SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended June 30, 1997 or

[ ] 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:   001-14474

                        AMERTRANZ WORLDWIDE HOLDING CORP.
             (Exact name of registrant as specified in its charter)

           DELAWARE                                               11-3309110
(State or other jurisdiction                                   (I.R.S. Employer
of incorporation or organization)                            Identification No.)

2001 Marcus Avenue, Lake Success, New York                          11042
(Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code                (516) 326-9000


     Securities registered pursuant to Section 12(b) of the Act:

Title of Class                         Name of Each Exchange on Which Registered
      None                                               None

     Securities registered pursuant to Section 12(g) of the Act:

                                 Title of Class
                          Common Stock, $.01 par value
                    Redeemable Common Stock Purchase Warrants

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 X No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive  proxy or information  statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant as of September 23, 1997 was $5,774,846.

The number of shares of common stock  outstanding  as of September  23, 1997 was
7,962,397.

                       DOCUMENTS INCORPORATED BY REFERENCE
To the extent specified,  Part III of this Form 10-K incorporates information by
reference to the  Registrant's  definitive  proxy  statement for its 1997 Annual
Meeting of Shareholders (to be filed).



<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
                         1997 ANNUAL REPORT ON FORM 10-K

                                Table of Contents


                                                                            Page

                                     PART I


Item 1.  Business                                                              3
Item 2.  Properties                                                            7
Item 3.  Legal Proceedings                                                     7
Item 4.  Submission of Matters to a Vote of Security Holders                   7
         Executive Officers of the Registrant                                  8


                                     PART II

Item 5.  Market for Registrant's Common Equity and Related
         Stockholder Matters                                                   9
Item 6.  Selected Financial Data                                              11
Item 7.  Management's Discussion and Analysis of Financial
         Conditions and Results of Operations                                 12
Item 8.  Financial Statements and Supplementary Data                          17
Item 9.  Changes in and Disagreements with Accountants
         on Accounting and Financial Disclosures                              17


                                    PART III

Item 10. Directors and Executive Officers of the Registrant                   18
Item 11. Executive Compensation                                               18
Item 12. Security Ownership of Certain Beneficial Owners
         and Management                                                       18
Item 13. Certain Relationships and Related Transactions                       18


                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports
         on Form 8-K                                                          19



                                        2

<PAGE>



                                     PART I


ITEM  1.  BUSINESS


Background

         Amertranz   Worldwide  Holding  Corp.   ("Company")   provides  freight
forwarding   services  and   logistics   services,   through  its  wholly  owned
subsidiaries,  Caribbean Air Services, Inc. ("CAS") and Target Airfreight,  Inc.
("Target"),  and, until June 23, 1997, Amertranz Worldwide,  Inc. ("Amertranz").
The Company has a network of offices in 26 cities  throughout  the United States
and Puerto Rico.  The Company  believes  that it is one of the dominant  freight
forwarders between the continental United States and Puerto Rico.

         The  Company  was  incorporated  in  Delaware  in  January  1996 as the
successor to operations commenced in 1970 as the "Wrangler Aviation" division of
Blue Bell,  Inc.,  an  apparel  manufacturer.  The  Wrangler  Aviation  division
transported raw material to Blue Bell facilities in Puerto Rico and returned the
finished  goods to its facilities in Greensboro,  North  Carolina.  In 1988, new
owners of Blue Bell, Inc.  separately  incorporated  the division in Delaware as
Wrangler Aviation, Inc. ("Wrangler"), and then sold Wrangler in October 1990. At
that time,  Caribbean  Freight System,  Inc.  ("CFS") was incorporated in Puerto
Rico to act as the marketing arm of Wrangler.

         In December 1991, the owners of Wrangler  engaged a new management team
following  the  discovery  of  certain  improprieties  performed  under  the old
management.  As a  result  of  investigations  by  the  new  management,  it was
determined  to  reorganize  both Wrangler and CFS under Chapter 11 of the United
States  Bankruptcy  Code.  CFS and Wrangler both  successfully  emerged from the
Chapter 11 proceedings in November 1992 and June 1993, respectively.  In January
1994,  Wrangler changed its name to TIA, Inc. ("TIA").  Thereafter,  TIA and CFS
continued  to  specialize  in  the  movement  of  large  freight  shipments  for
manufacturers,  and maintained sales and/ or full offices in  Philadelphia,  New
York, Chicago, Los Angeles, Hartford, and Greensboro, North Carolina, as well as
a network of sales persons in Puerto Rico.

         Amertranz  and its  predecessor  began  operations  in June  1985 as an
independently  owned exclusive agent of a domestic and international air freight
forwarder.  During the next eight years, Amertranz opened nine offices under its
exclusive agency arrangement.

         In January 1994, Amertranz acquired the domestic air freight forwarding
business (i.e.,  the transport of freight which has both its point of origin and
its point of destination  within the United States) of the freight forwarder for
which Amertranz was acting as an exclusive  agent, as a result of the settlement
of a lawsuit.  Thereafter,  Amertranz  owned and  operated 20 offices  primarily
focusing on the movement of domestic  freight and, in its original nine offices,
international  air  freight.  As an  independent  freight  operation,  Amertranz
established an internal  infrastructure,  including accounting,  data processing
and communications departments, to support its 20 office network.

         In  February  1996,  the  Company   acquired  all  of  the  issued  and
outstanding stock of Amertranz and received the freight  forwarding  business of
TIA and CFS, and contributed the TIA and CFS freight forwarding business to CAS.
As  a  result,  Amertranz  became  a  wholly-owned  subsidiary  of  the  Company
conducting Amertranz's freight forwarding and logistics services businesses, and
the freight  forwarding  business of TIA and CFS was  transferred to the Company
and is conducted by CAS.

         On October 10, 1996, the Company  acquired  Consolidated  Air Services,
Inc.  ("Consolidated"),  a Phoenix  based freight  forwarder  that had begun its
operation in 1982 focusing  primarily on serving the fashion and retail industry
with  domestic  and  international  freight  forwarding  services.  As a result,
Consolidated  became a  wholly-owned  subsidiary  of the Company with  Amertranz
conducting Consolidated's freight forwarding business.


                                        3

<PAGE>



         On May 8, 1997,  the Company  acquired  (by merger  into the  Company's
Target  subsidiary)  Target Air Freight,  Inc. (a California  corporation) a Los
Angeles-based  freight forwarder ("Air Freight").  Under the terms of the merger
(the "Target  Merger"),  the Company  issued  900,000 shares of Common Stock and
paid  $400,000  to Air  Freight's  stockholders.  Following  the Target  Merger,
Christopher A.  Coppersmith,  the principal  shareholder of Air Freight became a
director of the Company.

         While the  business  of the  Company's  CAS  subsidiary  has  generated
positive cash flows for several years,  the business of the Company's  Amertranz
subsidiary  has incurred  operating  losses for each of its  operating  periods.
Because of continuing losses in the Amertranz  subsidiary,  on June 23, 1997 the
Company  commenced  actions to close the operations of the Amertranz  subsidiary
and transfer its customer  accounts to the Company's Target  subsidiary for fair
consideration.

         The Company is currently  negotiating  with the unsecured  creditors of
the Amertranz subsidiary's trade payables (which have not been guaranteed by the
Company) to allow  Amertranz  to satisfy its trade  payable  obligations  over a
period of time, primarily based on a percentage of the Company's future profits.
There  can be no  assurance  that  the  Company  will  be  successful  in  these
negotiations.  In  connection  with the  closing  of the  Amertranz  subsidiary,
Amertranz  has recorded a $3.4 million  restructuring  charge.  To date, a large
portion of the  Amertranz  subsidiary's  business  has been  transferred  to the
Company's Target subsidiary.  While the Company projects that the closing of the
Amertranz  subsidiary will have a positive  affect on the Company's  operations,
there can be no assurance that the business of the Amertranz  subsidiary will be
preserved and transferred to the Company's other operating subsidiaries, or that
the closing of Amertranz will produce positive operating results. If the Company
is not successful in these negotiations with these trade creditors,  the Company
may consider  other  options,  including  seeking  protection  for the Amertranz
subsidiary under the Bankruptcy Code.

         Following the closing of the Amertranz subsidiary, the Company operates
through its two wholly-owned subsidiaries, CAS and Target.


Description of Business

         The Company's  freight  forwarding  services involve  arranging for the
total  transport  of  customers'  freight  from the  shippers'  location  to the
designated  recipients,  including the preparation of shipping documents and the
providing  of  handling,  packing  and  containerization  services.  The Company
concentrates  on cargo  shipments  weighing  more than 50 pounds  and  generally
requiring  second-day  delivery.  The  Company  also  assembles  bulk  cargo and
arranges  for  insurance.  The  Company  has a network  of  offices in 26 cities
throughout  the United  States  and  Puerto  Rico,  including  exclusive  agency
relationships in nine cities.  The Company has international  freight forwarding
operations consisting of strategic  relationships in over 20 countries including
share ownership in its exclusive agents in Hong Kong, Malaysia and Singapore.


Operations

         Movement  of  Freight.  The  Company  does  not  own any  airplanes  or
significant  trucking  equipment and relies on independent  contractors  for the
movement of its cargo. The Company utilizes its expertise to provide  forwarding
services  that are  tailored to meet  customers'  requirements.  It arranges for
transportation of customers'  shipments via commercial airlines and/or air cargo
carriers and, if delivery  schedules permit, the Company makes use of lower cost
inter-city truck  transportation  services.  The Company selects the carrier for
particular  shipments on the basis of cost,  delivery time and  available  cargo
capacity. Through the Company's advanced data processing system, it can provide,
at no additional cost to the customer,  value-added  services such as electronic
data  interchange,  computer based shipping and tracking  systems and customized
computer  generated reports.  Additionally,  the Company provides cargo assembly
and warehousing services.

         The  rates  charged  by the  Company  to its  customers  are  based  on
destination,  shipments  weight and required  delivery  time. The Company offers
graduated discounts for shipments with later scheduled delivery items and rates

                                        4

<PAGE>



generally  decrease in inverse proportion to the increasing weight of shipments.
Due to the high  volume of  freight  controlled  by the  Company,  it is able to
obtain favorable  contract rates from airlines and is often able to book freight
space at times when  available  space is  limited.  When  possible,  the Company
consolidates   different   customers'   shipments   to   reduce   its   cost  of
transportation.

         Under the terms of the Cargo Aircraft Charter  Agreement dated February
29, 1994, as amended ("L-1011 Charter"), the Company has exclusive rights, until
June 30, 1998, to the use of a Lockheed  L-1011 cargo  aircraft that is operated
on behalf of Tradewinds Airlines,  Inc. between the Company's Borinquen,  Puerto
Rico location and its  Greensboro,  North  Carolina and  Hartford,  Connecticut,
locations.  The L-1011 aircraft  carries a payload of 110,000 pounds.  Under the
terms of the L-1011 Charter,  the L-1011 aircraft must be available at all times
(except during scheduled  maintenance) for use by the Company, as needed.  While
the Company is guaranteed the use of the L-1011 aircraft as needed,  the Company
pays  only  for  its  actual  use of  the  aircraft  at  market  rates.  Freight
originating  throughout  the United States is generally  transported by truck to
either Greensboro or Hartford for loading onto the aircraft.  Similarly, freight
originating in Puerto Rico is flown on the L-1011 aircraft to either  Greensboro
or Hartford, and then transported by truck to its destination.

         Information  Systems.  An important component of the Company's business
strategy is to provide  accurate and timely  information  to its  management and
customers.  Accordingly,  the Company has invested, and will continue to invest,
substantial  management and financial  resources in developing these information
systems.

         The Company leases an HP 9000 mainframe  computer and has a proprietary
freight forwarding  software system which the Company has named "Trax".  Trax is
an integrated  freight  forwarding  and  financial  management  data  processing
system.  It  provides  the  Company  with the  information  needed to manage its
sourcing  and  distribution  activities  through  either  printed or  electronic
medium. Specifically, the Trax system permits the Company to track the flow of a
particular shipment from the point of origin through the transportation  process
to the point of delivery.  The Company intends to  continuously  upgrade Trax to
enhance its ability to maintain a competitive advantage.

         International  Operations.  The  Company  has  recently  increased  its
international  operations  through the acquisition of Target.  During the fiscal
year  ended  June 30,  1997,  the  Company's  international  freight  forwarding
accounted for 6.6% of the Company's operating revenue.


Customers and Marketing

         The  Company's  principal  customers  include large  manufacturers  and
distributors   of   pharmaceuticals,   computers   and  other   electronic   and
high-technology  equipment,  computer software and wearing apparel.  The Company
currently has more than 2,400 accounts.

         The  Company   markets  its  services   through  an   organization   of
approximately 50 full-time salespersons supported by the sales efforts of senior
management,  and the  operations  staff in the  Company's  offices.  The Company
strongly  promotes  team  selling,  wherein the  salesperson  is able to utilize
expertise from other departments in the Company to provide value-added  services
to gain a specific account.  The Company has a national account sales group that
targets high-revenue  national accounts with multiple shipping locations.  These
industry specialists discern the specific freight transportation requirements of
the customers and are able to prepare customized shipping programs to meet these
specific requirements. The Company staffs each office with operational employees
to  provide  support  for the sales  team,  develop  frequent  contact  with the
customer's  traffic  department,  and  maintain  customer  service.  The Company
believes that it is important to maintain frequent contact with its customers to
assure  satisfaction and to immediately  react to resolve any problem as quickly
as possible.

         The Company enhanced its Fashion Services Division which specializes in
providing   service  to  the  garment   industry   through  the  acquisition  of
Consolidated.  This division  targets  customers  from  manufacturers  to retail
establishments  and  provides  specific  expertise  in handling  fashion-related
shipments.  The Fashion Services Division specializes in the movement of wearing
apparel for manufacturing  customers to their department store customers located
throughout the United States.

                                        5

<PAGE>




         Many of the  Company's  customers  utilize  more  than one air  freight
transportation provider. In soliciting new accounts, the Company uses a strategy
of  becoming  an  approved  carrier  in order to  demonstrate  the  quality  and
cost-effectiveness  of its  services.  Using  this  approach,  the  Company  has
advanced its relationships with several of its major customers,  from serving as
a back-up freight services provider to primary freight forwarder.


Competition

         Although there are no weight  restrictions on the Company's  shipments,
the Company focuses  primarily on cargo  shipments  weighing more than 50 pounds
and requiring  second-day  delivery.  As a result, the Company does not directly
compete for most of its business with overnight couriers and integrated shippers
of principally  small parcels,  such as United Parcel Service of America,  Inc.,
Federal Express  Corporation,  DHL Worldwide  Express,  Inc.,  Airborne  Freight
Corporation  and the United  States Postal  Service.  However,  some  integrated
carriers,  such as Emery Air Freight  Corporation  and  Burlington  Air Express,
Inc.,  primarily  solicit  the  shipment  of  heavy  cargo in  competition  with
forwarders.

         There is intense  competition within the freight  forwarding  industry.
While the industry is highly fragmented,  the Company most often competes with a
relatively  small  number of  forwarders  who have  nationwide  networks and the
capability  to provide a full range of  service  similar to that  offered by the
Company. These include Eagle USA Air Freight, Inc., Pilot Air Freight, Inc., and
LEP Profit  International,  Inc.  There is also  competition  from passenger and
cargo air carriers  and trucking  companies.  On the  international  side of the
business,  the  Company  competes  with  forwarders  that  have a  predominantly
international  focus, such as Fritz Companies,  Inc., Air Express  International
Corporation and Harper Group, Inc. All of these companies, as well as many other
competitors,  have  substantially  greater  facilities,  resources and financial
capabilities than those of the Company.  The Company also faces competition from
regional  and local air  freight  forwarders,  cargo sales  agents and  brokers,
surface freight  forwarders and carriers and associations of shippers  organized
for the  purpose of  consolidating  their  members'  shipments  to obtain  lower
freight rates from carriers.


Employees

         The  Company  and its  subsidiaries  had  approximately  326  full-time
employees as of June 30, 1997.  None of the  Company's  employees  are currently
covered by a collective  bargaining  agreement.  The Company has  experienced no
work stoppages and considers its relations with its employees to be good.


Regulation

         The  Company's  freight  forwarding  business as an indirect  air cargo
carrier  is  subject  to  regulation   by  the  United   States   Department  of
Transportation  under the Federal Aviation Act. However,  air freight forwarders
(including the Company) are exempted from most of such Act's requirements by the
Economic Aviation Regulations promulgated thereunder.  The Company's foreign air
freight  forwarding  operations  are  subject to  regulation  by the  regulatory
authorities of the respective foreign jurisdictions.  The air freight forwarding
industry is subject to regulatory and  legislative  changes which 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.




                                        6

<PAGE>



ITEM 2.  PROPERTIES

         The  Company  leases  terminal  facilities  consisting  of  office  and
warehouse  space in 17 cities  located in the United States and Puerto Rico, and
also  utilizes  nine  offices  operated  by  exclusive  agents.   The  Company's
headquarters  are located in Lake  Success,  New York,  in 7,000  square feet of
leased  office  space.  The Company is in the process of closing this office and
relocating  its  headquarters  to  the  Company's  Greensboro,  North  Carolina,
facility  where the Company  leases an aggregate of 15,000 square feet of office
and warehouse space. The Company's 16 facilities range in size from 1,000 square
feet to 100,000 square feet and consist of offices and  warehouses  with loading
bays. All of such properties are leased from third parties.  Management believes
that its current facilities are underutilized.  Accordingly, management believes
that the Company's  facilities are more than  sufficient for its planned growth.
The principal warehouse facilities are set forth in the following table:

                             Approximate Square Feet             Lease
Location                        of Floor Space                Expiration

Los Angeles, CA                      100,280                  July 2002
Aquadilla, PR                         45,000                Month-to-Month

The Company has an  additional  thirteen  terminal  facilities  in the following
locations:

            Atlanta, Georgia                   Indianapolis, Indiana
            Charlotte, North Carolina          Miami, Florida
            Chicago, Illinois                  Newark, New Jersey
            Dallas, Texas                      New York, New York
            Hartford, Connecticut              San Francisco, California
            Houston, Texas                     San Juan, Puerto Rico
                                               Seattle, Washington


ITEM 3.  LEGAL PROCEEDINGS

None


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         By written  consent  dated May 20,  1997,  the  owners of an  aggregate
3,498,741 shares of Common Stock, or 51.25% of all issued and outstanding shares
of the Company's Common Stock at that time, approved, by written consent in lieu
of a meeting,  the  adoption of an  amendment to the  Company's  Certificate  of
Incorporation  to increase the number of authorized  shares of Common Stock from
15,000,000  shares to  30,000,000  shares.  Such  action by  written  consent is
sufficient  to satisfy the  applicable  requirements  of  Delaware  law that any
amendment  of the  Company's  Certificate  of  Incorporation  be approved by the
stockholders.  An Information  Statement in accordance with the  requirements of
Regulation 14C under the Securities  Exchange Act of 1934 was distributed to the
Company's  stockholders,  but the  stockholders  were not asked to take  further
action on such  amendment.  On July 9, 1997,  the  amendment  was filed with the
office of the Secretary of State of Delaware.


