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, 1998 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

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

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

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 16, 1998 was $3,076,307.

The number of shares of common stock  outstanding  as of September  16, 1998 was
8,479,094.

                       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 1998 Annual
Meeting of Shareholders (to be filed).



<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
                         1998 ANNUAL REPORT ON FORM 10-K

                                Table of Contents


                                                                            Page

                                     PART I


Item 1.  Business                                                             3
Item 2.  Properties                                                           7
Item 3.  Legal Proceedings                                                    7
Item 4.  Submission of Matters to a Vote of Security Holders                  7

Executive Officers of the Registrant                                          8


                                     PART II

Item 5.  Market for Registrant's Common Equity and Related
         Stockholder Matters                                                  9
Item 6.  Selected Financial Data                                             10
Item 7.  Management's Discussion and Analysis of Financial
         Conditions and Results of Operations                                11
Item 8.  Financial Statements and Supplementary Data                         15
Item 9.  Changes in and Disagreements with Accountants
         on Accounting and Financial Disclosures                             15


                                    PART III

Item 10. Directors and Executive Officers of the Registrant                  16
Item 11. Executive Compensation                                              16
Item 12. Security Ownership of Certain Beneficial Owners
         and Management                                                      16
Item 13. Certain Relationships and Related Transactions                      16


                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports
         on Form 8-K                                                         17



                                        2

<PAGE>



                                     PART I


ITEM 1.  BUSINESS


Background

         Amertranz   Worldwide  Holding  Corp.   ("Company")   provides  freight
forwarding services and logistics services, through its wholly owned subsidiary,
Target  Airfreight,  Inc.  ("Target").  Prior to July 13, 1998, the Company also
provided services through its wholly-owned  subsidiary,  Caribbean Air Services,
Inc.  ("CAS"),  and,  until June 23, 1997,  also provided  services  through its
Amertranz Worldwide, Inc. ("Amertranz") subsidiary. The Company has a network of
offices in 22 cities throughout the United States and Puerto Rico.

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

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

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

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

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

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


                                        3

<PAGE>



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

         Since the  business  of the  Company's  Amertranz  subsidiary  incurred
operating  losses  for  each of its  operating  periods,  on June  23,  1997 the
Company's  Amertranz  subsidiary  ceased operations and transferred its customer
accounts to the Company's Target subsidiary for fair consideration.

         On July 13, 1998, CAS sold substantially all of its operating assets to
a  subsidiary  of  Geologistics  Corporation  for $27  million in cash (the "CAS
Sale") pursuant to the terms of an Asset Purchase  Agreement dated June 15, 1998
(the  "Asset  Purchase  Agreement").  Under  the  terms  of the  Asset  Purchase
Agreement,  CAS retained its accounts  receivable,  and the Company expects that
CAS will realize an additional $3.1 million from its accounts  receivable  after
payment of its liabilities.

         Following the CAS Sale, the Company  operates  through its wholly-owned
subsidiary, Target.


Description of Business

         The Company's  freight  forwarding  services involve  arranging for the
total  transport  of  customers'  freight  from the  shippers'  location  to the
designated  recipients,  including the preparation of shipping documents and the
providing  of  handling,  packing  and  containerization  services.  The Company
concentrates  on cargo  shipments  weighing  more than 50 pounds  and  generally
requiring  second-day  delivery.  The  Company  also  assembles  bulk  cargo and
arranges for  insurance.  On June 30, 1998, the Company had a network of offices
in 27 cities throughout the United States and Puerto Rico. Subsequent to the CAS
Sale,  the Company has a network of offices in 22 cities  throughout  the United
States,  including exclusive agency relationships in ten 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, Malaysia and Singapore.


Operations

         Movement  of  Freight.  The  Company  does  not  own any  airplanes  or
significant  trucking  equipment and relies on independent  contractors  for the
movement of its cargo. The Company utilizes its expertise to provide  forwarding
services  that are  tailored to meet  customers'  requirements.  It arranges for
transportation  of  customers'  shipments  via  commercial  airlines,  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,  shipments  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
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.

         Prior  to the  CAS  Sale,  CAS  had  exclusive  rights  to the use of a
Lockheed  L-1011  freighter  aircraft  operated  by  Tradewinds  Airlines,  Inc.
("Tradewinds Air") between the Company's Borinquen, Puerto Rico location and its
Greensboro, North Carolina and Hartford,  Connecticut locations, pursuant to the
terms of a Cargo Aircraft Charter

                                        4

<PAGE>



Agreement  dated  February 28, 1994,  as amended,  (the "L-1011  Charter").  The
L-1011  aircraft  carries a payload  of 110,000  pounds.  Under the terms of the
L-1011  Charter,  the L-1011  aircraft must be available at all times for use by
the Company,  as needed.  While the L-1011 Charter guaranteed to the Company the
use of the L-1011  aircraft as needed,  the Company was required to pay only for
its actual use of the aircraft at market rates.  In maximizing  efficiencies  in
the operation of the L-1011 aircraft,  freight originating throughout the United
States was generally  transported by truck to either  Greensboro or Hartford for
loading onto the aircraft,  and,  similarly,  freight originating in Puerto Rico
was flown on the L-1011 aircraft to either  Greensboro or Hartford for transport
by truck to its  destination.  In connection with the CAS Sale, CAS assigned all
of its rights  under the  L-1011  Charter to the  purchaser,  and the  purchaser
assumed all of CAS' obligations under the L-1011 Charter.

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

         The Company leases an HP 9000 mainframe  computer and has a proprietary
freight forwarding  software system which the Company has named "Trax".  Trax is
an integrated  freight  forwarding  and  financial  management  data  processing
system.  It  provides  the  Company  with the  information  needed to manage its
sourcing  and  distribution  activities  through  either  printed or  electronic
medium. Specifically, the Trax system permits the Company to track the flow of a
particular shipment from the point of origin through the transportation  process
to the point of delivery.  The Company intends to  continuously  upgrade Trax to
enhance its ability to maintain a competitive  advantage.  The Company  believes
that the "Year 2000" issue does not have any impact on Trax.

         International  Operations.  During the fiscal year ended June 30, 1997,
the Company  increased its international  operations  through the acquisition of
Target. During the fiscal year ended June 30, 1998, the Company's  international
freight forwarding  accounted for 18.1% of the Company's operating revenue. On a
pro  forma  basis  (assuming  the  CAS  Sale  closed  on July  1,  1997),  after
elimination of revenue from CAS,  international freight forwarding would account
for 40.8% of the Company's operating revenue.


Customers and Marketing

         The  Company's  principal  customers  include large  manufacturers  and
distributors   of   pharmaceuticals,   computers   and  other   electronic   and
high-technology equipment, computer software and wearing apparel. As of June 30,
1998, the Company had approximately 3,900 accounts, and, following the CAS Sale,
the Company currently has approximately 2,900 accounts.

         The  Company   markets  its  services   through  an   organization   of
approximately  15 full-time  salespersons  and 22  independent  sales agents (25
full-time  and 22  independent  agents  prior to the CAS Sale)  supported by the
sales efforts of senior  management,  and the operations  staff in the Company's
offices. The Company strongly promotes team selling,  wherein the salesperson is
able to utilize  expertise  from  other  departments  in the  Company to provide
value-added  services  to gain a specific  account.  The  Company has a national
account sales group that targets  high-revenue  national  accounts with multiple
shipping  locations.  These industry  specialists  discern the specific  freight
transportation  requirements of the customers and are able to prepare customized
shipping programs to meet these specific  requirements.  The Company staffs each
office with operational employees to provide support for the sales team, develop
frequent contact with the customer's traffic  department,  and maintain customer
service.  The Company believes that it is important to maintain frequent contact
with its customers to assure  satisfaction  and to immediately  react to resolve
any problem as quickly as possible.

         The  Company'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.


                                        5

<PAGE>



         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  service  similar to that  offered by the
Company. These include Eagle USA Air Freight, Inc., Pilot Air Freight, Inc., and
Geologistics  Americas,  Inc. There is also competition from passenger and cargo
air carriers and trucking companies.  On the international side of the business,
the Company  competes with forwarders  that have a  predominantly  international
focus, such as Fritz Companies,  Inc., Air Express International Corporation and
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  331  full-time
employees as of June 30, 1998 and,  following  the CAS Sale,  approximately  154
full-time employees.  None of the Company's employees are currently covered by a
collective bargaining  agreement.  The Company has experienced no work stoppages
and considers its relations with its employees to be good.


Regulation

         The  Company's  freight  forwarding  business as an indirect  air cargo
carrier  is  subject  to  regulation   by  the  United   States   Department  of
Transportation  under the Federal Aviation Act. However,  air freight forwarders
(including the Company) are exempted from most of such Act's requirements by the
Economic Aviation Regulations promulgated thereunder.  The Company's foreign air
freight  forwarding  operations  are  subject to  regulation  by the  regulatory
authorities of the respective foreign jurisdictions.  The air freight forwarding
industry is subject to regulatory and  legislative  changes which can affect the
economics  of the  industry  by  requiring  changes in  operating  practices  or
influencing the demand for, and the costs of providing, services to customers.




                                        6

<PAGE>



ITEM 2.  PROPERTIES

         As of June 30, 1998, the Company leased terminal facilities  consisting
of office and  warehouse  space in 17 cities  located  in the United  States and
Puerto  Rico,  and also  utilized  ten  offices  operated by  exclusive  agents.
Following the CAS Sale, the Company  leased  terminal  facilities  consisting of
office and warehouse  space in 13 cities located in the United States,  and also
utilized ten offices operated by exclusive  agents.  The Company's  headquarters
are located in Baltimore,  Maryland. The Company's facilities range in size from
1,000 square feet to 100,000  square feet and consist of offices and  warehouses
with  loading  bays.  All of such  properties  are leased  from  third  parties.
Management believes that its current facilities are underutilized.  Accordingly,
management  believes that the Company's  facilities are more than sufficient for
its planned  growth.  The principal  warehouse  facilities  are set forth in the
following table:

                        Approximate Square Feet               Lease
Location                       of Floor Space               Expiration

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

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

        Atlanta, Georgia                            Indianapolis, Indiana
        Charlotte, North Carolina                   Miami, Florida
        Chicago, Illinois                           Newark, New Jersey
        Dallas, Texas                               New York, New York
        Greensboro, North Carolina                  San Francisco, California
       *Hartford, Connecticut                      *San Juan, Puerto Rico
        Houston, Texas                              Seattle, Washington
--------------------------
* Transferred to the purchaser as part of the CAS Sale.


