<PAGE>
                                       1


                       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, 2000 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: 0-29754

                             TARGET LOGISTICS, INC.
             (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.)

112 East 25th Street, Baltimore, Maryland                        21218
-----------------------------------------                -----------------------
(Address of principal executive offices)                       (Zip Code)

Registrant's telephone number, including area code           (410) 338-0127

           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 20, 2000 was $1,599,986.

The number of shares of common stock  outstanding  as of September  20, 2000 was
11,879,002

                      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 2000 Annual
Meeting of Shareholders (to be filed).


<PAGE>
                                       2


                             TARGET LOGISTICS, INC.
                        2000 ANNUAL REPORT ON FORM 10-K

                               Table of Contents


                                                                            Page

                                     PART I


Item 1.    Business                                                           3
Item 2.    Properties                                                         5

Item 3.    Legal Proceedings                                                  5
Item 4.    Submission of Matters to a Vote of Security Holders                5

Executive Officers of the Registrant                                          6


                                    PART II

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

                                    PART III

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


                                    PART IV

Item 14.   Exhibits, Financial Statement Schedules and Reports
           on Form 8-K                                                       13


<PAGE>
                                       3


                                     PART I
                                     ------

ITEM 1.   BUSINESS
          --------

Background
----------

          Target Logistics,  Inc., formerly,  Amertranz Worldwide Holding Corp.,
("Company") provides freight forwarding services and logistics services, through
its wholly owned subsidiary,  Target Logistic Services,  Inc. (formerly,  Target
Airfreight,  Inc.) ("Target"). Prior to July 13, 1998, the Company also provided
services  through its  wholly-owned  subsidiary,  Caribbean Air  Services,  Inc.
("CAS"). The Company has a network of offices in 29 cities throughout the United
States.

         The  Company  was  incorporated  in  Delaware  in  January  1996 as the
successor to operations commenced in 1970. In May 1997, the Company acquired (by
merger into the Company's  Target  subsidiary)  Target Air Freight,  Inc., a Los
Angeles-based  freight  forwarder.  As a result,  Target  became a  wholly-owned
subsidiary of the Company.

         On July 13, 1998, the Company's CAS subsidiary sold  substantially  all
of its operating  assets to Geologistics  Air Services,  Inc. an indirect wholly
owned subsidiary of Geologistics Corporation ("Geologistics") for $27 million in
cash (the "CAS  Sale"),  pursuant  to the terms of an Asset  Purchase  Agreement
dated June 15, 1998.

         Following the CAS Sale, the Company  operates  through its wholly-owned
subsidiary,  Target.  On November  30,  1998,  the  Company  changed its name to
"Target Logistics, Inc."

Description of Business
-----------------------

          The Company's  freight  forwarding  services involve arranging for the
total  transport  of  customers'  freight  from the  shipper's  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 29 cities
throughout the United States,  including  exclusive  agency  relationships in 17
cities. The Company has international  freight forwarding  operations consisting
of strategic relationships in over 20 countries including share ownership in its
exclusive agents in China, Hong Kong, Philippines and Singapore. The Company has
developed an expertise in material supply logistics to  manufacturing  concerns,
and expanded its facilities and capabilities to accommodate rapid growth in this
specialty.  Currently,  the Company maintains  material supply warehouses in Los
Angeles and El Paso, and through its agents in Wuxi/China,  Penang/Malaysia, and
Singapore.  Current trends in electronic  manufacturing show that this area will
continue to grow rapidly  worldwide and the Company has established an excellent
reputation as a supply chain specialist.

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  customer  requirements.  It  arranges  for
transportation  of  customers'  shipments  via  commercial  airlines,  air cargo
carriers,  steamship lines, 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,  shipment  weight and required  delivery  time.  The Company offers
graduated  discounts for shipments with later scheduled delivery times and rates
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

<PAGE>
                                       4


obtain favorable  contract rates from carriers 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.

         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  two  HP  9000  mainframe   computers  and  has  a
proprietary  freight  forwarding  software  system  which the  Company has named
"TRACS". TRACS 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 TRACS 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
TRACS to enhance its ability to maintain a competitive advantage.

         International   Operations.   The  Company's  international  operations
consist of air and ocean  freight  movements  imported to and exported  from the
Company's Target  subsidiaries  network of offices in the United States.  During
the  fiscal  year ended  June 30,  2000,  the  Company's  international  freight
forwarding accounted for 33.3% of the Company's operating revenue.

Customers and Marketing
-----------------------

         The  Company's  principal  customers  include large  manufacturers  and
distributors of computers and other  electronic and  high-technology  equipment,
computer  software and wearing  apparel.  As of June 30,  2000,  the Company had
approximately 3,300 accounts.

         The  Company   markets  its  services   through  an   organization   of
approximately  12  full-time   salespersons  and  28  independent  sales  agents
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 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's   Fashion  Services   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.

         Many of the Company's  customers  utilize more than one  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 Pittston BAX Group,  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 services  similar to those offered by the
Company.  These include EGL, Inc.,  Pilot Air Freight,  Inc.,  and  Geologistics
Americas,  Inc. There is also  competition from passenger and cargo air carriers

<PAGE>
                                       5


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  Circle
International  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  195  full-time
employees as of June 30, 2000.  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.


ITEM 2.  PROPERTIES
         ----------

         As of June 30, 2000, the Company leased terminal facilities  consisting
of office and warehouse  space in 12 cities  located in the United  States,  and
also utilized 17 offices operated by exclusive agents. The Company's  facilities
range in size from  approximately  1,000  square feet to  approximately  100,000
square feet and consist of offices and warehouses with loading bays. All of such
properties are leased from third parties. The Company's headquarters are located
in Baltimore,  Maryland,  and its principal warehouse facility is located in Los
Angeles,  California, and consists of approximately 100,000 square feet of floor
space  leased  pursuant  to the terms of a lease  which  expires  in July  2002.
Management  believes that its current  facilities are underutilized and are more
than sufficient for its planned growth.

The Company has an additional 11 terminal facilities in the following locations:

       Atlanta, Georgia                   Houston, Texas
       Charlotte, North Carolina          Miami, Florida
       Chicago, Illinois                  Newark, New Jersey
       Dallas, Texas                      New York, New York
       El Paso, Texas                     Seattle, Washington
       Greensboro, North Carolina


ITEM 3.  LEGAL PROCEEDINGS
         -----------------

         There are no material legal proceedings.


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

         None.



<PAGE>
                                       6


EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------

         The following is a listing of the executive  officers of the Company as
of June 30, 2000.  There are no family  relationships  between any Directors and
Officers of the Company.

NAME                              AGE     POSITION
----                              ---     --------

Stuart Hettleman.................. 50     President and Chief Executive
                                          Officer

Philip J. Dubato.................. 44     Vice President, Chief Financial
                                          Officer and Secretary

Christopher Coppersmith........... 50     President and Chief Executive Officer,
                                          Target Logistic Services, Inc.

STUART HETTLEMAN has been President,  Chief Executive  Officer and a director of
the Company and a director and Executive  Vice  President of CAS, since February
7, 1996, and a director and Chairman 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  since  1990,  and is  currently  the
Executive Vice President,  of TIA, Inc.; and has been Vice President since 1991,
and is currently Executive Vice President, of Caribbean Freight System, Inc.

PHILIP J. DUBATO has been Vice President,  Chief Financial Officer and Secretary
of the  Company  since  February  3, 1997 and a director  of the  Company  since
September  18, 1998.  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.

CHRISTOPHER COPPERSMITH has been President and Chief Executive Officer of Target
Logistic  Services,  Inc.  (acquired by the Company in May 1997) since  November
1996,  and a director of the Company since May 1997.  From 1974 through  October
1996, Mr.  Coppersmith was Executive Vice President and Chief Operating  Officer
of Target Airfreight, Inc.


<PAGE>
                                       7


                                    PART II

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

         Prior to December 4, 1998, the Company's  common stock,  $.01 par value
(the  "Common  Stock")  and  Redeemable  Common  Stock  Purchase  Warrants  (the
"Warrants") were traded on the  Over-The-Counter  (OTC) market under the symbols
AMTZ and AMTZW,  respectively.  Since  December 4, 1998, as a result of the name
change,  the Common  Stock and the  Warrants  have been traded on the OTC market
under the symbols TARG and TARGW, respectively.

         The  following  table shows the high and low sales prices of the Common
Stock and Warrants for each of the quarters  during the fiscal years  indicated,
as reported by NASDAQ and as available  through the OTC market.  The  quotations
represent  prices  between  dealers  and do not reflect  the  retailer  markups,
markdowns or commissions, and may not represent actual transactions.  There have
been no dividends declared.
<TABLE>

<CAPTION>
                                             COMMON STOCK                     WARRANTS

<S>     <C>    <C>    <C>    <C>    <C>    <C>

   Fiscal Year Ended June 30, 1999
   First Quarter                          High    -    1 7/8              High    -   1/8
                                          Low     -    11/16              Low     -   3/100

   Second Quarter                         High    -    1 7/8              High    -   2/25
                                          Low     -    1/2                Low     -   1/100

   Third Quarter                          High    -    1 5/8              High    -   1/10
                                          Low     -    9/16               Low     -   1/100

   Fourth Quarter                         High    -    1 1/8              High    -   1/16
                                          Low     -    35/50              Low     -   1/50

   Fiscal Year Ended June 30, 2000
   First Quarter                          High    -    7/8                High    -   1/25
                                          Low     -    3/50               Low     -   0

   Second Quarter                         High    -    7/10               High    -   1/50
                                          Low     -    45/100             Low     -   0

   Third Quarter                          High    -    7/8                High    -   1/25
                                          Low     -    1/2                Low     -   0

   Fourth Quarter                         High    -    13/16              High    -   1/50
                                          Low     -    13/32              Low     -   0


</TABLE>
          On  September  20, 2000 there were 756  shareholders  of record of the
Company's Common Stock and 649 holders of record of the Company's Warrants.  The
closing price of the Common Stock on that date was $0.37 per share.  The closing
price of the Warrants on that date was $0.005 per Warrant.