                                        7

<PAGE>



EXECUTIVE OFFICERS OF THE REGISTRANT

         The  following is a listing of the  executive  officers of the Company.
There are no family  relationships  between any  Directors  and  Officers of the
Company.

NAME                                AGE       POSITION

Stuart Hettleman.............       47        President and Chief Executive
                                              Officer

Richard A. Faieta............       51        Executive Vice President

Philip J. Dubato.............       41        Vice President, Chief Financial
                                              Officer and Secretary


STUART HETTLEMAN has been President,  Chief Executive  Officer,  Chief Financial
Officer  and a  director  of the  Company  and a  director  and  Executive  Vice
President of each of Amertranz and CAS,  since  February 7, 1996, and a director
and Executive Vice President of Target since May 8, 1997. Mr.  Hettleman is also
an executive officer of several of the Company's predecessors.  Specifically, he
has been Vice  President of TIA since 1990 and is currently the  Executive  Vice
President of TIA; and has been Vice President of CFS since 1991 and is currently
Executive Vice President of CFS.

RICHARD A.  FAIETA  has been  Executive  Vice  President  and a director  of the
Company,  a director and  President  of CAS, and a director and Chief  Executive
Officer of Amertranz, since February 7, 1996, and a director of Target since May
8, 1997. He has served as President and Chief  Executive  Officer of each of TIA
and CFS, the Company's predecessors, since April 1992. From 1987 through 1991 he
served as Vice President-Operations of LEP Profit International  Corporation,  a
domestic and international freight forwarder.

PHILIP J. DUBATO has been Vice President,  Chief Financial Officer and Secretary
of the Company since  February 3, 1997.  From 1984 through 1996,  Mr. Dubato was
employed by LEP Profit International, Inc., a domestic and international freight
forwarder,  where he held  successive  positions as Controller,  Chief Financial
Officer and Executive Vice President.


                                        8

<PAGE>



                                     PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

         The Company's  initial  public  offering of its common stock,  $.01 par
value (the "Common  Stock") and Redeemable  Common Stock Purchase  Warrants (the
"Warrants")  took place on June 28, 1996.  Since that date both the Common Stock
and the  Warrants  have been  listed on the  NASDAQ  SmallCap  Market  under the
symbols AMTZ and AMTZW, respectively;

         The  following  table shows the high and low sales prices of the Common
Stock  and  Warrants  for the  year  ended  June 30,  1996,  and for each of the
quarters during the year ended June 30, 1997, as reported by NASDAQ.
There have been no dividends declared.

                                    COMMON STOCK             WARRANTS

Fiscal Year Ended June 30, 1996
                                    High - 7                 High - 1 7/8
                                    Low  - 6                 Low  - 1

Fiscal Year Ended June 30, 1997
First Quarter                       High - 6 5/8             High - 1 7/8
                                    Low  - 4 5/8             Low  - 1

Second Quarter                      High - 5 1/2             High - 1 3/4
                                    Low  - 3 7/8             Low  -   1/2

Third Quarter                       High - 4 1/2             High - 1 1/16
                                    Low  - 3 3/4             Low  -    3/8

Fourth Quarter                      High - 3 7/8             High -    1/2
                                    Low  - 1                 Low  -    1/8

         On September  23, 1997 there were 1,127  shareholders  of record of the
Company's Common Stock and 946 holders of record of the Company's Warrants.  The
closing price of the Common Stock on that date was $1.50 per share.  The closing
price of the Warrants on that date was $0.25 per Warrant.

         On May 8, 1997, the Company acquired its Target  subsidiary  Target Air
Freight,  Inc. (a California  corporation) a Los Angeles-based freight forwarder
("Air  Freight").  Under the terms of the  merger  (the  "Target  Merger"),  the
Company issued 900,000 shares of Common Stock and paid $400,000 to Air Freight's
stockholders.

         On June 13, 1997, the Company completed a $2,575,000  private placement
of equity securities to individual  investors (the "Private Placement") pursuant
to Regulation D promulgated  under the  Securities  Act of 1933.  GKN Securities
Corp. was the placement agent for the Private Placement.  Under the terms of the
Private  Placement,  each  $100,000  investment  purchased  10,000 shares of the
Company's Class C Preferred Stock and 50,000 Warrants.

         Each share of Class C Preferred  Stock has a stated  value (the "Stated
Value") of $10.00 and earns cumulative dividends at 10% per annum (pro rated for
shorter periods)  payable  quarterly,  in arrears,  in cash or, at the Company's
option if the Registration  Statement  described below is current and effective,
in shares of Common Stock  (based on the average  closing bid price per share of
Common  Stock on the five  trading  days ending two  business  days prior to the
respective dividend payment date). Upon a liquidation of the Company (including,
at the option of the holder,  a merger or  consolidation in which the Company is
not the surviving entity or a sale by the Company of all or substantially all of
its assets), the holders of the Class C Preferred Stock shall be entitled to

                                        9

<PAGE>



receive, prior to the distribution to the holders of the Company's Common Stock,
Class A Preferred  Stock and Class B Preferred  Stock, an amount per share equal
to the greater of (i) the Stated Value plus any accrued and unpaid dividends, or
(ii) the  amount  they  would  have  received  had they  converted  the  Class C
Preferred Stock into Common Stock on the business day  immediately  prior to the
record  date  with  respect  to such  liquidation.  The  holders  of the Class C
Preferred  Stock  shall,  at any time,  have the right to convert  each share of
Class C Preferred Stock into 10 shares of Common Stock.  Fractional  Shares will
not be issued. Instead, the Company will round up to the nearest whole number of
shares.  Subject to the  conversion  right,  the  Company may redeem the Class C
Preferred Stock at its Stated Value plus all accrued and unpaid dividends if the
Registration  Statement described below is current and effective,  upon 30 days'
written  notice given at any time if the last sale price of the Common Stock has
been at least $2.50 on all 20 of the trading days ending on the third date prior
to the  date on which  written  notice  of  redemption  is  given.  The  Class C
Preferred  Stock ranks senior to all classes of the Company's  capital stock now
existing  or which may be created in the  future;  provided,  however,  that the
Company is entitled to create a Class D preferred  stock,  which would rank pari
passu with the Class C Preferred  Stock with respect to dividend and liquidation
preferences,  for  issuance  solely to certain  holders of Company debt upon the
occurrence of certain events. The holders of the Class C Preferred Stock have no
voting rights until such time as they convert their Class C Preferred Stock into
Common Stock, except as provided by law.

         Each Warrant  issued in the Private  Placement  entitles the registered
holder to purchase one share of the Common  Stock at an exercise  price equal to
$6.00 during the four-year period commencing June 28, 1997. At any time and from
time to time during the period that the Warrant is exercisable,  the Company, in
its sole discretion,  upon appropriate notice to the Warrant holders, may extend
the period  during which the Warrant is  exercisable.  No  fractional  shares of
Common stock will be issued in  connection  with the  exercise of the  Warrants.
Upon exercise,  the Company will pay the holder the value of any such fractional
shares in cash, based upon the market value of the Common Stock at such time. In
the event a holder of the Warrants fails to exercise his Warrants prior to their
expiration,  such  Warrants  will  expire  and the holder  thereof  will have no
further  rights with respect to the Warrants.  A holder of the Warrants does not
have any rights, privileges or liabilities as a stockholder of the Company prior
to  exercise  of the  Warrants.  The  Company  is  required  to keep  reserved a
sufficient number of authorized shares of Common Stock to permit the exercise of
the  Warrants.  The exercise  price of the Warrants is subject to  adjustment to
protect  against  dilution  in the  event  of  stock  dividends,  stock  splits,
combinations,  subdivisions and reclassifications.  In the event the Company has
an effective  Registration  Statement covering the resale of the Warrants by the
holders  thereof and the shares of Common Stock  issuable  upon  exercise of the
Warrants, and provided that not less than 30 days' notice of redemption is given
and the last sale date of the Common  Stock has been at least $10.00 for each of
the 20 trading  days ending on the third  business day prior to the day on which
notice is given,  the Company has the right to call the Warrants for  redemption
at a redemption price of $.01 per Warrant.

         Shares of Class C Preferred Stock and Warrants  acquired in the Private
Placement and all shares of Common Stock underlying such securities or issued as
dividends  on the Class C  Preferred  Stock may not be sold until June 13,  1998
without the approval of GKN Securities Corp.

         The  Company  received  $2,202,855  in net  proceeds  from the  Private
Placement.  Of these  proceeds,  $400,000 was used to acquire Air Freight (which
currently  operates as the Company's  Target  subsidiary),  $200,000 was used to
repay a short-term loan and the balance was used for working capital and general
corporate purposes.


                                       10

<PAGE>



ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
AMERTRANZ WORLDWIDE HOLDING CORP. (1)
(in thousands, except per share data)
                                                                                    Six Months        Year
                                                 Years Ended December 31,       Ended June 30,   Ended June 30,
                                         1993            1994            1995           1996          1997
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Statement of Operations Data:
   Operating revenue                     $32,671        $38,576         $38,211        $27,446       $75,352
   Cost of transportation                 24,232         30,254          30,300         20,961        57,199
                                          ------         ------          ------         ------        ------
   Gross profit                            8,439          8,322           7,911          6,485        18,153
   Selling, general &
      administrative
      expenses                             6,505          4,634           4,513          8,772        23,985
   Net income (loss) before
      restructuring charge                $  869         $2,661          $2,366        $(6,397)      $(7,101)
   Restructuring charge                       -              -               -              -         (3,407)
   Net income (loss)                      $  869         $2,661          $2,366        $(6,397)      (10,508)
   Net loss per common share                                                           $(1.84)       $(1.74)

Balance Sheet Data:
   Total assets                                                                        $22,740       $29,821
   Working capital (deficit)                                                           (13,937)      (12,541)
   Current liabilities                                                                  22,470        27,158
   Long-term indebtedness                                                                8,018         4,094
   Stockholders' equity (deficit)                                                      $(7,749)       (1,430)

<FN>
(1) The amounts for the freight forwarding business of the Company represent the
historical operations associated with the freight forwarding business of TIA and
CFS  contributed  to the Company in the  combination  of these  businesses.  The
freight  forwarding  business of TIA and CFS did not operate as a separate legal
or reporting  entity during the periods  presented.  The operations data for the
fiscal year ended December 31, 1993 and for the first two months of 1994 include
the effect of the  aviation  assets  which TIA sold in March,  1994.  Management
believes that if the  operations  data were restated to exclude the operation of
these aviation assets, cost of transportation  would be higher but would be more
than offset by a reduction in selling, general and administrative expenses.
</FN>
</TABLE>

                                       11

<PAGE>



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

Overview

         The Company was  incorporated  in January  1996 to continue the freight
forwarding business of TIA and CFS and acquire Amertranz.  The Company generated
operating  revenues of $75.4  million and had net losses  before  taxes of $10.5
million for the fiscal year ended June 30, 1997.  The loss  included a charge of
$3.4 million attributed to restructuring costs in connection with the closing of
the Company's Amertranz  subsidiary.  The freight forwarding business of TIA and
CFS generated  operating revenues of $38.6 million and $38.2 million and had net
income  before  taxes of $2.7  million  and $2.4  million  for the  years  ended
December 31, 1994 and 1995, respectively.

         Historically,  the  CAS  business  has  derived  substantial  operating
revenues  from  companies  engaging  in  business in Puerto Rico who were taking
advantage of  significant  United States  income tax benefits  available to such
companies.  In 1993,  Congress  reduced the tax benefits  available to companies
doing business in Puerto Rico, and  legislation  enacted into law in August 1996
contains a 10-year phaseout of these tax benefits.  This legislation,  or in the
event that there is any further  modification to these tax benefits available to
United States  companies  doing  business in Puerto Rico,  could result in these
companies  reducing  the level of the  business  they have been  doing in Puerto
Rico,  which could have a material  adverse  effect on the  Company's  operating
results.

         While the  businesses  of the Company's  CAS  subsidiary  has generated
positive cash flows for several years,  the business of the Company's  Amertranz
subsidiary  has incurred  operating  losses for each of its  operating  periods.
Because of continuing losses in the Amertranz  subsidiary,  on June 23, 1997 the
Company  commenced  actions to close the operations of the Amertranz  subsidiary
and transfer its customer accounts to the Company's other  subsidiaries for fair
consideration.

         The Company is currently  negotiating  with the unsecured  creditors of
the Amertranz subsidiary's trade payables (which have not been guaranteed by the
Company) to allow  Amertranz  to satisfy its trade  payable  obligations  over a
period of time, primarily based on a percentage of the Company's future profits.
There  can be no  assurance  that  the  Company  will  be  successful  in  these
negotiations.  In  connection  with the  closing  of the  Amertranz  subsidiary,
Amertranz  has recorded a $3.4 million  restructuring  charge.  To date, a large
portion of the  Amertranz  subsidiary's  business  has been  transferred  to the
Company's Target subsidiary.  While the Company projects that the closing of the
Amertranz  subsidiary will have a positive  affect on the Company's  operations,
there can be no assurance that the business of the Amertranz  subsidiary will be
preserved and transferred to the Company's other operating subsidiaries, or that
the closing of Amertranz will produce positive operating results. If the Company
is not successful in these negotiations with these trade creditors,  the Company
may consider  other  options,  including  seeking  protection  for the Amertranz
subsidiary  under the Bankruptcy  Code.  See "Liquidity and Capital  Resources",
below.


Results of Operations

         This  Annual  Report  on Form  10-K  contains  certain  forward-looking
statements  reflecting the Company's  current  expectations  with respect to its
operations,  performance,  financial  condition,  and other  developments.  Such
statements  are  necessarily  estimates  reflecting the Company's best judgement
based upon current  information and involve a number of risks and uncertainties.
While it is impossible  to identify all such factors,  factors which could cause
actual results to differ  materially  from  expectations  are: (i) the Company's
recent losses and ability to achieve  profitability,  (ii) competitive practices
in the industries in which the Company competes,  (iii) the Company's dependence
on  current  management,  (iv)  the  impact  of  current  and  future  laws  and
governmental  regulations  affecting the transportation  industry in general and
the Company's  operations in particular,  (v) general economic  conditions,  and
(vi) other factors  which may be  identified  from time to time in the Company's
Securities and Exchange Commission filings and other public announcements. There
can be no assurance that these and other factors will not affect the accuracy of
such forward-looking  statements.  Forward-looking statements are preceded by an
asterisk (*).

                                       12

<PAGE>




Years Ended June 30, 1997 and 1996

         The Company began its existence as the holding company for the combined
operations  of Amertranz and the freight  forwarding  business of TIA and CFS on
February  8, 1996.  From and after  February  8, 1996,  the  freight  forwarding
business of TIA and CFS was operated through the Company's CAS subsidiary. Prior
to such date, the operations of Amertranz and the freight forwarding business of
TIA and CFS were  independent of each other.  For the fiscal year ended June 30,
1997, the consolidated  financial  statements  included the accounts of Holding,
CAS,  Amertranz,  Consolidated  (since October 1, 1996) and Target (since May 1,
1997). The following  discussion  relates to the combined results of the Company
for the period  June 30,  1997  compared  to the  results of  Holdings,  CAS and
Amertranz  for the period  February 8, 1996  through  June 30, 1996 and only the
operations of the freight forwarding business of TIA and CFS for the period July
1, 1995 through February 7, 1996.

                                                     Year Ended
                                           June 30, 1997     June 30, 1996
                                                         (Pro forma/Unaudited)

Operating revenue                            $75,352,065       $47,922,981
Cost of transportation                        57,198,797        36,828,542
Gross profit                                  18,153,268        11,094,376
Selling, general and
  administrative expenses                     23,985,223        11,025,323
Net loss before restructuring charge        ($ 7,100,852)      ($4,317,845)
Restructuring charge                           3,407,482                 -
Net loss                                    ($10,502,398)      ($4,317,845)

         Operating  Revenue.  Operating revenue  increased by $27.4 million,  or
57.2%,  from $47.9 million for the period July 1, 1995 through June 30, 1996, to
$75.4  million for the period July 1, 1996 through June 30, 1997.  This increase
resulted almost  entirely from the Company's  Amertranz  subsidiary's  operating
revenues which were included in the 1997 period but only in the period  February
8, 1996 through June 30, 1996 for the twelve months ended June 30, 1996, and the
1997 acquisitions of Consolidated and Target.

         Cost of  Transportation.  Cost of transportation  decreased to 75.9% of
operating revenues for the period July 1, 1996 through June 30, 1997, from 76.8%
of operating  revenues  for the period July 1, 1995 through June 30, 1996.  This
improvement  is  almost  entirely  from  the  Company's  Amertranz  subsidiary's
historically  lower cost of  transportation  as a percentage of sales which were
included in the 1997 period but only the period  February 8, 1996  through  June
30, 1996 for the twelve months ended June 30, 1996.

         Gross Profit.  As a result of the factors described in the two previous
paragraphs,  gross  profit for the period July 1, 1996  through  June 30,  1997,
increased to 24.1% of operating revenues from 23.2% of operating revenue for the
period July 1, 1995 through June 30, 1996.

         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative  expenses increased to 31.8% of operating revenues for the period
July 1, 1996  through June 30,  1997,  from 23.0% of operating  revenues for the
period July 1, 1995  through  June 30, 1996.  This  increase is almost  entirely
attributable  to  the  Company's  Amertranz  subsidiary's   historically  higher
selling,  general and administrative expenses as a percentage of its sales which
were  included in the 1997 period but only the period  February 8, 1996  through
June  30,  1996  for the  twelve  months  ended  June  30,  1996,  and the  1997
acquisitions of Consolidated and Target.

Six Months Ended June 30, 1996 and 1995

         The Company began its existence as the holding company for the combined
operations  of Amertranz and the freight  forwarding  business of TIA and CFS on
February  8, 1996.  From and after  February  8, 1996,  the  freight  forwarding
business of TIA and CFS was operated through the Company's CAS subsidiary. Prior
to such date, the operations of Amertranz and the freight forwarding business of
TIA and CFS were independent of each other. The

                                       13

<PAGE>



following  discussion  relates  to the  combined  results of  Holdings,  CAS and
Amertranz  for the period  February 8, 1996  through  June 30, 1996 and only the
operations  of the  freight  forwarding  business  of TIA and CFS for the period
January 1, 1996  through  February  7,  1996,  and the  results  of the  freight
forwarding  business of TIA and CFS for the period  January 1, 1995 through June
30, 1995.
                                                    Six Months Ended
                                           June 30, 1996     June 30, 1995
                                                         (Pro forma/Unaudited)

Operating revenue                            $27,445,583      $17,733,971
Cost of transportation                        20,961,019       14,432,953
Gross profit                                   6,484,564        3,301,018
Selling, general and
  administrative expenses                      8,772,226        2,260,057
Net (loss) income before taxes               ($6,396,524)     $   287,450


         Operating  Revenue.  Operating  revenue  increased by $9.7 million,  or
54.8%,  from $17.7 million for the period January 1, 1995 through June 30, 1995,
to $27.4  million for the period  January 1, 1996 through  June 30,  1996.  This
increase  resulted  almost  entirely  from  the  Company's  acquisition  of  its
Amertranz subsidiary on February 8, 1996.