ITEM 3.  LEGAL PROCEEDINGS

         On June 15, 1998, the Company was served with a complaint  filed in the
United States  District Court for the Eastern  District of New York (case number
CV 98 3777),  by Martin  Hoffenberg,  a former  consultant  to the Company.  The
Company,  its Amertranz,  Target,  and CAS  subsidiaries,  Stuart  Hettleman and
Richard A.  Faieta,  officers  and  directors  of the  Company,  and TIA and CFS
(principal  shareholders of the Company),  are named  defendants in the lawsuit.
The  complaint is based on events  occurring  prior to February  1996,  when Mr.
Hoffenberg  controlled the Amertranz  Worldwide  subsidiary as its president and
chairman, and on events occurring subsequent thereto, when Mr. Hoffenberg served
as a  consultant  to the  Company.  The  complaint  alleges  breach of contract,
violations  of the federal  anti-racketeering  laws,  fraud,  and failure to pay
wages and  benefits.  The  complaint  seeks  economic  damages in excess of $5.6
million, and punitive damages of $7.5 million. The Company intends to vigorously
defend the action.  The Company believes that the complaint is without merit and
that any material recovery by Mr. Hoffenberg is unlikely.


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

         None.


                                        7

<PAGE>



EXECUTIVE OFFICERS OF THE REGISTRANT

         The following is a listing of the executive  officers of the Company as
of June 30, 1998.  There are no family  relationships  between any Directors and
Officers of the Company.

NAME                            AGE       POSITION

Stuart Hettleman                 48       President and Chief Executive
                                          Officer

Richard A. Faieta                52       Executive Vice President

Philip J. Dubato                 42       Vice President, Chief Financial
                                          Officer and Secretary

Christopher Coppersmith          48       President, Target Airfreight, Inc.


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

RICHARD A.  FAIETA  has been  Executive  Vice  President  and a director  of the
Company,  a director and  President  of CAS, and a director and Chief  Executive
Officer of Amertranz, since February 7, 1996, and a director of Target since May
8, 1997. He has served as President and Chief  Executive  Officer of each of TIA
and CFS, the Company's predecessors, since April 1992. From 1987 through 1991 he
served  as  Vice  President-Operations  of LEP  Profit  International,  Inc.,  a
domestic and international  freight forwarder.  In connection with the CAS Sale,
Mr.  Faieta  resigned as a director and officer of the Company,  CAS and each of
the Company's  other  subsidiaries;  and became  President of  Geologistics  Air
Services, 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 of Target Airfreight,  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.


                                        8

<PAGE>



                                     PART II


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

         Prior to February 25, 1998, the Company's common stock,  $.01 par value
(the  "Common  Stock")  and  Redeemable  Common  Stock  Purchase  Warrants  (the
"Warrants") were listed on the NASDAQ SmallCap Market under the symbols AMTZ and
AMTZW,  respectively.  Since  February  25,  1998 both the Common  Stock and the
Warrants  have been traded on the  Over-The-Counter  (OTC) market under the same
symbols (AMTZ and AMTZW).

         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.

                                    COMMON STOCK          WARRANTS

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

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

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

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

Fiscal Year Ended June 30, 1998
First Quarter                       High  -  1 3/4       High  -    1/2
                                    Low   -    7/8       Low   -    1/8

Second Quarter                      High  -  2 1/4       High  -    7/16
                                    Low   -  1           Low   -    1/16

Third Quarter                       High  -  2 1/4       High  -    1/4
                                    Low   -    9/16      Low   -    3/16

Fourth Quarter                      High  -  1 9/16      High  -    3/16
                                    Low   -  1 1/16      Low   -    1/16

         On  September  16,  1998 there were 930  shareholders  of record of the
Company's Common Stock and 795 holders of record of the Company's Warrants.  The
closing  price of the  Common  Stock on that date was  $0.8125  per  share.  The
closing price of the Warrants on that date was $0.0625 per Warrant.


                                        9

<PAGE>



ITEM 6.  SELECTED FINANCIAL DATA

AMERTRANZ WORLDWIDE HOLDING CORP. (1)
(in thousands, except per share data)
<TABLE>
<CAPTION>
                                                                       Six Months       Year            Year
                                         Years Ended December 31,   Ended June 30,  Ended June 30,  Ended June 30,
                                         1994            1995            1996           1997            1998
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Statement of Operations Data:
   Operating revenue                    $38,576        $38,211         $27,446        $75,352         $97,784
   Cost of transportation                30,254         30,300          20,961         57,199          76,677
                                         ------         ------          ------         ------          ------
   Gross profit                           8,322          7,911           6,485         18,153          21,107
   Selling, general &
      administrative
      expenses                            4,634          4,513           8,772         23,985          19,933
   Restructuring charge                       -              -               -         (3,407)              -
   Operating income (loss)               $3,688         $3,398         $(2,288)       $(9,239)         $1,173
   Net income (loss)                     $2,553         $2,366         $(6,397)       (10,508)         $7,404
   Net income (loss) per common share                                  $ (1.84)        $(1.74)          $0.90

Balance Sheet Data:
   Total assets                                                        $22,740        $29,821         $38,547
   Working capital (deficit)                                           (13,937)       (12,541)         (2,340)
   Current liabilities                                                  22,470         27,158          26,085
   Long-term indebtedness                                                8,018          4,094           4,138
   Shareholders' equity (deficit)                                      $(7,749)        (1,430)          8,324


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

                                       10

<PAGE>



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

Overview

         The Company was  incorporated  in January  1996 to continue the freight
forwarding business of TIA and CFS and acquire Amertranz.  The Company generated
operating revenues of $97.8 million, $75.4 million, and $27.4 million, and had a
net profit of $7.4 million,  and net losses of $10.5 million,  and $6.4 million,
for the fiscal  years ended June 30, 1998 and 1997 and the six months ended June
30, 1996, respectively.  The fiscal year 1998 profit includes a $7.6 million net
income tax benefit  arising from the CAS Sale which closed on July 13, 1998, and
the  fiscal  year 1997 loss  included  a charge of $3.4  million  attributed  to
restructuring  costs in connection  with the closing of the Company's  Amertranz
subsidiary.  The Company had  consolidated  earnings  (losses) before  interest,
taxes,  depreciation  and amortization  (EBITDA) of approximately  $2.6 million,
($8.3 million), and ($2.0 million), for the fiscal years ended June 30, 1998 and
1997 and the six months ended June 30, 1996, respectively.

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

         Following  the  closing  of the  Company's  Amertranz  subsidiary,  the
Company entered into an Extension and Composition Agreement dated as of November
7, 1997 (the  "Composition  Agreement")  with certain  general  unsecured  trade
creditors of the Company's  Amertranz  subsidiary,  whereby  $1,581,799 of trade
debt of the Amertranz subsidiary was acquired by the Company in exchange for the
issuance  of  158,180  shares  of the  Company's  Class E  Preferred  Stock.  In
addition,  and as part of the Composition  Agreement,  $312,140 of trade debt of
the  Amertranz  subsidiary  was acquired by the Company  from certain  unsecured
trade  creditors  of the  Amertranz  subsidiary  in exchange  for the  Company's
obligation to pay a reduced amount totaling $125,185.  This transaction resulted
in $187,129 of debt cancellation income.  Currently,  approximately $2.0 million
of the Company's outstanding accounts payable represent unsecured trade payables
of the Company's closed Amertranz subsidiary.

         On November 28, 1997, the Company  acquired  $1,000,000 of secured debt
of the Amertranz  subsidiary  in exchange for the issuance of 100,000  shares of
its Class D Preferred Stock. While repayment of this $1,000,000 was subordinated
to the Company's  obligations under its accounts receivable  financing facility,
the total outstanding  indebtedness of the Company (on a consolidated basis) has
been reduced by a like amount.

         On July 13, 1998, in the CAS Sale,  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. Under the terms of the Asset Purchase  Agreement,
CAS  retained  its accounts  receivable,  and the Company  expects that CAS will
realize an additional $3.1 million from CAS's accounts  receivable after payment
of its liabilities.

Results of Operations

         This  Annual  Report  on Form  10-K  contains  certain  forward-looking
statements  reflecting the Company's  current  expectations  with respect to its
operations,  performance,  financial  condition,  and other  developments.  Such
statements  are  necessarily  estimates  reflecting the Company's best judgement
based upon current  information and involve a number of risks and uncertainties.
While it is impossible  to identify all such factors,  factors which could cause
actual results to differ  materially  from  expectations  are: (i) the Company's
recent losses and ability to achieve  profitability,  (ii) competitive practices
in the industries in which the Company competes,  (iii) the Company's dependence
on  current  management,  (iv)  the  impact  of  current  and  future  laws  and
governmental  regulations  affecting the transportation  industry in general and
the Company's  operations in particular,  (v) general economic  conditions,  and
(vi) other factors  which may be  identified  from time to time in the Company's
Securities and Exchange Commission filings and other public announcements. There
can be no assurance that these and other factors will

                                       11

<PAGE>



not affect the  accuracy  of such  forward-looking  statements.  Forward-looking
statements are preceded by an asterisk (*).

Years Ended June 30, 1998 and 1997

         Operating Revenue. Operating revenue increased to $97.8 million for the
year ended June 30, 1998 from $75.4  million for the year ended June 30, 1997, a
29.8% increase. Of this increase,  61% resulted from growth in the Company's CAS
subsidiary  and the balance was due to the  operations of the  Company's  Target
subsidiary which the Company acquired in May 1997.

         Cost of  Transportation.  Cost of transportation was 78.4% of operating
revenue for the year ended June 30, 1998, and 75.9% of operating revenue for the
year ended June 30, 1997. This increase is due to (i) the February 2, 1998 start
up of a new  service  between  Indianapolis  and  Aquadilla,  Puerto Rico by the
Company's CAS subsidiary,  (ii) the Company's  Target  subsidiary  international
freight  forwarding  services,  which  historically  reflect  a  higher  cost of
transportation  as a  percentage  of  sales,  and  (iii)  the  Company's  Target
subsidiary's  agency  network which is  significantly  larger than the Amertranz
agency network.

         Gross  Profit.  As a result of the factors  described  in the  previous
paragraph,  gross profit for the year ended June 30, 1998  decreased to 21.6% of
operating  revenue from 24.1% of  operating  revenue for the year ended June 30,
1997.

