipment-by-shipment basis, typically with individual, or spot market, pricing.

Revenue

We generate revenue through the sale of transportation and logistics services to our clients. Revenue is recognized when the client's
product is delivered by a third-party carrier. Since our inception, our growth rates have decreased as our revenue has grown. Our revenue was $49.1 million and $89.1 million for the
three month periods ended March 31, 2009 and 2010, respectively, an increase of 81.6%.

Our
revenue is generated from two different types of clients: enterprise and transactional. Our enterprise accounts typically generate higher dollar amounts and volume than our
transactional relationships. We categorize a client as an enterprise client if we have a contract with the client for the provision of services on a recurring basis. Our contracts with enterprise
clients typically have a multi-year term and are often exclusive for a certain transportation mode or point of origin. In several cases, we provide substantially all of a client's
transportation and logistics requirements. We categorize all other clients as transactional clients. We provide services to our transactional clients on a shipment-by-shipment
basis. As of March 31, 2010, we had 124 enterprise clients and, for the three month period ended March 31, 2010 we served over 9,900 transactional clients. For the three month period
ended March 31, 2010, we entered into contracts with eight new enterprise clients. For the three month periods ended March 31, 2009 and 2010, enterprise clients accounted for 43% and 42%
of our revenue, respectively, and transactional clients accounted for 57% and 58% of our revenue, respectively. We expect to continue to grow both our enterprise and transactional client base in the
future, although the rate of growth for each type of client will vary depending on opportunities in the marketplace.

Revenue
recognized per shipment will vary depending on the transportation mode, fuel prices, shipment weight and density and mileage of the product shipped. The primary modes of shipment
that we transact in are TL, LTL and small parcel. Other transportation modes include inter-modal, domestic air, expedited services and international. Typically, our revenue is lower for an LTL
shipment than for a TL shipment, and revenue per shipment is higher for shipments in modes other than TL, LTL and small parcel. Material shifts in the percentage of our revenue by transportation mode
could have a significant impact on our revenue growth. For the three month period ended March 31, 2010, LTL

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accounted
for 44% of our revenue, TL accounted for 38% of our revenue, small parcel accounted for 6% of our revenue and other transportation modes accounted for 12% of our revenue.

The
transportation industry has historically been subject to seasonal sales fluctuations as shipments generally are lower during and after the winter holiday season because many
companies ship goods and stock inventories prior to the winter holiday season. While we have experienced some seasonality, differences in our revenue between periods have been driven primarily by
growth in our client base.

Transportation costs and net revenue

We act primarily as a service provider to add value and expertise in the procurement and execution of transportation and logistics
services for our clients. Our fee structure is primarily variable, although we have entered into a limited number of fixed fee arrangements that represent an insignificant portion of our revenue. Net
revenue consists of transportation revenue minus transportation cost. Our transportation costs consists primarily of the direct cost of transportation paid to the carrier.

Net
revenue is the primary indicator of our ability to procure services provided by carriers and other third-parties and is considered by management to be the primary measurement of our
growth. Although our transportation cost is typically lower for an LTL shipment than for a TL shipment, our net revenue margin is typically higher for an LTL shipment than for a TL shipment. Material
shifts in the percentage of our revenue by transportation mode, including small parcel, could have a significant impact on our net revenue. The discussion of results of operations below focuses on
changes in our net revenues and expenses as a percentage of net revenue margin. For the three month periods ended March 31, 2009 and 2010, our net revenue was $11.0 million and
$17.0 million, respectively, reflecting a growth rate of 55%.

Operating expenses

Our costs and expenses, excluding transportation costs, consist of commissions paid to our sales personnel, general and administrative
expenses to run our business and depreciation and amortization.

Commissions
paid to our sales personnel, including employees and agents, are a significant component of our operating expenses. These commissions are based on the net revenue we collect
from the clients for which they have primary responsibility. For the three month periods ended March 31, 2009 and 2010, commission expense was 29.0% and 30.7%, respectively, as a percentage of
our net revenue. The percentage of net revenue paid as commissions will vary depending on the type of client, composition of the sales team and mode of transportation. Commission expense, stated as a
percentage of net revenue, could increase or decrease in the future depending on the composition of our revenue growth and the relative impact of changes in sales teams and service offerings.