<PAGE>
                                       8

<TABLE>
 ITEM 6. SELECTED FINANCIAL DATA
         -----------------------

                             TARGET LOGISTICS, INC.
                     (in thousands, except per share data)

<CAPTION>
                                                 Six Months
                                                Ended June 30                    Year Ended June 30,
                                               ---------------- ------------------------------------------------------
                                                    1996           1997          1998         1999          2000

Statement  of Operations Data:

<S>                                            <C>              <C>         <C>           <C>          <C>
    Operating Revenue                          $   27,446       $ 75,352    $   97,784    $  51,720    $   84,088
    Cost of transportation                         20,961         56,884        73,599       34,790        56,949
                                                   ------         ------        ------       ------        ------
    Gross profit                                    6,485         18,468        24,185       16,930        27,139
    Selling, general & administrative
      expenses                                      8,772         24,300        23,012       21,304        28,183
    Restructuring charge                                -         (3,407)            -            -             -
    Operating income (loss)                    $   (2,288)      $ (9,239)   $    1,173    $  (4,374)   $   (1,044)
    Gain on sale of subsidiary                          -              -             -       24,832             -
    Net income (loss)                          $   (6,397)      $(10,508)   $    7,404    $  14,016    $   (1,197)
    Net income (loss) per common share         $    (1.84)      $  (1.74)   $     0.90    $    1.63    $    (0.14)

Balance Sheet Data:

    Total assets                               $   22,740       $ 29,821    $   38,547    $  34,932    $   36,669
    Working capital (deficit)                     (13,937)       (12,541)       (2,340)       5,717         4,735
    Current liabilities                            22,470         27,158        26,085       15,251        18,474
    Long-term indebtedness                          8,018          4,094         4,138           24            92
    Shareholders' equity (deficit)             $   (7,749)      $ (1,430)   $    8,324    $  19,657    $   18,102

</TABLE>

ITEM 7.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
         ------------------------------------------------------------------
         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 judgment 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  historic
losses and  ability  to  achieve  operating  profitability,  (ii) the  Company's
ability to increase operating  revenue,  improve gross profit margins and reduce
selling,  general and administrative  costs, (iii) competitive  practices in the
industries  in which the Company  competes,  (iv) the  Company's  dependence  on
current  management,  (v) the impact of current and future laws and governmental
regulations  affecting the transportation  industry in general and the Company's
operations in  particular,  (vi) general  economic  conditions,  and (vii) 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 (*).

Overview
--------

          The  Company  generated  operating  revenues of $84.1  million,  $51.7
million, and $97.8 million, and had a net loss of $1,197,000 and a net profit of
$14.0  million and $7.4 million for the fiscal years ended June 30, 2000,  1999,
and 1998,  respectively.  The fiscal year 1999 results  include a $16.6  million
gain (net of tax) arising  from the CAS Sale which closed on July 13, 1998,  and
the fiscal  year 1998  results  include a $7.6  million  net income tax  benefit
arising from the CAS Sale.

          The Company had (losses) earnings before interest, taxes, depreciation
and amortization  (EBITDA) of approximately  ($55,000),  $22.0 million, and $2.6
million, for the fiscal years ended June 30, 2000, 1999, and 1998, respectively.
(As stated  above,  the fiscal 1999 and 1998 results  include gains and benefits

<PAGE>
                                       9


arising from the CAS Sale.) EBITDA,  like operating income, does not include the
effects  of  interest  and  taxes,  and  excludes  the  "non-cash"   effects  of
depreciation and amortization on current assets.  Companies have some discretion
as to which elements of depreciation and amortization are excluded in the EBITDA
calculation.  The Company excludes all depreciation charges related to property,
plant and equipment,  and all amortization  charges,  including  amortization of
goodwill,  leasehold  improvements and other intangible assets. While management
considers EBITDA useful in analyzing the Company's  results,  it is not intended
to replace any  presentation  included in the Company's  consolidated  financial
statements.

        * In the fall of 1997, the Company  determined  that it would be in the
best interests of the Company and its  shareholders  to deleverage the Company's
balance sheet and create the cash resources needed to grow the Company's freight
forwarding and logistics  business.  While the Company's CAS subsidiary has been
historically  profitable,  management  determined that this strategy can best be
accomplished  by the sale of the operations of its CAS  subsidiary.  On July 13,
1998,  the  Company's CAS  subsidiary  sold  substantially  all of its operating
assets to a  subsidiary  of  Geologistics  Corporation  for $27  million in cash
pursuant to the terms of an Asset Purchase  Agreement  dated June 15, 1998. As a
result of the CAS Sale,  the Company  deleveraged  its balance sheet by repaying
approximately  $15 million in  outstanding  liabilities  and  obtained  required
working  capital to take  advantage  of growth  opportunities  available  to the
Company's Target subsidiary. These opportunities include improved vendor pricing
and attracting  quality  personnel and agents on a world-wide  basis,  which the
Company believes will drive its future profitability.  In addition,  the Company
may  consider  strategic  acquisitions.  There  can be no  assurance  that  this
strategy to increase profitability will be successful.

          * Management believes that the results of the Company's operations for
the fiscal  year ended June 30, 2000  indicate  that  management's  concentrated
focus on Target's business together with the Company's  available resources will
enable the Company to achieve the intended  growth.  For the year ended June 30,
2000,  Target's revenue increased by 67.7% to $84,088,195.  While Target's gross
profit  margin  (i.e.,  gross  operating  revenue  less  cost of  transportation
expressed as a percentage of gross  operating  revenue)  decreased to 32.3% from
33.3% from the corresponding period of 1999, this decrease is primarily a result
of higher fuel costs and lower gross profit  margins for Target's  international
air import freight movement. Management intends to continue to work on improving
Target's gross profit margins while focusing on increasing  operating revenue by
adding quality sales personnel and exclusive forwarders  (previously referred to
as independent  agents) and reducing fixed selling,  general and  administrative
costs to restore the Company's net income.

Results of Operations
---------------------

Years ended June 30, 2000 and 1999

         Operating Revenue. Operating revenue increased to $84.1 million for the
year ended June 30, 2000 from $51.7  million for the year ended June 30, 1999, a
62.6% increase. The prior year includes 12 days of CAS operating revenues due to
the CAS Sale on July 13, 1998.  Within the  operations of the  Company's  Target
subsidiary  operating  revenue  increased by 67.7% to  $84,088,195  for the year
ended June 30,  2000 from  $50,156,285  for the  corresponding  1999  period,  a
$33,931,910  increase due to increased freight volume. Also within the company's
Target  subsidiary,  domestic  and  international  revenue  increased  by 81% to
$56,093,399  and by 46% to  $27,994,796  for the year ended  June 30,  2000 from
$30,958,528 and $19,197,757 for the year ended June 30, 1999, respectively.

         Cost of  Transportation.  Cost of transportation was 67.7% of operating
revenue for the year ended June 30, 2000, and 67.3% of operating revenue for the
year ended June 30,  1999.  This  increase  is due to an  increase in the Target
subsidiary's  cost of  transportation  as a percentage  of sales.  The Company's
Target  subsidiary's  cost  of  transportation  as a  percentage  of  sales  has
increased  to 67.7% for the  current  period  from  66.7%  for the  prior  year,
primarily  a  result  of (i)  higher  fuel  costs,  and  (ii) a  higher  cost of
transportation for Target's international air import freight movement.

         Gross  Profit.  As a result of the factors  described  in the  previous
paragraph,  gross profit for the year ended June 30, 2000  decreased to 32.3% of
operating  revenue from 32.7% of  operating  revenue for the year ended June 30,
1999. Within the Company's Target  subsidiary,  gross profit margin decreased to
32.3% from 33.3% for the year ended June 30, 2000 and 1999, respectively.

         Selling,  General and Administrative  Expenses.  Selling,  general, and
administrative  expenses  decreased to 33.5% of  operating  revenue for the year
ended June 30, 2000, from 41.2% of operating revenue for the year ended June 30,

<PAGE>
                                       10


1999.  This  decrease  was  primarily  due  to (i)  lower  selling  general  and
administrative  expenses as a percentage  of sales within the  Company's  Target
subsidiary  partially  offset by an increase in exclusive  forwarder  commission
expense due to the Company's addition of new exclusive forwarders;  and (ii) the
elimination of CAS expenses as a result of the CAS Sale.

         Within  the  Company's   Target   subsidiary,   selling,   general  and
administrative  expenses (excluding exclusive forwarder commission expense) were
16.3% of  operating  revenue  for the year ended June 30, 2000 and 24.8% for the
year ended June 30, 1999, a 34.2%  decrease.  This decrease was primarily due to
operating  revenue  growth  without a  corresponding  increase in fixed selling,
general and administrative expenses.  Exclusive forwarder commission expense was
15.2% of  operating  revenue  for the year ended June 30, 2000 and 11.8% for the
year ended June 30, 1999. This increase is due to the Company's  addition of new
exclusive forwarders.