         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative  expenses were 20.4% of operating revenue for the year ended June
30, 1998,  and 31.8%  (excluding  restructuring  charges in connection  with the
closing of the Company's Amertranz subsidiary) of operating revenue for the year
ended June 30, 1997.  This  decrease was primarily due to (i) the closing of the
Amertranz  subsidiary  prior to  beginning  of the 1998  fiscal  year (while the
Amertranz  subsidiary was included for almost all of the 1997 fiscal year);  and
(ii) the historically lower selling,  general and  administrative  expenses as a
percentage of sales of the Company's Target  subsidiary  (acquired in May 1997),
and the  inclusion of those  results in the  Company's  consolidated  results of
operations for the year ended June 30, 1998.

         Net Income (Loss).  The Company realized a net profit of $7,403,643 for
the year ended June 30, 1998,  compared to a net loss of  ($10,508,334)  for the
year ended June 30, 1997. This increase was due to the $7,662,135 net income tax
benefit  realized as the result of the CAS Sale on July 13, 1998,  the increased
operating revenue from growth in the Company's CAS subsidiary, the operations of
the  Company's  Target  subsidiary,  the decrease in expenses as a result of the
closing of the Company's  Amertranz  subsidiary,  the decrease in  restructuring
charges  (which were recorded in their entirety in the prior year) in connection
with the closing of the Amertranz subsidiary,  and $187,129 of debt cancellation
income (see "Liquidity and Capital Resources", below).

Years Ended June 30, 1997 and 1996

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



                                       12

<PAGE>



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

Operating revenue                       $75,352,065          $47,922,981
Cost of transportation                   57,198,797           36,828,542
Gross profit                             18,153,268           11,094,376
Selling, general and
  administrative expenses                23,985,223           11,025,323
Net loss before restructuring charg    ($ 7,100,852)         ($4,317,845)
Restructuring charge                      3,407,482                    -
Net loss                               ($10,508,334)         ($4,317,845)

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

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

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

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

Liquidity and Capital Resources

         During  the year  ended  June 30,  1998,  net  cash  used by  operating
activities  was $1.1  million.  Cash used in investing  activities  was $556,557
which consisted of capital  expenditures.  Cash provided by financing activities
was $1.1 million which  primarily  consisted of the  non-payment  of interest on
short  term debt due to  affiliates,  net  borrowings  under the  Company's  BNY
Facility (described below), and financing under a capital lease.

         Capital expenditures for the year ended June 30, 1998 were $556,557.

         BNY  Facility.  During  the year  ended June 30,  1998,  the  Company's
subsidiaries  (the  "Borrowers")  maintained  a  $10  million  revolving  credit
facility ("BNY  Facility") with BNY Financial Corp.  ("BNY"),  guaranteed by the
Company. The interest rate of the BNY Facility is prime plus 2%. Under the terms
of the BNY  Facility,  the Borrowers can borrow the lesser of $10 million or 85%
of eligible  accounts  receivable.  The  borrowings  under the BNY  Facility are
secured by a first lien on all of the Company's and its subsidiaries' assets. As
of June 30, 1998, there were outstanding  borrowings of $6,745,853 under the BNY
Facility  which  represented  86% of the amount  available  thereunder,  and the
amount  available  for  borrowing  under  the  BNY  Facility  was  approximately
$1,061,000.  This debt was repaid on July 13, 1998 by CAS with the proceeds from
the CAS Sale (and CAS acquired the

                                       13

<PAGE>



Amertranz  subsidiary's  portion of the debt). The BNY Facility remains in place
and available for use by the Company's Target subsidiary.

         Revolver Note. As part of the  combination of Amertranz and the freight
forwarding  business of TIA and CFS,  TIA and CFS agreed to advance to CAS, on a
revolving loan basis,  up to an aggregate  maximum of $4,000,000  outstanding at
any time, pursuant to the terms of a Revolving Credit Promissory Note ("Revolver
Note"),  bearing  interest  at  the  greater  of (i) 1%  per  month,  or  (ii) a
fluctuating  rate equal to the prime rate of interest as  published  in The Wall
Street Journal, plus 4%. All obligations under the Revolver Note were guaranteed
by the Company and its Amertranz subsidiary and secured by a first priority lien
on all of the issued and outstanding shares of CAS, a first priority lien on all
of the assets of the Company and CAS, and a lien on the accounts  receivable  of
Amertranz,  subordinate  only  to the  first  priority  lien  granted  to BNY in
connection  with the BNY Facility and the second position lien granted to TIA in
connection with the TIA Loan (described below). As of June 30, 1998, the Company
had outstanding  borrowings of $905,913 under the Revolver Note. All obligations
under the Revolver  Note were repaid on July 13, 1998 with the proceeds from the
CAS Sale.

         Exchange Note. As part of the  combination of Amertranz and the freight
forwarding  business  of TIA  and  CFS,  the  Company  issued  to TIA  and CFS a
promissory  note  in the  original  principal  amount  of  $10,000,000,  bearing
interest  at the rate of 8% per  annum  ("Exchange  Note").  In June  1996,  TIA
exchanged $2,000,000 principal amount of the Exchange Note for 200,000 shares of
the  Company's  Class A Preferred  Stock,  and of the proceeds of the  Company's
initial public offering,  $2,000,000 was used to repay a portion of the Exchange
Note. The Company's indebtedness under the Exchange Note was subordinated to the
Company's  obligations under the BNY Facility.  As of June 30, 1998, the Company
had an  outstanding  balance  of  $7,332,126  (including  $1,332,126  of accrued
interest), under the Exchange Note. All obligations under the Exchange Note were
repaid on July 13, 1998 with the proceeds from the CAS Sale.

         * Working Capital Requirements. Cash needs of the Company are currently
met by funds  generated from  operations,  the BNY Facility and funds  remaining
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 term. However, the Company's actual working capital needs for the long and
short terms will depend upon numerous factors, including the Company's operating
results,  the cost of increasing the Company's  sales and marketing  activities,
and, competition, none of which can be predicted with certainty.

         As of June 30, 1998,  the Company had a working  capital  deficiency of
$2.3 million. Approximately $2 million of this amount represents unsecured trade
payables of the Amertranz subsidiary.  In addition, $11 million of the Company's
current  liabilities as of June 30, 1998 represent  obligations to TIA, CFS, and
BNY which were repaid on July 13, 1998 with the proceeds from the CAS Sale. On a
pro forma basis,  taking into account the effect of the CAS Sale, as of June 30,
1998, the Company had working capital of approximately $8.2 million.


                                       14

<PAGE>



Impact of the CAS Sale

         On July 13, 1998, in the CAS Sale,  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. Under the terms of the Asset Purchase  Agreement,
CAS  retained  its accounts  receivable,  and the Company  expects that CAS will
realize an additional $3.1 million from CAS's accounts  receivable after payment
of its liabilities.

         On a pro  forma  basis  (assuming  that the CAS Sale  closed on July 1,
1997),  the Company's  results from operations  would be adjusted to reflect the
elimination  of all  revenue  and direct  expenses of CAS,  the  elimination  of
interest  expense due to the repayment of debt,  an increase in interest  income
resulting from the  investment of the CAS Sale proceeds in overnight  repurchase
agreements, and the elimination of tax benefits relating to the CAS Sale.
These pro forma adjustments would result in the following:

                                                   Pro Forma/Unaudited
                                                      Year Ended
                                                     June 30, 1998
Statement of Operations Data:
Operating revenue                                       $43,408,396
Net income (loss)                                       (2,647,673)
Net (loss) per
  common share                                              ($0.33)

Balance Sheet Data:
Total assets                                           $40,852,384
Working capital                                          8,179,538
Current liabilities                                     16,351,162
Long-term indebtedness                                     138,006
Shareholders' equity                                   $24,363,216

         * The  above pro  forma  financial  information  is  unaudited  and not
necessarily  indicative of the  consolidated  results which  actually would have
occurred  if the  sale  had  been  concluded  at  the  beginning  of the  period
presented,  nor does it purport to represent the future  financial  position and
results of operations for future periods.

         * While the Company's CAS subsidiary has been historically  profitable,
the  Company's  strategy in  entering  into and  concluding  the CAS Sale was to
deleverage the Company's balance sheet by repaying  approximately $15 million in
outstanding  liabilities and provide  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.

Inflation

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

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

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

None

                                       15

<PAGE>



                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The  information  with respect to the identity  and business  experience  of the
directors  of the Company and their  remuneration  in the  Company's  definitive
Proxy Statement to be filed pursuant to Regulation 14A and issued in conjunction
with  the 1998  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 1998
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 1998
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 1998
Annual Meeting of Shareholders.


                                       16

<PAGE>



                                     PART IV


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

(a)  1.  Financial Statements

<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
AMERTRANZ WORLDWIDE HOLDING CORP.                                                       PAGE
                                                                                        
Report of Independent Public Accountants                                                F-1
Consolidated Balance Sheets as of June 30, 1998 and 1997                                F-2
Consolidated Statements of Operations for the Years Ended June 30, 1998 and 1997
and the Six Months Ended June 30, 1996                                                  F-3
Consolidated Statements of Shareholders' Deficit for the Years Ended
June 30, 1998 and 1997 and the Six Months Ended June 30, 1996                           F-4
Consolidated Statements of Cash Flows for the Years Ended June 30, 1998 and 1997
and the Six Months Ended June 30, 1996                                                  F-6
Notes to Consolidated Financial Statements                                              F-8

AMERTRANZ WORLDWIDE HOLDING CORP. (FORMERLY THE FREIGHT FORWARDING
BUSINESS OF TIA AND CFS)
Independent Auditors' Report                                                            F-23
Balance Sheets as of December 31, 1994 and 1995                                         F-24
Statements of Operations and Changes in Accumulated Deficit for the Years
December 31, 1993, 1994 and 1995                                                        F-25
Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and 1995           F-26
Notes to Financial Statements                                                           F-27
</TABLE>

(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
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 March 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)