We
accrue for commission expense when we recognize the related revenue. Some of our sales personnel receive a monthly advance to provide them with a more consistent income stream. Cash
paid to our sales personnel in advance of commissions earned is reflected as a prepaid expense on our balance sheet. As our sales personnel earn commissions, a portion of their commission payment is
withheld and offset against their prepaid commission balance, if any.

Our
general and administrative expenses, which exclude commission expense, primarily consist of compensation costs for our operations, information systems, finance and administrative
support employees and change to contingent consideration liability. For the three month periods ended March 31, 2009 and 2010, our general and administrative expenses were $6.7 million
and $8.1 million, respectively. For the three month periods ended March 31, 2009 and 2010, general and administrative expenses as a percentage of net revenue were 60.5% and 47.6%,
respectively.

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Our
depreciation expense is primarily attributable to our depreciation of purchases of computer hardware and software, equipment, furniture and fixtures, and the capitalization of
internally developed software. For the three month periods ended March 31, 2009 and 2010, depreciation expense was $0.9 million and $1.3 million, respectively.

Our
amortization expense is attributable to our amortization of intangible assets acquired from business combinations, including client relationships, tradenames and
non-compete agreements. For the three month periods ended March 31, 2009 and 2010, amortization expense was $0.2 million and $0.4 million, respectively.

Reverse Stock Split and Recapitalization

Prior to our initial public offering, on September 25, 2009, we effectuated a one-for-two reverse stock
split of all outstanding shares of our Series A common stock, Series B preferred stock and Series D preferred stock. Immediately following the reverse stock split, we exchanged
all outstanding shares of our Series A common stock, Series B preferred stock and Series D preferred stock for newly issued shares of common stock on approximately a
one-for-one basis.

Income Taxes

On June 7, 2006, our company completed a conversion pursuant to which Echo Global Logistics, LLC, a limited liability company,
converted to Echo Global Logistics, Inc., a corporation. As a limited liability company, we were treated as a partnership for federal income tax purposes. As a result, all items of income, expense,
gain and loss of Echo were generally reportable on the tax returns of members of Echo Global Logistics, LLC.

As
a result of our conversion, we account for income taxes in accordance with ASC Topic 740 (previously SFAS No. 109,Accounting for Income
Taxes), under which deferred assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement
carrying values of assets and liabilities and their respective tax bases. In connection with our conversion, we used $9.4 million of our net proceeds from the issuance of our Series D
preferred stock to redeem certain of our Series A common units. Because we redeemed the units as a limited liability company, the cash distribution was taxable to the members and our tax basis
increased resulting in the recognition of a deferred tax asset of $3.8 million, for which we recorded a valuation allowance of $2.0 million and a corresponding net increase to additional
paid in capital of $2.0 million. The Company evaluated this valuation allowance as of December 31, 2009 and determined it was more likely than not that the existing deferred tax assets
would be fully realized, thus the valuation allowance was reduced to zero with the corresponding income tax benefit recorded to income tax expense in 2009.

Comparison of three months ended March 31, 2010 and 2009



Our revenue increased by $40.0 million, or 81.6%, to $89.1 million for the three month period ended March 31, 2010
from $49.1 million for the three month period ended March 31, 2009. The increase was attributable to the increase in the number of our clients, the total number of shipments executed on
behalf of, and services provided to these clients. This was partially offset by a decrease in the transportation rates due to pricing declines caused by a weaker economy. In addition,
$7.3 million of revenue was generated for the three month period ended March 31, 2010 from the RayTrans Distribution Services acquisition completed in June 2009.

Our
revenue from enterprise clients increased by $16.4 million, or 77.4%, to $37.6 million for the three month period ended March 31, 2010 from $21.2 million
for the three month period ended March 31, 2009, resulting from an increase in the number of enterprise clients and shipments executed

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Table of Contents

and
services provided. As we increased our number of transactional clients, our percentage of revenue from enterprise clients decreased to 42% of our revenue for the three month period ended
March 31, 2010 from 43% of our revenue for the three month period ended March 31, 2009. As of March 31, 2010, we had 124 enterprise clients under contract, which was an increase
of 26, compared to 98 enterprise clients under contract as of March 31, 2009.