         Net Income.  The Company  realized a  net loss of ($1,196,605)  for the
year ended June 30, 2000,  compared to a net income of $14,016,436  for the year
ended June 30, 1999. The 1999 results included a $16.6 million gain (net of tax)
arising from the CAS Sale, which closed on July 13, 1998.

Years Ended June 30, 1999 and 1998

         Operating Revenue. Operating revenue decreased to $51.7 million for the
year ended June 30, 1999 from $97.9  million for the year ended June 30, 1998, a
47.1%  decrease.  This decrease  resulted from the inclusion of CAS's  operating
revenue  for the full 1998 period but only for 12 days of the 1999 period due to
the CAS Sale on July 13, 1998.  Within the  operations of the  Company's  Target
subsidiary  operating  revenue  increased by 15.7% to  $50,156,285  for the year
ended  June 30,  1999 from  $43,351,754  for the year  ended  June 30,  1998,  a
$6,804,531 increase, due to increased freight volume.

         Cost of  Transportation.  Cost of transportation was 67.3% of operating
revenue for the year ended June 30, 1999, and 75.3% of operating revenue for the
year ended June 30, 1998.  This decrease is due to (i) a reduction in the Target
subsidiary's cost of transportation as a percentage of sales (66.7% for the 1999
period,  from 70.7% for the 1998 period),  and (ii) the historically higher cost
of  transportation  for the Company's CAS  subsidiary  (the assets of which were
sold on July 13, 1998) than the Company's Target subsidiary.

         Gross  Profit.  As a result of the factors  described  in the  previous
paragraph,  gross profit for the year ended June 30, 1999  increased to 32.7% of
operating  revenue from 24.7% of  operating  revenue for the year ended June 30,
1998.

         Within the Company's Target  subsidiary,  gross profit margin increased
to 33.3% from 29.3% for the years  ended June 30,  1999 and 1998,  respectively.
This increase in gross profit margin  accounts for  approximately  $2,006,000 of
Target's  gross profit for the year ended June 30, 1999.  Target's  actual gross
profit increased by 31.9%, or $4,043,474, to $16,725,039 for the year ended June
30, 1999 from $12,681,565 for the year June 30, 1998.

         Selling,  General  and  Administrative  Expenses.  Selling  general and
administrative  expenses  were  41.2%  of  operating  revenue  (39.7%  excluding
non-recurring  expenses  explained in (iii) and (iv),  below) for the year ended
June 30, 1999, and 23.5% of operating  revenue for the year ended June 30, 1998.
This  increase  was  primarily  due to (i) an  increase in  exclusive  forwarder
commission  expense due to the Company's  addition of new exclusive  forwarders;
(ii) the historically lower selling,  general and  administrative  expenses as a
percentage of sales for the CAS  subsidiary  than the Target  subsidiary;  (iii)
non-recurring  expenses of $244,943 incurred in the 1999 period to wind down the
Company's CAS subsidiary  (primarily,  the collection of accounts receivable and
payment of accounts  payable);  and (iv) the  non-recurring  accrual in the 1999
period  (reflected  within  "Selling,  general  and  administrative  expenses  -
Corporate") of executive bonus compensation of $537,820 primarily as a result of
the CAS Sale.

         Within  the  Company's   Target   subsidiary,   selling,   general  and
administrative  expenses  (excluding  agent  commission  expense)  were 24.8% of
operating  revenue for the year ended June 30, 1999 and 26.4% for the year ended
June 30, 1998, a 6.1% decrease. Exclusive forwarder commission expense was 11.8%
of  operating  revenue  for the year ended  June 30,  1999 and 7.1% for the year
ended June 30,  1998.  This  increase  is due to the  Company's  addition of new
exclusive forwarders.


<PAGE>
                                       11


         Net Income. The Company realized net income of $14,016,436 for the year
ended June 30, 1999,  compared to a net income of $7,403,643  for the year ended
June 30, 1998. This increase was due to the CAS Sale.

Liquidity and Capital Resources
-------------------------------

         General.  During  the year  ended  June  30,  2000,  net  cash  used in
operating  activities  was  $4,309,612.  Cash used in investing  activities  was
$435,787. Cash provided by financing activities was $2,918,908,  which primarily
consisted  of  borrowings  under the  Company's  accounts  receivable  financing
facility.

         Currently,  approximately  $1.5  million of the  Company's  outstanding
accounts payable represent unsecured trade payables of closed subsidiaries.

         Capital  expenditures.  Capital  expenditures for the fiscal year ended
June 30, 2000 were $435,787.

         GMAC  Facility.  During  the year ended June 30,  2000,  the  Company's
Target  subsidiary  maintained a $10 million  revolving  credit  facility ("GMAC
Facility") with GMAC Commercial Credit LLC ("GMAC"),  guaranteed by the Company.
The interest  rate of the GMAC Facility is prime plus 2%. Under the terms of the
GMAC  Facility,  Target can borrow the lesser of $10  million or 85% of eligible
accounts  receivable.  The  borrowings  under the GMAC Facility are secured by a
first lien on all of the Company's and its subsidiaries'  assets. As of June 30,
2000,  there were  outstanding  borrowings of $4,636,821 under the GMAC Facility
which  represented  74% of the  amount  available  thereunder,  and  the  amount
available for borrowing under the GMAC Facility was approximately $6,241,000.

         * Working Capital Requirements. Cash needs of the Company are currently
met by funds  generated  from  operations,  the  Company's  accounts  receivable
financing facility,  and funds remaining from the CAS Sale. As of June 30, 2000,
the Company had $1,603,993  available under its $10 million accounts  receivable
financing  facility and  approximately  $6,055,000 from operations and remaining
proceeds  from the CAS Sale.  The Company  believes  that its current  financial
resources will be sufficient to finance its operations and  obligations  for the
long and short terms.  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,  and,  competition,  none of which can be predicted  with
certainty.

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 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
          ----------------------------------------------------------

          The Company's principal  financial  instrument is long-term debt under
the GMAC  Facility  which  provides  for interest at the prime rate plus 2%. The
Company is  affected  by market risk  exposure  primarily  through the effect of
changes in  interest  rates on amounts  payable  by the  Company  under the GMAC
Facility. A significant rise in the prime rate could materially adversely affect
the Company's business,  financial condition and results of operations.  At June
30, 2000, an aggregate  principal amount of $4,636,821 was outstanding under the
GMAC Facility bearing interest at an annual rate of 11.5%. If principal  amounts
outstanding  under the Company's credit facility remained at this year-end level
for an entire year and the prime rate increased or decreased,  respectively,  by
0.5%,  the Company would pay or save,  respectively,  an  additional  $23,184 in
interest  in that  year.  The  Company  does not  utilize  derivative  financial
instruments to hedge against changes in interest rates or for any other purpose.


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


<PAGE>
                                       12


                                    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 2000  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 2000
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 2000
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 2000
Annual Meeting of Shareholders.


<PAGE>
                                       13


                                    PART IV
                                    -------


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

(a)  1.  Financial Statements

                                                                            Page
                                                                            ----

Report of Independent Public Accountants                                    F-1
Consolidated Balance Sheets as of June 30, 2000 and 1999                    F-2
Consolidated Statements of Operations for the Years Ended
  June 30, 2000, 1999, and 1998                                             F-3
Consolidated Statements of Shareholders' Deficit for the Years Ended
  June 30, 2000, 1999, and 1998                                             F-4
Consolidated Statements of Cash Flows for the Years Ended
  June 30, 2000, 1999, and 1998                                             F-6
Notes to Consolidated Financial Statements                                  F-8

(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
         -----------------------------------------------------------

Exhibit No.
-----------

3.1  Certificate of  Incorporation  of Registrant,  as amended  (incorporated by
     reference  to Exhibit 3.1 to the  Registrant's  Current  Report on Form 8-K
     dated November 30, 1998, File No. 0-29754)

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, 1998, File No. 0-29754)

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  Certificate  of  Designations  with  respect  to the  Registrant's  Class A
     Preferred Stock (contained in Exhibit 3.1)

4.4  Certificate  of  Designations  with  respect  to the  Registrant's  Class B
     Preferred Stock (contained in Exhibit 3.1)

4.5  Certificate  of  Designations  with  respect  to the  Registrant's  Class C
     Preferred Stock (contained in Exhibit 3.1)

4.6  Certificate  of  Designations  with  respect  to the  Registrant's  Class D
     Preferred Stock (contained in Exhibit 3.1)

4.7  Certificate  of  Designations  with  respect  to the  Registrant's  Class E
     Preferred Stock (contained in Exhibit 3.1)

10.1 1996 Stock  Option Plan  (incorporated  by reference to Exhibit 10.1 to the
     Registrant's  Quarterly  Report on Form 10-Q for the Quarter Ended December
     31, 1997, File No. 0-29754)

10.2 Restated and Amended Accounts Receivable Management and Security Agreement,
     dated  as of July  13,  1998 by and  between  GMAC  Commercial  Credit  LLC
     (successor  by  merger to BNY  Financial  Corp.),  as  Lender,  and  Target
     Logistic  Services,  Inc., as Borrower,  and  guaranteed by the  Registrant
     ("GMAC Facility Agreement")

10.3 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)

10.4 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)


<PAGE>
                                       14


10.5 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)

10.6 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)

10.7 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. 0-29754)

10.8 Addendum to Employment  Agreement  effective  June 24, 1999 between  Target
     Logistics, Inc. and Stuart Hettleman

10.9 Asset Purchase  Agreement dated as of June 15, 1998, by and among Amertranz
     Worldwide  Holding Corp.,  Caribbean Air Services,  Inc., and  Geologistics
     Corporation  (incorporated  by reference to Exhibit 2.1 to the Registrant's
     Current Report on Form 8-K, dated July 13, 1998, File No. 0-29754)

10.10(P) Lease Agreement for Los Angeles Facility  (incorporated by reference to
     Exhibit 10.17 to the  Registrant's  Annual Report on Form 10-K for the Year
     Ended June 30, 1997, File No. 0-29754)

21   Subsidiaries  of  Amertranz   Worldwide  Holding  Corp.   (incorporated  by
     reference to Exhibit 21 to the Registrant's  Annual Report on Form 10-K for
     the Year Ended June 30, 1997, File No. 0-29754)

23   Consent of Arthur Andersen LLP

27   Financial Data Schedule


(b)      Reports on Form 8-K
         -------------------

         None.