                                       17

<PAGE>



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     Accounts Receivable  Management and Security  Agreement,  dated January
         16, 1997 by and between BNY Financial  Corp., as Lender,  and Amertranz
         Worldwide,  Inc.,  Caribbean Air Services,  Inc., and  Consolidated Air
         Services,  Inc., as Borrowers,  and  guaranteed by Amertranz  Worldwide
         Holding Corp. ("BNY Facility Agreement")  (incorporated by reference to
         Exhibit 10.1 to the Registrant's  Quarterly Report on Form 10-Q for the
         Quarter Ended March 31, 1997, File No. 0- 29754)
10.3     Letter Amendment to BNY Facility Agreement,  dated April 16, 1997 ("BNY
         Letter  Amendment")  (incorporated  by reference to Exhibit 10.2 to the
         Registrant's  Quarterly Report on Form 10-Q for the Quarter Ended March
         31, 1997, File No. 0-29754)
10.4     Shadow Warrant entered into in connection with the BNY Letter Amendment
         (incorporated   by  reference  to  Exhibit  10.3  to  the  Registrant's
         Quarterly  Report on Form 10-Q for the Quarter  Ended  March 31,  1997,
         File No. 0-29754)
10.5     Letter  Amendment to BNY Facility  Agreement,  dated September 25, 1997
         (incorporated by reference to Exhibit 10.5 to the  Registrant's  Annual
         Report on Form 10-K for the Year Ended June 30, 1997, File No. 0-29754)
10.6     Loan and Security  Agreement dated October  25,1995  between  Amertranz
         Worldwide,   Inc.  and  TIA,   Inc.,   as  amended   January  24,  1996
         (incorporated   by  reference  to  Exhibit  10.5  to  the  Registrant's
         Registration Statement on Form S-1, Registration No. 333-03613)
10.7     Form of Amended and Restated  Promissory  Note of Amertranz  Worldwide,
         Inc. payable to TIA, Inc. in principal amount of $800,000 (incorporated
         by reference to Exhibit 10.6 to the Registrant's Registration Statement
         on Form S-1, Registration No. 333-03613)
10.8     Revolving  Credit  Promissory  Note dated February 7, 1996 of Caribbean
         Air Services,  Inc. payable to TIA, Inc. and Caribbean  Freight System,
         Inc. in the principal  amount of $4,000,000  (incorporated by reference
         to Exhibit 10.9 to the Registrant's Registration Statement on Form S-1,
         Registration No. 333-03613)
10.9     Promissory Note dated February 7, 1996 of Amertranz  Worldwide  Holding
         Corp.  payable to TIA, Inc. and Caribbean  Freight System,  Inc. in the
         principal  amount of $10,000,000  (incorporated by reference to Exhibit
         10.10  to  the  Registrant's   Registration   Statement  on  Form  S-1,
         Registration No. 333-03613)
10.10    Employment  Agreement dated June 24, 1996 between  Amertranz  Worldwide
         Holding  Corp.  and Stuart  Hettleman  (incorporated  by  reference  to
         Exhibit  10.13 to the  Registrant's  Annual Report on Form 10-K for the
         Fiscal Year Ended June 30, 1996, File No. 0-29754)
10.11    Employment  Agreement dated June 24, 1996 between  Amertranz  Worldwide
         Holding  Corp.  and Richard A. Faieta  (incorporated  by  reference  to
         Exhibit  10.14 to the  Registrant's  Annual Report on Form 10-K for the
         Fiscal Year Ended June 30, 1996, File No. 0-29754)
10.12    Consulting  Agreement dated February 7, 1996 among Amertranz  Worldwide
         Holding  Corp.,   Amertranz  Worldwide,   Inc.  and  Martin  Hoffenberg
         (incorporated  by  reference  to  Exhibit  10.11  to  the  Registrant's
         Registration Statement on Form S-1, Registration No. 333-03613)
10.13    Cargo Aircraft  Charter  Agreement dated February 28, 1994 between TIA,
         Inc. and Florida West Airlines,  Inc., as amended and assigned November
         29,  1995   (incorporated   by  reference  to  Exhibit   10.15  to  the
         Registrant's  Registration  Statement  on Form  S-1,  Registration  No.
         333-03613)
10.14    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)


                                       18

<PAGE>



10.15    Lease  Agreement  dated August 7, 1990 between S Partners and Caribbean
         Freight System, Inc. for the premises at 7001 Cessna Drive, Greensboro,
         North Carolina,  as amended and extended April 9, 1994 (incorporated by
         reference to Exhibit 10.17 to the Registrant's  Registration  Statement
         on Form S-1, Registration No. 333-03613)
10.16(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

         On June 23, 1998,  the  Registrant  filed a current Report on Form 8-K,
dated June 15, 1998,  reporting the execution by the Registrant and Geologistics
Corporation  of an  Asset  Purchase  Agreement  with  respect  to  the  sale  of
substantially all of the assets of the Registrant's Caribbean Air Services, Inc.
subsidiary to a subsidiary of Geologistics Corporation

         On July 27, 1998,  the  Registrant  filed a current Report on Form 8-K,
dated July 13, 1998,  reporting the sale of  substantially  all of the assets of
the  Registrant's  Caribbean  Air Services,  Inc.  subsidiary to a subsidiary of
Geologistics Corporation



                                       19

<PAGE>



                                   SIGNATURES


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


                                        AMERTRANZ WORLDWIDE HOLDING CORP.



Date:  October 8, 1998                  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        October 8, 1998
Stuart Hettleman            Officer and Director


/s/ Michael Barsa           Director                          October 8, 1998
Michael Barsa


/s/ Philip J. Dubato        Vice President, Chief             October 8, 1998
Philip J. Dubato            Financial Officer,
                            Principal Accounting Officer
                            and Director




C74809.198

                                       20

<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Amertranz Worldwide Holding Corp.:

We have  audited  the  accompanying  consolidated  balance  sheets of  Amertranz
Worldwide Holding Corp., a Delaware  corporation,  as of June 30, 1998 and 1997,
and the related consolidated statements of operations,  shareholders' equity and
cash  flows for the years  ended  June 30,  1998 and 1997 and for the six months
ended June 30, 1996. These financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of Amertranz Worldwide
Holding  Corp. as of June 30, 1998 and 1997,  and the results of its  operations
and cash flows for the years ended June 30, 1998 and 1997 and for the six months
ended  June  30,  1996,  in  conformity  with  generally   accepted   accounting
principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
consolidated  financial  statements taken as a whole. The schedule listed in the
index of financial  statements is presented  for purposes of complying  with the
Securities  and  Exchange  Commission'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 18, 1998


                                       F-1

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                           June 30, 1998          June 30, 1997
                                                                           -------------          -------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                    ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                                   $   879,797           $ 1,382,243
Accounts receivable, net of allowance for doubtful
  accounts of $514,542 and $782,607, respectively                            14,555,151            12,490,694
Deferred income taxes (Note 9)                                                7,705,092                    --
Prepaid expenses and other current assets                                       604,588               743,569
                                                                            -----------           -----------
                  Total current assets                                       23,744,628            14,616,506
PROPERTY AND EQUIPMENT, net (Note 4)                                            755,822               734,900
OTHER ASSETS                                                                    238,904               223,768
DEFERRED INCOME TAXES (Note 9)                                                  184,895                    --
GOODWILL, net of accumulated amortization of
  $1,305,445 and $709,091, respectively (Notes 3 and 5)                      13,622,579            14,245,932
                                                                            -----------           -----------
                  Total assets                                              $38,546,828           $29,821,106
                                                                            ===========           ===========

                     LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable                                                            $ 8,542,850           $ 8,131,715
Accrued expenses                                                              2,007,845             2,050,245
Accrued transportation expenses                                               3,863,230             3,303,366
Reserve for restructuring                                                       264,143             2,681,956
Note payable to bank (Note 6)                                                 6,745,853             6,467,558
Note payable to affiliate (Note 6)                                              905,913               789,728
Note payable to creditors                                                        53,835                    --
Current portion of long-term debt due to affiliate (Note 6)                   3,332,126             3,633,273
Current portion of long-term debt (Note 6)                                       50,000                50,000
Dividends payable                                                               117,524                12,875
Taxes payable                                                                   110,000                25,000
Lease obligation-current portion (Note 8)                                        91,735                12,063
                                                                            -----------           -----------
                  Total current liabilities                                  26,085,054            27,157,779
LONG-TERM DEBT DUE TO AFFILIATE (Note 6)                                      4,000,000             4,000,000
LONG TERM DEBT (Note 6)                                                          10,500                87,500
LEASE OBLIGATION--LONG-TERM (Note 8)                                            127,506                 6,251
                                                                            -----------           -----------
                  Total liabilities                                         $30,223,060           $31,251,530
                                                                            -----------           -----------

COMMITMENTS AND CONTINGENCIES (Note 8)

SHAREHOLDERS' EQUITY (Note 7):
Preferred Stock, $10 par value; 2,500,000 shares authorized,
  621,387 and 498,000 shares issued and outstanding, respectively             6,213,870             4,980,000
Common stock, $.01 par value; 15,000,000 shares authorized,
  8,419,094 and 6,826,504 shares issued and outstanding,
  respectively                                                                   84,190                68,265
Paid-in capital                                                              22,546,331            20,972,256
Accumulated deficit                                                         (20,509,373)          (27,439,695)
Less:  Treasury stock, 106,304 shares held at cost                              (11,250)              (11,250)
                                                                            -----------           -----------
                  Total shareholders' equity (deficit)                        8,323,768            (1,430,424)
                                                                            -----------           -----------
                  Total liabilities and shareholders' equity                 38,546,828           $29,821,106
                                                                            ===========           ===========
</TABLE>

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

                                       F-2

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                                                    Six Months
                                                                Year Ended        Year Ended           Ended
                                                               June 30, 1998     June 30, 1997     June 30, 1996
                                                               -------------     -------------     -------------

<S>                                                             <C>               <C>               <C>        
OPERATING REVENUE                                               $97,784,411       $75,352,065       $27,445,583

COST OF TRANSPORTATION                                           76,677,883        57,198,797        20,961,019
                                                                -----------       -----------       -----------

         Gross profit                                            21,106,528        18,153,268         6,484,564

SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES:

         Selling, general and administrative expenses            19,933,230        23,985,223         8,772,226

         Restructuring charge                                             -         3,407,482                 -
                                                                -----------       -----------       -----------

         Total                                                   19,933,230        27,392,705         8,772,226
                                                                -----------       -----------       ------------

         Operating income (loss)                                 1,173,298         (9,239,437)       (2,287,662)

OTHER INCOME (EXPENSE):

         Interest expense                                       (1,645,902)        (1,335,833)       (4,057,864)

         Other income (expense), net                               214,112             66,936           (50,998)
                                                               -----------       ------------      ------------

         Loss before income taxes                                 (258,492)       (10,508,334)       (6,396,524)

         Income tax benefit, net (Note 9)                       (7,662,135)                 -                 -
                                                               -----------       ------------      ------------

         Net income (loss)                                     $ 7,403,643       ($10,508,334)     ($6,396,524)
                                                               ===========       ============      ===========

         Net income (loss) per share:
            Basic                                                    $0.90             ($1.74)          ($1.84)
                                                               -----------       ------------      -----------
            Diluted (1)                                              $0.53                  -                -
                                                               -----------       ------------      -----------

         Weighted average shares outstanding:
            Basic                                                7,949,705          6,048,148        3,482,504
                                                               -----------       ------------      -----------
            Diluted (1)                                         13,468,964                  -                -
                                                               ===========       ============      ===========


<FN>
(1)  Diluted loss per share in 1997 and 1996 was anti-dilutive.
</FN>
</TABLE>




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

                                       F-3

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
               FOR THE YEARS ENDED JUNE 30, 1998 AND 1997 AND THE
                         SIX MONTHS ENDED JUNE 30, 1996

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

Net loss                            -           -         -        -           -           -       -      (10,508,334) (10,508,334)
                                ----------------------------------------------------------------------------------------------------
Balance June 30, 1997              498,000 $4,980,000 6,826,504  $68,265  $20,972,256   106,304 ($11,250)($27,439,695) ($1,430,424)

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

</TABLE>

                                      F-4

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
               FOR THE YEARS ENDED JUNE 30, 1998 AND 1997 AND THE
                  SIX MONTHS ENDED JUNE 30, 1996 -- (Continued)
<TABLE>

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

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      -         -           -                0

Stock options exercised             -          -        52,590      525        (525)      -         -           -                0

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      -         -           -                0

Common stock issued in connection
  with the conversion of Class C
  Preferred Stock                (23,750)  (237,500)   237,500    2,375      235,125      -         -           -                0

Preferred stock dividends associated
  with the Class A Preferred Stock 12,696    126,960     -         -           -          -         -        (126.960)           0

Preferred stock dividends associated
  with the Class D Preferred Stock  6,511     65,110     -         -           -          -         -         (65.110)           0

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 statements.