Our
revenue from transactional clients increased by $23.6 million, or 84.8%, to $51.5 million for the three month period ended March 31, 2010 from
$27.9 million for the three month period ended March 31, 2009. The growth in revenue from transactional clients during this period was driven by the increase in the number of our
transactional clients due to the addition of transactional sales representatives and sales agents, including those acquired in connection with the acquisition of RayTrans Distribution Services. Our
percentage of revenue from transactional clients increased to 58% of our revenue for the three month period ended March 31, 2010 from 57% of our revenue for the three month period ended
March 31, 2009. We served over 9,900 transactional clients in the three month period ended March 31, 2010, an increase of approximately 2,000 compared to the 7,900 transactional clients
served in the three month period ended March 31, 2009.



Our transportation costs increased by $34.0 million, or 89.4%, to $72.1 million for the three month period ended
March 31, 2010 from $38.1 million for the three month period ended March 31, 2009. The growth in the total number of shipments executed on behalf of our clients accounted for most
of the increase in our transportation costs during this period. Our transportation costs as a percentage of revenue increased to 80.9% for the three month period ended March 31, 2010 from 77.6%
for the three month period ended March 31, 2009.



Net revenue increased by $6.0 million, or 54.8%, to $17.0 million for the three month period ended March 31, 2010
from $11.0 million for the three month period ended March 31, 2009. The growth in the total number of shipments executed on behalf of our clients accounted for most of the increase in
our net revenue during this period. The remaining increase in net revenue was the result of the $1.3 million generated from the RayTrans Distribution Services acquisition. Net revenue margins
decreased to 19.1% for the three month period ended March 31, 2010 from 22.4% for the three month period ended March 31, 2009. The decrease in net revenue margins was the result of
tightening in capacity in the truckload market and a higher mix of truckload revenue.



Commission expense increased by $2.0 million, or 63.7%, to $5.2 million for the three month period ended March 31,
2010 from $3.2 million for the three month period ended March 31, 2009. This increase is attributable to the increase in net revenue.

General
and administrative expenses increased by $1.4 million, or 21.8%, to $8.1 million for the three month period ended March 31, 2010 from $6.7 million for
the three month period ended March 31, 2009. The increase is primarily the result of hiring personnel to support our growth. This increase was offset by a $1.2 million reduction of to
the contingent consideration obligations recorded primarily related to the acquisitions of RayTrans Distribution Services and FMI. As a percentage of net revenue, general and administrative expenses
decreased to 47.6% for the three month period ended March 31, 2010 from 60.5% for the three month period ended March 31, 2009. The decrease, as a percentage of net revenue, is partially
attributable to the reduction of contingent consideration obligations as well as our ability to add clients and sales personnel in order to increase our net revenue without the same corresponding
increase in our general and administrative expenses.

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Depreciation expense increased by $0.4 million, or 45.8%, to $1.3 million for the three month period ended
March 31, 2010 from $0.9 million for the three month period ended March 31, 2009. The increase in depreciation expense is primarily attributable to purchases of computer hardware
and software, equipment, furniture and fixtures, and the capitalization of internally developed software. Amortization expense increased by $0.2 million, or 142.4%, to $0.4 million for
the three month period ended March 31, 2010 from $0.2 million for the three month period ended March 31, 2009. The increase in amortization expense the result of the intangibles
acquired in the RayTrans Distribution Services and FMI acquisitions completed in 2009.



Income from operations increased by $1.9 million to $2.0 million for the three month period ended March 31, 2010
from $0.1 million for the three month period ended March 31, 2009. The increase in income from operations is attributable to the increase in net revenue in excess of the increase in
operating expenses, due to improved leverage gained through the growth of our business.



