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, 2001 or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ___________ to ____________.

                        Commission file number: 0-29754

                             TARGET LOGISTICS, INC.
             (Exact name of registrant as specified in its charter)

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

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

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

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

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

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

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

Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

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

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant as of September 20, 2001 was $788,655.

The number of shares of common stock  outstanding  as of September  20, 2001 was
11,879,002

                      DOCUMENTS INCORPORATED BY REFERENCE

To the extent specified,  Part III of this Form 10-K incorporates information by
reference to the  Registrant's  definitive  proxy  statement for its 2001 Annual
Meeting of Shareholders (to be filed).




<PAGE>

                             TARGET LOGISTICS, INC.
                        2001 ANNUAL REPORT ON FORM 10-K

                               Table of Contents

                                                                            Page
                                                                            ----

                                     PART I

Item 1.    Business                                                           3
Item 2.    Properties                                                         5
Item 3.    Legal Proceedings                                                  5
Item 4.    Submission of Matters to a Vote of Security Holders                5

           Executive Officers of the Registrant                               6


                                    PART II

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


                                    PART III

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


                                    PART IV

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






                                       2
<PAGE>

                                     PART I


ITEM  1. BUSINESS

Background
----------

     Target Logistics, Inc. ("Company") provides freight forwarding services and
logistics  services,  through  its  wholly  owned  subsidiary,  Target  Logistic
Services,  Inc.  ("Target").  Prior to July 13, 1998,  the Company also provided
services  through its  wholly-owned  subsidiary,  Caribbean Air  Services,  Inc.
("CAS"). The Company has a network of offices in 32 cities throughout the United
States.

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

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

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

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

     The Company's freight  forwarding  services involve arranging for the total
transport of customers'  freight from the shipper's  location to the  designated
recipients, including the preparation of shipping documents and the providing of
handling,  packing and  containerization  services.  The Company concentrates on
cargo shipments weighing more than 50 pounds and generally requiring  second-day
delivery. The Company also assembles bulk cargo and arranges for insurance.  The
Company  has a network  of offices in 31 cities  throughout  the United  States,
including  exclusive  agency   relationships  in  17  cities.  The  Company  has
international    freight   forwarding   operations   consisting   of   strategic
relationships  in over 20 countries  including  share ownership in its exclusive
agents in China, Hong Kong, Philippines and Singapore. The Company has developed
an  expertise  in material  supply  logistics  to  manufacturing  concerns,  and
expanded its facilities  and  capabilities  to accommodate  rapid growth in this
specialty.  Currently,  the Company maintains  material supply warehouses in Los
Angeles and El Paso, and through its agents in Wuxi/China,  Penang/Malaysia, and
Singapore.  Current trends in electronic  manufacturing show that this area will
continue to rapidly grow worldwide and the Company has  established an excellent
reputation as a supply chain specialist.

Operations
----------

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

     The rates charged by the Company to its customers are based on destination,
shipment  weight and  required  delivery  time.  The  Company  offers  graduated
discounts for shipments with later scheduled  delivery times and rates generally
decrease in inverse proportion to the increasing weight of shipments. Due to the
high volume of freight controlled by the Company, it is able to 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.



                                       3
<PAGE>

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

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

     International Operations. The Company's international operations consist of
air and ocean  freight  movements  imported to and exported  from the  Company's
Target subsidiaries  network of offices in the United States.  During the fiscal
year  ended  June 30,  2001,  the  Company's  international  freight  forwarding
accounted for 27.6% of the Company's operating revenue.

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

     The  Company's   principal   customers  include  large   manufacturers  and
distributors of computers and other  electronic and  high-technology  equipment,
computer  software and wearing  apparel.  As of June 30,  2001,  the Company had
approximately 4,614 accounts.

     The Company markets its services  through an organization of  approximately
20 full-time salespersons and 31 independent sales agents supported by the sales
efforts of senior management, and the operations staff in the Company's offices.
The Company strongly  promotes team selling,  wherein the salesperson is able to
utilize expertise from other  departments in the Company to provide  value-added
services  to gain a specific  account.  The  Company  staffs  each  office  with
operational  employees to provide support for the sales team,  develop  frequent
contact with the customer's traffic  department,  and maintain customer service.
The Company believes that it is important to maintain  frequent contact with its
customers to assure satisfaction and to immediately react to resolve any problem
as quickly as possible.