</TABLE>

                                       F-5

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>

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

<S>     <C>    <C>    <C>    <C>    <C>    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                                                  $7,403,643      ($10,508,334)      ($6,396,524)
  Bad debt expense                                                                     (268,065)          411,285           (13,187)
  Depreciation and amortization                                                       1,196,480           870,123           361,467
  Deferred income tax benefit                                                        (7,889,987)                -                 -
  Write off and write down of fixed assets                                                    -           727,938                 -
  Decrease in debt issuance costs                                                             -           103,466         3,208,809
  Restructuring charge                                                                        -         3,407,482                 -
  Adjustments to reconcile net loss to net cash used in operating activities-
     Increase in accounts receivable                                                 (1,796,390)         (485,963)       (3,628,728)
     Decrease (increase) in prepaid expenses and other current assets                   138,981          (257,630)          (22,301)
     (Increase) decrease in other assets                                                (15,136)           32,913        (1,214,586)
     Increase (decrease) in accounts payable and accrued expenses                       204,052        (2,000,123)        1,132,292
                                                                                     ----------      ------------         ---------
                      Net cash used in operating activities                          (1,026,422)       (7,698,843)       (6,572,758)
                                                                                     ----------      ------------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment                                                  (556,557)         (468,912)         (123,068)
  Acquisition of Consolidated                                                                 -           105,602                 -
  Acquisition of Target                                                                       -          (452,032)                -
  Cash advances under notes receivable                                                        -                 -          (300,000)
                                                                                   --------------    ------------       ------------
                      Net cash used in investing activities                            (556,557)         (815,342)         (423,068)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from initial public offering ("IPO") - net of costs                                -        12,190,682                  -
  Proceeds from Private Placement - net of costs                                        (34,908)        2,202,855                  -
  Issuance of common stock in connection with the IPO                                         -            23,000                  -
  Dividends paid                                                                       (128,819)                -                  -
  Stock options exercised                                                                     -             5,543                  -
  Net borrowings (repayments) from note payable to bank                                 278,295         4,676,355           (56,515)
  Proceeds (repayment) from short-term debt                                             698,853        (4,104,227)        5,190,064
  Repayment of long-term debt                                                           (50,000)       (2,000,000)       (3,990,064)
  Proceeds (repayment) from revolving loan due to affiliate                             116,185        (3,454,235)        3,954,989
  Proceeds (payment) of lease obligations                                               200,927           (21,035)           (8,139)
  Purchase of treasury stock                                                                  -                 -           (11,250)
  Cash portion of assets distributed to TIA                                                   -                 -        (2,590,031)
                                                                                   -------------    --------------     -------------
                      Net cash provided by financing activities                       1,080,533         9,518,938         2,489,054

                      Net (decrease) increase in cash and cash equivalents             (502,446)        1,004,753        (4,506,772)

CASH AND CASH EQUIVALENTS, beginning of the year                                      1,382,243           377,490         4,884,262
                                                                                     ----------          --------         ---------
CASH AND CASH EQUIVALENTS, end of the year                                              879,797        $1,382,243           377,490
                                                                                    ===========        ==========         =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Payments For:
  Interest                                                                         $    821,336     $     468,588     $     825,563
  Income taxes                                                                     $     82,492     $      46,396     $     434,199

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

                                       F-6

<PAGE>



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

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
<TABLE>
<CAPTION>
                                                                                                                         Six Months
                                                                                    Year Ended          Year Ended          Ended
                                                                                   June 30, 1998       June 30, 1997   June 30, 1996
                                                                                   -------------       -------------   -------------
<S>                                                                                 <C>                <C>              <C>    

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 Common Stock for Stock Options exercised                                $       525                   -                -
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                   -                -
Conversion of 23,750 Class C Preferred Shares                                       $  (237,500)                  -                -
Issuance of Common Stock for conversion of 23,750
  Class C Preferred Shares                                                          $     2,375                   -                -
Issuance of preferred stock as partial repayment of long-term debt                            -        $  2,000,000                -
Issuance of preferred stock for the Private Placement                                         -        $  2,575,000                -
Issuance of preferred stock for the acquisition of Consolidated                               -        $    200,000                -
Issuance of preferred stock as dividends for the Class A preferred stock                      -            $205,000                -
Issuance of note payable to Consolidated stockholders                                         -        $    150,000                -
Issuance of common stock in connection with the acquisition of Target                         -              $9,000                -

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

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

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

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

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

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

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

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

                                       F-7

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BACKGROUND

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

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

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

2. SUBSEQUENT EVENT

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 $27
million  in cash (the "CAS  Sale"),  in  accordance  with the terms of the Asset
Purchase  Agreement  among the parties dated June 15, 1998 (the "Asset  Purchase
Agreement").

Under  the terms of the Asset  Purchase  Agreement  CAS  retained  its  accounts
receivable,  and the Company  expects that CAS will realize an  additional  $3.1
million from CAS's accounts receivable after payment of its liabilities.

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.

In connection with the CAS Sale,  Richard A. Faieta, a director and President of
CAS and a director and Executive Vice President to the Company became  President
of Geologistics Air Services, Inc. and resigned as a director and officer of the
Company, CAS and each of the Company's other subsidiaries.

For the fiscal  year ended June 30, 1998  revenues  from the  operations  of CAS
contributed  approximately  $54 million to the  Company's  total  revenues,  and
income  from  the  operations  of  CAS  contributed  approximately  $4.5  to the
Company's operating income.

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

                                       F-8

<PAGE>


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




                                                   Pro Forma/Unaudited
                                                       Year Ended
                                                     June 30, 1998
                                                     -------------
Statement of Operations Data:
Operating revenue                                       $43,408,396
Net income (loss)                                       (2,647,673)
Net (loss) per
  common share                                              ($0.33)

Balance Sheet Data:
Total assets                                            $40,852,384
Working capital                                           8,179,538
Current liabilities                                      16,351,162
Long-term indebtedness                                      138,006
Shareholders' equity                                    $24,363,216

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Principles of Consolidation

For the fiscal year ended June 30, 1998, the consolidated  financial  statements
include the accounts of Holding, CAS, Target, Amertranz and Consolidated.

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

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.

Goodwill

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


                                       F-9

<PAGE>


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



Stock Options

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

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

Revenue Recognition

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

Cash and Cash Equivalents

Cash at June 30, 1998  includes  $323,000 of  overnight  repurchase  agreements.
There were no such agreements at June 30, 1997.

Self Insurance

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

CAS has been self-insured for medical claims since February 6, 1996. For each of
the years  ended  June 30,  1998 and 1997,  CAS  accrued  approximately  $38,000
relating to medical claims.

Per Share Data

In 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings
per Share".  This statement  establishes  standards for computing and presenting
earnings per share ("EPS"),  replacing the  presentation  of currently  required
Primary EPS with a presentation  of Basic EPS. For entities with complex capital
structures,  the statement  requires the dual presentation of both Basic EPS and
Diluted EPS on the face of the statement of operations. Under this new standard,
Basic EPS is computed based on the weighted  average  number of shares  actually
outstanding  during the year.  Diluted  EPS  includes  the  effect of  potential
dilution from the exercise of  outstanding  dilutive  stock options and warrants
into common stock using the treasury stock method.


                                      F-10

<PAGE>


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



For the period ended June 30, 1998, the Company adopted SFAS No. 128,  "Earnings
Per Share".  In accordance  with the  requirements of SFAS No. 128, 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.

A  reconciliation  between  the  numerators  and  denominators  of the basic and
diluted EPS computations for net earnings for the year ended June 30, 1998 is as
follows:
<TABLE>
<CAPTION>

                                                           Year Ended June 30, 1998
                                                           ------------------------
                                                  Income              Shares          Per Share
                                                (Numerator)        (Denominator)       Amounts
                                                -----------        -------------       -------
<S>                                             <C>                 <C>                <C>    

Net earnings                                    $7,403,643
Preferred stock dividends                         (246,343)
                                                  -------- 

BASIC EPS
Net earnings attributable  to common stock      $7,157,300          7,949,705          $0.90
                                                ==========          =========          =====

EFFECT OF DILUTIVE SECURITIES
Convertible Preferred Stock                                         5,327,969
Stock Options                                                         191,290
Stock Warrants                                                              0
                                                                   ----------

DILUTED EPS
Net earnings attributable  to common stock
  and assumed preferred conversions
  and option exercises                          $7,157,300         13,468,964          $0.53
                                                ==========         ==========          =====
</TABLE>

Options to  purchase  225,800  shares of common  stock 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.  The options were
still outstanding at the end of the period.