Other expense decreased to $50,000 for the three month period ended March 31, 2010 from $77,000 for the three month period ended
March 31, 2009. The decrease is due to the pay down of our line of credit during the second half of 2009.

Provision
for income taxes increased to $0.7 million for the three month period ended March 31, 2010 from $18,000 for the three month period ended March 31, 2009.
Our effective tax rate decreased from
approximately 39% for the three month period ended March 31, 2009 to 38% for the three month period ended March 31, 2010.



Net income increased by $1.2 million to $1.2 million for the three month period ended March 31, 2010 from $28,000
for the three month period ended March 31, 2009 related to the items previously discussed.

Liquidity and Capital Resources

As of March 31, 2010, we had $41.8 million in cash and cash equivalents, $62.2 million in working capital and
$20.0 million available under our credit facility. On April 15, 2010, we amended the line of credit facility from $20.0 million to $10.0 million in availability.



For the three month period ended March 31, 2010, $1.5 million of cash was used in operating activities, representing an
increase of $0.4 million compared to three month period ended March 31, 2009. For the three month period ended March 31, 2010, we generated $1.2 million of operating cash
flow from net income, as compared to $28,000 for the three month period ended March 31, 2009, or an increase of $1.2 million. This cash flow generation was offset by a change in net
current assets of $4.1 million, which was primarily attributable to increases in accounts receivable and prepaid expenses, offset in part by an increase in accounts payable. This increase in
net current assets was attributable to the growth in our business. For the three month period ended March 31, 2010, the increase in net current assets was $1.7 million. The higher
increase in cash utilized due to changes in net current assets was due to the acceleration of the timing of payments made to our vendors in an effort to improve their cash flow in response to the
overall slowdown in the economy.

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Cash used in investing activities was $4.2 million and $1.3 million during the three month periods ended March 31,
2010 and 2009, respectively. The primary investing activities during these periods were acquisition related payments, the procurement of computer hardware and software and the internal development of
computer software. During the three month period ended March 31, 2010, we used $1.2 million for new acquisitions, and paid a $1.4 million earn-out payment to the
former owners of Mountain Logistics.



During the three month period ended March 31, 2010, net cash used in financing activities was $0.3 million compared to
cash provided by financing activities of $1.2 million for the three month period ended March 31, 2009. This was primarily attributable to the $2.1 million net borrowings on our
credit line for the three month period ended March 31, 2009, offset by a $0.7 million decrease in IPO fees paid for the three month period ended March 31, 2010.



As of March 31, 2010, we had no amounts outstanding on a $20.0 million line of credit with JPMorgan Chase Bank, N.A.,
which is due to expire on July 31, 2010. Any outstanding borrowings are collateralized by substantially all of our assets. The maximum amount outstanding under our line of credit cannot exceed
80% of the book value of our eligible accounts receivable. Our line of credit contains limitations on our ability to incur indebtedness, create liens and make certain investments. Interest on the line
of credit is payable monthly at an interest rate equal to either: (1) the prime rate or (2) LIBOR plus 2.25%. We have discretion in determining if specific advances against the line of
credit are drawn down as a prime rate advance or a LIBOR advance. The terms of the credit line include various covenants, including covenants that require us to maintain a maximum leverage ratio and a
minimum interest coverage ratio. As of March 31, 2010, we were not in violation of any of these various covenants. On April 15, 2010, we amended the line of credit facility from
$20.0 million to $10.0 million in availability.



Our priority is to continue to grow our revenue and net revenue. We anticipate that our operating expenses and planned expenditures
will constitute a material use of cash, and we expect to use available cash to expand our sales force, to enhance our technology, to acquire or make strategic investments in complementary businesses
and for working capital and other general corporate purposes. We also expect to use available cash to make approximately $19.3 million of potential earn-out payments due in
connection with our acquisitions. We currently expect to use up to $5.0 million for capital expenditures through the end of 2010. We also expect that we will use up to $5.0 million
through the end of 2010 to fund working capital requirements. We expect the use of cash for working capital purposes will be offset by the cash flow generated from operating earnings during this
period.