<PAGE>
                                       15


                                   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.


                                            TARGET LOGISTICS, INC.



Date:  September 28, 2000                   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.

Signature                      Title                         Date
---------                      -----                         ----


/s/ Stuart Hettleman           President, Chief Executive    September 28, 2000
---------------------------    Officer and Director
Stuart Hettleman


/s/ Michael Barsa              Director                      September 28, 2000
---------------------------
Michael Barsa


/s/ Brian K. Coventry          Director                      September 28, 2000
---------------------------
Brian K. Coventry


                               Director                      September __, 2000
---------------------------
Christopher Coppersmith


/s/ Philip J. Dubato           Vice President, Chief         September 28, 2000
---------------------------    Financial Officer,
Philip J. Dubato               Principal Accounting Officer
                               and Director








<PAGE>
                                      F-1


                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Target Logistics, Inc. (formerly Amertranz Worldwide Holding Corp.):

We  have  audited  the  accompanying   consolidated  balance  sheets  of  Target
Logistics,  Inc.  (formerly  Amertranz  Worldwide  Holding  Corp.),  (a Delaware
corporation),  and  subsidiaries  as of June 30, 2000 and 1999,  and the related
consolidated  statements of operations,  shareholders' equity and cash flows for
the years ended June 30, 2000,  1999, and 1998.  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 auditing standards generally accepted
in the United States. 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 Target Logistics,
Inc. and  subsidiaries  as of June 30, 2000,  1999 and 1998,  and the results of
their  operations  and their cash flows for the years then ended,  in conformity
with accounting  principles generally accepted in the United States applied on a
consistent basis.

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's  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 6, 2000


<PAGE>
                                      F-2

<TABLE>
                             TARGET LOGISTICS, INC.
                          CONSOLIDATED BALANCE SHEETS


<CAPTION>
                                     ASSETS                                        June 30, 2000      June 30, 1999
                                                                                   -------------      -------------
CURRENT ASSETS:

<S>                                                                                 <C>                 <C>
Cash and cash equivalents                                                           $ 6,055,104         $7,881,595
Accounts receivable, net of allowance for doubtful accounts of
   $1,630,768 and $1,318,109, respectively                                           15,149,824         10,853,316
Deferred income taxes (Note 9)                                                        1,972,411          2,080,105
Prepaid expenses and other current assets                                                32,361            152,940
                                                                                     ----------         ----------
                                 Total current assets                                23,209,700         20,967,956
PROPERTY AND EQUIPMENT, NET (Note 4)                                                    575,186            473,398
OTHER ASSETS                                                                            268,615            278,382
DEFERRED INCOME TAXES (Note 9)                                                          183,694            184,895
GOODWILL, net of accumulated amortization of $2,523,371
   and $1,927,504, respectively (Note 3)                                             12,431,652         13,027,520
                                                                                    -----------         ----------
                                 Total assets                                       $36,668,847         34,932,151
                                                                                    ===========         ==========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable                                                                    $ 3,908,883         $4,413,792
Accrued expenses                                                                      2,030,224          2,360,211
Accrued transportation expenses                                                       7,614,884          6,745,613
Reserve for restructuring                                                                     -             21,567
Note payable to bank (Note 5)                                                         4,636,821          1,349,978
Current portion of long-term debt (Note 5)                                                    -             10,500
Dividends payable                                                                       116,064            168,680
Taxes payable                                                                            78,830             77,245
Lease obligation - current portion (Note 7)                                             103,385             88,600
                                                                                    -----------         ----------
                                 Total current liabilities                           18,474,306         15,250,971
LEASE OBLIGATION -- LONG TERM (Note 7)                                                   92,374             24,116
                                                                                    -----------        -----------
                                 Total liabilities                                  $18,566,680        $15,275,087
                                                                                    -----------        -----------

COMMITMENT AND CONTINGENCIES (Note 7)

SHAREHOLDERS EQUITY (Note 6):
Preferred Stock, $10 par value; 2,500,00 shares authorized,
   320,696 and 427,207 shares issued and outstanding, respectively                    3,206,960          4,272,070
Common Stock, $.01 par value; 30,000,000 shares authorized,
   12,613,953 and 10,031,868 shares issued and outstanding,
   respectively                                                                         126,139            100,318
Paid-in capital                                                                      23,905,248         22,877,209
Accumulated deficit                                                                  (8,491,375)        (6,937,598)
Less:  Treasury stock, 734,951 and 839,855 shares held at cost, respectively           (644,805)          (654,935)
                                                                                    -----------        -----------
                                 Total shareholders' equity                          18,102,167         19,657,064
                                                                                    -----------        -----------
                                 Total liabilities and shareholders' equity         $36,668,847        $34,932,151
                                                                                    ===========        ===========

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



<PAGE>
                                      F-3

<TABLE>
                              TARGET LOGISTICS INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<CAPTION>
                                                            Year Ended           Year Ended           Year Ended
                                                          June 30, 2000         June 30, 1999        June 30, 1998
                                                          -------------         -------------        -------------

OPERATING REVENUES:
<S>                                                         <C>                   <C>                  <C>
Operating revenues - Target subsidiary                      $84,088,195           $50,156,285          $43,351,754
Operating revenues - Caribbean subsidiary                             -             1,563,298           54,432,657
                                                            -----------           -----------          -----------
  Operating revenues                                         84,088,195            51,719,583           97,784,411

COST OF TRANSPORTATION:
Cost of transportation - Target subsidiary                   56,948,811            33,431,246           30,670,189
Cost of transportation - Caribbean subsidiary                         -             1,358,031           42,928,749
                                                             ----------            ----------           ----------
  Cost of transportation                                     56,948,811            34,789,277           73,598,938

GROSS PROFIT:
Gross profit - Target subsidiary                             27,139,384            16,725,039           12,681,565
Gross profit - Caribbean subsidiary                                   -               205,267           11,503,908
                                                             ----------            ----------           ----------
  Gross profit                                               27,139,384            16,930,306           24,185,473

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
("SG&A"):
SG&A - Target subsidiary                                     13,692,166            12,454,287           11,444,841
SG&A - Target subsidiary
(Exclusive forwarder commissions)                            12,803,075             5,929,533            3,078,945
SG&A - Caribbean subsidiary                                           -               595,338            6,270,882
SG&A - Corporate                                                698,635             1,491,598            1,085,513
Depreciation and amortization                                   989,205               833,268            1,131,994
                                                             ----------            ----------           ----------
  Selling, general and administrative expenses               28,183,081            21,304,024           23,012,175

Operating (loss) income                                      (1,043,697)           (4,373,718)           1,173,298

OTHER INCOME (EXPENSE):
Interest (expense) income                                       (44,013)              291,510           (1,645,902)
Other income                                                          -               119,291              214,112
Gain on sale of subsidiary                                            -            24,832,353                    -
                                                             ----------            ----------           ----------

(Loss) income before income taxes                            (1,087,710)           20,869,436             (258,492)
Provision (benefit) for income taxes (Note 9)                   108,895             6,853,000           (7,662,135)
                                                            -----------           -----------           ----------
Net (loss) income                                           $(1,196,605)          $14,016,436           $7,403,643
                                                            ===========           ===========           ==========

Net (loss) income per share:
  Basic                                                         $(0.14)                 $1.63                $0.90
                                                                ======                  =====                =====
  Diluted                                                       $(0.14)                 $0.99                $0.55
                                                                ======                  =====                =====

Weighted average shares outstanding:
  Basic                                                     11,015,126              8,351,386            7,949,705
                                                            ==========             ==========           ==========
  Diluted                                                            -             14,121,246           13,468,964
                                                            ==========             ==========           ==========

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

<PAGE>
                                      F-4

<TABLE>

                             TARGET LOGISTICS, INC.
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                FOR THE YEARS ENDED JUNE 30, 2000, 1999 AND 1998

<CAPTION>

                                   Preferred Stock      Common Stock    Additional    Treasury Stock
                                   ---------------      ------------      Paid-In     --------------     Accumulated
                                  Shares    Amount    Shares    Amount    Capital    Shares      Amount    Deficit         Total
                                  ------    ------    ------    ------    -------    ------      ------    -------         -----
<S>          <C> <C>             <C>     <C>         <C>       <C>     <C>         <C>       <C>       <C>           <C>
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)

Additional costs associated
  with the Private Placement           -          -          -       -            -        -           -       (34,908)     (34,908)

Common stock issued in connection
  with the conversion of Class A
  Preferred Stock               (110,250)(1,102,500) 1,102,500  11,025    1,091,475        -           -             -            -