         Cost of  Transportation.  Cost of transportation  decreased to 76.4% of
operating  revenues for the period  January 1, 1996 through June 30, 1996,  from
81.4% of  operating  revenues  for the period  January 1, 1995  through June 30,
1995. Of this 5.0% change in cost of transportation as a percentage of operating
revenues  between the periods,  approximately 1% resulted from an improvement in
the operations of the Company's CAS  subsidiary.  The balance of the improvement
resulted from the Company's  Amertranz  subsidiary's  historically lower cost of
transportation  as a percentage  of sales which were included in the 1996 period
but not in the 1995 period.

         Gross Profit.  As a result of the factors described in the two previous
paragraphs,  gross profit for the period  January 1, 1996 through June 30, 1996,
increased to 23.6% of operating revenues from 18.6% of operating revenue for the
period January 1, 1995 through June 30, 1995.

         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative  expenses increased to 32.0% of operating revenues for the period
January 1, 1996 through June 30, 1996, from 12.7% of operating  revenues for the
period January 1, 1995 through June 30, 1995.  This increase is almost  entirely
attributable  to the  Company's  acquisition  of  its  Amertranz  subsidiary  on
February 8, 1996 and that subsidiary's  historically higher selling, general and
administrative expenses as a percentage of its sales.

Years Ended December 31, 1995 and 1994

         Operating Revenue. Operating revenue decreased 1.0% to $38.2 million in
1995 from $38.6 million in 1994. While TIA and CFS experienced  volume increases
from  most  major  customers,   there  were  several  major  accounts  that  had
significant decreases in revenue in 1995 compared to 1994 revenue.  Sales to two
major customers  decreased by an aggregate of approximately $2.0 million in 1995
compared  to  1994,  which  offset  the  gain  in  revenue  by  other  accounts.
Furthermore,  several major  accounts had large volume  increases in 1994 due to
unusual  situations  which  did  not  recur  in  1995.  As an  example,  a major
pharmaceutical   firm  instituted  a  recall  which   necessitated   substantial
additional  air freight  needs over normal  business  operations.  Also,  due to
market  conditions,  several  major retail  suppliers  had to use air freight in
substantially greater volume than those used in normal market conditions.

         Cost of  Transportation.  Cost of transportation  increased to 79.3% of
1995 operating revenue from 78.4% of 1994 operating revenue.

         Gross  Profit.  As a result of the factors  described in the  preceding
paragraphs, gross profit for the year ended December 31, 1995 decreased to 20.7%
from 21.6% of operating revenue in the comparable period of 1994.

                                       14

<PAGE>




         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative  expenses decreased slightly to 11.8% of operating revenue in the
year ended  December 31, 1995 from 12.0% of operating  revenue in the comparable
period in 1994.


Liquidity and Capital Resources

         During  the year  ended  June 30,  1997,  net  cash  used by  operating
activities  was $7.7  million.  Cash used in investing  activities  was $800,000
which  consisted  of capital  expenditures  and the  acquisitions  of Target and
Consolidated.  Cash  provided by financing  activities  was $9.5  million  which
primarily  consisted  of net  proceeds  from the  issuance of common  stock as a
result of the Company's initial public offering  ("IPO"),  net proceeds from the
issuance  of  preferred  stock as a result  of the  Private  Placement,  and net
borrowings under the BNY Facility.

         Capital expenditures for the year ended June 30, 1997 were $468,912.

         IPO. On July 3, 1996, the Company completed its IPO of 2,300,000 shares
of common  stock and  redeemable  common stock  purchase  warrants at an initial
offering  price of $6.00 per share and $0.10 per warrant.  The proceeds from the
IPO, net of underwriting  discounts and commissions and after deducting expenses
of the IPO, were approximately $12,200,000.  Of this amount, $4,137,000 was used
to repay the  outstanding  principal  and  interest  balance on  earlier  bridge
financing,  $373,000 was used to repay the  outstanding  principal  and interest
balance on earlier interim financing,  $2,000,000 was used as partial payment on
a  pre-IPO  obligation  to TIA  and CFS  ("Exchange  Note"),  and  approximately
$700,000 was used to repay overdue trade payables.  The remaining balance of the
proceeds was retained by the Company for working capital  purposes.  TIA and CFS
exchanged $2,000,000 principal amount of the Exchange Note for 200,000 shares of
the Company's Class A Preferred Stock.

         Private Placement.  On June 13, 1997, the Company completed the Private
Placement. The proceeds from the Private Placement, net of commissions and after
deducting  expenses of the Private Placement,  were $2,202,855.  Of this amount,
$400,000  was used to acquire  Target,  $200,000  was used to repay a short-term
loan,  and the  balance  was used for  working  capital  and  general  corporate
purposes.

         BNY  Facility.  On January 16, 1997,  the Company  entered into a three
year $10 million revolving Accounts Receivable Management and Security Agreement
("BNY  Facility") with BNY Financial  Corp.  ("BNY") which replaced the existing
facility with Fidelity Funding of California, Inc. On April 16, 1997 the Company
and BNY amended certain financial  covenants set forth in the BNY Facility.  The
interest  rate of the BNY  Facility is prime plus 2%. Under the  Agreement,  the
Company  can  borrow  the  lesser of $10  million  or 85% of  eligible  accounts
receivable.  The  Company's  borrowings  under the BNY Facility are secured by a
first lien on all of the Company's  assets. As of June 30, 1997, the Company had
outstanding  borrowings of $6,467,558  under the BNY Facility which  represented
84% of the amount available  thereunder,  and the amount available for borrowing
under the BNY Facility was approximately $1,204,000.

         TIA Loan. In October 1995,  Amertranz obtained a $500,000  subordinated
secured  loan from TIA,  which was  increased  to $800,000 in January 1996 ("TIA
Loan").  The TIA Loan bears interest at the rate of 12% per annum.  The TIA Loan
is secured by a lien on all of the assets of Amertranz  subordinated only to the
lien  granted  to BNY  in  connection  with  the  BNY  Facility.  The  Company's
indebtedness  under  the  TIA  Loan  has  matured,  but is  subordinated  to the
Company's  obligations  under  its BNY  Facility,  and may only be repaid to the
extent of the  Company's  "Excess Cash Flow",  defined as 80% of the  difference
between (i) the Company's  earnings before  interest,  taxes,  depreciation  and
amortization,  less (ii) interest on the Company's  obligations to BNY,  capital
expenditures and payments for income taxes. As of June 30, 1997, the Company had
$953,073 (includes $153,073 of accrued interest) outstanding under the TIA Loan.

         Revolver Note. As part of the  combination of Amertranz and the freight
forwarding  business of TIA and CFS,  TIA and CFS agreed to advance to CAS, on a
revolving loan basis, the net collections of the accounts  receivable of TIA and
CFS as of February 7, 1996 and  additional  amounts in the discretion of TIA and
CFS, up to an aggregate maximum of $4,000,000  outstanding at any time, pursuant
to the terms of a Revolving Credit

                                       15

<PAGE>



Promissory Note ("Revolver  Note").  Funds advanced under the Revolver Note with
respect to the TIA and CFS accounts  receivable  do not bear  interest  prior to
maturity.  Discretionary  advances  under the Revolver Note bear interest at the
greater of (i) 1% per month, or (ii) a fluctuating  rate equal to the prime rate
of interest as published in The Wall Street Journal, plus 4%. Advances under the
Revolver Note may be used only for ordinary,  current operating  expenses of CAS
unless TIA and CFS consent to another use of such funds.  All obligations  under
the Revolver Note are guaranteed by the Company and Amertranz.  All  obligations
under the  Revolver  Note and the  guarantees  thereof  are  secured  by a first
priority  lien on all of the  issued  and  outstanding  shares  of CAS,  a first
priority  lien on all of the assets of the  Company  and CAS,  and a lien on the
accounts  receivable of Amertranz,  subordinate  only to the first priority lien
granted to BNY in connection  with the BNY Facility and the second position lien
granted to TIA in connection  with the TIA Loan.  On January 16, 1997,  upon the
closing of the BNY Facility, the Company repaid $3,570,768 of the Revolver Note.
The balance of the Company's  indebtedness  under the Revolver Note has matured,
but is subordinated to the Company's obligations under its BNY Facility, and may
only be repaid to the extent of the  Company's  Excess Cash Flow. As of June 30,
1997  and  1996,  the  Company  had  outstanding   borrowings  of  $500,754  and
$3,954,989, respectively, under the Revolver Note.

         Exchange Note. As part of the  combination of Amertranz and the freight
forwarding  business  of TIA  and  CFS,  the  Company  issued  to TIA  and CFS a
promissory note in the original  principal  amount of  $10,000,000,  which bears
interest at the rate of 8% per annum  ("Exchange  Note").  The Exchange  Note is
payable in monthly  payments of principal and interest in the amount of $166,667
each until the  Exchange  Note has been paid in full.  Prior to the IPO, TIA and
CFS  exchanged  $2,000,000  principal  amount of the  Exchange  Note for 200,000
shares of the Company's Class A Preferred Stock, and of the proceeds of the IPO,
$2,000,000  was used to repay a portion  of the  Exchange  Note.  The  Company's
indebtedness   under  the  Exchange  Note  is   subordinated  to  the  Company's
obligations under its BNY Facility,  and may only be repaid to the extent of the
Company's  Excess  Cash Flow.  As of June 30,  1997 and 1996,  the  Company  had
outstanding balances of $6,680,200  (including $680,200 of accrued interest) and
$10,000,000, respectively, under the Exchange Note.

         * Working Capital Requirements. Cash needs of the Company are currently
met by funds  generated from  operations,  the BNY Facility and funds  remaining
from the Private  Placement.  The Company  believes  that its current  financial
resources will be sufficient to finance its operations and  obligations  for the
short term. However, the Company's actual working capital needs for the long and
short terms will depend upon numerous factors, including the Company's operating
results,  the cost of increasing the Company's  sales and marketing  activities,
changes in law which affect doing  business in Puerto  Rico,  and,  competition,
none of which can be predicted with certainty.  To the extent the Company's long
term working capital needs are not met from these sources,  additional financing
will be necessary.

         * Management's  Plans. During the year ended June 30, 1997, the Company
incurred a loss of $10.5 million.  Included in this loss was approximately  $3.4
million  attributed  to  restructuring  costs in  connection  with the Company's
closing of its Amertranz subsidiary and cessation of the Amertranz  subsidiary's
operation.  The balance of the Company's loss for the fiscal year ended June 30,
1997  before the  restructuring  charges  ($7.1  million) is  attributed  to the
Amertranz  subsidiary's  operations.  Losses of the Amertranz subsidiary for the
fiscal  year ended June 30,  1997  before the  restructuring  charges  were $8.3
million,  representing  approximately 117% of the $7.1 million net losses of the
Company before restructuring  charges.  Without the restructuring charges or the
Amertranz  subsidiary's  losses, the Company would have reported a profit before
income taxes of approximately $1.2 million, primarily from the operations of its
CAS subsidiary.

         As part of the  closing  of the  Amertranz  subsidiary,  the  Amertranz
subsidiary's  business was combined with the  Company's  Target  subsidiary.  To
date,  management  believes that Target has successfully  integrated many of the
customers of the Amertranz subsidiary into Target's operations.

         The Company  anticipates  that the closing of the Amertranz  subsidiary
while  retaining  many of its customers  will have the effect of containing  the
significant  losses which the Company has incurred during the fiscal years ended
June 30, 1997 and 1996.


                                       16

<PAGE>



         As of June 30, 1997,  the Company had a working  capital  deficiency of
$12.5 million.  Approximately  $3.9 million of this amount represents  unsecured
trade payables of the Amertranz subsidiary. In order to preserve the goodwill of
these trade  creditors,  the Company is currently  negotiating  with these trade
creditors to satisfy the  Amertranz  subsidiary's  obligations  over a period of
time, primarily based on a percentage of the Company's future profits.

         In  addition,   $4.1  million  of  the  Company's  current  liabilities
represent obligations to TIA and CFS, which, by their terms, are subordinated to
the Company's  revolving credit  obligations to BNY.  Accordingly,  repayment of
these  obligations  to TIA and CFS will only be made from the  Company's  future
profits.

         The Company was in violation of the financial  covenants  under the BNY
Facility. BNY waived these violations and has revised the covenants. The Company
is in compliance with the revised covenants.  These revisions did not affect the
availability  under the BNY Facility.  As of June 30, 1997, the Company had $1.2
million  available under the BNY Facility,  as well as additional cash resources
of  approximately  $1.4 million from the proceeds of the Private  Placement  and
from operations.

         Results of the Company's  operations  for July and August 1997 indicate
that:  (i) the  closing  of the  Amertranz  subsidiary  is having a  significant
positive  impact  on  operating  results;  (ii)  management  believes  that many
customers  of  the  Amertranz  subsidiary  have  been  retained  and  are  being
successfully integrated into the operations of the Target subsidiary;  and (iii)
the operations of the Company's CAS subsidiary continue to be profitable.  There
can be no assurance that management's plans outlined above to stem the Company's
losses and  return to  profitability  will be  successful.  However,  management
believes  that it will  successfully  conclude its  negotiations  with the trade
creditors  of the  Amertranz  subsidiary  and that there  will be a  significant
positive impact on the Company's  consolidated  operating results and cash flows
as a result of the closing of the Amertranz  subsidiary and the consolidation of
the Amertranz customer base into Target to sustain the Company's  operations for
the fiscal year ending June 30, 1998.


Inflation

         The Company  does not believe  that the  relatively  moderate  rates of
inflation in the United States in recent years have had a significant  effect on
its operations.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


         The financial statements and supplementary data required by this Item 8
are included in the Company's Consolidated Financial Statements and set forth in
the pages indicated in Item 14(a) of this Annual Report.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURES

None

                                       17

<PAGE>



                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The  information  with respect to the identity  and business  experience  of the
directors  of the Company and their  remuneration  in the  Company's  definitive
Proxy Statement to be filed pursuant to Regulation 14A and issued in conjunction
with  the 1997  Annual  Meeting  of  Shareholders,  is  incorporated  herein  by
reference.  The information with respect to the identity and business experience
of executive officers of the Company is set forth in Part I of this Form 10-K.


ITEM 11. EXECUTIVE COMPENSATION

The  information  required by this item is  incorporated  by reference  from the
Company's  definitive  Proxy Statement to be issued in conjunction with the 1997
Annual Meeting of Shareholders.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  information  required by this item is  incorporated  by reference  from the
Company's  definitive  Proxy Statement to be issued in conjunction with the 1997
Annual Meeting of Shareholders.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  information  required by this item is  incorporated  by reference  from the
Company's  definitive  Proxy Statement to be issued in conjunction with the 1997
Annual Meeting of Shareholders.


                                       18

<PAGE>



                                     PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8 - K

(a)  1.  Financial Statements

<TABLE>
<CAPTION>
AMERTRANZ WORLDWIDE HOLDING CORP.                                                                         PAGE
                                                                                                          ----
<S>                                                                                                         <C>
Report of Independent Public Accountants                                                                  F-1
Consolidated Balance Sheets as of June 30, 1997 and 1996                                                  F-2
Consolidated Statements of Operations for the Year Ended June 30, 1997 and
Six Months Ended June 30, 1996                                                                            F-3
Consolidated Statements of Shareholders' Deficit for the Year Ended
June 30, 1997 and Six Month Period Ended June 30, 1996                                                    F-4
Consolidated Statements of Cash Flows for the Year Ended June 30, 1997 and
Six Months Ended June 30, 1996                                                                            F-5
Notes to Consolidated Financial Statements                                                                F-7

AMERTRANZ WORLDWIDE HOLDING CORP. (FORMERLY THE FREIGHT FORWARDING
BUSINESS OF TIA AND CFS)
Independent Auditors' Report                                                                              F-19
Balance Sheets as of December 31, 1994 and 1995                                                           F-20
Statements of Operations and Changes in Accumulated Deficit for the Years
   December 31, 1993, 1994 and 1995                                                                       F-21
Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and 1995                             F-22
Notes to Financial Statements                                                                             F-23

(a)  2.  Financial Statement Schedules

Schedule II - Schedule of Valuation and Qualifying Accounts                                               S-1

All  other  schedules  are  omitted  because  they are not  applicable,  are not
required,  or because the required  information is included in the  consolidated
financial statements or notes thereto.

(a)  3.  Exhibits required to be filed by Item 601 of Regulation S-K
</TABLE>

Exhibit No.