Adoption of SFAS No. 128 requires that the Company's reported loss per share for
fiscal 1997 and 1996 be restated.  There are no material differences between the
amounts  previously  recorded and the restated amounts.  For the year ended June
30, 1997 and the six months ended June 30, 1996 no diluted EPS is presented,  as
the effect of  dilutive  securities  would be  anti-dilutive  on loss per common
share. A reconciliation between the numerators and denominators of the basic EPS
computations  for net losses for the year ended June 30, 1997 and the six months
ended June 30, 1996 is as follows:
<TABLE>
<CAPTION>

                                             Year Ended June 30, 1997            Six Months Ended June 30, 1996
                                             ------------------------           -------------------------------
                                         Income        Shares      Per Share   Income       Shares     Per Share
                                       (Numerator)  (Denominator)   Amounts  (Numerator) (Denominator)  Amounts
                                       -----------  -------------   -------  -------------------------  -------
<S>                                  <C>                                   <C>    

Net loss                             ($10,508,334)                         ($6,396,524)
Preferred stock dividends                 (12,875)                                   0
                                     -------------                         ------------

BASIC EPS
Net loss attributable to common stock($10,521,209)   6,048,148    ($1.74)  ($6,396,524)     3,482,504   ($1.84)
                                     =============   =========    =======  ============     =========   =======
</TABLE>

For the year ended June 30,  1997,  2,008,889  shares of  convertible  preferred
stock were not  included in the  computation  of diluted EPS due to their effect
being anti-dilutive.

                                      F-11

<PAGE>


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




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.

Recently Issued Accounting Pronouncements

In June 1997,  the  Financial  Accounting  Standards  Board issued SFAS No. 130,
"Reporting  Comprehensive Income", which establishes standards for reporting and
display of comprehensive income and its components (revenue, expenses, gains and
losses) in a full set of general purpose financial statements.  The Company does
not expect the adoption to have a material impact on the financial statements.

Reclassifications

Certain amounts in the prior years' consolidated  financial statements have been
reclassified to conform with the 1998 presentation.

4. PROPERTY AND EQUIPMENT, NET
<TABLE>
<CAPTION>

                                                                               June 30,          June 30,
                                                                                 1998              1997
                                                                                 ----              ----
<S>                                                                          <C>               <C>    

         Property and Equipment consists of the following:
                  Furniture and fixtures                                     $   726,888       $   730,341
                  Computer equipment                                             658,617           665,738
                  Leasehold improvements                                         202,059            25,538
                  Vehicles                                                       116,036           171,801
                                                                             -----------       -----------
                                                                               1,703,600         1,593,418
                  Less:  Accumulated depreciation and amortization               947,778           858,518
                                                                             -----------       -----------
                                                                             $   755,822       $   734,900
                                                                             ===========       ===========
</TABLE>

5. ACQUISITIONS

(a) On  February 7, 1996,  Holding  acquired  all of the issued and  outstanding
stock of Amertranz and the former  stockholders  of Amertranz  received  870,254
shares  (which  consist of the  investment  in  Amertranz  Worldwide  of 518,056
shares,  assigned notes of 280,888 shares and 71,310 shares  associated with the
Interim  Financing)  of Holding's  common stock and options to purchase  224,399
shares of Holding's common stock valued at $4,415,000 or approximately $4.25 per
share and option. The Amertranz transaction has been accounted for as a purchase
and resulted in goodwill of  approximately  $12.1 million which  represents  the
excess of the cost over the fair value of the assets acquired.


                                      F-12

<PAGE>


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



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

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

(d) The following unaudited pro forma financial  information for the Company for
the years ended June 30, 1997 and 1996,  gives  effect to the  Consolidated  and
Target  acquisitions  as if they  occurred at the beginning of the fiscal period
presented.  These pro forma results have been prepared for comparative  purposes
only,  and do not purport to be indicative  of the results of  operations  which
actually would have resulted had the acquisitions occurred on the date indicated
or which may result in the future:
<TABLE>
<CAPTION>

                                                                              Pro Forma
                                                                              ---------
                                                          Year Ended                      Six Months Ended
                                                         June 30, 1997                      June 30, 1996
                                                         -------------                   ----------------
<S>                                                     <C>                                 <C>    

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

6. DEBT

As of June 30, 1998 and 1997,  long-term and  short-term  debt  consisted of the
following:
<TABLE>
<CAPTION>

                                                                June 30, 1998    June 30, 1997
                                                                -------------    -------------
<S>                                                             <C>              <C>   

         Promissory note to TIA and CFS (a)                     $7,332,126       $6,680,200
         Revolving loan to TIA and CFS (b)                         905,913          789,728
         Asset-based financing (c)                               6,745,853        6,467,558
         Notes payable to TIA (d)                                        -          953,073
         Promissory note to
              Consolidated Shareholders (e)                         60,500          137,500
                                                               -----------          -------

         Total debt                                             15,044,392       15,028,059
         Less: Current portion                                 (11,033,892)     (10,940,559)
                                                                -----------      ------------
         Long-term debt                                          4,010,500        4,087,500
                                                               ============      ============
</TABLE>

(a) On February 7, 1996, as part of the Agreement, Holding issued to TIA and CFS
a  $10,000,000  promissory  note which  bears  interest  at the rate of 8.0% per
annum. On July 3, 1996, Holding repaid $2,000,000 of this debt from the proceeds
of the IPO and  converted  $2,000,000  of the note  into  Class  A,  non-voting,
cumulative,  convertible  preferred  stock.  As  of  June  30,  1998  and  1997,
$7,332,126  (includes  $1,332,126 of accrued interest) and $6,680,200  (includes
$680,200 of accrued  interest),  respectively,  was outstanding under this note.
All  obligations  under this note were repaid on July 13, 1998 with the proceeds
from the CAS Sale.


                                      F-13

<PAGE>


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



(b) As  part of the  Agreement,  TIA and  CFS  have  agreed  to lend to CAS on a
revolving loan basis, an amount up to the net cash  collections of TIA and CFS's
accounts  receivable  as of  February  7,  1996 and  additional  amounts  at the
discretion of TIA and CFS, up to an aggregate maximum of $4,000,000  outstanding
at any time,  pursuant to the terms of a Revolving Credit  Promissory Note. Only
funds advanced at the discretion of TIA and CFS bear interest, at the greater of
(i) 1% per month or (ii) at a rate of 4% over prime.  The note is secured by all
of the assets of CAS and is  guaranteed by Holding and  Amertranz.  Furthermore,
the note  discussed  here and in (a) above  are  subordinated  to the  Company's
revolving credit  obligations to BNY (see below).  On January 16, 1997, upon the
closing of the BNY Facility,  the Company repaid  $3,570,768 of this note. As of
June 30, 1998 and 1997,  $905,913 and $789,728,  respectively,  was  outstanding
under this  facility.  All  obligations  under this note were repaid on July 13,
1998 with the proceeds from the CAS Sale.

(c) In January, 1997, the Company's  subsidiaries  ("Borrowers") entered into an
Accounts  Receivable  Management and Security Agreement with BNY Financial Corp.
("BNY") whereby the Borrowers  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 ("BNY  Facility") is subject to interest at a rate of 2.0% per annum
over the prevailing  prime rate as defined by BNY (8.5% as of June 30, 1998). At
June 30, 1998, the outstanding  balance on the BNY Facility was $6,745,853 which
represented 86% of the approximate  $7,807,000 available  thereunder.  BNY has a
security interest in all present and future accounts  receivable,  machinery and
equipment  and other assets of the  Borrowers and the BNY Facility is guaranteed
by Holding. This debt was repaid on July 13, 1998 with the proceeds from the CAS
Sale (and CAS acquired the Amertranz  subsidiary's portion of the debt). The BNY
Facility  remains  in  place  and  available  for  use by the  Company's  Target
subsidiary.

(d) In October 1995,  Amertranz  obtained a $500,000  subordinated  secured loan
from TIA,  which was  increased  to $800,000 in January 1996 ("TIA  Loan").  The
original  TIA Loan bears  interest at the rate of 12% per annum.  As of June 30,
1997,  the  Company  had  $953,073  (including  $153,073  of  accrued  interest)
outstanding  under the TIA Loan. On November 28, 1997, the Company acquired this
debt  ($1,000,000)  in  exchange  for the  issuance  of  100,000  shares  of the
Company's Class D Preferred Stock.

(e) 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, 1998, the amount outstanding under this note was $60,500.
This note bears  interest  at the rate of 8% per annum and now  matures  July 1,
1999.

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

The indebtedness to TIA and CFS is subordinated to the obligations under the BNY
Facility.

7. SHAREHOLDERS' DEFICIT

Preferred Stock

As of June 30, 1998, the authorized  preferred stock of the Company is 2,500,000
shares.  As of June 30, 1998,  621,387 shares of preferred stock are outstanding
as follows:



                                      F-14

<PAGE>


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


<TABLE>
<CAPTION>

                                                          Number of Shares Outstanding
                                                          ----------------------------
                                Class A (a)   Class B (b)    Class C (c)   Class D (d)   Class E (e)      Total
                                -----------   -----------    -----------   -----------   -----------      -----
<S>                               <C>             <C>           <C>            <C>          <C>          <C>

Balance at June 30, 1997            220,500        20,000       257,500              -            -      498,000

     Issuances                       12,696             -                      106,511      158,180      277,387
     Conversions                  (110,250)       (20,000)      (23,750)             -            -     (154,000)
                                    -------        ------       --------       -------      --------     -------

Balance at June 30, 1998           122,946              -       233,750        106,511      158,180      621,387
                                   =======        =======       =======        =======      =======      =======
</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 B Preferred  Stock.  On October 10, 1996,  the Company  issued  20,000
shares of Class B, non-voting,  convertible  preferred stock with a par value of
$10.00 for all of the issued and outstanding shares of Consolidated.

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

On November 24, 1997,  20,000 shares of Class B Preferred  Stock were  converted
into 200,000 shares of the Company's common stock.

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

The Class C Preferred Stock will pay cumulative cash dividends at an annual rate
of $1.00 per share payable the last day of each calendar  quarter in cash or, at
the option of the  Company,  in shares of common stock  provided a  registration
statement with respect to the underling shares of common stock is in effect. The
Company is  prohibited  from  paying any  dividends  on common  stock or Class A
Preferred  Stock unless all required Class C Preferred Stock dividends have been
paid. Each share of Class C Preferred Stock may be converted at any time, at the
option of the

                                      F-15

<PAGE>


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



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.

During  fiscal  year ending June 30,  1998,  23,750  shares of Class C Preferred
Stock were converted into 237,500 shares of the Company's common stock.

(d) Class D Preferred  Stock.  On November 28, 1997,  the Company  acquired from
TIA, Inc. $1,000,000 of secured debt of the Amertranz 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.

The Class D 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
D Preferred  Stock,  at the rate of $10.00 per share.  The Company is prohibited
from  paying any cash  dividends  on common  stock and other  junior  securities
unless all required Class D Preferred Stock dividends have been paid. Each share
of Class D 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 D Preferred  Stock  holders are entitled to a  liquidation  preference  of
$10.00 per share plus all accrued and unpaid dividends.

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.