     The  Company's   fashion   services   division   targets   customers   from
manufacturers  to retail  establishments  and  provides  specific  expertise  in
handling fashion-related shipments. The fashion services division specializes in
the movement of wearing apparel for manufacturing  customers to their department
store customers located throughout the United States.

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

Competition
-----------

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

     There is intense competition within the freight forwarding industry.  While
the  industry is highly  fragmented,  the  Company  most often  competes  with a
relatively  small  number of  forwarders  who have  nationwide  networks and the
capability  to provide a full range of services  similar to those offered by the
Company.  These include EGL, Inc.,  Pilot Air Freight,  Inc.,  and  Geologistics
Americas,  Inc. There is also  competition from passenger and cargo air carriers
and trucking companies.  On the international side of the business,  the Company
competes with forwarders that have a predominantly  international focus, such as


                                       4
<PAGE>

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 196 full-time  employees
as of June 30, 2001. None of the Company's  employees are currently covered by a
collective bargaining  agreement.  The Company has experienced no work stoppages
and considers its relations with its employees to be good.

Regulation
----------

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


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

     As of June 30, 2001, the Company leased terminal  facilities  consisting of
office and warehouse  space in 14 cities located in the United States,  and also
utilized 17 offices operated by exclusive agents. The Company's facilities range
in size from  approximately  1,000 square feet to  approximately  100,000 square
feet and  consist of offices  and  warehouses  with  loading  bays.  All of such
properties are leased from third parties. The Company's headquarters are located
in Baltimore,  Maryland,  and its principal warehouse facility is located in Los
Angeles,  California, and consists of approximately 100,000 square feet of floor
space  leased  pursuant  to the terms of a lease  which  expires  in July  2002.
Management  believes that its current  facilities are underutilized and are more
than sufficient for its planned growth.

The Company has an additional 13 terminal facilities in the following locations:

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


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

     The Company,  from time to time,  becomes involved in various routine legal
proceedings in the ordinary  course of its business.  The Company  believes that
the  outcome of all  pending  legal  proceedings  and  unasserted  claims in the
aggregate will not have a material adverse effect on its consolidated results of
operations, consolidated financial position or liquidity.


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

         None.




                                       5
<PAGE>

EXECUTIVE OFFICERS OF THE REGISTRANT

     The following is a listing of the  executive  officers of the Company as of
June 30,  2001.  There are no family  relationships  between any  Directors  and
Officers of the Company.

NAME                              AGE               POSITION

Stuart Hettleman...............    51     President and Chief Executive
                                          Officer

Philip J. Dubato...............    45     Vice President, Chief Financial
                                          Officer and Secretary

Christopher Coppersmith........    51     President and Chief Executive Officer,
                                          Target Logistic Services, Inc.

STUART HETTLEMAN has been President,  Chief Executive  Officer and a director of
the Company and a director and Executive  Vice  President of CAS, since February
7, 1996, and a director and Chairman of Target since May 8, 1997.

PHILIP J. DUBATO has been Vice President,  Chief Financial Officer and Secretary
of the  Company  since  February  3, 1997 and a director  of the  Company  since
September  18, 1998.  From 1984  through  1996,  Mr.  Dubato was employed by LEP
Profit  International,  Inc., a domestic and  international  freight  forwarder,
where he held successive  positions as Controller,  Chief Financial  Officer and
Executive Vice President.

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







                                       6
<PAGE>

                                    PART II

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

     The  Company's  common  stock,  $.01 par value  (the  "Common  Stock")  and
Redeemable  Common  Stock  Purchase  Warrants  (the  "Warrants")  trade  on  the
Over-The-Counter  (OTC) market  under the symbols TARG and TARGW,  respectively.
The warrants expired on June 28, 2001.

     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
available  through the OTC  market.  The  quotations  represent  prices  between
dealers and do not reflect the retailer markups,  markdowns or commissions,  and
may not represent actual transactions. There have been no dividends declared.

<TABLE>
<CAPTION>
                                               COMMON STOCK                  WARRANTS

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

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

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

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

   Fiscal Year Ended June 30, 2001
   First Quarter                          High    -    53/100          High    -   0
                                          Low     -    36/100          Low     -   0

   Second Quarter                         High    -    45/100          High    -   0
                                          Low     -    23/100          Low     -   0

   Third Quarter                          High    -    47/100          High    -   0
                                          Low     -    25/100          Low     -   0

   Fourth Quarter                         High    -    36/100          High    -   0
                                          Low     -    25/100          Low     -   0


</TABLE>
     On  September  20,  2001  there  were 747  shareholders  of  record  of the
Company's  Common Stock.  The closing price of the Common Stock on that date was
$0.20 per share.