Historically,
our average accounts receivable lifecycle has been longer than our average accounts payable lifecycle, meaning that we have used cash to pay carriers in advance of
collecting from our clients. We elect to provide this benefit to foster strong relationships with our clients and carriers. As our business grows, we expect this use of cash to continue. The amount of
cash we use will depend on the growth of our business.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

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Contractual Obligations

As of March 31, 2010, we had the following contractual obligations:

Total

Less than
1 year

1-3 years

3-5 years

More than
5 yearsCapital lease

$
701

$
343

$
358

$


$
Operating lease


11,103


2,220


4,249


3,631


1,003Contingent consideration obligations(1)


19,284


5,687


10,474


3,123


Total

$
31,088

$
8,250

$
15,081

$
6,754

$
1,003


(1)Amounts
relate to contingent consideration for the Mountain Logistics, Inc., Bestway Solutions, LLC, RayTrans Distribution Services, Inc., Freight
Management, Inc., Distribution Specialist Inc. and Resource Group acquisitions.


Recent Accounting Pronouncements

In October 2009, the FASB issued ASC Topic 605 (previously ASU No. 2009-13,Multiple
Deliverable Revenue Arrangementsa consensus of the FASB Emerging Issues Task Force (ASU 2009-13)). The guidance addresses the accounting for
multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. The guidance is effective prospectively for revenue
arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. We are currently evaluating the impact that the adoption of
this guidance may have on our consolidated financial statements.

In
January 2010, the FASB issued ASC 820 (previously "Improving Disclosures about Fair Value Measurements"
(ASU 2010-06). This guidance improves disclosures originally required under SFAS No. 157. ASU 2010-06 is effective for interim and annual periods beginning
after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those
disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those years. We are currently evaluating the impact that the adoption of this
guidance may have on our consolidated financial statements.

In
February 2010, the FASB issued ASC 855 (previously "Amendments to Certain Recognition and Disclosure Requirements"
(ASU 2010-09)). ASU 2010-09 amended SFAS No. 165, "Subsequent Events" to resolve conflicts with SEC reporting requirements. The adoption of this guidance
did not have a material impact on the Company's consolidated results of operations and financial condition.

Item 3.Quantitative and Qualitative Disclosures About Market Risk



We pass through increases in fuel prices to our clients. As a result, we believe that there is no material risk exposure to
fluctuations in fuel prices.



We have exposure to changes in interest rates on our line of credit. The interest rate on our line of credit fluctuates based on the
prime rate or LIBOR plus 2.25%. Assuming the $20,000,000 line of credit was fully drawn, a 1.0% increase in the prime rate would increase our annual interest expense by $200,000.

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Our
interest income is sensitive to changes in the general level of U.S. interest rates, in particular because all of our investments are in cash equivalents. Due to the
short-term nature of our investments, we believe that there is no material risk exposure.

We
do not use derivative financial instruments for speculative trading purposes.

Impact of Inflation

We believe that our results of operations are not materially impacted by moderate changes in the inflation rate. Inflation and changing
prices did not have a material impact on our operations for the three months ended March 31, 2009 and 2010.

Item 4.    Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our
disclosure controls and procedures as of March 31, 2010. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act"), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports
that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies
its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2010,
our chief executive officer and chief financial officer concluded that, as of such date, the Company's disclosure controls and procedures were effective at the reasonable assurance level.

No
change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the first
quarter ended March 31, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.    Legal Proceedings

We are not a party to any legal proceedings that we believe would have a material adverse effect on our business, financial condition
or operating results.

Item 1A.    Risk Factors

There have been no material changes from the risk factors described in Item 1A ("Risk Factors") of our Annual Report on
Form 10-K for the year ended December 31, 2009.

Item 6.    Exhibits

Exhibit No

Description of Exhibit31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

ECHO GLOBAL LOGISTICS, INC.Date: May 14, 2010

By:

/s/ DOUGLAS R. WAGGONER Douglas R. Waggoner Chief Executive OfficerDate: May 14, 2010

By:

/s/ DAVID B. MENZEL David B. Menzel Chief Financial Officer


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EXHIBIT INDEX

Number

Description31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


28

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