3.1      Certificate of Incorporation of Registrant, as amended (incorporated by
         reference to Exhibit 3.1 to the Registrant's  Registration Statement on
         Form S-3, Registration No. 333-30351)
3.2      By-Laws of Registrant, as amended (incorporated by reference to Exhibit
         3.2 to the  Registrant's  Quarterly Report on Form 10-Q for the Quarter
         Ended December 31, 1996, File No. 001-14474)
4.1      Warrant Agent  Agreement  (incorporated  by reference to Exhibit 4.3 to
         the Registrant's  Registration  Statement on Form S-1, Registration No.
         333-03613)
4.2      Form of Amendment No. 1 to Warrant Agent  Agreement dated June 13, 1997
         (incorporated   by  reference  to  Exhibit  4.7  to  the   Registrant's
         Registration Statement on Form S-1, Registration No. 333-30351)
4.3      Agreement  of Merger,  dated as of April 17,  1997,  by and between the
         Registrant,  Target  International  Services,  Inc. (name  subsequently
         changed to Target  Airfreight,  Inc.),  Target Air Freight,  Inc.,  and
         Christopher A. Coppersmith (incorporated by reference to Exhibit 4.4 to
         the Registrant's  Registration  Statement on Form S-3, Registration No.
         333-30351)
4.4      Agency Agreement,  dated May 8, 1997, by and between the Registrant and
         GKN Securities  Corp.  with respect to the  Registrant's  June 13, 1997
         Private  Placement  (incorporated  by  reference  to Exhibit 4.5 to the
         Registrant's  Registration  Statement  on Form  S-3,  Registration  No.
         333-30351)

                                       19

<PAGE>



4.5      Form of  Subscription  Agreement,  dated June 13, 1997, with respect to
         the  Registrant's  June 13, 1997  Private  Placement  (incorporated  by
         reference to Exhibit 4.6 to the Registrant's  Registration Statement on
         Form S-3, Registration No. 333-30351)
4.6      Certificate of Designations  with respect to the  Registrant's  Class A
         Preferred Stock (contained in Exhibit 3.1)
4.7      Certificate of Designations  with respect to the  Registrant's  Class B
         Preferred Stock (contained in Exhibit 3.1)
4.8      Certificate of Designations  with respect to the  Registrant's  Class C
         Preferred Stock (contained in Exhibit 3.1)
4.9      Form of  Underwriter's  Purchase Option  (incorporated  by reference to
         Exhibit 4.4 to the  Registrant's  Registration  Statement  on Form S-1,
         Registration No. 333-03613)
10.1     1996 Stock  Option Plan  (incorporated  by reference to Exhibit 10.1 to
         the Registrant's  Registration  Statement on Form S-1, Registration No.
         333-03613)
10.2     Accounts Receivable  Management and Security  Agreement,  dated January
         16, 1997 by and between BNY Financial  Corp., as Lender,  and Amertranz
         Worldwide,  Inc.,  Caribbean Air Services,  Inc., and  Consolidated Air
         Services,  Inc., as Borrowers,  and  guaranteed by Amertranz  Worldwide
         Holding Corp. ("BNY Facility Agreement")  (incorporated by reference to
         Exhibit 10.1 to the Registrant's  Quarterly Report on Form 10-Q for the
         Quarter Ended March 31, 1997, File No. 001- 14474)
10.3     Letter Amendment to BNY Facility Agreement,  dated April 16, 1997 ("BNY
         Letter  Amendment")  (incorporated  by reference to Exhibit 10.2 to the
         Registrant's  Quarterly Report on Form 10-Q for the Quarter Ended March
         31, 1997, File No. 001-14474)
10.4     Shadow Warrant entered into in connection with the BNY Letter Amendment
         (incorporated   by  reference  to  Exhibit  10.3  to  the  Registrant's
         Quarterly  Report on Form 10-Q for the Quarter  Ended  March 31,  1997,
         File No. 001-14474)
10.5     Letter Amendment to BNY Facility Agreement, dated September 25, 1997
10.6     Loan and Security  Agreement dated October  25,1995  between  Amertranz
         Worldwide,   Inc.  and  TIA,   Inc.,   as  amended   January  24,  1996
         (incorporated   by  reference  to  Exhibit  10.5  to  the  Registrant's
         Registration Statement on Form S-1, Registration No. 333-03613)
10.7     Form of Amended and Restated  Promissory  Note of Amertranz  Worldwide,
         Inc. payable to TIA, Inc. in principal amount of $800,000 (incorporated
         by reference to Exhibit 10.6 to the Registrant's Registration Statement
         on Form S-1, Registration No. 333-03613)
10.8     Revolving  Credit  Promissory  Note dated February 7, 1996 of Caribbean
         Air Services,  Inc. payable to TIA, Inc. and Caribbean  Freight System,
         Inc. in the principal  amount of $4,000,000  (incorporated by reference
         to Exhibit 10.9 to the Registrant's Registration Statement on Form S-1,
         Registration No. 333-03613)
10.9     Promissory Note dated February 7, 1996 of Amertranz  Worldwide  Holding
         Corp.  payable to TIA, Inc. and Caribbean  Freight System,  Inc. in the
         principal  amount of $10,000,000  (incorporated by reference to Exhibit
         10.10  to  the  Registrant's   Registration   Statement  on  Form  S-1,
         Registration No. 333-03613)
10.10    Employment  Agreement dated June 24, 1996 between  Amertranz  Worldwide
         Holding  Corp.  and Stuart  Hettleman  (incorporated  by  reference  to
         Exhibit  10.13 to the  Registrant's  Annual Report on Form 10-K for the
         Fiscal Year Ended June 30, 1996, File No. 001-14474)
10.11    Employment  Agreement dated June 24, 1996 between  Amertranz  Worldwide
         Holding  Corp.  and Richard A. Faieta  (incorporated  by  reference  to
         Exhibit  10.14 to the  Registrant's  Annual Report on Form 10-K for the
         Fiscal Year Ended June 30, 1996, File No. 001-14474)
10.12    Consulting  Agreement dated February 7, 1996 among Amertranz  Worldwide
         Holding  Corp.,   Amertranz  Worldwide,   Inc.  and  Martin  Hoffenberg
         (incorporated  by  reference  to  Exhibit  10.11  to  the  Registrant's
         Registration Statement on Form S-1, Registration No. 333-03613)
10.13    Employment   Agreement  dated  September  27,  1994  between   Amerford
         Domestic,   Inc.  and  Bruce  Brandi,  as  modified  February  7,  1996
         (incorporated  by  reference  to  Exhibit  10.12  to  the  Registrant's
         Registration Statement on Form S-1, Registration No. 333-03613)

                                       20

<PAGE>



10.14    Cargo Aircraft  Charter  Agreement dated February 28, 1994 between TIA,
         Inc. and Florida West Airlines,  Inc., as amended and assigned November
         29,  1995   (incorporated   by  reference  to  Exhibit   10.15  to  the
         Registrant's  Registration  Statement  on Form  S-1,  Registration  No.
         333-03613)
10.15    Lease  Agreement  dated  March 31,  1994  between  The  Equitable  Life
         Assurance  Society of the U.S. and  Integrity  Logistics,  Inc. for the
         premises at 2001 Marcus Avenue, Lake Success, New York (incorporated by
         reference to Exhibit 10.16 to the Registrant's  Registration  Statement
         on Form S-1,  Registration  No.  333-03613) 
10.16    Lease  Agreement  dated August 7, 1990 between S Partners and Caribbean
         Freight System, Inc. for the premises at 7001 Cessna Drive, Greensboro,
         North Carolina,  as amended and extended April 9, 1994 (incorporated by
         reference to Exhibit 10.17 to the Registrant's  Registration  Statement
         on Form S-1, Registration No. 333-03613)
10.17    Lease Agreement for Los Angeles Facility 
21       Subsidiaries of Amertranz Worldwide Holding Corp.
23       Consent of Arthur Andersen LLP
27       Financial Data Schedule


(b)      Reports on Form 8-K

         None



                                       21

<PAGE>



                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereto duly authorized.


                                            AMERTRANZ WORLDWIDE HOLDING CORP.



Date:  September 30, 1997                   By:   /s/ Stuart Hettleman
                                               ----------------------------
                                                  Stuart Hettleman
                                                  President


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature                                   Title                                       Date
<S>     <C>    <C>    <C>    <C>    <C>    <C>


     /s/ Stuart Hettleman                   President, Chief Executive          September 30, 1997
----------------------------------          Officer and Director
Stuart Hettleman                            


     /s/ Richard A. Faieta                  Executive Vice President            September 30, 1997
----------------------------------          and Director
Richard A. Faieta                  


     /s/ Michael Barsa                      Director                            September 30, 1997
----------------------------------
Michael Barsa


     /s/ Philip J. Dubato                   Vice President, Chief               September 30, 1997
----------------------------------          Financial Officer and
Philip J. Dubato                            Principal Accounting Officer

</TABLE>



C70815.198 R:1

                                       22

<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Amertranz Worldwide Holding Corp.:

We have  audited  the  accompanying  consolidated  balance  sheets of  Amertranz
Worldwide Holding Corp., a Delaware  corporation,  as of June 30, 1997 and 1996,
and the related consolidated statements of operations, shareholders' deficit and
cash flows for the year ended  June 30,  1997 and for the six months  ended June
30, 1996.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of Amertranz Worldwide
Holding  Corp. as of June 30, 1997 and 1996,  and the results of its  operations
and cash  flows for the year ended  June 30,  1997 and for the six months  ended
June 30, 1996, in conformity with generally accepted accounting principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
consolidated  financial  statements taken as a whole. The schedule listed in the
index of financial  statements is presented  for purposes of complying  with the
Securities  and  Exchange  Commission  rules  and  are  not  part  of the  basic
consolidated  financial  statements.  This  schedule  has been  subjected to the
auditing  procedures  applied in the audit of the basic  consolidated  financial
statements  and, in our  opinion,  fairly  states in all  material  respects the
financial  data  required  to be set  forth  therein  in  relation  to the basic
consolidated financial statements taken as a whole.


                                                       ARTHUR ANDERSEN LLP



New York, New York
September 25, 1997



                                       F-1

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                            June 30, 1997          June 30, 1996
                                                                            -------------      -----------------
                                    ASSETS
<S>     <C>    <C>    <C>    <C>    <C>    <C>
CURRENT ASSETS:
Cash and cash equivalents                                                  $  1,382,243           $    377,490
Accounts receivable, net of allowance for doubtful
  accounts of $782,607 and $371,322, respectively                            12,490,694              7,598,390
Prepaid expenses and other current assets                                       743,569                557,192
                                                                           ------------           ------------
                  Total current assets                                       14,616,506              8,533,072
PROPERTY AND EQUIPMENT, net (Note 4)                                            734,900                829,442
DEBT ISSUANCE COST, net of accumulated amortization
  of $3,367,698 and $3,264,232, respectively                                          -                103,466
OTHER ASSETS                                                                    223,768              1,373,314
GOODWILL, net of accumulated amortization of
  $709,091 and $191,460, respectively (Notes 3 and 5)                        14,245,932             11,900,735
                                                                           ------------           ------------
                  Total assets                                              $29,821,106            $22,740,029
                                                                            ===========            ===========

                                    LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable                                                            $ 8,131,715             $7,699,721
Accrued expenses                                                              2,364,219              1,614,453
Accrued transportation expenses                                               3,303,366                413,821
Reserve for restructuring                                                     2,681,956                      -
Note payable to bank (Note 6)                                                 6,467,558              1,641,347
Note payable to affiliate (Note 6)                                              500,754              3,954,989
Current portion of long-term debt due to affiliate (Note 6)                   3,633,273              3,150,000
Current portion of long-term debt (Note 6)                                       50,000              3,975,000
Dividends payable                                                                12,875                      -
Lease obligation-current portion (Note 8)                                        12,063                 21,034
                                                                           ------------           ------------
                  Total current liabilities                                  27,157,779             22,470,365
LONG-TERM DEBT DUE TO AFFILIATE (Note 6)                                      4,000,000              8,000,000
LONG TERM DEBT (Note 6)                                                          87,500                      -
LEASE OBLIGATION--LONG-TERM (Note 8)                                              6,251                 18,315
                                                                           ------------           ------------
                  Total liabilities                                         $31,251,530            $30,488,680
                                                                            -----------            -----------

COMMITMENTS AND CONTINGENCIES (Note 8)

STOCKHOLDERS' DEFICIT:
Preferred Stock, $10 par value; 2,500,000 shares authorized,
  498,000 shares issued and outstanding                                       4,980,000                      -
Common stock, $.01 par value; 15,000,000 shares authorized,
  6,826,504 and 3,626,504 shares issued and outstanding,
  respectively                                                                   68,265                 36,265
Paid-in capital                                                              20,972,256              8,567,675
Accumulated deficit                                                         (27,439,695)           (16,341,341)
Less:  Treasury stock, 106,304 shares held at cost                              (11,250)               (11,250)
                                                                           ------------           ------------
                  Total stockholders' deficit                                (1,430,424)            (7,748,651)
                                                                           ------------           ------------
                  Total liabilities and stockholders' deficit               $29,821,106            $22,740,029
                                                                            ===========            ===========
</TABLE>

              The accompanying notes are an integral part of these
                            consolidated statements.


                                                      F-2

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                                                   Six Months
                                                                            Year Ended                Ended
                                                                           June 30, 1997          June 30, 1996
                                                                           -------------          -------------

<S>                                                                         <C>                    <C>        
OPERATING REVENUE                                                           $75,352,065            $27,445,583

COST OF TRANSPORTATION                                                       57,198,797             20,961,019
                                                                           ------------           ------------

         Gross profit                                                        18,153,268              6,484,564

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                                 23,985,223              8,772,226

OTHER INCOME (EXPENSE):

         Interest expense                                                    (1,335,833)            (4,057,864)

         Other income (expense), net                                             66,936                (50,998)
         Loss before restructuring charge                                    (7,100,852)            (6,396,524)

         Restructuring charge (Note 2)                                       (3,407,482)                     -
                                                                           ------------           ------------

         Net loss                                                          ($10,508,334)           ($6,396,524)
                                                                           ============            ===========

         Net loss per common share                                               ($1.74)                ($1.84)
                                                                           ------------           ------------

         Weighted average number of common shares                             6,048,148              3,482,504
                                                                           ------------           ------------
</TABLE>





              The accompanying notes are an integral part of these
                            consolidated statements.


                                       F-3

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
                    FOR THE YEAR ENDED JUNE 30, 1997 AND THE
                         SIX MONTHS ENDED JUNE 30, 1996


<TABLE>
<CAPTION>
                                                                          Additional
                                    Preferred Stock       Common Stock      Paid-in      Treasury Stock    Accumulated
                                    Shares   Amount     Shares    Amount    Capital      Shares   Amount    (Deficit)       Total

<S>             <C>                                   <C>        <C>                                      <C>          <C>         
Balance January 1, 1996              -          -     2,100,000  $21,000       -           -       -      ($4,932,989) ($4,911,989)

Liabilities in excess of assets
  distributed to TIA/CFS             -          -         -        -           -           -       -        4,988,172    4,988,172

Exchange Note issued to TIA/
  CFS in connection with asset
  exchange                           -          -         -        -           -           -       -      (10,000,000) (10,000,000)

Common Stock issued in connection
  with assigned notes                -          -       280,888    2,809    1,376,301       -       -            -       1,379,110

Common Stock issued in connection
  with Bridge and Interim
  financings                         -          -       727,560    7,276    2,781,787      -       -            -        2,789,063

Common Stock issued to former
  stockholders of Amertranz
  Worldwide                          -          -       518,056    5,180    4,409,587      -       -            -        4,414,767

Purchase of treasury stock           -          -         -        -           -         106,304 (11,250)       -          (11,250)

Net loss                             -          -         -        -           -           -       -       (6,396,524)  (6,396,524)
                                   -------------------------------------------------------------------------------------------------

Balance, June 30, 1996               -          -     3,626,504  $36,265  $8,567,675     106,304($11,250)($16,341,341) ($7,748,651)


Common stock issued in
  connection with the IPO            -          -     2,300,000  $23,000 $11,013,288       -       -            -      $11,036,288

Preferred stock issued in
  exchange for a principal
  reduction in the Exchange Note   200,000  2,000,000     -        -           -           -       -            -        2,000,000

Common stock issued in connection
  with the acquisition of Target     -          -       900,000    9,000   1,014,750       -       -            -        1,023,750

Acquisition of Consolidated         20,000    200,000     -        -         371,000       -       -            -          571,000

Stock Options exercised              -          -         -        -           5,543       -       -            -            5,543

Preferred stock issued in
  connection with the Private
  Placement                        257,500  2,575,000     -        -           -          -         -        (372,145)   2,202,855

Cash dividends associated with the
  Class C Preferred stock            -          -         -        -           -          -        -          (12,875)     (12,875)

Preferred Stock dividends associated
  with the Class A Preferred stock  20,500    205,000     -        -           -          -        -         (205,000)       -

Net loss                             -          -         -        -           -          -        -      (10,508,334) (10,508,334)
                                   -------------------------------------------------------------------------------------------------

Balance June 30, 1997              498,000 $4,980,000 6,826,504  $68,265 $20,972,256    106,304 ($11,250)($27,439,695) ($1,430,424)
                                   ======= ========== =========  ======= ===========    =======  =======  ===========   ========== 
</TABLE>


                                       F-4

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                                    Six Months
                                                                                  Year Ended           Ended
                                                                                 June 30, 1997     June 30, 1996

<S>     <C>    <C>    <C>    <C>    <C>    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                       ($10,508,334)     ($6,396,524)
  Bad debt expense                                                                    411,285          (13,187)
  Depreciation and amortization                                                       870,123          361,467
  Write off and write down of fixed assets                                            727,938            -
  Decrease in debt issuance costs                                                     103,466        3,208,809
  Restructuring charge                                                              3,407,482            -
  Adjustments to reconcile net loss to net cash used in operating activities-
     Increase in accounts receivable                                                 (485,963)      (3,628,728)
     Increase in prepaid expenses and other current assets                           (257,630)         (22,301)
     Decrease (increase) in other assets                                               32,913       (1,214,586)
     (Decrease) increase in accounts payable and accrued expenses                  (2,000,123)       1,130,878
     Increase in due to affiliates                                                      -                1,414
                                                                                -------------     ------------
         Net cash used in operating activities                                     (7,698,843)      (6,572,758)
                                                                                -------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment                                                (468,912)        (123,068)
  Acquisition of Consolidated                                                         105,602            -
  Acquisition of Target                                                              (452,032)           -
  Cash advances under notes receivable                                                  -             (300,000)
                                                                                -------------     ------------
         Net cash used in investing activities                                       (815,342)        (423,068)
                                                                                -------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from initial public offering ("IPO") - net of costs                     12,190,682            -
  Proceeds from Private Placement - net of costs                                    2,202,855            -
  Issuance of common stock in connection with the IPO                                  23,000            -
  Stock options exercised                                                               5,543            -
  Net borrowings (repayments) from note payable to bank                             4,676,355          (56,515)
  (Repayment) proceeds from short-term debt                                        (4,104,227)       5,190,064
  Repayment of long-term debt                                                      (2,000,000)      (3,990,064)
  (Repayment) proceeds from revolving loan due to affiliate                        (3,454,235)       3,954,989
  Payment of lease obligations                                                        (21,035)          (8,139)
  Purchase of treasury stock                                                            -              (11,250)
  Cash portion of assets distributed to TIA                                             -           (2,590,031)
                                                                                -------------     ------------
         Net cash provided by financing activities                                  9,518,938        2,489,054
                                                                                -------------     ------------

         Net increase (decrease) in cash and cash equivalents                       1,004,753       (4,506,772)
                                                                                -------------     ------------

CASH AND CASH EQUIVALENTS, beginning of the year                                      377,490        4,884,262
                                                                                -------------     ------------
CASH AND CASH EQUIVALENTS, end of the year                                      $   1,382,243     $    377,490
                                                                                =============     ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Payments For:
  Interest                                                                      $     468,588     $    825,563
  Income taxes                                                                  $      46,396     $    434,199

</TABLE>
              The accompanying notes are an integral part of these
                            consolidated statements.