                                       7
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA
        -----------------------

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


<CAPTION>
                                                                        Year Ended June 30,
                                               -------------------------------------------------------------------
<S>                                                 <C>             <C>           <C>          <C>           <C>
                                                    1997            1998          1999         2000          2001
Statement  of Operations Data:
    Operating revenue                          $   75,352       $   97,784    $   51,720    $  84,088    $   90,143
    Cost of transportation                         56,884           73,599        34,790       56,949        60,912
                                               ----------       ----------    ----------    ---------    ----------
    Gross profit                                   18,468           24,185        16,930       27,139        29,231
    Selling, general & administrative
      expenses                                     24,300           23,012        21,304       28,183        31,552
    Restructuring charge                           (3,407)               -             -            -             -
    Operating income (loss)                    $   (9,239)      $    1,173    $   (4,374)   $  (1,044)   $   (2,321)
    Gain on sale of subsidiary                          -                -        24,832            -             -
    Net income (loss)                          $  (10,508)      $    7,404    $   14,016    $  (1,197)   $   (1,772)
    Net income (loss) per common share         $    (1.74)      $     0.90    $     1.63    $   (0.14)   $    (0.18)

Balance Sheet Data:
    Total assets                               $   29,821       $   38,547    $   34,932    $  36,669    $   36,484
    Working capital (deficit)                     (12,541)         ( 2,340)        5,717        4,735           536
    Current liabilities                            27,158           26,085        15,251       18,474        20,440
    Long-term indebtedness                          4,094            4,138            24           92            34
    Shareholders' equity (deficit)             $   (1,430)      $    8,324    $   19,657    $  18,102      $ 16,010


</TABLE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS
         -----------------------------------------------------------

     This Annual Report on Form 10-K contains certain forward-looking statements
reflecting the Company's  current  expectations  with respect to its operations,
performance,  financial condition,  and other developments.  Such statements are
necessarily  estimates reflecting the Company's best judgment based upon current
information  and  involve  a number  of  risks  and  uncertainties.  While it is
impossible  to identify  all such  factors,  factors  which  could cause  actual
results to differ materially from  expectations are: (i) the Company's  historic
losses and  ability  to  achieve  operating  profitability,  (ii) the  Company's
ability to increase operating  revenue,  improve gross profit margins and reduce
selling,  general and administrative  costs, (iii) competitive  practices in the
industries  in which the Company  competes,  (iv) the  Company's  dependence  on
current  management,  (v) the impact of current and future laws and governmental
regulations  affecting the transportation  industry in general and the Company's
operations in  particular,  (vi) general  economic  conditions,  and (vii) other
factors  which may be identified  from time to time in the Company's  Securities
and Exchange Commission filings and other public announcements. In addition, the
effects on the air freight industry of the September 11, 2001 terrorist  attacks
in New York,  Washington and Pennsylvania are unknown at this time. There can be
no assurance  that these and other  factors will not affect the accuracy of such
forward-looking  statements.  Forward-looking  statements  are  preceded  by  an
asterisk (*).

Overview
--------

     The Company generated  operating revenues of $90.1 million,  $84.1 million,
and $51.7  million,  and had a net and loss of $1.5 million,  $1.2 million and a
net profit of $14.0 million for the fiscal years ended June 30, 2001,  2000, and
1999,  respectively.  The fiscal year 1999 results  include a $16.6 million gain
(net of tax) arising  from the CAS Sale which  closed on July 13, 1998,  and the
fiscal year 1998 results  include a $7.6 million net income tax benefit  arising
from the CAS sale.



                                       8
<PAGE>

     The Company had (losses) or earnings before interest,  taxes,  depreciation
and amortization  (EBITDA) of approximately ($1.4 million),  ($0.06),  and $21.4
million,  for the fiscal years ended June 30, 2001, 2000, and 1999 respectively.
(As stated  above,  the fiscal 1999 and 1998 results  include gains and benefits
arising from the CAS Sale.) EBITDA,  like operating income, does not include the
effects  of  interest  and  taxes,  and  excludes  the  "non-cash"   effects  of
depreciation and amortization on current assets.  Companies have some discretion
as to which elements of depreciation and amortization are excluded in the EBITDA
calculation.  The Company excludes all depreciation charges related to property,
plant and equipment,  and all amortization  charges,  including  amortization of
goodwill,  leasehold  improvements and other intangible assets. While management
considers EBITDA useful in analyzing the Company's  results,  it is not intended
to replace any  presentation  included in the Company's  consolidated  financial
statements.