Stock options exercised                -          -     52,590     525         (525)       -           -             -            -

Preferred stock issued for
  repayment of secured long-term
  debt of Amertranz Worldwide,
  Inc.                           100,000  1,000,000          -       -            -        -           -             -    1,000,000

Preferred stock issued for purchase
  of $1,581,800 of trade debt of
  Amertranz Worldwide, Inc.      158,180  1,581,800          -       -            -        -           -             -    1,581,800

Common stock issued in connection
  with the conversion of Class B
  Preferred Stock                (20,000)  (200,000)   200,000   2,000      198,000        -           -             -            -

Common stock issued in connection
  with the conversion of Class C
  Preferred Stock                (23,750)  (237,500)   237,500   2,375      235,125        -           -             -            -

Preferred stock dividends
  associated with the Class A
  Preferred Stock12,696          126,960          -          -       -            -        -    (126,960)            -

Preferred stock dividends
  associated with the Class D
  Preferred Stock 6,511           65,110          -          -       -            -        -     (65,110)            -

Cash dividends associated with
  the Class C Preferred Stock          -          -          -       -            -        -           -      (246,343)   (246,343)

Warrants issued in connection with
  the sale of the assets of CAS        -          -          -       -       50,000        -           -             -      50,000

Net income                             -          -          -       -            -        -           -     7,403,643   7,403,643
                                -------- ----------  --------- -------  -----------  -------    --------  ------------  ----------

Balance, June 30, 1998           621,387 $6,213,870  8,419,094 $84,190  $22,546,331 (106,304)   $(11,250) $(20,509,373) $8,323,768


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

</TABLE>



<PAGE>
                                      F-5

<TABLE>
                             TARGET LOGISTICS, INC.
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
        FOR THE YEARS ENDED JUNE 30, 2000, 1999, AND 1998 -- (Continued)


<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>    <C>
Common stock issued in connection
 with the conversion of Class C
 Preferred Stock                 (36,000)  (360,000)   360,000    3,600     356,400        -           -             -           -

Stock Options exercised                -          -    174,852    1,749      62,256        -           -             -      64,005

Cash dividends associated with the
 Class A, C and D Preferred Stock      -          -          -        -           -        -           -      (444,661)   (444,661)

Redemption of Class E
 Preferred Stock                (158,180)(1,581,800)         -        -           -        -           -             -  (1,581,800)

Purchase of Treasury Stock,
  at cost                              -          -          -        -           - (733,551)   (643,685)            -    (643,685)

Additional Common Stock issued
 in connection with the
 acquisition of Target                 -          -  1,077,922   10,779     (87,778)       -           -             -     (76,999)

Net income                             -          -          -        -           -        -  14,016,436    14,016,436
                                --------  --------- ---------- -------- ----------- --------  ----------   ----------- -----------

Balance, June 30, 1999           427,207 $4,272,070 10,031,868 $100,318 $22,877,209 (839,855)  $(654,935)  $(6,937,598)$19,657,064

Cash dividends associated with
the Class A, C and D Preferred
Stock                                  -          -          -        -           -        -           -      (357,172)   (357,172)

Common Stock issued in connection
with the conversion of Class D
Preferred Stock                 (106,511)(1,065,110) 2,582,085   25,821   1,039,289        -           -             -           -

Purchase of Treasury Stock at cost     -          -          -        -           -    1,400)     (1,120)            -      (1,120)

Treasury Stock retired, at cost        -          -          -        -     (11,250) 106,304      11,250             -           -

Net loss                               -          -          -        -           -        -           -    (1,196,605) (1,196,605)
                                -------- ---------- ---------- -------- ----------- --------   ---------   ----------- -----------

Balance, June 30, 2000           320,696 $3,206,960 12,613,953 $126,139 $23,905,248 (734,951)  $(644,805)  $(8,491,375)$18,102,167
                                ======== ========== ========== ======== =========== =========  =========   =========== ===========

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

</TABLE>

<PAGE>
                                      F-6

<TABLE>
                             TARGET LOGISTICS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<CAPTION>
                                                                                    Year Ended        Year Ended       Year Ended
                                                                                   June 30, 2000    June 30, 1999     June 30, 1998
                                                                                   -------------    -------------     -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                 <C>              <C>               <C>
  Net income (loss)                                                                ($1,196,605)      $14,016,436       $ 7,403,643
  Bad debt expense                                                                     312,659           803,567          (268,065)
  Depreciation and amortization                                                        989,206           833,268         1,196,480
  Gain on sale of CAS                                                                        -       (24,832,353)                -
  Deferred income taxes                                                                108,895         5,624,987        (7,889,987)
  Adjustments to reconcile net loss to net cash used in operating activities-
     (Increase) decrease in accounts receivable                                     (4,609,167)        2,898,268        (1,796,390)
     Decrease in prepaid expenses and other current assets                             120,579           245,395           138,981
     Decrease (increase) in other assets                                                 9,767          (113,962)          (15,136)
     (Decrease) increase in accounts payable and accrued expenses                      (44,946)       (1,716,369)          204,052
                                                                                    ----------        ----------        ----------
                  Net cash used in operating activities                             (4,309,612)       (2,240,763)       (1,026,422)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment                                                 (435,787)        (605,092)         (556,557)
  Proceeds from sale of CAS, net of closing costs                                            -       25,762,397                 -
  Acquisition of Target                                                                      -          (77,000)                -
                                                                                    ----------       ----------         ---------
                  Net cash (used in) provided by investing activities                 (435,787)      25,080,305          (556,557)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from Private Placement - net of costs                                             -                -           (34,908)
  Dividends paid                                                                      (409,788)        (340,660)         (128,819)
  Stock options exercised                                                                    -           64,005                 -
  Purchase of treasury stock                                                            (1,120)        (643,685)                -
  Redemption of Class E Preferred Stock                                                      -       (1,141,750)                -
  Net borrowings (repayments) from note payable to bank                              3,286,843       (5,395,875)          278,295
  (Repayment) proceeds from long-term debt due to affiliates                                 -       (7,332,126)          698,853
  Repayment of long-term debt                                                          (10,500)         (50,000)          (50,000)
  (Repayment) proceeds from revolving loan due to affiliate                                  -         (905,913)          116,185
  Proceeds (payment) of lease obligations                                               53,473          (91,740)          200,927
                                                                                     ---------      ------------       ----------
                  Net cash provided by (used in) financing activities                2,918,908      (15,837,744)        1,080,533
                                                                                     ---------      ------------       ----------
                  Net (decrease) increase in cash and cash equivalents              (1,826,491)       7,001,798          (502,446)

CASH AND CASH EQUIVALENTS, beginning of year                                         7,881,595          879,797         1,382,243
                                                                                    ----------      -----------        ----------
CASH AND CASH EQUIVALENTS, end of year                                              $6,055,104      $ 7,881,595        $  879,797
                                                                                    ==========      ===========        ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
  Interest                                                                          $  361,349      $   105,157        $  821,336
  Income taxes                                                                      $   19,934      $ 1,243,022        $   82,492

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


<PAGE>
                                      F-7

<TABLE>
                             TARGET LOGISTICS, INC.
              CONSOLIDATED STATEMENTS OF CASH FLOWS -- (Continued)

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

<CAPTION>
                                                                                    Year Ended        Year Ended       Year Ended
                                                                                   June 30, 2000    June 30, 1999     June 30, 1998
                                                                                   -------------    -------------     -------------

<S>                     <C>                                                        <C>
TIA, Inc. conversion of 106,511 Class D Preferred Shares                           $(1,065,110)               -                 -
Issuance of Common Stock for TIA, Inc. conversion of 106,511
   Class D Preferred Shares                                                             25,821                -                 -
Retirement of Treasury Stock                                                       $    11,250                -                 -
Conversion of 36,000 and 23,750, respectively, Class C Preferred Shares                      -        $(360,000)      $  (237,500)
Issuance of Common Stock for Conversion of 36,000 and 23,750,
   respectively, Class C Preferred Shares                                                    -        $   3,600       $     2,375
Issuance of Common Stock for Stock Options exercised                                         -        $   1,749       $       525
Issuance of Common Stock in connection with the acquisition of Target                        -        $  10,779                 -
TIA, Inc. conversion of 110,250 Class A Preferred Shares                                     -                -       $(1,102,500)
Issuance of Common Stock for TIA, Inc. conversion of
   110,250 Class A Preferred Shares                                                          -                -       $    11,025
Issuance of 100,000 Class D Preferred Stock for repayment
   of secured long-term debt of Amertranz Worldwide, Inc.                                    -                -       $ 1,000,000
Issuance of 158,180 Class E Preferred Stock for the purchase
   of $1,581,800 of trade debt of Amertranz Worldwide, Inc.                                  -                -       $ 1,581,800
Conversion of 20,000 Class B Preferred Shares                                                -                -       $  (200,000)
Issuance of Common Stock for conversion of 20,000
   of Class B Preferred Shares                                                               -                -       $     2,000

























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




<PAGE>
                                      F-8


                             TARGET LOGISTICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       BACKGROUND

In January  1996,  Target  Logistics,  Inc.  ("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")
and Caribbean  Freight  System,  Inc.  ("CFS"),  among  others.  As part of this
transaction,  Holding  received 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 in addition to stock in the
Company.

The transactions between the Company, TIA, CFS and CAS 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).