                                       F-5

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
              CONSOLIDATED STATEMENTS OF CASH FLOWS -- (Continued)


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:


<TABLE>
<CAPTION>
                                                                                                    Six Months
                                                                                Year Ended             Ended
                                                                               June 30, 1997       June 30, 1996

<S>                                                                              <C>                       
Issuance of preferred stock as partial repayment of long-term debt               $2,000,000               -
Issuance of preferred stock for the Private Placement                            $2,575,000               -
Issuance of preferred stock for the acquisition of Consolidated                  $  200,000               -
Issuance of preferred stock as dividends for the Class A preferred stock         $  205,000               -
Issuance of note payable to Consolidated stockholders                            $  150,000               -
Issuance of common stock in connection with the acquisition of Target            $    9,000               -


On October 10, 1996,  Consolidated  merged with and into the Company pursuant to
the terms of a merger  agreement  dated as of September 30, 1996. In conjunction
with the acquisition, the resulting goodwill is as follows:

         Net assets assumed                                                     ($  121,539)               -
         Purchase Price                                                             786,428                -
                                                                                -----------
              Goodwill                                                           $  664,889                -
                                                                                ===========

On May 8, 1997, Target merged with and into the Company pursuant to the terms of
Merger dated as of April 17, 1997.  In  conjunction  with the  acquisition,  the
resulting goodwill is as follows:

         Net liabilities assumed                                                 $  709,157                -
         Purchase Price                                                           1,488,782                -
                                                                                 ----------
              Goodwill                                                           $2,197,939                -
                                                                                 ==========

On February 7, 1996 Holdings purchased the capital stock of Amertranz for shares
valued  at  $4,415,000.  In  conjunction  with the  acquisition,  the  resulting
goodwill is as follows:

         Net liabilities assumed                                                       -          $  7,685,000
         Purchase price                                                                -             4,415,000
                                                                                                  ------------
              Goodwill                                                                 -           $12,100,000

         Net liabilities retained by TIA/CFS                                           -             4,988,172
         Cash portion of assets distributed to TIA                                     -            (2,590,031)
                                                                                                  ------------
         Net liabilities distributed                                                   -          $  2,398,141
                                                                                                  ============
</TABLE>
 

                   The  accompanying   notes  are  an  integral  part  of  these
consolidated statements.


                                       F-6

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BACKGROUND

In January 1996, Amertranz Worldwide Holding Corp.  ("Holding" or the "Company")
was incorporated in the state of Delaware.  Effective  February 7, 1996, Holding
concluded an Asset Exchange  Agreement (the "Agreement") with TIA, Inc. ("TIA"),
Caribbean Freight System, Inc. ("CFS"),  Amertranz Worldwide, Inc. ("Amertranz")
and the stockholders and convertible note holders of Amertranz.  As part of this
transaction,  Holding  received (i) all of the issued and  outstanding  stock of
Amertranz,  (ii) $1,379,110 in convertible notes of Amertranz, and (iii) the air
freight  forwarding  business of TIA and CFS.  Holding then  contributed the air
freight  forwarding  business of TIA and CFS to  Caribbean  Air  Services,  Inc.
("CAS") in return for all of the issued and  outstanding  shares of CAS. TIA and
CFS received  2,100,000  shares of common stock of the Company and a $10,000,000
promissory note, as discussed in Note 6, in addition to stock in the Company.

The transactions  described above have been accounted for as a  recapitalization
of TIA and CFS,  whereby  the  historical  data  for  their  freight  forwarding
operations  are being  presented as that of Holdings for all periods  presented.
The issuance of the  $10,000,000  Promissory Note has been reflected as a charge
to retained  earnings and the  distribution of assets and liabilities to TIA and
CFS has been  reflected  as a net  adjustment  to equity,  at book value  (which
approximates fair value).  The transaction with Amertranz has been accounted for
as an acquisition under purchase accounting.

On July 3, 1996,  the Company  completed an initial public  offering  ("IPO") of
2,300,000 shares of common stock and redeemable  common stock purchase  warrants
at an initial offering price of $6.10 per share.  Prior to the IPO, there was no
public market for the Company's  capital stock.  The net proceeds to the Company
of $12,213,682 were used to pay down existing debt of $6,503,000 and the balance
was used for working capital purposes.  Additionally, the Company issued 200,000
shares of Class A, non-voting,  cumulative,  convertible  preferred stock with a
par value of $10.00 in exchange for payment of $2,000,000 of its promissory note
with TIA and CFS.

2. MANAGEMENT'S PLANS

During  the year  ended  June 30,  1997,  the  Company  incurred a loss of $10.5
million.  Included in this loss was  approximately  $3.4 million  attributed  to
restructuring  costs in connection  with the Company's  closing of its Amertranz
subsidiary and cessation of the Amertranz subsidiary's operation. The balance of
the  Company's  loss  for the  fiscal  year  ended  June  30,  1997  before  the
restructuring charges ($7.1 million) is attributed to the Amertranz subsidiary's
operations.  Losses of the Amertranz  subsidiary  for the fiscal year ended June
30,  1997  before the  restructuring  charges  were $8.3  million,  representing
approximately  117%  of the  $7.1  million  net  losses  of the  Company  before
restructuring  charges.  Without  the  restructuring  charges  or the  Amertranz
subsidiary's  losses,  the Company  would have  reported a profit  before income
taxes of  approximately  $1.2 million,  primarily from the operations of its CAS
subsidiary.

As part of the closing of the Amertranz subsidiary,  the Amertranz  subsidiary's
business was combined with the Company's Target subsidiary.  To date, management
believes that Target has  successfully  integrated  many of the customers of the
Amertranz subsidiary into Target's operations.

The Company  anticipates  that the  closing of the  Amertranz  subsidiary  while
retaining  many  of its  customers  will  have  the  effect  of  containing  the
significant  losses which the Company has incurred during the fiscal years ended
June 30, 1997 and 1996.

As of June 30,  1997,  the Company  had a working  capital  deficiency  of $12.5
million.  Approximately  $3.9 million of this amount represents  unsecured trade
payables of the Amertranz subsidiary. In order to preserve the goodwill of these
trade creditors, the Company is currently negotiating with these trade creditors
to  satisfy  the  Amertranz  subsidiary's  obligations  over a  period  of time,
primarily based on a percentage of the Company's future profits.


                                       F-7

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)




In  addition,  $4.1  million  of the  Company's  current  liabilities  represent
obligations  to TIA and CFS,  which,  by their terms,  are  subordinated  to the
Company's revolving credit obligations to BNY.  Accordingly,  repayment of these
obligations to TIA and CFS will only be made from the Company's future profits.

The Company was in violation of the financial  covenants under the BNY Facility.
BNY waived these  violations  and has revised the  covenants.  The Company is in
compliance  with the  revised  covenants.  These  revisions  did not  affect the
availability  under the BNY Facility.  As of June 30, 1997, the Company had $1.2
million  available under the BNY Facility,  as well as additional cash resources
of  approximately  $1.4 million from the proceeds of the Private  Placement  and
from operations.

Results of the Company's  operations for July and August 1997 indicate that: (i)
the closing of the Amertranz  subsidiary is having a significant positive impact
on  operating  results;  (ii)  management  believes  that many  customers of the
Amertranz  subsidiary have been retained and are being  successfully  integrated
into the  operations of the Target  subsidiary;  and (iii) the operations of the
Company's CAS subsidiary  continue to be  profitable.  There can be no assurance
that  management's  plans outlined above to stem the Company's losses and return
to profitability will be successful.  However,  management believes that it will
successfully conclude its negotiations with the trade creditors of the Amertranz
subsidiary and that there will be a significant positive impact on the Company's
consolidated  operating results and cash flows as a result of the closing of the
Amertranz  subsidiary and the consolidation of the Amertranz  customer base into
Target to sustain the Company's  operations  for the fiscal year ending June 30,
1998.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant  accounting  policies of the Company,  as summarized  below,  are in
conformity with generally  accepted  accounting  principles.  The preparation of
financial statements in conformity with generally accepted accounting principles
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.

Principles of Consolidation

For the fiscal year ended June 30, 1997, the consolidated  financial  statements
include the accounts of Holding, CAS, Amertranz,  Consolidated (since October 1,
1996) and Target (since May 1, 1997).

For the six months ended June 30, 1996, the  consolidated  financial  statements
include the accounts of Holding,  CAS and Amertranz  since February 7, 1996. The
accompanying  consolidated  statements  of  operations  and  changes in retained
deficit  include  the  accounts  of the former air  freight  business  of TIA (a
wholly-owned  subsidiary of Wrexham Aviation Corporation) and CFS, which was not
a separate legal or historical  reporting  entity for the period January 1, 1996
through February 7, 1996. All significant intercompany accounts and transactions
have been eliminated.

Property and Equipment

Property and equipment are stated at cost.  Depreciation  is computed  under the
straight-line  method over  estimated  useful  lives  ranging from 3 to 8 years.
Assets under capital  leases are  depreciated  over the shorter of the estimated
useful  life of the asset or the lease term.  The  Company  utilizes a half-year
convention for assets in the year of acquisition and disposal.



                                       F-8

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)



Goodwill

Goodwill  represents  the  excess of cost over the net  assets  acquired  and is
amortized on a  straight-line  basis over 25 years. In accordance with Statement
of  Financial  Accounting  Standards  ("SFAS")  No.  121,  "Accounting  for  the
Impairment  of Acquired  Assets and for  Long-Lived  Assets to be Disposed  of",
management  periodically  assesses  whether  there has been an impairment in the
carrying value of the excess of cost over the net assets acquired,  by comparing
current and projected annual  undiscounted  cash flows with the carrying amount.
In the event there is an  impairment  of goodwill,  management  would reduce the
carrying value to an amount equal to the projected  discounted  cash flow of the
underlying assets.

Stock Options

The Company  grants  stock  options to certain  officers  and  related  parties.
Compensation  expense is recognized based upon the aggregate  difference between
the fair  market  value of the  Company's  stock at date of grant and the option
price. Compensation expense is recognized equally over the vesting period.

In October,  1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for  Stock-Based  Compensation".  This statement  establishes a fair
value based method of accounting  for an employee stock option or similar equity
instrument  but allows  companies to continue to measure  compensation  cost for
those plans using the intrinsic  value based method of accounting  prescribed by
APB  Opinion  No. 25,  "Accounting  for Stock  Issued to  Employees".  Companies
electing to continue using the accounting under APB Onion No. 25 must,  however,
make pro forma  disclosures  of net income and earnings per share as if the fair
value based method of accounting  defined in SFAS No. 123 had been applied (Note
7). These disclosure requirements are effective for fiscal years beginning after
December  16,  1995.  The Company has  elected to  continue  accounting  for its
stock-based  compensation awards to employees and directors under the accounting
prescribed by APB Opinion No. 25 and to provide the disclosures required by SFAS
No. 123.

Revenue Recognition

Revenue from freight forwarding is recognized upon delivery of goods, and direct
expenses  associated with the cost of transportation  are accrued  concurrently.
Monthly  provision  is made for  doubtful  receivables,  discounts,  returns and
allowances.

Cash and Cash Equivalents

Cash at June 30, 1996  includes  $297,000 of  overnight  repurchase  agreements.
There were no such agreements at June 30, 1997.

Self Insurance

The Company's  CAS and Amertranz  subsidiaries  are generally  self-insured  for
losses and liabilities related to medical and dental claims.  Losses are accrued
based upon each  subsidiary's  estimates of the aggregate  liability for medical
and dental claims incurred based on each subsidiary's experience. In addition to
this  self-insurance,  an  insurance  policy is  maintained  which  insures both
subsidiaries  for losses  over  $50,000  for each  individual  insured and on an
aggregate basis for losses over an amount determined by formula.



                                       F-9

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)



CAS and Amertranz  have been  self-insured  for medical claims since February 6,
1996 and May 1, 1997,  respectively.  For the year ended June 30, 1997,  CAS and
Amertranz have accrued approximately $38,000 and $50,000,  respectively relating
to medical claims.

Per Share Data

Earnings  per share is  computed  using the  weighted  average  number of common
shares outstanding and, where applicable, common equivalent shares issuable upon
exercise of stock  options and  warrants  redeemable  under the  treasury  stock
method to the extent that they are dilutive.  Any  dividends on preferred  stock
accrued by the Company have been accounted for in the computation.

In 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings
per Share." This  statement  establishes  standards for computing and presenting
earnings per share ("EPS"),  replacing the  presentation  of currently  required
Primary EPS with a presentation  of Basic EPS. For entities with complex capital
structures,  the statement  requires the dual presentation of both Basic EPS and
Diluted EPS on the face of the statement of operations. Under this new standard,
Basic EPS is computed based on the weighted  average  number of shares  actually
outstanding  during the year.  Diluted  EPS  includes  the  effect of  potential
dilution from the exercise of  outstanding  dilutive  stock options and warrants
into common stock using the treasury stock method. SFAS No. 128 is effective for
financial  statements  issued for periods  ending after  December 15, 1997,  and
earlier  application is not permitted.  The Company does not expect the adoption
of this statement to have a material effect on its financial position or results
of operations.

Fair Value of Financial Instruments

Cash equivalents are reflected at cost which approximate their fair values.  The
fair value of notes and loans payable  outstanding  is estimated by  discounting
the future  cash flows using the  current  rates  offered by lenders for similar
borrowings  with similar credit  ratings.  The carrying  amounts of the accounts
receivable and debt approximate their fair value.

4. PROPERTY AND EQUIPMENT, NET

<TABLE>
<CAPTION>
                                                                               June 30,          June 30,
                                                                                 1997              1996
<S>     <C>    <C>    <C>    <C>    <C>    <C>
         Property and Equipment consists of the following:
                  Furniture and fixtures                                     $   730,341       $   303,502
                  Computer equipment                                             665,738           421,946
                  Computer software                                                -               219,701
                  Leasehold improvements                                          25,538            63,658
                  Logos and trademarks                                             -                22,349
                  Vehicles                                                       171,801             8,499
                                                                             -----------       -----------
                                                                               1,593,418         1,039,655
                  Less:  Accumulated depreciation and amortization               858,518           210,213
                                                                             -----------       -----------
                                                                             $   734,900       $   829,442
                                                                             ===========       ===========
</TABLE>

5. ACQUISITIONS

(a) On  February 7, 1996,  Holding  acquired  all of the issued and  outstanding
stock of Amertranz and the former  stockholders  of Amertranz  received  870,254
shares (which consist of the investment in Amertranz Worldwide of


                                      F-10

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)



518,056  shares,  assigned notes of 280,888 shares and 71,310 shares  associated
with the Interim  Financing)  of Holding's  common stock and options to purchase
224,399 shares of Holding's  common stock valued at $4,415,000 or  approximately
$4.25 per share and option. The Amertranz  transaction has been accounted for as
a purchase  and  resulted in  goodwill  of  approximately  $12.1  million  which
represents the excess of the cost over the fair value of the assets acquired.

(b) On October 10, 1996, the Company  acquired all of the issued and outstanding
stock of Consolidated Air Services,  Inc.  ("Consolidated") for 20,000 shares of
Holding's Class B Preferred Stock valued at $571,000 or approximately $28.55 per
share.  The  Consolidated  transaction  has been accounted for as a purchase and
resulted in goodwill of approximately  $665,000 which represents the excess cost
over the fair value of the assets acquired.

(c) On May 8, 1997, the Company acquired all of the issued and outstanding stock
of Target  Airfreight,  Inc.  ("Target") for $400,000 cash and 900,000 shares of
Holding's  common stock valued at $1,023,750 or  approximately  $1.14 per share.
The Target  transaction  has been  accounted  for as a purchase  and resulted in
goodwill of approximately $2.2 million which represents the excess cost over the
fair value of the assets acquired.

(d) The following  unaudited  pro forma  financial  information  for the Company
gives effect to the Consolidated and Target  acquisitions as if they occurred at
the beginning of each fiscal period presented. These pro forma results have been
prepared for  comparative  purposes only, and do not purport to be indicative of
the  results  of  operations   which   actually  would  have  resulted  had  the
acquisitions occurred on the date indicated or which may result in the future:

                                                 Year Ended    Six Months Ended
                                                June 30, 1997    June 30, 1996

         Operating revenue                      $100,026,271      $44,281,278
         Net loss                              ($ 10,545,825)    ($ 6,385,598)
         Net loss per share                    ($1.55)           ($1.46)

6. DEBT

As of June 30, 1997 and 1996,  long-term and  short-term  debt  consisted of the
following:

<TABLE>
<CAPTION>
                                                                June 30, 1997    June 30, 1996

<S>                                                            <C>                <C>        
         Promissory note to TIA and CFS (a)                    $  6,680,200       $10,000,000
         Revolving loan to TIA and CFS (b)                          500,754         3,954,989
         February Bridge notes (c)                                    -             2,775,000
         May bridge notes (d)                                         -             1,200,000
         Asset-based financing (e)                                6,467,558         1,641,347
         Notes payable to TIA (f)                                   953,073           800,000
         Interim financing                                            -               350,000
         Promissory note to
              Consolidated Shareholders (g)                         137,500             -
                                                               ------------      ------------

         Total debt                                              14,739,085        20,721,336
         Less: Current portion                                  (10,651,585)      (12,721,336)
                                                               ------------      ------------
         Long-term debt                                           4,087,500         8,000,000
                                                               ============      ============
</TABLE>



                                      F-11

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)



(a) On February 7, 1996, as part of the Agreement, Holding issued to TIA and CFS
a  $10,000,000  promissory  note which  bears  interest  at the rate of 8.0% per
annum. On July 3, 1996, Holding repaid $2,000,000 of this debt from the proceeds
of the IPO and  converted  $2,000,000  of the note  into  Class  A,  non-voting,
cumulative,  convertible  preferred  stock.  As of  June  30,  1997,  $6,680,200
(includes $680,200 of accrued interest) was outstanding under this note.

(b) As  part of the  Agreement,  TIA and  CFS  have  agreed  to lend to CAS on a
revolving loan basis, an amount up to the net cash  collections of TIA and CFS's
accounts  receivable  as of  February  7,  1996 and  additional  amounts  at the
discretion of TIA and CFS, up to an aggregate maximum of $4,000,000  outstanding
at any time,  pursuant to the terms of a Revolving Credit  Promissory Note. Only
funds advanced at the discretion of TIA and CFS bear interest, at the greater of
(i) 1% per month or (ii) at a rate of 4% over prime.  The note is secured by all
of the assets of CAS and is  guaranteed by Holding and  Amertranz.  Furthermore,
the note  discussed  here and in (a) above  are  subordinated  to the  Company's
revolving  credit  obligations to BNY. On January 16, 1997,  upon the closing of
the BNY  Facility,  the Company  repaid  $3,570,768 of this note. As of June 30,
1997, $500,754 was outstanding under this facility.