     * Management believes that the Company's revenue growth for the fiscal year
ended June 30, 2001 indicate that  management's  concentrated  focus on Target's
business together with the Company's available resources will enable the Company
to achieve growth. In addition, for the year ended June 30, 2001, Target's gross
profit  margin  (i.e.,  gross  operating  revenue  less  cost of  transportation
expressed as a percentage of gross operating  revenue)  increased  slightly from
the 2000 period.  Management  continues to believe that its focus on  increasing
revenues  and gross  profit  margin will  restore the Company to  profitability.
Management  intends to continue to work on growing  revenue by  increasing  both
sales generated by the Company's employed sales personnel and sales generated by
exclusive forwarders (previously referred to as independent agents).  Management
also intends to continue to work on improving  Target's  gross profit margins by
reducing fixed selling, general and administrative costs.

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

Years ended June 30, 2001 and 2000

     Operating  Revenue.  Operating  revenue  increased to $90.1 million for the
year ended June 30, 2001 from $84.1  million for the year ended June 30, 2000, a
7.2%  increase,  due to increased  domestic  freight  volume.  Domestic  revenue
increased  by 16.3%  to  $65,255,740  for the year  ended  June  30,  2001  from
$56,093,399  for the year  ended  June 30,  2000,  while  international  revenue
decreased  by 11.1%  to  $24,887,462  for the year  ended  June  30,  2001  from
$27,994,796 for the year ended June 30, 2000,  primarily the result of decreases
in air export and import freight volume.

     Cost of Transportation.  Cost of transportation decreased slightly to 67.6%
of  operating  revenue for the year ended June 30, 2001 from 67.7% of  operating
revenue for the year ended June 30, 2000.

     Gross  Profit.  As a  result  of the  factors  described  in  the  previous
paragraph,  gross profit for the year ended June 30, 2001 increased  slightly to
32.4% of operating  revenue  from 32.3% of operating  revenue for the year ended
June 30, 2000.

     Selling,  General  and  Administrative  Expenses.   Selling,  general,  and
administrative  expenses  increased to 35.0% of  operating  revenue for the year
ended June 30, 2001, from 33.5% of operating revenue for the year ended June 30,
2000.   Within  the   Company's   Target   subsidiary,   selling,   general  and
administration  expenses (excluding exclusive forwarder commission expense) were
16.7% of  operating  revenue  for the year ended June 30, 2001 and 16.3% for the
year ended June 20, 2000, a 2.5%  increase.  This  increase was primarily due to
increased  operating  labor  costs to handle the  increased  freight  volume and
increased  selling labor cost  resulting  from  increases in the number of sales
personnel employed by Target.  Exclusive forwarder  commission expense was 16.4%
and  15.2%  of  operating   revenue  for  the  year  June  30,  2001  and  2000,
respectively,  a 7.9%  increase,  resulting  from  increases in forwarder  agent
freight volume.

     Net Loss.  The Company  realized a net loss of ($1,771,583)  for the year
ended June 30, 2001,  compared to a net loss of ($1,196,605)  for the year ended
June 30, 2000.

Years ended June 30, 2000 and 1999

     Operating  Revenue.  Operating  revenue  increased to $84.1 million for the
year ended June 30, 2000 from $51.7  million for the year ended June 30, 1999, a
62.6% increase. The prior year includes 12 days of CAS operating revenues due to
the CAS Sale on July 13, 1998.  Within the  operations of the  Company's  Target
subsidiary  operating  revenue  increased by 67.7% to  $84,088,195  for the year
ended June 30,  2000 from  $50,156,285  for the  corresponding  1999  period,  a
$33,931,910  increase due to increased freight volume. Also within the company's


                                       9
<PAGE>

Target  subsidiary,  domestic  and  international  revenue  increased  by 81% to
$56,093,399  and by 46% to  $27,994,796  for the year ended  June 30,  2000 from
$30,958,528 and $19,197,757 for the year ended June 30, 1999, respectively.