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.       DISPOSITION OF ASSETS

On July 13, 1998, the Company's CAS  subsidiary  sold  substantially  all of the
operating  assets  of  CAS to  Geologistics  Air  Services,  Inc.,  an  indirect
wholly-owned  subsidiary  of  Geologistics  Corporation  ("Geologistics"),   for
approximately  $26 million in cash, net of costs (the "CAS Sale"), in accordance
with the terms of the Asset Purchase  Agreement  dated June 15, 1998 (the "Asset
Purchase Agreement").

Under  the terms of the Asset  Purchase  Agreement  CAS  retained  its  accounts
receivable.  CAS  realized  $2.7 million from these  accounts  receivable  after
payment of its liabilities during the fiscal year ended June 30, 1999.

Other  than with  respect to certain  obligations  pursuant  to leases and other
agreements  included in the  assigned  assets,  Geologistics  did not assume any
obligations of the Company or CAS.

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  years  ended June 30,  2000,  1999 and 1998,  the  consolidated
financial statements include the accounts of Holding,  Target Logistic Services,
Inc.  ("Target"),   CAS  and  other  inactive   subsidiaries.   All  significant
intercompany balances and transactions have been eliminated upon consolidation.




<PAGE>
                                      F-9


                             TARGET LOGISTICS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


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.

Accounting for Long-Lived Assets

The Company accounts for long-lived  assets in accordance with the provisions of
Statement of Financial  Accounting  Standards ("SFAS") No. 121,  "Accounting for
the  Impairment of Long-Lived  Assets and for  Long-Lived  Assets to be Disposed
Of." This statement establishes financial accounting and reporting standards for
the  impairment of long-lived  assets,  certain  identifiable  intangibles,  and
goodwill related to those assets to be held and used, and for long-lived  assets
and certain identifiable intangibles to be disposed of. Management has performed
a review of all long-lived  assets and has determined  that no impairment of the
respective carrying value has occurred as of June 30, 2000.

Goodwill

Goodwill  represents excess of cost over net assets acquired and is amortized on
a straight-line basis over 25 years. The Company reviews goodwill for impairment
whenever events or changes in circumstances indicate that the carrying amount of
the goodwill exceeds the fair value of the asset. If circumstances indicate that
the  carrying  amount of  goodwill  may not be  recoverable,  the  Company  will
recognize an impairment loss,  calculated by comparing the net book value of the
Company to the value  indicated by the market price of the equity  securities of
the Company. If the net book value exceeds the market capitalization, the excess
carrying  amount of goodwill is written off.  Management has determined  that no
impairment of goodwill has occurred.  The amortization  period will be evaluated
by  management  on a continuing  basis,  and will be adjusted if the life of the
goodwill is impaired.

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
6). 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.
Ongoing  provision  is made for  doubtful  receivables,  discounts,  returns and
allowances.


<PAGE>
                                      F-10


The Company recognizes revenue in accordance with SEC Staff Accounting  Bulletin
(SAB) No. 101, "Revenue Recognition in Financial Statements." Under SAB No. 101,
revenue is recognized when persuasive  evidence of an arrangement  exists,  when
delivery  has  occurred,  when  the  price  to  the  buyer  is  both  fixed  and
determinable and when collectibility is reasonably assured.

The Company  recognizes  revenue gross,  in accordance with Emerging Issues Task
Force (EITF) Issue 99-19, "Reporting Revenue Gross versus Net." Under EITF Issue
99-19,  revenue  may be  recognized  gross if the company (1) takes title to the
product prior to delivery of the product to the customer, (2) is responsible for
delivering  the product and  collecting  the sales price,  (3) bears credit risk
related  to the  customer's  payment  obligation,  (4)  bears  the risk that the
product will be returned, (5) determines the sales price of and, therefore,  the
gross margin received from the sale of the product,  and (6) maintains the goods
in inventory.

Cash and Cash Equivalents

The Company considers all highly liquid  investments  purchased with an original
maturity of three months or less to be cash equivalents.

Per Share Data

In accordance with the requirements of SFAS No. 128,  "Earnings per Share",  net
earnings per common share  amounts  ("basic  EPS") were computed by dividing net
earnings after deducting preferred stock dividend requirements,  by the weighted
average number of common shares  outstanding  and  contingently  issuable shares
(which satisfy  certain  conditions) and excluding any potential  dilution.  Net
earnings  per common  share  amounts - assuming  dilution  ("diluted  EPS") were
computed by reflecting  potential  dilution from the exercise of stock  options.
SFAS No. 128 requires the  presentation of both basic EPS and diluted EPS on the
face of the income statement. Earnings per share amounts for the same prior-year
periods have been restated to conform with the provisions of SFAS No. 128.

A  reconciliation  between  the  numerators  and  denominators  of the basic and
diluted EPS  computations  for net earnings for the year ended June 30, 2000 and
1999 is as follows:

<TABLE>
<CAPTION>
                                           Year Ended June 30, 2000                Year Ended June 30, 1999
                                           ------------------------                ------------------------

                                       Income         Shares     Per Share     Income        Shares     Per Share
                                     (Numerator)  (Denominator)   Amounts    (Numerator) (Denominator)   Amounts
                                     -----------  -------------   -------    ----------- -------------   -------

<S>                                <C>                                       <C>
Net earnings                       $(1,196,605)                              $14,016,436
Preferred stock dividends          $  (357,172)                              $  (444,661)

BASIC EPS
Net earnings attributable to       $(1,553,777)     11,015,126    $(0.14)    $13,571,775   8,351,386      $1.63
common stock                       ===========      ==========    ======     ===========   ==========     =====


EFFECT OF DILUTIVE SECURITIES
Convertible Preferred Stock                                                                5,698,663
Stock Options                                                                                 71,197
                                                                                           ---------
DILUTED EPS
Add back Preferred Stock dividends $   357,172
Net earnings  attributable  to
common stock and assumed preferred
conversions and option exercises   $(1,196,605)    11,015,126      $(0.14)   $14,016,436  14,121,246      $0.99
                                   ============    ==========      =======   ===========  ==========      =====

ANTI-DILUTIVE SECURITIES
Convertible Preferred Stock                         5,127,730
Stock Options                                           6,389
                                                    ---------
Total Anti-Dilutive Securities                      5,134,119
                                                    =========

</TABLE>
Options to purchase  450,000 and  440,000  shares of common  stock for the years
ended June 30, 2000 and 1999, respectively, were not included in the computation
of diluted EPS because the  exercise  prices of those  options were greater than
the average market price of the common shares, thus they are anti-dilutive.  The
options were still outstanding at the end of the period.

Warrants to purchase  5,183,731  shares of common stock for the years ended June
30, 2000 and 1999 were not  included in the  computation  of diluted EPS because
they were also anti-dilutive.


<PAGE>
                                      F-11


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.

Foreign Currency Transactions

In the normal  course of  business  the  Company  has  accounts  receivable  and
accounts payable that are transacted in foreign currencies. The Company accounts
for  transaction   differences,   in  accordance  with  Statement  of  Financial
Accounting Standard Number 52, "Foreign Currency Translation",  and accounts for
the gains or losses in operations. For all periods presented, these amounts were
immaterial to the Company's operations.

Reclassifications

Certain amounts in the prior years' consolidated  financial statements have been
reclassified to conform with the 2000 presentation.

Comprehensive Income

During 1998,  the Company  adopted the  provisions  of SFAS No. 130,  "Reporting
Comprehensive  Income," which establishes standards for reporting and displaying
comprehensive  income  and  its  components  in a full  set of  general  purpose
financial  statements.  The  adoption of this  standard has had no impact on the
Company's financial  statements.  Accordingly,  the Company's  comprehensive net
loss is equal to its net loss for the period  ended  June 30,  1998,  1999,  and
2000.

Recent Accounting Pronouncements

In June,  1998,  the  FASB  issued  SFAS No.  133,  "Accounting  for  Derivative
Instruments and Hedging Activities," which establishes  accounting and reporting
standards for derivative  instruments,  including certain derivative instruments
embedded  in other  contracts,  and for  hedging  activities.  SFAS No.  133 (as
amended by SFAS No.  137) is  effective  for all fiscal  quarters  of all fiscal
years  beginning after June 15, 2000. The Company does not enter into derivative
instruments  or  engage  in  hedging  activities  as  defined  in SFAS No.  133.
Accordingly,  management has determined  that the adoption of this standard will
have no impact on the Company's financial statements.

During  March  2000,  the FASB issued  interpretation  No. 44,  "Accounting  for
Certain   Transactions   Involving  Stock  Compensation,"  which  clarifies  the
application  of APB Opinion No. 25,  regarding (a) the definition of an employee
for purposes of applying  APB Opinion No. 25, (b) the  criteria for  determining
whether  a  plan  qualifies  as  a  noncompensatory  plan,  (c)  the  accounting
consequence of various  modifications  to the terms of a previously  fixed stock
option or award,  and (d) the accounting  for an exchange of stock  compensation
awards in a business combination.  Interpretation No. 44 is effective on July 1,
2000.  Certain events as defined by  Interpretation  No. 44, may require earlier
consideration  if they  occurred  after  December  15, 1998 or January 12, 2000,
depending  on the  event,  although  no  financial  statement  effect  would  be
recognized until July 1, 2000. The effects of applying Interpretation No. 44 are
recognized prospectively.  Management has reviewed its stock compensation events
and determined that none qualify as those covered by Interpretation  No. 44 that
would require early consideration.