(c) On February 7, 1996, Holding consummated a private placement with a group of
investors  whereby Holding borrowed  $2,775,000 and issued promissory notes. The
notes were due at the earlier of (i) the consummation of the IPO by the Company,
or (ii) February 7, 1998, or (iii) the sale or merger of Holding.  The investors
also  received  416,250  shares of common  stock of Holding,  as well as 832,500
warrants to purchase  shares of common  stock of Holding for five years at $5.00
per share. These warrants converted into IPO warrants upon the completion of the
IPO by Holding and are exercisable at the IPO price.  The notes accrued interest
at 10% per annum until April 30, 1996 and thereafter at 15% per annum. The notes
were secured by a junior lien on all of the assets of the  Company.  The Company
recorded debt issuance costs of approximately $2,143,000 in connection with such
bridge  financing  and  amortized  the  amount  over the life of the debt.  Upon
repayment of the debt, the related  unamortized debt issuance cost was expensed.
The  effective  annual rate of interest on the notes after giving  effect to the
debt issuance cost of $2,143,000 is 200%. The fair value of the shares of common
stock at the time of issuance was $4.25 per share.  This debt was repaid on July
3, 1996 with the proceeds of the IPO.

(d) On May 10, 1996,  Holding  consummated a private  placement  with a group of
investors  whereby Holding borrowed  $1,200,000 and issued promissory notes. The
notes were due at the  earlier of (i) the  closing of the IPO by Holding or (ii)
February  7, 1998 or (iii) the sale or merger of  Holding.  The  investors  also
received 240,000 shares of common stock of Holding,  as well as 480,000 warrants
to purchase shares of common stock of Holding for five years at $5.00 per share.
These  warrants  converted  into IPO warrants upon the  completion of the IPO by
Holding and are exercisable at the IPO price.  The notes accrued interest at 15%
per annum. The notes were secured by a lien on all of the assets of the Company.
The  Company  recorded  debt  issuance  costs  of  approximately  $1,020,000  in
connection with such bridge  financing and amortized the amount over the life of
the debt. Upon repayment of the debt, the related unamortized debt issuance cost
was expensed.  The  effective  annual rate of interest on the notes after giving
effect to the debt issuance  cost of  $1,020,000 is 525%.  The fair value of the
shares of common  stock at the time of issuance  was $4.25 per share.  This debt
was repaid on July 3, 1996 with the proceeds of the IPO.

(e) In January, 1997, the Company entered into an Accounts Receivable Management
and Security  Agreement with a lender whereby it receives  advances of up to 85%
of the net amounts of eligible accounts  receivable  outstanding to a maximum of
$10,000,000.  The loan is subject to  interest  at a rate of 2.0% per annum over
the prevailing  prime rate as defined by BNY (8.5% as of June 30, 1997). At June
30,  1997,  the  outstanding  balance on the credit  line was  $6,467,558  which
represented 84% of the approximate  $7,671,000 available thereunder.  The lender
has a security interest in all present and future accounts receivable, machinery
and  equipment  and other  assets of  Amertranz  and the loan is  guaranteed  by
Holding.


                                      F-12

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)




(f) In October 1995,  Amertranz  obtained a $500,000  subordinated  secured loan
from TIA,  which was  increased  to $800,000 in January 1996 ("TIA  Loan").  The
original  TIA Loan bears  interest at the rate of 12% per annum.  As of June 30,
1997,  the  Company  had  $953,073   (includes  $153,073  of  accrued  interest)
outstanding under the TIA Loan.

(g) In connection  with the  acquisition of  Consolidated,  the Company issued a
promissory  note to the  Consolidated  stockholders  in the aggregate  principal
amount of $150,000.  The note bears  interest at the rate of 8% per annum and is
repayable in 12 equal,  consecutive quarterly payments of principal and interest
commencing January 2, 1997.

Between June 1995 and November 1995,  Amertranz borrowed $1,379,110 in aggregate
principal amount from persons affiliated with Amertranz and other non-affiliated
lenders and issued  convertible notes thereof.  All of these notes were assigned
by the holders thereof to Holding as part of the Combination and are included in
additional paid-in capital.

The  Company's  indebtedness  to TIA and CFS is  subordinated  to the  Company's
obligations under its accounts receivable  financing facility with BNY Financial
Corp.

7. SHAREHOLDERS' DEFICIT

Preferred Stock

As of June 30, 1997, the authorized  preferred stock of the Company is 2,500,000
shares. As of the date of this Form 10-K,  498,000 shares of preferred stock are
outstanding as follows:

                                                        Number of Shares
                  Date Issued                                Issued
                  -----------                                ------
                  July 3, 1996                               200,000   (a)
                  October 10, 1996                            20,000   (b)
                  December 31, 1996                           10,000   (a)
                  June 13, 1997                              257,500   (c)
                  June 30, 1997                               10,500   (a)
                                                             -------
                  Preferred Stock Issued                     498,000
                                                             =======

(a) Class A Preferred  Stock. On July 3, 1996, the Company issued 200,000 shares
of Class A, non-voting, cumulative, convertible preferred stock with a par value
of $10.00 in exchange for a paydown of $2,000,000 on the $10,000,000  promissory
note.

The Class A Preferred Stock will pay cumulative cash dividends at an annual rate
of $1.00 per share in cash or, at the option of the Company,  in shares of Class
A Preferred  Stock,  at the rate of $10.00 per share.  The Company is prohibited
from paying any dividends on common stock unless all required  Class A Preferred
Stock  dividends  have been paid.  Each share of Class A Preferred  Stock may be
converted  at any time,  at the option of the  holder,  into  common  stock at a
conversion  price of the lower of (i) the IPO price per share of common stock or
(ii) 80% of the  average of the closing  price per share of common  stock on the
day prior to the conversion  date.  Class A Preferred Stock holders are entitled
to a  liquidation  preference  of $10.00 per share plus all  accrued  and unpaid
dividends.

On December 31, 1996 and June 30, 1997,  the Company  issued  10,000 and 10,500,
respectively, shares of Class A, non-voting,  cumulative,  convertible preferred
stock with a par value of $10.00  representing the semi-annual  dividend due the
Class A preferred shareholders.


                                      F-13

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)




(b) Class B Preferred  Stock.  On October 10, 1996,  the Company  issued  20,000
shares of Class B, non-voting,  convertible  preferred stock with a par value of
$10.00 for all of the issued and outstanding shares of Consolidated.

No  dividends  are paid on Class B  Preferred  Stock,  and the  shares  carry no
liquidation  preference or voting rights.  Each share of Class B Preferred Stock
may be converted,  at the option of the holder thereof at any time after October
10, 1997, into 10 shares of the Company's common stock.

(c) Class C Preferred Stock. On June 13, 1997, the Company issued 257,500 shares
of Class C, non-voting, cumulative, convertible preferred stock with a par value
of $10.00 upon completion of a $2,575,000 private placement of equity securities
to individual investors (the "Private Placement").

The Class C Preferred Stock will pay cumulative cash dividends at an annual rate
of $1.00 per share payable the last day of each calendar  quarter in cash or, at
the option of the  Company,  in shares of common stock  provided a  registration
statement with respect to the underling shares of common stock is in effect. The
Company is  prohibited  from  paying any  dividends  on common  stock or Class A
Preferred  Stock unless all required Class C Preferred Stock dividends have been
paid. Each share of Class C Preferred Stock may be converted at any time, at the
option of the  holder,  into 10 shares of common  stock.  Each  share of Class C
Preferred Stock acquired in the Private Placement and all shares of Common Stock
underlying  such  securities  may not be sold until June 13,  1998  without  the
approval of GKN Securities  Corp.  ("GKN"),  the placement agent for the Private
Placement.

Warrants

As of June 30, 1997, the Company had 5,074,283 warrants  outstanding to purchase
5,074,283 shares of common stock at $6.00 per share.

In connection with the Company's  February 1996 and May 1996 bridge  financings,
the Company issued warrants to purchase  1,386,783  shares of common stock at an
exercise price and on terms identical to the warrants issued in the IPO.

In connection with the IPO of July 3, 1997, the Company issued  2,300,000 shares
of common stock and 2,300,000 warrants. Each warrant entitles the holder thereof
to purchase  one share of common  stock for $6.00  during the  four-year  period
commencing June 28, 1997.

In connection  with the Private  Placement of June 13, 1997,  the Company issued
257,500 shares of Class C preferred stock and 1,387,500  warrants.  Each warrant
entitles  the holder  thereof to  purchase  one share of common  stock for $6.00
during the four-year period commencing June 28, 1997.

The Company  may redeem the  warrants at a price of $.01 per warrant at any time
after they become  exercisable  upon not less than 30 days' prior written notice
if the last sale price of the common  stock has been at least $10.00 for each of
the 20  consecutive  trading  days  ending on the third day prior to the date on
which the notice of redemption is given.

Stock Option Plan

In June 1996,  the Board of  Directors  of the  Company  adopted  the  Amertranz
Worldwide  Holding  Corp.  1996  Stock  Option  Plan  ("1996  Plan"),  which was
subsequently approved by shareholders.  The 1996 Plan authorizes the granting of
awards,  the exercise of which would allow up to an aggregate of 402,348  shares
of the Company's common stock to be acquired by the holders of said awards.  The
awards can take the form of incentive stock options ("ISOs") or


                                      F-14

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)



nonqualified  stock  options  ("NSOs")  and  may be  granted  to key  employees,
officers,  directors and  consultants.  Any plan  participant  who is granted an
Incentive  Stock Option and possesses  more than 10% of the voting rights of the
Company's  outstanding  common stock must be granted an option price at at least
110% of the  fair  market  value on the date of  grant  and the  option  must be
exercised  within five years from the date of grant.  Under the 1996 Plan, stock
options have been granted to employees and directors for terms of up to 10 years
at exercise prices ranging from $.10 to $6.00 and are exercisable in whole or in
part at stated  times  from the date of grant up to four  years from the date of
grant. At June 30, 1997, 96,300 stock options granted to employees and directors
were  exercisable.  The Company  accounts  for  equity-based  awards  granted to
employees  and  directors  under APB Opinion No. 25 under which no  compensation
cost has been recognized for stock options granted at market value (Note 3). Had
compensation  cost for these stock options been determined  consistent with SFAS
No. 123, the Company's net loss and net loss per share would have been increased
to the following pro forma amounts:

                                         Year            Six Months
                                        Ended              Ended
                                    June 30, 1997      June 30, 1996

Net loss:      As Reported           ($10,508,334)       ($6,396,524)
               Pro Forma             ($10,833,762)       ($6,997,862)

Primary EPS:   As Reported                ($1.74)            ($1.84)
               Pro Forma                  ($1.79)            ($2.01)

The  effects  of  applying  SFAS No.  123 in the pro  forma  disclosure  are not
indicative  of  future  amounts  as  additional   awards  in  future  years  are
anticipated.

Prior to the adoption of the 1996 Plan,  there were 224,399  options  granted to
purchase  common stock at exercise  prices ranging from $0.048 to $0.408.  These
options were granted to the stockholders of Amertranz and the holders of certain
convertible  promissory  notes of  Amertranz  pursuant to the terms of the Asset
Exchange  Agreement.  At June 30, 1997,  196,007  options were  outstanding  and
181,809 were exercisable.

The following  table reflects  activity  under the plan for the two-year  period
ended June 30, 1997:

<TABLE>
<CAPTION>
                                             Year Ended June 30, 1997        Six Months Ended June 30, 1996
                                             ------------------------        ------------------------------

                                                          Weighted                           Weighted
                                                           Average                            Average
                                                          Exercise                           Exercise
                                              Shares        Price                Shares        Price

<S>                                           <C>            <C>                  <C>            <C>
Outstanding at beginning of year              526,399        2.76                 42,590         .16
Granted                                        -             -                   483,809        2.99
Exercised                                     (38,392)        .68                 -             -
Forfeited                                     (56,800)       2.06                 -             -
Cancelled                                      -             -                    -             -

Outstanding at end of year                    431,207       $3.08                526,399       $2.76
Exercisable at end of year                    278,109       $2.18                196,005       $ .34

</TABLE>


                                      F-15

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)




The weighted  average fair value and  exercise  price for options  granted at an
exercise  price  equal to fair  market  is $3.18  and  $.06,  respectively.  The
weighted  average  fair  value and  exercise  price for  options  granted  at an
exercise price below fair market is $2.51 and $.06, respectively.

The fair value of each stock  option  grant is estimated as of the date of grant
using the Black-Scholes option pricing model with the following weighted average
assumptions:

                                            1996

Risk-Free Interest Rates                     6.05%
Expected Lives                               5
Expected Volatility                         64.00%
Expected Dividend Yields                     0.00%

The following table summarizes  information  about stock options  outstanding at
June 30, 1997:

<TABLE>
<CAPTION>
                                Options Outstanding                               Options Exercisable

                            Number            Weighted         Weighted         Number          Weighted
                          Outstanding          Average          Average       Exercisable        Average
                              at              Remaining        Exercise           at            Exercise
Exercise Prices             6/30/97       Contractual Life       Price          6/30/97           Price

<C>     <C>                 <C>                     <C>           <C>           <C>                <C>  
$0.04 - $0.50               196,007                 5             $0.34         181,809            $0.35
$4.00 - $6.00               235,200                 5             $5.37          96,300            $5.61
                            -------                                             --------
$0.04 - $6.00               431,207                 5             $3.08         278,109            $2.17
                            =======                                             =======
</TABLE>


8. COMMITMENTS AND CONTINGENCIES

Leases

Future minimum lease payments for capital leases and operating  leases  relating
to equipment and rental premises are as follows:

<TABLE>
<CAPTION>
       YEAR ENDING                                           CAPITAL LEASES                 OPERATING LEASES

<S>      <C>                                                     <C>                            <C>       
         1998                                                    $24,053                        $2,370,093
         1999                                                     14,031                         1,892,802
         2000                                                      -                             1,329,909
         2001                                                      -                               883,474
         2002                                                      -                               798,298
         2003                                                      -                                33,092
                                                                --------                       -----------

         Total minimum lease payments                             38,084                        $7,307,669
                                                                                                ==========
         Less--Amount representing interest                       (1,373)
                                                                --------
                                                                 $36,711
</TABLE>



                                      F-16

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)



Employment Agreements

Amertranz has employment  agreements with certain employees  expiring at various
times through July 2000. Such  agreements  provide for minimum salary levels and
for  incentive  bonuses  which are  payable if  specified  management  goals are
attained.  The  aggregate  commitment  for  future  salaries  at June 30,  1997,
excluding bonuses, was approximately $1,040,000.

9. INCOME TAXES

At February 7, 1996,  the Company had a tax net operating  loss carry forward of
approximately  $7,757,000,  available within statutory  limits, to offset future
regular federal taxable income. In accordance with certain provisions of the Tax
Reform Act of 1986, a change in ownership  of a  corporation  of greater than 50
percentage  points within a three-year period places an annual limitation on the
corporation's ability to utilize its existing net operating loss carry forwards.
Such a change in ownership was deemed to have  occurred in  connection  with the
Asset Exchange Agreement in which Amertranz became part of the Company, at which
time the Company's net operating loss carry forwards  amounted to  approximately
$7,757,000.  The Company is subject to a  significant  annual  limitation of the
utilization of such tax attributes  over the fifteen year carry forward  period.
To the extent the annual  limitation is not utilized,  it may be carried forward
for  utilization  in future years.  This  limitation  could affect the Company's
future  provisions  for or payment of  federal  income tax should the  Company's
operations produce increased amounts of taxable income in the future.

Deferred  tax  benefits at June 30, 1997 and 1996,  which are fully  offset by a
valuation  allowance,  primarily  represent the estimated  future tax effects of
federal  net  operating   losses   aggregating   approximately   $4,457,099  and
$3,548,022, respectively.

10. RELATED PARTY TRANSACTIONS

(a)  Under the  terms of a cargo  aircraft  charter  agreement  with  Tradewinds
Airlines,  Inc.  ("Tradewinds  Air"),  a subsidiary  of  Tradewinds  Acquisition
Corporation,  of which  TIA owns  approximately  26% of the  outstanding  common
stock,  CAS has  exclusive  rights  until  June 30,  1998 to the use of a leased
L-1011  freighter  aircraft.  While  CAS is  guaranteed  the  use of the  L-1011
aircraft as needed, it pays only for actual use of the aircraft at market rates.
At  June  30,  1997,  CAS  had   outstanding   payables  to  Tradewinds  Air  of
approximately $465,000 and accrued expenses of $815,000.

(b) CAS had sales to Amertranz of $985,477,  and related accounts  receivable of
approximately $673,000 as of and for the year ended June 30, 1997.

At June 30, 1997,  Amertranz owes approximately  $673,000 to CAS for air freight
forwarding services.

(c) In connection  with the  acquisition of  Consolidated,  the Company issued a
Promissory  Note in the  amount  of  $150,000.  At June  30,  1997,  the  amount
outstanding  under this note was  $137,500.  The note bears  interest  at 8% and
matures October 1, 1999.

(d) The President of Target, who is also a Director of the Company,  owns 10% of
the shares of Target  Airfreight (Hong Kong) Limited ("Target - HKG") and Target
- HKG owns shares in Target Airfreight (Asia) PTE., Limited ("Target - SIN").



                                      F-17

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)



Target  had sales to Target - HKG and  Target - SIN of  $261,952  and  $157,233,
respectively,  for the two  month  period  ended  June 30,  1997;  and  accounts
receivable of $315,548 and $275,595, respectively, at June 30, 1997.

At June 30, 1997,  Target owes  $390,384 and $4,345 to Target - HKG and Target -
SIN, respectively.


                                      F-18

<PAGE>



                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
TIA, Inc.:

         We have audited the accompanying  balance sheets of Amertranz Worldwide
Holding Corp. (formerly The Freight Forwarding Business of TIA and CFS) (note 1)
as of December 31, 1994 and 1995 and the related  statements of  operations  and
changes  in  accumulated  deficit  and cash  flows  for each of the years in the
three-year   period  ended   December  31,  1995.   These   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these statements based on our audits.

         We conducted our audits in accordance with generally  accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material respects,  the financial position of Amertranz Worldwide
Holding Corp.  (formerly The Freight  Forwarding  Business of TIA and CFS) as of
December 31, 1994 and 1995, and the results of its operations and its cash flows
for each of the  years in the  three-year  period  ended  December  31,  1995 in
conformity with generally accepted accounting principles.