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

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

     Selling,  General  and  Administrative  Expenses.   Selling,  general,  and
administrative  expenses  decreased to 33.5% of  operating  revenue for the year
ended June 30, 2000, from 41.2% of operating revenue for the year ended June 30,
1999.  This  decrease  was  primarily  due  to (i)  lower  selling  general  and
administrative  expenses as a percentage  of sales within the  Company's  Target
subsidiary  partially  offset by an increase in exclusive  forwarder  commission
expense due to the Company's addition of new exclusive forwarders;  and (ii) the
elimination of CAS expenses as a result of the CAS Sale.

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

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

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

     General.  During the year ended June 30,  2001,  net cash used in operating
activities was $766,541.  Cash used in investing  activities was $450,694.  Cash
provided by financing  activities  was $649,024,  which  primarily  consisted of
borrowings under the Company's accounts receivable financing facility.

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

     Capital  expenditures.  Capital expenditures for the fiscal year ended June
30, 2001 were $450,694.

     GMAC Facility.  During the year ended June 30, 2001,  the Company's  Target
subsidiary  maintained a $10 million revolving credit facility ("GMAC Facility")
with GMAC  Commercial  Credit  LLC  ("GMAC"),  guaranteed  by the  Company.  The
interest rate of the GMAC Facility is prime plus 1%. Under the terms of the GMAC
Facility,  Target  can  borrow  the  lesser of $10  million  or 85% of  eligible
accounts  receivable.  The  borrowings  under the GMAC Facility are secured by a
first lien on all of the Company's and its subsidiaries'  assets. As of June 30,
2001,  there were  outstanding  borrowings of $5,679,912 under the GMAC Facility
(which represented 82% of the amount available thereunder) out of a total amount
available for borrowing under the GMAC Facility of approximately $6,967,000. The
GMAC Facility expires on January 14, 2003.

     * Working Capital Requirements. Cash needs of the Company are currently met
by funds generated from operations,  the Company's accounts receivable financing
facility,  and funds  remaining  from the CAS  Sale.  As of June 30,  2001,  the
Company  had  $1,286,983  available  under its $10 million  accounts  receivable
financing  facility and  approximately  $5,486,893 in cash from  operations  and
remaining  proceeds  from the CAS Sale.  The Company  believes  that its current
financial resources will be sufficient to finance its operations and obligations


                                       10
<PAGE>

(current and long-term  liabilities) for the long and short terms.  However, the
Company's  actual working capital needs for the long and short terms will depend
upon numerous factors,  including the Company's  operating results,  the cost of
increasing the Company's sales and marketing activities, and, competition,  none
of which can be predicted with certainty.

Inflation
---------

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

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

     The Company's  principal  financial  instrument is long-term debt under the
GMAC Facility which provides for interest at the prime rate plus 1%. The Company
is affected by market risk exposure  primarily  through the effect of changes in
interest  rates on amounts  payable by the Company  under the GMAC  Facility.  A
significant  rise in the  prime  rate  could  materially  adversely  affect  the
Company's business,  financial condition and results of operations.  At June 30,
2001, an aggregate principal amount of $5,679,912 was outstanding under the GMAC
Facility  bearing  interest at an annual  rate of 7.75%.  If  principal  amounts
outstanding  under the Company's credit facility remained at this year-end level
for an entire year and the prime rate increased or decreased,  respectively,  by
0.5%,  the Company would pay or save,  respectively,  an  additional  $28,400 in
interest  in that  year.  The  Company  does not  utilize  derivative  financial
instruments to hedge against changes in interest rates or for any other purpose.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
         -------------------------------------------

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

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

         None




                                       11
<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 2001  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 2001
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 2001
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 2001
Annual Meeting of Shareholders.