During  January  2000,  the  EITF  reached  a  consensus  on EITF  Issue  99-17,
"Accounting for Advertising Barter  Transactions."  EITF Issue 99-17 states that
advertising  barter  transactions  entered into after January 20, 2000 should be
accounted  for at fair value on a  one-for-one  basis with  revenue from similar
advertising sold in a cash transaction that occurred in the preceding six months
with  comparable   terms,   such  as  length  of  program,   cost  and  type  of
advertisement.  A cash  transaction  may be  used  only  once as the  basis  for
providing fair value  evidence for a barter  transaction.  As a result,  revenue
from  barter is  effectively  limited to no more than 50% of total  revenue  per
year.  EITF Issue 99-17 is applicable  only to  transactions  entered into after

<PAGE>
                                      F-12


January 20,  2000.  The Company has adopted  EITF Issue  99-17.  The Company has
concluded  that the adoption of this issue has not had a material  impact on its
financial  statements,   as  it  has  not  participated  in  advertising  barter
transactions.

On May 18, 2000,  the EITF reached a consensus on EITF Issue 00-14,  "Accounting
for certain Sales Incentives," EITF Issue 00-14 states that when recognized, the
reduction in or refund of the selling price of the product or service  resulting
from any cash  sales  incentive  offered  by a vendor  to a  customer  should be
classified as a reduction of revenue.  In addition,  for a sales  incentive that
will not result in a loss on the sale of a product  and  service,  it was agreed
that a vendor should recognize the "cost" of the sales incentive at the later of
the date at which the  related  revenue is recorded by the vendor or the date at
which the sales incentive is offered. EITF Issue 00-14 also states that a vendor
should recognize a liability (or "deferred  revenue") for those sales incentives
that are  based on the  estimated  amount of  refunds  or  rebates  that will be
claimed by  customers.  A vendor  should not recognize a liability for the sales
incentive  prior to the date at which the  related  revenue is  recognized.  The
Company has adopted EITF Issue 00-14  effective  May 18, 2000 and has  concluded
that  adoption  of this  issue has not had a  material  impact on its  financial
statements.

<TABLE>
4.       PROPERTY AND EQUIPMENT, NET

<CAPTION>
                                                                           June 30, 2000           June 30, 1999
                                                                           -------------           -------------
         Property and Equipment consists of the following:
<S>                                                                          <C>                    <C>
              Furniture and fixtures                                         $  760,655             $  614,530
              Computer Equipment                                                648,807                471,683
              Computer Software                                                  84,638                      -
              Leasehold Improvements                                            347,465                319,565
              Vehicles                                                          116,036                116,036
                                                                             ----------             ----------
                                                                              1,957,601              1,521,814
              Less:  Accumulated depreciation and amortization                1,382,415              1,048,416
                                                                             ----------             ----------
                                                                             $  575,186             $  473,398
                                                                             ==========             ==========
</TABLE>
5.       DEBT

<TABLE>

As of June 30, 2000 and 1999,  long-term and  short-term  debt  consisted of the
following:

<CAPTION>
                                                                           June 30, 2000           June 30, 1999
                                                                           -------------           -------------

<S>                                                                          <C>                    <C>
         Asset-based financing (a)                                           $4,636,821             $1,349,978
         Promissory note to Consolidated Shareholders (b)                             -                 10,500
                                                                             ----------             ----------

         Total debt                                                           4,636,821              1,360,478
         Less:  Current portion                                              (4,636,821)            (1,360,478)
                                                                             ----------             ----------
         Long-term debt                                                      $        -             $        -
                                                                             ==========             ==========
</TABLE>

(a)  During  the  years ended  June 30,  2000 and  1999,  the  Company's  Target
subsidiary   ("Borrower")  maintained  an  Accounts  Receivable  Management  and
Security Agreement with GMAC Commercial Credit LLC ("GMAC") whereby the Borrower
can  receive  advances  of up to 85% of the net  amounts  of  eligible  accounts
receivable  outstanding  to a maximum of  $10,000,000.  The credit  line  ("GMAC
Facility")  is  subject  to  interest  at a rate  of 2.0%  per  annum  over  the
prevailing prime rate as defined by GMAC (9.5% and 7.75% as of June 30, 2000 and
1999,  respectively).  At June 30, 2000 and 1999, the outstanding balance on the
GMAC Facility was $4,636,821 and $1,349,978 which represented 74% and 27% of the
approximate  $6,241,000 and $5,058,000 available  thereunder,  respectively.  At
June 30,  2000,  the  remaining  amount  available  under the GMAC  Facility was
approximately $1,604,000. GMAC has a security interest in all present and future
accounts  receivable,  machinery  and equipment and other assets of the Borrower
and the GMAC Facility is guaranteed by the Company.  In connection  with the CAS
Sale, the outstanding  obligations then due from the Target and CAS subsidiaries
under the GMAC  Facility  were repaid on July 13, 1998 by CAS with the  proceeds
from the CAS Sale, and CAS acquired a closed subsidiary's portion of the debt.


<PAGE>
                                      F-13


(b) 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. During fiscal year 1998, this note was reduced by $27,000 as
a result of a net worth reconciliation, pursuant to the terms of the acquisition
agreement.  At June 30, 2000, there were no amounts outstanding under this note.
This note which bore  interest  at the rate of 8% per annum,  matured on July 1,
1999.

6.       SHAREHOLDERS' EQUITY

Preferred Stock

As of June 30, 2000, the authorized  preferred stock of the Company is 2,500,000
shares.  As of June 30, 2000,  320,696 shares of preferred stock are outstanding
as follows:
<TABLE>

<CAPTION>
                                                                 Number of Shares Outstanding
                                            -------------------------------------------------------------------
                                            Class A (a)         Class C (b)         Class D (c)         Total
                                            -----------         -----------         -----------         -----

<S>             <C> <C>                       <C>                 <C>                <C>               <C>
Balance at June 30, 1999                      122,946             197,750            106,511           427,207

     Issuances                                      -                   -                  -                 -
     Conversions                                    -                   -           (106,511)         (106,511)
                                              -------             -------           --------          --------
Balance at June 30, 2000                      122,946             197,750                  -           320,696
                                              =======             =======           ========           =======

</TABLE>
(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 cash 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  (subject to adjustment) of the lower of (i)
$6.00 per share,  or (ii) 80% of the  average of the closing bid and asked 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,  June 30,  1997,  December 31, 1997 and June 30,
1998, the Company issued 10,000, 10,500, 6,887 and 5,809 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.

        On September 23, 1997,  110,250  shares of Class A Preferred  Stock were
converted into 1,102,500 shares of the Company's Common Stock.

(b) 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. Prior to June
13, 1998,  resales of shares of Class C Preferred  Stock acquired in the Private
Placement  and all  shares of  Common  Stock  underlying  such  securities  were
prohibited without the approval of GKN Securities Corp.  ("GKN"),  the placement
agent for the Private Placement.


<PAGE>
                                      F-14


        There  were no  shares of Class C  Preferred  Stock  converted  into the
Company's Common Stock during fiscal year ending June 30, 2000.

(c) Class D Preferred  Stock.  On November 28, 1997,  the Company  acquired from
TIA, Inc.  $1,000,000 of secured debt of a closed subsidiary in exchange for the
issuance of 100,000 shares of the Company's non-voting,  cumulative, convertible
Class D Preferred  Stock,  par value $10.00 per share.  On December 31, 1997 and
June 30, 1998, the Company issued 1,479 and 5,032 respectively,  shares of Class
D,  non-voting,  cumulative,  convertible  preferred  stock  with a par value of
$10.00  representing  the  semi-annual   dividend  due  the  Class  D  Preferred
shareholders.  On October 29 and November 1, 1999,  55,000 and 51,511  shares of
Class D Preferred Stock,  respectively,  were converted into 2,582,085 shares of
the Company's  Common  Stock.  Therefore,  as of November 1, 1999,  there are no
shares of Class D Preferred Stock outstanding.

Warrants

As of June 30, 2000, the Company had 5,074,283 warrants  outstanding to purchase
5,074,283 shares of common stock at $6.00 per share and a warrant outstanding to
purchase 109,448 shares of common stock at $1.56 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, 1996, 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.

In connection with the CAS Sale, the Company engaged an investment  banking firm
to  market  the sale and  issued to the  investment  banking  firm a warrant  to
purchase  109,448 shares of common stock for $1.56 per share,  at any time until
January 21, 2002.

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 1,000,000 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  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 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,  2000,
193,624 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

<PAGE>
                                      F-15


these stock options been determined  consistent with SFAS No. 123, the Company's
net income (loss) and net income  (loss) per share would have been  increased to
the following pro forma amounts:

<TABLE>
<CAPTION>

                                                      Year Ended            Year Ended           Year Ended
                                                     June 30, 2000        June 30, 1999         June 30, 1998
                                                     -------------        -------------         -------------
    Net income
<S>                                                   <C>                  <C>                   <C>
    (loss):             As Reported                   $(1,196,605)         $14,016,436           $7,403,643
                        Pro Forma                     $(1,270,152)         $13,463,612           $6,978,972


    Basic EPS:          As Reported                      $(0.14)                 $1.63                $0.90
                        Pro Forma                        $(0.15)                 $1.61                $0.86

    Diluted EPS:        As Reported                      $(0.14)                 $0.99                $0.55
                        Pro Forma                        $(0.15)                 $0.98                $0.54

</TABLE>

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 pursuant to the terms of the Asset Exchange  Agreement.  At
each of June  30,  2000  and  1999,  6,957  and  6,957  of  these  options  were
outstanding and 6,957 and 6,957 were exercisable, respectively.