                                                           KPMG PEAT MARWICK LLP

Greensboro,  North  Carolina  March 8,  1996,  except  with  respect to the last
paragraph in Note 2 for which the date is May 1, 1996


                                      F-19

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
            (FORMERLY THE FREIGHT FORWARDING BUSINESS OF TIA AND CFS)

                                 BALANCE SHEETS

                           December 31, 1994 AND 1995
<TABLE>
<CAPTION>
                                                                                        1994              1995
                                                                                        ----              ----
                                        ASSETS
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Current assets:
   Cash and cash equivalents                                                        $ 2,141,047        $ 2,463,336
   Accounts receivable, net of allowance for doubtful accounts
      of $131,229 in 1995 and $228,424 in 1994 (Note 7)                               5,196,113          5,379,903
   Income taxes receivable                                                                   --             65,000
   Prepaid expenses and deposits                                                        111,878             84,917
                                                                                    -----------        -----------

          Total current assets                                                        7,449,038          7,993,156
                                                                                    -----------        -----------

   Property and equipment, at cost:
      Ground support equipment                                                        1,211,507          1,259,942
      Furniture, fixtures and leasehold improvements                                    374,751            429,145
                                                                                    -----------        -----------

                                                                                      1,586,258          1,689,087
       Less accumulated depreciation and amortization                                   762,229          1,129,340
                                                                                    -----------        -----------
          Net property and equipment                                                    824,029            559,747
   Notes receivable (Note 3)                                                                 --            500,000
   Other assets                                                                          54,077             54,077
                                                                                    -----------        -----------

                                                                                    $ 8,327,144        $ 9,106,980
                                                                                    ===========        ===========

                    LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
   Note payable to affiliate (Note 4)                                               $ 3,387,808        $ 2,187,808
   Current installments of note payable (Note 4)                                         25,000             25,000
   Accounts payable (Note 7)                                                          1,614,424          1,605,257
   Accrued liabilities (Note 4)                                                       1,479,493          1,235,568
   Income taxes payable                                                                 108,201                 --
                                                                                    -----------        -----------
          Total current liabilities                                                   6,614,926          5,053,633
                                                                                    -----------        -----------

   Note payable (Note 4)                                                                 50,000             25,000
   Note payable to Parent (Note 4)                                                    8,940,336          8,940,336
                                                                                    -----------        -----------

          Total liabilities                                                          15,605,262         14,018,969
                                                                                    -----------         ----------

   Stockholders' equity (deficit):
      Common stock, $.01 par value; 15,000,000 shares
         authorized, 2,100,000 shares issued
         and outstanding                                                                 21,000             21,000
      Accumulated deficit                                                            (7,299,118)        (4,932,989)
                                                                                    -----------        -----------
   Total stockholders' equity (deficit)                                              (7,278,118)        (4,911,989)
   Commitments and contingencies (Notes 6 and 9)
                                                                                    $ 8,327,144        $ 9,106,980
                                                                                    ===========        ===========
</TABLE>



                 See accompanying notes to financial statements.


                                      F-20

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
            (FORMERLY THE FREIGHT FORWARDING BUSINESS OF TIA AND CFS)

                          STATEMENTS OF OPERATIONS AND
                         CHANGES IN ACCUMULATED DEFICIT

                  Years Ended December 31, 1993, 1994 and 1995

<TABLE>
<CAPTION>

                                                                         DECEMBER 31,
                                                       --------------------------------------------------
                                                         1993                1994                1995
                                                         ----                ----                ----


<S>                                                    <C>                <C>                 <C>        
Operating revenue                                      $32,670,727        $38,576,285         $38,211,306
Cost of transportation (Note 7)                         24,231,379         30,254,733          30,300,476
                                                     -------------       ------------        ------------

     Gross profit                                        8,439,348          8,321,552           7,910,830
Selling, general and administrative expenses             6,504,897          4,633,676           4,513,154
                                                     -------------       ------------           ---------

     Operating income                                    1,934,451          3,687,876           3,397,676
Other income (expense):
     Interest expense (Note 4)                          (1,107,520)        (1,143,787)         (1,155,215)
     Other, net                                             41,928            117,214             123,668
                                                     -------------       ------------        ------------

     Total other expense                                (1,065,592)        (1,026,573)         (1,031,547)
                                                     -------------       ------------        ------------

     Income before income taxes                            868,859          2,661,303           2,366,129
Income taxes (Note 5)                                           --            108,201                  --
                                                     -------------       ------------        ------------

Net income                                                 868,859          2,553,102           2,366,129
Accumulated deficit:
     Balance at beginning of year                      (10,721,079)        (9,852,220)         (7,299,118)
                                                     -------------       ------------        ------------

Balance at end of year                               $  (9,852,220)      $ (7,299,118)       $ (4,932,989)
                                                     =============       ============        ============
</TABLE>











               See accompanying notes to the financial statements.


                                      F-21

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
            (FORMERLY THE FREIGHT FORWARDING BUSINESS OF TIA AND CFS)

                            STATEMENTS OF CASH FLOWS

                  Years Ended December 31, 1993, 1994 and 1995

<TABLE>
<CAPTION>
                                                                                        DECEMBER 31,
                                                                           1993             1994             1995
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Cash flows from operating activities:
   Net income                                                           $ 868,859       $ 2,553,102      $ 2,366,129
   Adjustments to reconcile net income to
     net cash provided by operating activities
     Depreciation and amortization                                        416,830           377,569          367,111
     Net disposals of property and equipment                                   --            46,978               --
     Bad debt expense                                                     153,574            70,000           41,000
   Changes in assets and liabilities:
     Increase in accounts receivable                                     (771,087)         (949,027)        (224,790)
     Increase in income taxes receivable                                       --                --          (65,000)
     Increase in inventory                                                (11,309)               --               --
     (Increase) decrease in prepaid expenses                             (140,608)          581,376           26,961
     Increase (decrease) in accounts payable                              487,518          (274,010)          (9,167)
     Decrease in accrued liabilities                                     (706,398)         (165,264)        (243,925)
     Increase (decrease) in income taxes payable                               --            68,201         (108,201)
                                                                        ---------       -----------      -----------

       Total adjustments                                                 (571,480)         (244,177)        (216,011)
                                                                        ---------       -----------      -----------
       Net cash provided by operating activities                          297,379         2,308,925        2,150,118

Cash flows from investing activities:
    Cash advances under notes receivable                                       --                --         (500,000)
    Purchases of furniture, fixtures and equipment                        (95,567)          (42,280)        (102,829)
    Increase in other assets                                               (7,393)           (9,405)              --
                                                                        ---------       -----------      -----------

       Net cash used in investing activities                             (102,960)          (51,685)        (602,829)
Cash flows from financing activities:
    Proceeds from Parent cash advance                                     400,000                --               --
    Repayments on Parent cash advance                                    (161,199)         (238,801)              --
    Payments on note payable to affiliate                                      --                --       (1,200,000)
    Repayments on notes payable                                          (274,162)         (231,264)         (25,000)
                                                                        ---------       -----------      -----------

       Net cash used in financing activities                              (35,361)         (470,065)      (1,225,000)
                                                                        ---------       -----------      -----------

Net increase in cash and cash equivalents                                 159,058         1,787,175          322,289
Cash and cash equivalents at beginning of year                            194,814           353,872        2,141,047
                                                                        ---------       -----------      -----------

Cash and cash equivalents at end of year                                  353,872         2,141,047        2,463,336
                                                                        =========       ===========      ===========

Supplemental disclosure of cash flow information:
   Cash paid during the year for interest                                 586,056         1,666,950          946,155
                                                                        =========       ===========      ===========
   Cash paid during the year for income taxes                           $      --       $        --      $   173,201
                                                                        =========       ===========      ===========
</TABLE>




               See accompanying notes to the financial statements.


                                      F-22

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
            (FORMERLY THE FREIGHT FORWARDING BUSINESS OF TIA AND CFS)

                          NOTES TO FINANCIAL STATEMENTS

                        December 31, 1993, 1994 and 1995


(1) Significant Accounting Policies

  Company Background

         In January 1996,  Amertranz  Worldwide  Holding Corp.  ('Holding')  was
incorporated  in the state of  Delaware.  Effective  February  7, 1996,  Holding
concluded an asset  exchange  agreement  with TIA, Inc.  ('TIA'),  its 51% owned
subsidiary,  Caribbean Freight System, Inc. ('CFS'),  Amertranz Worldwide,  Inc.
('Amertranz') and the stockholders and convertible note holders of Amertranz. As
part of this transaction, Holding received (i) all of the issued and outstanding
stock of Amertranz, (ii) $1,379,110 in convertible notes of Amertranz, and (iii)
the freight  forwarding  business of TIA and CFS.  Holding then  contributed the
freight  forwarding  business of TIA and CFS to  Caribbean  Air  Services,  Inc.
('CAS') in return for all of the issued and  outstanding  shares of CAS. TIA and
CFS received a $10,000,000  promissory  note in addition to 2,100,000  shares of
common stock in Holding, as discussed in Note 2.

  Basis of Financial Statement Presentation

         The  accompanying  balance  sheets and  statements  of  operations  and
changes in accumulated deficit and cash flows include the accounts of the former
air  freight  business of TIA (a wholly  owned  subsidiary  of Wrexham  Aviation
Corporation)  and CFS,  which have been combined for  reporting  purposes as The
Freight  Forwarding  Business  of TIA and CFS (the  'Business'),  which is not a
separate legal or historical  reporting  entity.  The Business of TIA and CFS is
treated  as the  predecessor  since  TIA  and CFS  represent  the  majority  and
controlling  shareholders  of Holding,  accordingly  the  issuance of  2,100,000
shares of stock by Holding  for the freight  forwarding  business of TIA and CFS
has been  accounted  for as a  recapitalization  of the  Business.  Although the
Business is not a separate  legal  entity,  since the Business is treated as the
predecessor  the effect of the issuance of the 2,100,000  shares of common stock
of Holding in February 1996 has been reflected in the financial statements as if
it had occurred as of the  beginning of the earliest year  presented.  Since the
Business was combined in February 1996 with Holding the  accompanying  financial
statements  include  the  accounts  of TIA and CFS  related to their air freight
businesses and exclude accounts related to the minority interest in CFS.

         At December 31, 1995, CFS has a 51% ownership interest in Caribbean Air
Services Dominicana, Inc. (CASD); however, the accompanying financial statements
do not include the accounts of CASD since CASD was not combined with Holding.

         All  significant  intrabusiness  balances  and  transactions  have been
eliminated in the financial statements.

  Description of Business

         The  Business  operates an air freight  forwarding  business  primarily
serving the eastern  half of the United  States,  Puerto Rico and the  Dominican
Republic.

  Revenue Recognition

         The  Business is involved in brokering  air cargo  services for freight
flown  between  the  United  States,  Puerto  Rico and the  Dominican  Republic.
Revenues,  and related direct costs,  are recognized when the shipments of cargo
are completed.  Monthly provision is made for doubtful  receivables,  discounts,
returns and allowances.



                                      F-23

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            (FORMERLY THE FREIGHT FORWARDING BUSINESS OF TIA AND CFS)

                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

                        December 31, 1993, 1994 and 1995


(1)  Significant Accounting Policies - (Continued)

  Cash and Cash Equivalents

         Cash at December 31, 1995 includes  $2,290,000 of overnight  repurchase
agreements.

  Property and Equipment

         Property and equipment are depreciated using the  straight-line  method
over the estimated  useful lives of the assets of five years for ground  support
equipment and 5 to 10 years for furniture, fixtures and leasehold improvements.

  Income Taxes

         The  operations  of the  Business are included in the federal and state
income tax returns of TIA and CFS.  Income  taxes  allocated to the Business are
based on the actual income taxes of TIA and CFS for the periods presented.

         Deferred tax assets and liabilities are recognized  under the asset and
liability  method for the future tax  consequences  attributable  to differences
between  the  financial  statement  carrying  amounts  of  existing  assets  and
liabilities and their respective tax bases.  Deferred tax assets and liabilities
are measured  using enacted tax rates expected to apply to taxable income in the
years in which those  temporary  differences  are  expected to be  recovered  or
settled.  The effect on deferred tax assets and  liabilities  of a change in tax
rates is recognized in income in the period that includes the enactment date.

  Financial Instruments

         The carrying amounts of accounts  receivable,  notes  receivable,  note
payable to affiliate,  accounts payable and accrued liabilities approximate fair
value because of the short maturity of these financial instruments. The carrying
amount of the note  payable to the  Parent  approximates  fair value  because it
bears interest at an adjustable rate.

  Earnings per Share

         Earnings per share  information  has not been presented  since it would
not be  representative  of  future  earnings  per share  information  due to the
combination  of the Business  with Holding and Amertranz on February 7, 1996 and
the related changes in stockholders' equity which took place at that time.

  Reclassification

         Certain  amounts in the 1993 and 1994  financial  statements  have been
reclassified to conform with the 1995 presentation.

  Use of Estimates

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.




                                      F-24

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            (FORMERLY THE FREIGHT FORWARDING BUSINESS OF TIA AND CFS)

                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

                        December 31, 1993, 1994 and 1995


(2)  Asset Exchange Agreement

         In  anticipation of a public  offering of securities  ("Offering"),  in
February 1996 TIA and CFS entered into an asset exchange agreement  discussed in
note 1 in  which  the air  freight  business  of TIA and CFS was  combined  with
Holding, which contributed the business to a wholly owned subsidiary.

         The air  freight  business  is  defined  by the  agreement  to  include
customer lists and related business and marketing records;  CFS's rights under a
freight  handling  agreement  with  CASD;  the use of the names  "Caribbean  Air
Services" and "Tradewinds  International Airlines;" the operating leases for the
Puerto Rico,  Greensboro,  North Carolina,  and Hartford,  Connecticut  business
facilities;  furniture  and  fixtures  of $86,830 as of  December  31,  1995 and
$83,525  as  of  February  7,  1996;  and  all  assignable  customer  and  sales
representative  contracts  of TIA and CFS in  connection  with their air freight
businesses.  The air freight  business  does not include any other assets of TIA
and CFS,  including cash,  accounts  receivable,  notes receivable,  securities,
equipment, aircraft, parts or tools, nor any liabilities of TIA or CFS.

         In  exchange  for the  transfer  of the air  freight  operating  assets
described  above,  TIA and CFS received a  promissory  note of  $10,000,000  and
2,100,000  shares of Holding  (allocated  to TIA and CFS as notes  receivable of
$8,000,000  and  $2,000,000,  respectively,  and 1,680,000  and 420,000  shares,
respectively).  The promissory  note bears interest at 8%, and is due from March
1, 1996 through  July 1, 1996 in monthly  payments of $80,000 and from August 1,
1996 in monthly  payments of  $166,667.  In addition,  Holding  intends to apply
$2,000,000 of the net proceeds from the proposed  public  offering of securities
discussed in the first paragraph above against the promissory note.

         Pursuant to the asset exchange agreement, TIA and CFS agreed to advance
to the aforementioned  subsidiary of Holding, on a revolving loan basis, the net
collections  of TIA's and CFS's  accounts  receivable as of February 7, 1996 and
additional  amounts in the discretion of TIA and CFS, up to an aggregate maximum
of $4,000,000  outstanding at any time.  Funds advanced under the revolving loan
with respect to TIA's and CFS's  accounts  receivable  do not bear  interest and
discretionary advances bear interest at the greater of 1% per month or the prime
rate plus 4%. The revolving loan matures on July 6, 1996.

         The promissory  note and revolving loan are secured by a first priority
lien  on  all  of the  issued  and  outstanding  shares  of  the  aforementioned
subsidiary of Holding, a first priority lien on all of the assets of Holding and
the  subsidiary  of Holding,  and a second lien on the  accounts  receivable  of
another subsidiary of Holding.

         TIA and CFS have agreed that upon  consummation  of the public offering
of securities discussed above, they will defer repayment of the promissory note,
revolving loan and notes receivable  discussed in note 3 if, among other things,
Holding  does  not  meet  certain  financial  thresholds  or  obtain  additional
financing.  TIA and CFS have further  agreed that except upon the  occurrence of
certain  events  they will not take any action to  foreclose  on their  security
interests in the assets of Holding or its subsidiaries for one year.




                                      F-25

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            (FORMERLY THE FREIGHT FORWARDING BUSINESS OF TIA AND CFS)

                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

                        December 31, 1993, 1994 and 1995


(3) Notes Receivable

         In anticipation of entering into the asset exchange agreement discussed
in note 2,  TIA and CFS  made  advances  to a  subsidiary  of  Holding  totaling
$500,000 in 1995 and $300,000  subsequent  to December  31, 1995.  The notes are
secured by a subordinated  lien on all of the assets of a subsidiary of Holding,
bear  interest at a rate of 12%,  and are  repayable  in 12 monthly  payments of
principal  and interest  commencing  30 days after the closing of the  Offering.
However,  TIA and CFS have  agreed  that,  upon  consummation  of the  Offering,
repayment of the notes will be deferred as discussed in note 2.

(4) Notes Payable

         Substantially  all of TIA's and CFS's activities in 1993, 1994 and 1995
are  related  to  their  air  freight  business  and,  accordingly,  all  of the
historical interest expense related to the interest-bearing  debt of TIA and CFS
has been included in the accompanying financial statements.

         Interest expense relates primarily to two notes payable as follows:

         A note  payable  to  Harborview  Corporation  Ltd.  No.  1,  a  company
affiliated through common ownership to TIA has a balance outstanding at December
31, 1994 and 1995 of $3,387,808 and $2,187,808,  respectively, bears interest at
a rate of 10%,  is secured  by a senior  lien on all of the assets of TIA and is
due on demand. Interest expense on this note amounted to approximately $327,000,
$343,000 and $252,000 in 1993, 1994 and 1995, respectively.

         A note  payable to Wrexham  Aviation  Corporation,  Parent of TIA has a
balance  outstanding  at both  December 31, 1994 and 1995 of  $8,940,336,  bears
interest at prime plus 1% (9.5% at December  31,  1995),  is secured by a second
lien on all assets of TIA and is due on June 16, 1997.  Interest expense on this
note amounted to approximately $740,000, $783,000 and $903,000 in 1993, 1994 and
1995, respectively. Interest in the amount of approximately $11,000 and $202,000
is included in accrued liabilities at December 31, 1994 and 1995, respectively.

         In addition to the above notes, a non-interest  bearing note payable of
$50,000 is outstanding at December 31, 1995 and is due in payments of $25,000 in
1996 and 1997.




                                      F-26

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            (FORMERLY THE FREIGHT FORWARDING BUSINESS OF TIA AND CFS)

                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

                        December 31, 1993, 1994 and 1995


(5) Income Taxes

         The  operations  of the  Business are included in the federal and state
income tax returns of TIA and CFS.  Income  taxes  allocated to the Business are
based on the actual income taxes of TIA and CFS for the periods presented.