(e)  Class  E  Preferred  Stock.  The  Company  entered  into an  Extension  and
Composition Agreement dated as of November 7, 1997 (the "Composition Agreement")
with  certain  general  unsecured  trade  creditors of the  Company's  Amertranz
subsidiary,  whereby  $1,581,799 of trade debt of the Amertranz  subsidiary  was
acquired by the Company in exchange  for the  issuance of 158,180  shares of the
Company's non-voting Class E Preferred Stock, par value $10.00 per share.

The Class E Preferred Stock will pay dividends as follows:

         (i) Semi-annual  dividends (the "Semi-Annual  Dividends") payable as of
each  February 15 and September 30 of each year (the  "Semi-Annual  Distribution
Dates"), commencing February 15, 1998, to holders of outstanding shares of Class
E  Preferred  Stock  of  record  on  such  Semi-Annual  Distribution  Date.  The
Semi-Annual  Dividends  are payable  solely  from the  Company's  "Reported  Net
Profits"  (as  defined  below),  for the six month  period  ending on June 30 or
December 31 immediately  preceding the Semi-Annual  Distribution  Date (the "Six
Month Period").  As used herein,  "Reported Net Profits" means the net income of
the  Company  before  amortization  of  goodwill  for the  applicable  period as
reported  by the Company in its  applicable  financial  statements  filed on its
Quarterly Report on Form 10-Q or Annual Report on Form 10-K, as the case may be,
filed with the Securities and Exchange  Commission.  The Semi-Annual Dividend on
each  outstanding   share  of  Class  E  Preferred  Stock  on  each  Semi-Annual
Distribution  Date will be equal to the quotient obtained by dividing (a) 20% of
the Reported Net Profits for the preceding  Six Month Period,  by (b) the number
of issued shares of Class E Preferred  Stock  including  outstanding  shares and
shares  which have been  redeemed or otherwise  acquired by the Company.  In the
event that in any Six Month Period the Company  shall report a net loss,  before
amortization of goodwill (the "Net Loss"), the Net Loss shall be carried forward
into  succeeding  Six Month Periods and shall be used to reduce the Reported Net
Profits reported in succeeding Six Month Period(s).


                                      F-16

<PAGE>


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



         (ii) In addition to the  Semi-Annual  Dividends,  additional  dividends
(the "Additional  Dividends") are payable as of February 15, 1998, September 30,
1998,  February 15, 1999, and September 30, 1999 (the  "Additional  Distribution
Date"), to holders of outstanding shares of Class E Preferred Stock of record on
such Additional  Distribution Date. The Additional  Dividend on each outstanding
share of Class E Preferred  Stock on each Additional  Distribution  Date will be
equal to the quotient obtained by dividing (a) the amount required to be paid by
the Company's Target subsidiary to the Company's Amertranz subsidiary,  pursuant
to the  Customer  Sale  Agreement  dated as of June  20,  1997,  by and  between
Amertranz and Target, with respect to the Six Month Period immediately preceding
the relevant Additional Distribution Date, by (b) the number of issued shares of
Class E Preferred Stock including  outstanding shares and shares which have been
redeemed or otherwise acquired by the Company.

         (iii) In  addition  to the  Semi-Annual  Dividends  and the  Additional
Dividends,   special   dividends  (the  "Special   Dividends")  are  payable  on
outstanding  shares of Class E Preferred Stock from the net cash proceeds to the
Company from the sale of any equity securities prior to mandatory  conversion or
redemption of the Class E Preferred  Stock,  as follows:  To the extent at least
30% of such net cash proceeds are not used to redeem shares of Class E Preferred
Stock  (such  amount  not used to redeem  shares of Class E  Preferred  Stock is
hereinafter referred to as the "Aggregate Special Dividend Proceeds"), a Special
Dividend will be paid on each outstanding  share of Class E Preferred Stock. The
Special Dividend to be paid on each outstanding share of Class E Preferred Stock
will be equal to the  quotient  obtained by dividing (a) the  Aggregate  Special
Dividend Proceeds, by (b) the number of issued shares of Class E Preferred Stock
including  outstanding  shares and shares which have been  redeemed or otherwise
acquired by the Company.  Any Special  Dividend is payable on the tenth business
day following the receipt by the Company of such net cash proceeds to holders of
outstanding shares of Class E Preferred Stock of record on such date.

The cumulative amount of all Semi-Annual  Dividends,  Additional Dividends,  and
Special Dividends (collectively,  "Dividends") to be paid on each share of Class
E Preferred Stock throughout the time such share is outstanding shall not exceed
the par value.  Furthermore,  the aggregate  amount of Dividends  payable on any
Semi-Annual  Distribution Date or Additional  Dividend Date, as the case may be,
will be reduced by the amount of certain other  payments  required to be made by
the Company on such date  pursuant to the  Composition  Agreement,  and any such
reduction  will be  applied  pro rata  among all  outstanding  shares of Class E
Preferred Stock. No Dividends will be paid if such payment would cause a default
under, or violate the terms or conditions of, any agreement  between the Company
and one or more of its secured creditors.  Any Dividends not paid as a result of
any agreement between the Company and one or more of its secured creditors shall
accrue and be paid when permitted.

With respect to the  distribution  of assets upon  liquidation,  dissolution  or
winding up of the Company,  whether voluntary or involuntary,  the shares of the
Class E Preferred  Stock shall rank:  (i) senior to the Company's  Common Stock;
(ii) junior to the Company's Class C 10% Convertible Preferred Stock and Class D
Preferred  Stock;  and (iii) pari passu with any other class of capital stock or
series of preferred stock now existing or established  hereafter by the Board of
Directors.

All unredeemed  shares of Class E Preferred Stock will be deemed canceled on the
books and records of the Company  and/or its transfer  agent on December 1, 2004
(the  "Conversion  Date")  with no  further  action  on the  part of any  holder
thereof. In exchange for such cancellation, each holder will receive, as soon as
practicable  after the  Conversion  Date,  such number of shares of Common Stock
equal to: (i) the product  obtained by  multiplying  (a) the number of shares of
Class E  Preferred  Stock held of record by such  holder,  by (b) the par value,
divided by (ii) the greater of (a) the closing  market price of the Common Stock
on the Conversion  Date, as quoted on the market on which the shares are traded,
or (b) an amount equal to the sum of (A) $3.00,  plus (B) an amount equal to the
product  obtained by multiplying (1) $3.00, by (2) a fraction,  the numerator of
which is the aggregate  Dividends paid on a share of Class E Preferred Stock and
the  denominator of which is 1.25. If any conversion of Class E Preferred  Stock
would result in a fractional share of Common Stock,  such fractional share shall
be disregarded and the number of

                                      F-17

<PAGE>


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



shares of Common Stock  issuable  upon the  conversion  of the Class E Preferred
Stock shall be rounded to the nearest whole number of shares. Prior to mandatory
conversion,  the Company may redeem all or any portion of the outstanding shares
of Class E Preferred  Stock, at any time, for an amount in cash equal to the par
value for each share of Class E Preferred Stock so redeemed.

Warrants

As of June 30, 1998, 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 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,  1998,
332,209 stock options granted to employees and directors were  exercisable.  The
Company  accounts for  equity-based  awards  granted to employees  and directors
under APB Opinion No. 25 under which no  compensation  cost has been  recognized
for stock options  granted at market value (Note 3). Had  compensation  cost for
these stock options been determined  consistent with SFAS No. 123, the Company's
net loss and net loss per share would have been  increased to the  following pro
forma amounts:

                                      F-18

<PAGE>


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


<TABLE>
<CAPTION>

                                        Year Ended            Year Ended        Six Months Ended
                                       June 30, 1998         June 30, 1997        June 30, 1996
                                       -------------         -------------     ----------------
<S>                                      <C>                 <C>                   <C>   

Net income
(loss):        As Reported               $ 7,403,643         ($10,508,334)         ($6,396,524)
               Pro Forma                 $ 6,978,972         ($10,833,762)         ($6,997,862)

Basic EPS:     As Reported                     $0.90               ($1.74)              ($1.84)
               Pro Forma                       $0.86               ($1.79)              ($2.01)

Diluted EPS:   As Reported                     $0.53                     -                    -
               Pro Forma                       $0.51                     -                    -
</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 to the stockholders of Amertranz and the holders of certain
convertible  promissory  notes of  Amertranz  pursuant to the terms of the Asset
Exchange  Agreement.  At each of June 30, 1998 and 1997,  181,809  options  were
outstanding and 181,809 were exercisable.

The following table reflects  activity under the plan for the three-year  period
ended June 30, 1998:
<TABLE>
<CAPTION>

                                   Year Ended                 Year Ended               Six Months Ended
                                  June 30, 1998              June 30, 1997               June 30, 1996
                                  -------------              -------------               -------------
                                           Weighted                   Weighted                    Weighted
                                            Average                    Average                     Average
                                           Exercise                   Exercise                    Exercise
                                  Shares     Price         Shares       Price        Shares         Price
                                  ------     -----         ------       -----        ------         -----
<S>                              <C>           <C>        <C>            <C>       <C>              <C>

Outstanding at beginning of year 431,207       3.08       526,399        2.76        42,590            .16
Granted                                -          -             -           -       483,809           2.99
Exercised                        (14,198)       .16       (38,392)        .68             -              -
Forfeited                         (7,050)      4.25       (56,800)       2.06             -              -
Cancelled                         (2,850)      4.25             -           -             -              -

Outstanding at end of year       407,609      $3.16       431,207       $3.08       526,399           $2.76
Exercisable at end of year       332,209      $2.71       278,109       $2.18       196,005           $ .34
</TABLE>


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

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

                                               1996
                                               ----
Risk-Free Interest Rates                       6.05%
Expected Lives                                    5
Expected Volatility                           64.00%
Expected Dividend Yields                       0.00%

                                      F-19

<PAGE>


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





The following table summarizes  information  about stock options  outstanding at
June 30, 1998:
<TABLE>
<CAPTION>

                                Options Outstanding                               Options Exercisable
                                -------------------                               -------------------
                            Number            Weighted         Weighted         Number          Weighted
                          Outstanding          Average          Average       Exercisable        Average
                              at              Remaining        Exercise           at            Exercise
Exercise Prices            6/30/98         Contractual Life      Price           6/30/98         Price
---------------            -------         ----------------      -----           -------         -----
<S>                       <C>                  <C>               <C>            <C>              <C>    

$0.04 - $0.50              181,809              1.51              $0.35          181,809          $0.35
$4.00 - $6.00              225,800              2.93              $5.41          150,400          $5.56
                           -------                                              --------
$0.04 - $6.00              407,609              2.29              $3.16          332,209          $2.71
                                              =======                                            =======
</TABLE>


8. COMMITMENTS AND CONTINGENCIES

Leases

As of June 30,  1998,  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>    

         1999                                                     113,000                        1,096,883
         2000                                                     114,478                          656,643
         2001                                                      24,610                          491,445
         2002                                                           -                          260,721
                                                                ---------                        ---------

         Total minimum lease payments                             252,088                       $2,505,692
                                                                                                ==========
         Less--Amount representing interest                       (32,847)
                                                               -----------
                                                                 $219,241
</TABLE>

Employment Agreements

The Company has employment agreements with certain employees expiring at various
times through July 2001. 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,  1998,
excluding bonuses, was approximately $840,000.