The following table reflects  activity under the plan for the three-year  period
ended June 30, 2000:

<TABLE>
<CAPTION>
                                      Year Ended June 30, 2000   Year Ended June 30, 1999   Year Ended June 30, 1998
                                      ------------------------   ------------------------   ------------------------
                                                    Weighted                   Weighted                   Weighted
                                                     Average                    Average                    Average
                                        Shares    Exercise Price    Shares   Exercise Price   Shares   Exercise Price
                                        ------    --------------    ------   --------------   ------   --------------
<S>                                     <C>             <C>        <C>            <C>        <C>             <C>
Outstanding at beginning of year        446,957         2.00       407,609        3.16       431,207         3.08
Granted                                  10,000         1.25       415,000        1.22             -            -
Exercised                                     -            -      (174,852)       0.37       (14,198)        0.16
Forfeited                                     -            -      (200,800)       4.16        (7,050)        4.25
Cancelled                                     -            -             -           -        (2,850)        4.25

Outstanding at end of year              456,957        $1.99       446,957       $2.00       407,609         $3.16
Outstanding at end of year              193,624        $2.99        81,957       $5.49       332,209         $2.71

</TABLE>

The weighted  average fair value and  exercise  price for options  granted at an
exercise  price  equal to fair  market is $3.51  and  $5.49,  respectively.  The
weighted  average  fair  value and  exercise  price for  options  granted  at an
exercise price below fair market is $0.94 and $1.22, respectively.  The weighted
average fair value and exercise  price for options  granted at an exercise price
greater than fair market is $0.31 and $1.25, 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:


                                                     2000                1999
                                                     ----                ----
      Risk-Free Interest Rates                       6.34%               4.67%
      Expected Lives                                    5                   5
      Expected Volatility                           72.28%              77.60%
      Expected Dividend Yields                       0.00%               0.00%





<PAGE>
                                      F-16


The following table summarizes  information  about stock options  outstanding at
June 30, 2000:

<TABLE>
<CAPTION>
                                Options Outstanding                               Options Exercisable
                                -------------------                               -------------------
                             Number     Weighted Average      Weighted           Number          Weighted
                          Outstanding       Remaining          Average        Excercisable        Average
                           at 6/30/00   Contractual Life    Exercise Price     at 6/30/00      Exercise Price
                          -----------   ----------------    --------------    ------------     --------------


<S><C>     <C>                 <C>               <C>                <C>             <C>                 <C>
$0.04 - $1.25               381,957           9.35               $1.20           118,624             $1.09
$4.00 - $6.00                75,000           1.93               $6.00            75,000             $6.00
                            -------                                              -------
$0.04 - $6.00               456,957           8.11               $1.99           193,624             $2.99
                            =======                                              =======
</TABLE>


7.       COMMITMENTS AND CONTINGENCIES

Leases

As of June 30,  2000,  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>
                    2001                        $ 96,290                 $  828,246
                    2002                          64,489                    283,739
                    2003                          32,245                    108,925
                    2004                               -                     81,250
                    2005                               -                     81,250
                                                --------                 ----------
          Total minimum lease payments          $193,024                 $1,383,410
          Less - Amount representing interest    (12,050)                ==========
                                                --------
                                                $180,974
                                                ========
</TABLE>

Employment Agreements

The Company has employment agreements with certain employees expiring at various
times through July 2002. 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,  2000,
excluding bonuses, was approximately $500,500.

8.       SEGMENT INFORMATION

The  Company's  revenue  includes  both  domestic  and   international   freight
movements.  Domestic freight movements originate and terminate within the United
States, and never leave the United States.  International  freight movements are
either  exports  from the United  States or imports to the United  States.  With
regard to international  freight  movements,  the account  receivable can be due
from either a domestic debtor or from one of the Company's  Target  subsidiary's
international agents (an international debtor).

A reconciliation of the Company's  domestic and international  segment revenues,
gross profit, and accounts receivable for the years ended June 30, 2000 and 1999
is as follows:

<PAGE>
                                      F-17

<TABLE>
<CAPTION>
                                                            June 30, 2000             June 30, 1999
                                                            -------------             -------------
<S>                                                          <C>                        <C>
          Domestic revenue                                   $56,093,399                $32,521,826
          International revenue                               27,994,796                 19,197,757
                                                             -----------                -----------
                    Total revenue                            $84,088,195                $51,719,583
                                                             -----------                -----------

          Domestic gross profit                              $20,152,072                $12,011,496
          International gross profit                           6,987,312                  4,918,810
                                                             -----------                -----------
                    Total gross profit                       $27,139,384                $16,930,306
                                                             -----------                -----------

          Domestic accounts receivable                       $12,731,926                $ 9,549,383
          International accounts receivable                    4,048,666                  2,622,042
          Less: allowance for doubtful accounts               (1,630,768)                (1,318,109)
                                                             ------------               ------------
                   Accounts receivable, net of
                   allowance for doubtful accounts           $15,149,824                $10,853,316
                                                             -----------                -----------
</TABLE>


9.       INCOME TAXES

The Company  utilized  approximately  $25,000 and  $14,300,000  of net operating
losses to offset its regular taxable income for the year ended June 30, 2000 and
1999,  respectively.  The Company has a tax net operating loss  carryforward  of
approximately  $9.6 million,  available to offset future regular taxable income,
which  expires  from 2011  through  2013 and which is limited to annual  maximum
amounts,  due to ownership changes,  as defined in regulations under Section 382
of the  Internal  Revenue  Code.  In 1998,  the  Company  reduced  the  recorded
valuation allowance by approximately $6,309,000.  The determination that the net
tax asset was realizable was based on the CAS Sale subsequent to year-end, which
resulted in a taxable gain of approximately $16,443,000.  The Company's reversal
of the valuation  allowance  against its net deferred tax assets and realization
of net operating loss carryforwards  resulted in a realization of net income tax
benefits of approximately $7,662,000 in the fiscal year ended June 30, 1998.

The  components  of current  and  deferred  income tax  expense (benefit) are as
follows:

<TABLE>
<CAPTION>

                                    Year Ended            Year Ended       Year Ended
                                   June 30, 2000        June 30, 1999     June 30, 1998
                                   -------------        -------------     -------------
    (In thousands)

    Current:

<S>                                   <C>                <C>                 <C>
    State                             $  3               $  791              $   228
    Federal                              -                  269                    -

    Deferred:
    State                                -                    -                    -
    Fededral                           106                5,793               (7,890)
                                      ----               ------               ------
    Net income tax expense (benefit)  $109               $6,853              $(7,662)
                                      ====               ======               ======

</TABLE>


<PAGE>
                                      F-18


A  reconciliation  of income taxes between the statutory and effective tax rates
on income before income taxes is as follows:

<TABLE>
<CAPTION>
                                                           Year Ended            Year Ended               Year Ended
                                                          June 30, 2000         June 30, 1999           June 30, 1998
                                                          -------------         -------------           -------------

(In thousands)
<S>                                                          <C>                   <C>                       <C>
Income tax  (benefit) expense at U.S. statutory rate         $ (370)               $7,100                   $  (88)

Tax deductible goodwill                                           -                (2,730)                  (2,158)
Non-deductible goodwill                                         203                   211                        -

State and local income taxes                                      3                   522                      228
(net of federal benefit)

AMT Credit                                                      (17)                    -                        -

Valuation Allowance                                               -                  1730                   (5,688)

Non-deductible expenses                                         290                    20                       44
                                                             ------                ------                  -------
                                                             $  109                $6,853                  $(7,662)
                                                             ======                ======                  =======

The components of deferred income taxes are as follows:

                                                             Year Ended                  Year Ended
                                                            June 30, 2000              June 30, 1998
                                                            -------------              -------------
(In thousands)

NOLs                                                           $3,250                      $3,536
Tax credits                                                       286                         269
Accrued amounts and other                                         902                         759
                                                                -----                       -----
                                                                4,456                       4,564

Depreciation and amortization                                     184                         185
                                                                -----                      ------
                                                                4,640                       4,749

Valuation allowance                                            (2,484)                     (2,484)
                                                               ------                      ------
                                                               $2,156                      $2,265
                                                               ======                      ======


</TABLE>


<TABLE>

<PAGE>
                                      S-1


                 SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

<CAPTION>
                                                      Balance at    Charged to     Charged to
                                                      Beginning      Costs and       Other                      Balance at
                                                       of Year       Expenses       Accounts      Deductions    End of Year
                                                      ----------    ----------     ----------     ----------    -----------
For the fiscal year ended June 30, 1998

<S>                                                   <C>            <C>            <C>           <C>            <C>
  Allowance for doubtful accounts                     $     787      $    207       $      -      $   (479)      $     515
                                                      =========      ========       ========      ========       =========
  Reserve for restructuring                           $   2,682      $      -       $      -      $ (2,418)      $     264
                                                      =========      ========       ========      ========       =========



For the fiscal year ended June 30, 1999

  Allowance for doubtful accounts                     $     515      $    957       $      -      $   (154)      $   1,318
                                                      =========      ========       ========      ========       =========
  Reserve for restructuring                           $     264      $      -       $      -      $   (242)      $      22
                                                      =========      ========       ========      ========       =========


For the fiscal year ended June 30, 2000

  Allowance for doubtful accounts                      $  1,318      $    536       $      -      $   (223)      $   1,631
                                                       ========      ========       ========      ========       =========
  Reserve for restructuring                            $     22      $      -       $      -      $    (22)      $       -
                                                       ========      ========       ========      ========       =========






</TABLE>