         Income tax expense for 1993, 1994 and 1995 consists of:

                                               1993
                          CURRENT            DEFERRED              TOTAL

Federal                   $      --          $      --           $     --
State                            --                 --                 --
                          -----------------------------------------------
                          $      --          $      --           $     --
                          =========          =========           ========


                                               1994
                          CURRENT            DEFERRED              TOTAL

Federal                   $  79,494          $      --           $ 79,494
State                        28,707                 --             28,707
                          ---------          ---------           --------
                          $ 108,201          $      --           $108,201
                          =========          =========           ========


                                               1995
                          CURRENT            DEFERRED              TOTAL

Federal                   $      --          $      --           $     --
State                            --                 --                 --
                          -----------------------------------------------
                          $      --          $      --           $     --
                          =========          =========           ========


         Income tax expense for 1993, 1994 and 1995 differed from the "expected"
amount for those years  (computed by applying the federal  corporate rate of 34%
to income before income taxes) for the following reasons:


<TABLE>
<CAPTION>

                                                                        1993              1994              1995
                                                                        ----              ----              ----

<S>                                                                  <C>                <C>                <C>     
Computed "expected" tax expense                                      $  295,412         $ 904,843          $804,484
State income taxes, net of federal benefit                                   --            18,947                --
Change in valuation allowance for deferred tax
  assets allocated to income tax expense                               (295,412)         (861,672)         (817,928)
Other                                                                        --            46,083            13,444
                                                                     ----------         ---------         ---------

                                                                     $       --         $ 108,201         $      --
                                                                     ==========         =========         =========

</TABLE>


                                      F-27

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            (FORMERLY THE FREIGHT FORWARDING BUSINESS OF TIA AND CFS)

                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

                        December 31, 1993, 1994 and 1995


(5) Income Taxes--(Continued)

         The temporary differences that give rise to significant portions of the
deferred tax assets and deferred tax  liabilities  at December 31, 1994 and 1995
are presented below:

<TABLE>
<CAPTION>
                                                                                     1994                   1995
                                                                                     ----                   ----

<S>     <C>    <C>    <C>    <C>    <C>    <C>
Deferred tax assets:
  Allowance for doubtful accounts receivable                                     $    88,172            $    50,664
  Alternative minimum tax credit carry forward                                        79,494                 79,494
  Reserves and accruals, not deductible until paid for tax
     purposes                                                                         51,606                 40,656
  Net operating loss carry forwards                                                4,034,683              3,562,667
                                                                                 -----------            -----------

          Total gross deferred tax assets                                          4,253,955              3,733,481
          Less valuation allowance                                                (2,709,088)            (1,891,160)
                                                                                 -----------             ----------

          Net deferred tax assets                                                  1,544,867              1,842,321
Deferred tax liabilities:
  Fixed assets, primarily excess tax over financial statement
     depreciation                                                                 (1,544,867)            (1,842,321)
                                                                                 -----------             ----------

          Total gross deferred tax liabilities                                    (1,544,867)            (1,842,321)
                                                                                 -----------            -----------
                                                                                 $        --            $        --
                                                                                 ===========            ===========
</TABLE>


         The changes in the valuation  allowance for 1993,  1994 and 1995 result
from the  utilization  of net  operating  loss  carryforwards  allocated  to the
Business.  Subsequently  recognized  tax  benefits  relating  to  the  valuation
allowance for deferred tax assets as of December 31, 1995 will be recorded as an
income tax benefit in the statement of operations.

         At December  31,  1995,  TIA had federal and state net  operating  loss
carryforwards  of approximately  $9,227,000.  The  carryforwards  expire in 2005
through  2008 for federal  income tax  purposes  and 1996 through 1997 for state
income tax  purposes.  Due to the statutory  limitation  on net  operating  loss
carryforwards  following an ownership change,  the availability of approximately
$2,456,000  at December 31, 1995 of these net operating  loss carry  forwards to
reduce future taxable income is substantially limited.

         The excess of  alternative  minimum  tax over  regular  tax is a credit
which can be carried  forward to reduce regular tax liabilities in future years.
At December 31,  1995,  TIA and CFS have  approximately  $79,000  available  for
carryforward.




                                      F-28

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            (FORMERLY THE FREIGHT FORWARDING BUSINESS OF TIA AND CFS)

                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

                        December 31, 1993, 1994 and 1995


(6) Leases

         The Business  leases  certain  equipment  under various  noncancellable
operating  leases  expiring at various dates through 1997.  Future minimum lease
payments are as follows:



                  1996                                  $43,332
                  1997                                  $20,865


         Rent expense for cancelable and noncancellable operating leases for the
years ended  December  31,  1993,  1994 and 1995 was  approximately  $2,012,000,
$675,000 and $330,000, respectively.

(7) Related Party Transactions

         During the years ended  December 31, 1993,  1994 and 1995, the Business
incurred purchased transportation costs of approximately $541,000,  $848,000 and
$1,622,000,   respectively,   from   companies   partially   owned  by  minority
stockholders of CASD. Included in accounts payable at December 31, 1994 and 1995
was approximately $31,000 and $8,000, respectively, due to these companies.

         During the year ended  December 31,  1995,  the Business had sales to a
subsidiary  of Holding that amounted to  approximately  $350,500 and at December
31, 1995 related accounts  receivable of $150,500,  recorded in the accompanying
balance sheet.

         Under the terms of a cargo aircraft  charter  agreement with Tradewinds
Airlines,  Inc.  ('Tradewinds  Air'),  a subsidiary  of  Tradewinds  Acquisition
Corporation,  of which  TIA owns  approximately  30% of the  outstanding  common
stock,  TIA has  exclusive  rights  until  June 30,  1998 to the use of a leased
L-1011  freighter  aircraft.  While  TIA is  guaranteed  the  use of the  L-1011
aircraft as needed, it pays only for actual use of the aircraft at market rates.

         The  investment in, and related  activities of,  Tradewinds Air are not
reflected in the accompanying  financial statements as they were not included in
the  Business   combined  with  Holding,   see  Basis  of  Financial   Statement
Presentation in note 1 and Asset Exchange Agreement in note 2.

         TIA  currently  holds the United States  Department  of  Transportation
licenses  and  certificates  required  for the  operation  of the  L-1011 and is
operating  the  L-1011  aircraft  on behalf of  Tradewinds  Air under an interim
operating   agreement.   Upon  approval  by  the  United  States  Department  of
Transportation of the transfer of the licenses and certificates,  TIA intends to
assign the aircraft lease to Tradewinds Air.

         The leased L-1011,  along with assignment of the  aforementioned  cargo
aircraft charter agreement and interim operating agreement, was acquired in late
November  1995 by Tradewinds  Air from Florida West  Airlines,  Inc.  (FWA) upon
confirmation by the Bankruptcy  Court of FWA's plan of  reorganization.  FWA had
acquired  the leased  L-1011  from and  entered  into the  aforementioned  cargo
aircraft  charter  agreement and interim  operating  agreement with TIA in March
1994.  Prior to March  1994,  TIA had  operated  the  L-1011.  Accordingly,  the
accompanying  financial  statements for the year ended December 31, 1993 and for
the first two months of 1994 include the operations of the aircraft.


                                      F-29

<PAGE>


                        AMERTRANZ WORLDWIDE HOLDING CORP.
            (FORMERLY THE FREIGHT FORWARDING BUSINESS OF TIA AND CFS)

                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

                        December 31, 1993, 1994 and 1995


(7) Related Party Transactions (Continued)

         Total  transportation  costs  purchased  from  Tradewinds  Air  and FWA
related  to  these  agreements   amounted  to   approximately   $14,959,000  and
$16,691,000 in 1994 and 1995,  respectively.  At December 31, 1994 and 1995, the
Business owed $913,000 and $760,000,  respectively,  for such services which are
included in accounts payable.

         TIA  provides  accounting  services  to  Tradewinds  Air for $5,720 per
month.

(8) Supplier and Credit Concentration

         The  Business  charters  the flight  operations  of an L-1011  from one
supplier. Although there are a limited number of companies that charter or lease
L-1011 aircraft,  management believes that other suppliers could provide similar
services on  comparable  terms.  A change in suppliers,  however,  could cause a
delay in the air cargo  operations  and a possible  loss of sales,  which  would
affect operating results adversely.

         The air cargo industry is impacted by the general  economy.  Changes in
the marketplace of this industry may significantly affect management's estimates
and the Business's performance.

         Most of the Business's  customers are located  primarily in the eastern
half of the United States,  Puerto Rico, and the Dominican  Republic.  No single
customer  accounted for more than 10% of the sales of the Business in 1993, 1994
and 1995. The Business estimates an allowance for doubtful accounts based on the
credit  worthiness  of its  customers  as well as general  economic  conditions.
Consequently,  an adverse  change in those factors  could affect the  Business's
estimate of its bad debts.

(9) Contingencies

         TIA is responsible  for the clean-up of  contaminated  soil  associated
with the removal of an underground  storage tank in Greensboro,  North Carolina.
TIA  removed the waste oil tank  during  1994 and has  performed  a  substantial
portion of the  remediation  procedures on the site.  TIA, along with Tradewinds
Air, is responsible  for any remaining  soil clean-up  required and the State of
North Carolina has a trust fund  available to reimburse  companies for voluntary
remediation expenses in excess of certain deductibles.  Accordingly,  management
believes that any remaining remediation costs will not have a material effect on
the financial statements.



                                      F-30

<PAGE>



                                                                     SCHEDULE II


                  SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)


<TABLE>
<CAPTION>

                                                  Balance at   Charged to      Charged to
                                                   Beginning    Costs and         Other                   Balance at
                                                    of Year     Expenses        Accounts     Deductions   End of Year


<S>                            <C> <C> 
For the fiscal year ended June 30, 1996

  Allowance for doubtful accounts                  $    401      $    48        $  -          $   (83)      $   371
                                                   ========      =======        ========      =======       =======

  Accumulated depreciation and amortization
    of property and equipment                      $    106      $   108        $  -          $    (4)      $   210
                                                   ========      =======        ========      =======       =======

  Accumulated amortization of debt
    issuance cost                                  $  -          $ 3,264        $  -          $  -          $ 3,264
                                                   ========      =======        ========      ========      =======

  Accumulated amortization of goodwill             $  -          $   191        $  -          $ -           $   191
                                                   ========      =======        ========      =======       =======

  Deferred tax asset valuation allowance           $  -          $ 3,548        $  -          $  -          $ 3,548
                                                   ========      =======        ========      ========      =======



For the fiscal year ended June 30, 1997

  Allowance for doubtful accounts                  $    371      $   783        $  -          $  (367)      $   787
                                                   ========      =======        ========      =======       =======

  Accumulated depreciation and amortization
    of property and equipment                      $    210      $   352        $    469      $  (172)      $   859
                                                   ========      =======        ========      =======       =======

  Accumulated amortization of debt
    issuance cost                                  $  3,264      $   104        $  -          $ -           $ 3,368
                                                   ========      =======        ========      =======       =======

  Accumulated amortization of goodwill             $    191      $   518        $  -          $ -           $   709
                                                   ========      =======        ========      =======       =======

  Deferred tax asset valuation allowance           $  3,548      $   909        $  -          $  -          $ 4,457
                                                   ========      =======        ========      ========      =======

  Reserve for restructuring                        $   -         $ 3,408        $   -         $  (726)      $2,682
                                                   --------      -------         --------     --------      ------
</TABLE>



C70815.198 R:1


                                       S-1

<PAGE>



                                                                    EXHIBIT 10.5

                            BNY FINANCIAL CORPORATION
                           1290 AVENUE OF THE AMERICAS
                            NEW YORK, NEW YORK 10104
                                 (212) 408-7000

                               September 25, 1997


Amertranz Worldwide, Inc.
Caribbean Air Services, Inc.
Target Air Freight, Inc.
Consolidated Air Services, Inc.
Target International Services, Inc.
2001 Marcus Avenue
Lake Success, New York  11042

Ladies/Gentlemen:

         Reference is made to the Accounts  Receivable  Management  and Security
Agreement  between  us  bearing  the  effect  date  of  January  14,  1997  (the
"Agreement"). All capitalized terms not otherwise defined herein shall have such
meaning as are ascribed to them under the Agreement.

         You have advised us that due to continuing losses, Amertranz has ceased
its on-gong  operations  at this time.  You have also advised us that you are in
violation of a number of provisions and covenants under the Agreement.

         In light of the foregoing  and pursuant to your  request,  it is hereby
agreed that:

         1. Amertranz  shall no longer be an agent for the  Borrowers,  and such
duties as agent for the Borrower set forth in Section 4 and otherwise  under the
Agreement  shall now and henceforth be executed by Caribbean Air Services,  Inc.
and each Borrower  hereby appoints as its agent and  attorney-in-fact  Caribbean
Air Services,  Inc. to request and receive any Revolving  Credit  Advances under
the  Agreement  and to execute on behalf of each of them any and all  documents,
amendments,  reports,  schedules,  waivers and  agreements  pertaining  to or in
connection with the Agreement or any of the ancillary agreements.

         2. The Agreement shall be also be amended in the following manner:

            Section 12(n) of the Agreement shall be amended by deleting the text
appearing therein and inserting the following text in its place and stead:

                  "(n) It  shall  not  permit  the  consolidated  net  worth  of
                  Amertranz  Worldwide  Holding Corp.,  determined in accordance
                  with GAAP as in effect  on the  Closing  Date as of the end of
                  any fiscal  quarter to be less than the amount set forth below
                  for each respective measurement date:

          Quarter Ended                               Minimum Net Worth

          June 30, 1997                               ($1,600,000.00)
          September 30, 1997                          ($1,500,000.00)
          December 31, 1997                           ($1,300,000.00)
          March 31, 1998                              ($1,200,000.00)
          June 30, 1998                               ($1,000,000.00)
          September 30, 1998                          ($  800,000.00)
          December 31, 1998                           ($  500,000.00)
          March 31, 1999                              ($  350,000.00)
          June 30, 1999                               ($  150,000.00)
          September 30, 1999                           $   50,000.00
          December 31, 1999                            $  350,000.00
          March 31, 2000                               $  500,000.00
          June 30, 2000                                $  700,000.00


<PAGE>




                  To the  extent  that any new  equity is  raised  by  Amertranz
                  Worldwide Holding Corp. or to the extent any debt is converted
                  into  equity  then the dollar  amounts  set forth  immediately
                  above shall accordingly be increased by the amount of any such
                  new equity. Conversely, to the extent that Amertranz Worldwide
                  Holding  Corp.  pays  any  dividends  to  the  holders  of any
                  preferred stock issued in its settlement with trade creditors,
                  then in such  event  the  numbers  set  forth  above  shall be
                  decreased  by an amount equal to the  aggregate  amount of the
                  dividends paid."

         3.  Section  12(o)  shall be amended  by  deleting  the text  appearing
therein and inserting in its place and stead the following text:

                  "It shall not permit the  consolidated net profit of Amertranz
                  Worldwide Holding Corp., determined in accordance with GAAP as
                  in effect on the  Closing  Date to be less than the amount set
                  forth below for each respective measurement date:

          Quarter Ended                               Minimum Profit

          September 30, 1997                          $100,000.00
          December 31, 1997                           $200,000.00
          March 31, 1998                              $100,000.00
          June 30, 1998                               $200,000.00
          September 30, 1998                          $200,000.00
          December 31, 1998                           $300,000.00
          March 31, 1999                              $150,000.00
          June 30, 1999                               $200,000.00
          September 30, 1999                          $200,000.00
          December 31, 1999                           $300,000.00
          March 31, 2000                              $150,000.00
          June 30, 2000                               $200,000.00

         4. Section 12(q) of the Agreement shall be amended by deleting the text
appearing therein and inserting the following text in its place and stead:

                  "(q)  At the  end of  any  month  the  sum of  Borrowers'  (i)
unrestricted  cash plus, (ii) the Formula Amount less Revolving Credit Advances,
shall not bet less then $500,000.00.

         Provided  that your actual  financial  performance  is no worse than as
reported  to us, we hereby  agree to waive your  failure  to meet the  financial
covenant requirements under the Agreement with respect to minimum net profit for
the periods through June 30, 1997.

         This letter shall also serve to confirm that provided  Amertranz  shall
no longer request,  or have requested on its behalf, any future Loans other than
for the  purpose  of  providing  for its  reasonable  costs  of  winding  up and
liquidation  for  approximately  the next three  months (to which the  Borrowers
hereby  agree),  we hereby waive any Events of Default which may have arisen (i)
solely as a result of the  discontinuance  by Amertranz of this regular business
operations,  (ii) as a result of the insolvency of Amertranz, or (iii) any Event
of Default  which may have arisen solely as a result of the meeting of Amertranz
with its creditors in order to arrive at a payment plan with such creditors.

         In  consideration  of the foregoing you agree to pay us a waiver fee of
$48,000.00,  payable in 12 consecutive  equal monthly  installments of $4,000.00
each commencing on October 1, 1997,  which fee shall be in addition to any other
fees  charges or  interest  payable by you under the  Agreement,  and payment of
which fee shall be  effectuated  by our charging  your loan account on the first
day of each month in which such monthly payment is due.

         Except as hereby or heretofore modified or amended all of the terms and
conditions of the Agreement shall continue to remain in full force and effect in
accordance with its original terms.



                                       -2-

<PAGE>



         If the foregoing  correctly set forth the agreement  between us, please
execute a copy of this  letter in the space  provided  below and  return a fully
executed copy of this letter to our offices.

                                            Very truly yours,
                                            BNY FINANCIAL CORPORATION

                                            By:      /s/  Thomas W. Strachan
                                            Title:   Executive Vice President


READ & AGREED TO:
Amertranz Worldwide, Inc.

By:      /s/ Stuart Hettleman
Title:   Executive Vice President

Caribbean Air Services, Inc.

By:      /s/ Stuart Hettleman
Title:   Executive Vice President

Target Air Freight, Inc.

By:      /s/ Stuart Hettleman
Title:   Executive Vice President

Consolidated Air Services, Inc.

By:      /s/ Stuart Hettleman
Title:   Executive Vice President

Target International Services, Inc.

By:      /s/ Stuart Hettleman
Title:   Executive Vice President

                                       -3-

<PAGE>



                                                                      EXHIBIT 21



Subsidiaries of Amertranz Worldwide Holding Corp.

Amertranz Worldwide, Inc., a Delaware corporation
Caribbean Air Services, Inc., a Delaware corporation
Consolidated Air Services, Inc., a Delaware corporation
Target Airfreight, Inc., a Delaware corporation


Subsidiaries of Amertranz Worldwide, Inc.

Amertranz Logistics, Inc., a Delaware corporation
Integrity Logistics, Inc., a New York corporation
Amertranz Worldwide De Caribe, Inc., a Puerto Rico corporation

Subsidiaries of Target Airfreight, Inc.

Target Airfreight (HK) Ltd., a Hong Kong corporation


<PAGE>


                                                                      EXHIBIT 23



                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the incorporation of our
report  included  in  this  Form  10-K,  into  the  Company's  previously  filed
Registration Statements on Form S-3, File No. 333-30351 and File No. 333-03613.


                                                         ARTHUR ANDERSEN LLP



New York, New York
September 29, 1997


<PAGE>