Litigation

On June 15, 1998 the Company was served with a complaint by a former  consultant
to the Company.  The Company,  three  officers of the Company and two  principal
shareholders of the Company are named  defendants in the lawsuit.  The complaint
alleges breach of contract,  violations of the federal  anti-racketeering  laws,
fraud and  failure  to pay wages and  benefits.  The  complaint  seeks  economic
damages in excess of $5.6 million,  and punitive  damages of $7.5  million.  The
Company intends to vigorously  defend the action.  The Company believes that the
complaint is without  merit and that any material  recovery by the  plaintiff is
unlikely.


                                      F-20

<PAGE>


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



9. INCOME TAXES

The  Company  has a tax  net  operating  loss  carry  forward  of  approximately
$21,200,000,  available to offset future regular federal  taxable income,  which
expire from 2011 through 2013 and which are limited to annual  maximum  amounts,
due to ownership  changes,  as defined in  regulations  under Section 382 of the
Internal  Revenue Code. In 1998,  management  determined that it has become more
likely than not that the Company will realize its net deferred tax assets and it
has therefore reduced the valuation allowance by approximately  $6,309,000.  The
determination  that  the net tax  asset is  realizable  is based on the CAS Sale
subsequent to year-end,  which resulted in a gain of approximately  $16,690,000.
The Company's  reversal of the valuation  allowance against its net deferred tax
assets and  realization  of net  operating  loss carry  forwards  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) for the year
ended June 30, 1998 are as follows:

(In thousands)
Current:                                                            $       228
State

Deferred:                                                                      -
State
Federal, primarily NOL carry forwards                                    (7,890)
                                                                    ------------

Net income tax benefit                                              $    (7,662)
                                                                     ===========

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

<TABLE>
<CAPTION>
                                                        Six Months                 Years Ended
                                                      Ended June 30,                 June 30
                                                      --------------                 -------
(In thousands)                                             1996                1997              1998
                                                      --------------        ----------         --------
<S>                                                   <C>                   <C>             <C>    

Income tax benefit at U.S. statutory rate            $     (2,175)        $    (3,573)     $      (88)

Tax deductible goodwill                                                                        (2,158)

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

Valuation Allowance                                         2,155               3,533          (5,688)

Non deductible expenses                                        20                  40              44
                                                      -----------         -----------      -----------
                                                      $         -         $         -      $   (7,662)
                                                      ===========         ===========      ===========

</TABLE>



                                      F-21

<PAGE>


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



The components of deferred income taxes are as follows:




                                                      Years Ended June 30
                                                      -------------------
(In thousands)                                   1997                    1998
                                                 -----                   -----

NOLs                                             4,457                   7,328

Accrued amounts and other                            -                   1,131
                                                 ------                 ------
                                                 4,457                   8,459

Depreciation and amortization                        -                     185
                                                 -----                   -----
                                                 4,457                   8,644

Valuation allowance                             (4,457)                   (754)
                                                ------                   ------
                                                     -                    7,890
                                                ======                   ======


10. RELATED PARTY TRANSACTIONS

(a)  Under the  terms of a cargo  aircraft  charter  agreement  with  Tradewinds
Airlines, Inc. ("Tradewinds Air"), a subsidiary of Tradewinds Holdings, Inc., of
which  TIA owns  approximately  30% of the  outstanding  common  stock,  CAS has
exclusive  rights  until June 30, 2000 to the use of a leased  L-1011  freighter
aircraft.  While CAS is guaranteed the use of the L-1011 aircraft as needed,  it
pays only for actual use of the aircraft at market rates.  At June 30, 1998, CAS
had  outstanding  payables to Tradewinds  Air of  approximately  $1,697,520  and
accrued expenses of $352,411.

(b) CAS had sales to Target of  $317,795,  and related  accounts  receivable  of
approximately $191,000 as of and for the year ended June 30, 1998.

(c) In connection  with the  acquisition of  Consolidated,  the Company issued a
Promissory  Note  in the  amount  of  $150,000.  During  fiscal  year  1998  the
Promissory   Note  was   reduced   by  $27,000  as  a  result  of  a  net  worth
reconciliation,  per terms of the acquisition  agreement.  At June 30, 1998, the
amount  outstanding  under this note was $60,500.  The note bears interest at 8%
and now matures July 1, 1999.

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

Target had sales to Target - HKG and Target - SIN of  $742,908  and  $2,697,282,
respectively,  for the year ended June 30,  1998;  and  accounts  receivable  of
$198,036 and $808,962, respectively, at June 30, 1998.

At June 30, 1998, Target owes $304,725 and $182,878 to Target - HKG and Target -
SIN, respectively.

                                      F-22

<PAGE>



                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
TIA, Inc.:

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

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

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


                                                           KPMG PEAT MARWICK LLP

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

                                      F-23

<PAGE>



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

                                 BALANCE SHEETS

                           December 31, 1994 AND 1995
<TABLE>
<CAPTION>
                                                                                        1994              1995
                                                                                        ----              ----
                                        ASSETS
<S>                                                                                 <C>                <C>    

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

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

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

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

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

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

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

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

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



                 See accompanying notes to financial statements.
</TABLE>

                                      F-24

<PAGE>



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

                          STATEMENTS OF OPERATIONS AND
                         CHANGES IN ACCUMULATED DEFICIT

                  Years Ended December 31, 1993, 1994 and 1995


<TABLE>
<CAPTION>

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

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

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

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

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

     Total other expense                                (1,065,592)        (1,026,573)         (1,031,547)
                                                     -------------       ------------        ------------
ome before income taxes                                    868,859          2,661,303           2,366,129
Income taxes (Note 5)                                           --            108,201                  --
                                                     -------------       ------------        ------------

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

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











               See accompanying notes to the financial statements.
</TABLE>


                                      F-25

<PAGE>



                        AMERTRANZ WORLDWIDE HOLDING CORP.
            (FORMERLY THE FREIGHT FORWARDING BUSINESS OF TIA AND CFS)
                            STATEMENTS OF CASH FLOWS
                  Years Ended December 31, 1993, 1994 and 1995

<TABLE>
<CAPTION>
                                                                                         DECEMBER 31,
                                                                                         ------------
                                                                            1993             1994            1995
                                                                            ----             ----            ----
<S>                                                                    <C>              <C>              <C>    

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

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

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

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

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

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

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

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




               See accompanying notes to the financial statements.
</TABLE>

                                      F-26

<PAGE>



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

                          NOTES TO FINANCIAL STATEMENTS

                        December 31, 1993, 1994 and 1995


(1) Significant Accounting Policies

  Company Background

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

  Basis of Financial Statement Presentation

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

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

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

  Description of Business

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

  Revenue Recognition

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


                                      F-27

<PAGE>


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

                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

                        December 31, 1993, 1994 and 1995


(1)  Significant Accounting Policies - (Continued)

  Cash and Cash Equivalents

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

  Property and Equipment

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

  Income Taxes

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

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

  Financial Instruments

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

  Earnings per Share

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

  Reclassification

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

  Use of Estimates

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



                                      F-28

<PAGE>


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

                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

                        December 31, 1993, 1994 and 1995


(2)  Asset Exchange Agreement

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

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

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

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

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

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


                                      F-29

<PAGE>


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

                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

                        December 31, 1993, 1994 and 1995


(3) Notes Receivable

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

(4) Notes Payable

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

         Interest expense relates primarily to two notes payable as follows:

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

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

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



                                      F-30

<PAGE>


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

                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

                        December 31, 1993, 1994 and 1995


(5) Income Taxes

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

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

                                              1993
                                              ----
                       CURRENT             DEFERRED            TOTAL
                       -------             --------            -----

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


                                              1994
                                              ----
                       CURRENT            DEFERRED              TOTAL
                       -------            --------              -----

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


                                              1995
                                              ----
                       CURRENT             DEFERRED            TOTAL
                       -------             --------            -----

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


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

<TABLE>
<CAPTION>


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

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

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

                                                                     $       --         $ 108,201         $      --
                                                                     ==========         =========         =========
</TABLE>


                                      F-31

<PAGE>


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

                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

                        December 31, 1993, 1994 and 1995


(5) Income Taxes--(Continued)

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


                                                                                     1994                   1995
                                                                                     ----                   ----
<S>                                                                              <C>                      <C>    

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

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

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

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


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

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

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



                                      F-32

<PAGE>


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

                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

                        December 31, 1993, 1994 and 1995


(6) Leases

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



                  1996                $43,332
                  1997                $20,865


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

(7) Related Party Transactions

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

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

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

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

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

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

                                      F-33

<PAGE>


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

                  NOTES TO FINANCIAL STATEMENTS -- (Continued)

                        December 31, 1993, 1994 and 1995


(7) Related Party Transactions (Continued)

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

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

(8) Supplier and Credit Concentration

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

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

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

(9) Contingencies

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


                                      F-34

<PAGE>



                                                                     SCHEDULE II

                  SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                  Balance at   Charged to    Charged to
                                                   Beginning    Costs and       Other                   Balance at
                                                    of Year     Expenses      Accounts     Deductions   End of Year

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

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

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

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

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

  

For the fiscal year ended June 30, 1997

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

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

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

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

  
  Reserve for restructuring                        $   -         $ 3,408      $  -          $   (726)    $  2,682
                                                   ========      =======      ========      ========     ========


For the fiscal year ended June 30, 1998

  Allowance for doubtful accounts                  $    787      $   207      $  -          $   (479)    $    515
                                                   ========      =======      ========      ========     ========

  Accumulated depreciation and amortization
    of property and equipment                      $    859      $   536      $   (447)     $  -         $    948
                                                   ========      =======      ========      ========     ========

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

  Accumulated amortization of goodwill             $    709      $   596      $  -          $  -         $  1,305
                                                   ========      =======      ========      ========     ========

  
  Reserve for restructuring                        $  2,682      $  -         $  -          $ (2,418)    $    264
                                                   ========      =======      ========      ========     ========
</TABLE>


                                       S-1
<PAGE>