                                       12
<PAGE>

                                    PART IV
                                    -------

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

(a)  1.  Financial Statements
         --------------------

                                                                            Page
                                                                            ----

Report of Independent Public Accountants                                    F-1
Consolidated Balance Sheets as of June 30, 2001 and 2000                    F-2
Consolidated Statements of Operations for the Years Ended
   June 30, 2001, 2000, and 1999                                            F-3
Consolidated Statements of Shareholders' Equity for the
   Years Ended June 30, 2001, 2000, and 1999                                F-4
Consolidated Statements of Cash Flows for the Years Ended
   June 30, 2001, 2000, and 1999                                            F-5
Notes to Consolidated Financial Statements                                  F-7

(a)  2.  Financial Statement Schedules
         -----------------------------

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

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

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

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

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

3.2       By-Laws  of  Registrant,  as amended  (incorporated  by  reference  to
          Exhibit 3.2 to the Registrant's  Quarterly Report on Form 10-Q for the
          Quarter Ended December 31, 1998, File No. 0-29754)

4.1       Warrant Agent Agreement  (incorporated  by reference to Exhibit 4.3 to
          the Registrant's  Registration Statement on Form S-1, Registration No.
          333-03613)

4.2       Form of Amendment No. 1 to Warrant Agent Agreement dated June 13, 1997
          (incorporated   by  reference  to  Exhibit  4.7  to  the  Registrant's
          Registration Statement on Form S-1, Registration No. 333-30351)

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

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

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

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

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

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

10.2      Restated  and Amended  Accounts  Receivable  Management  and  Security
          Agreement,  dated as of July 13, 1998 by and between  GMAC  Commercial
          Credit LLC  (successor by merger to BNY Financial  Corp.),  as Lender,
          and Target Logistic Services, Inc., as Borrower, and guaranteed by the
          Registrant ("GMAC Facility  Agreement")  (incorporated by reference to
          Exhibit 10.2 to the  Registrant's  Annual  Report on Form 10-K for the
          Fiscal Year Ended June 30, 1999, File No. 0-29754)

10.3      Letter  amendment to GMAC Facility  Agreement,  dated January 25, 2001
          (incorporated  by  reference  to  Exhibit  10.3  to  the  Registrant's
          Quarterly Report on Form 10-Q for the Quarter Ended December 31, 2000,
          File No. 0-29754)



                                       13
<PAGE>

10.4      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)

10.5      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)

10.6      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)

10.7      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)

10.8      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)

10.9      Addendum to  Employment  Agreement  effective  June 24,  1999  between
          Target Logistics, Inc. and Stuart Hettleman (incorporated by reference
          to Exhibit 10.8 to the Registrant's Annual Report on Form 10-K for the
          Fiscal Year Ended June 30, 2000, File No. 0-29754)

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

10.11(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

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

          None.




                                       14
<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.


                                            TARGET LOGISTICS, INC.



Date:  September 25, 2001                   By:     /s/ Stuart Hettleman
                                               ---------------------------------
                                               Stuart Hettleman
                                               President


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

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

/s/ Stuart Hettleman            President, Chief Executive    September 25, 2001
----------------------------    Officer and Director
Stuart Hettleman


/s/ Michael Barsa               Director                      September 25, 2001
----------------------------
Michael Barsa


/s/ Brian K. Coventry           Director                      September 25, 2001
----------------------------
Brian K. Coventry


/s/ Christopher Coppersmith     Director                      September 25, 2001
----------------------------
Christopher Coppersmith


/s/ Philip J. Dubato            Vice President, Chief         September 25, 2001
----------------------------    Financial Officer,
Philip J. Dubato                Principal Accounting Officer
                                and Director








                                       15
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Target Logistics, Inc.:

We  have  audited  the  accompanying   consolidated  balance  sheets  of  Target
Logistics,  Inc. (a Delaware corporation),  and subsidiaries as of June 30, 2001
and 2000, and the related consolidated  statements of operations,  shareholders'
equity and cash flows for the three years then ended. These financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Target Logistics,
Inc.  and  subsidiaries  as of June 30, 2001 and 2000,  and the results of their
operations  and their cash flows for the years  ended  June 30,  2001,  2000 and
1999, in conformity with accounting  principles generally accepted in the United
States.

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
August 10, 2001


                                      F-1
<PAGE>

<TABLE>
                             TARGET LOGISTICS, INC.
                          CONSOLIDATED BALANCE SHEETS


<CAPTION>
                                     ASSETS
                                                                                   June 30, 2001      June 30, 2000
                                                                                   -------------      -------------
CURRENT ASSETS:
<S>                                                                                 <C>                <C>
Cash and cash equivalents                                                           $5,486,893         $6,055,104
Accounts receivable, net of allowance for doubtful accounts of
   $1,391,157 and $1,630,768, respectively                                          15,055,373         15,149,824
Deferred income taxes                                                                  245,960          1,972,411
Prepaid expenses and other current assets                                              188,135             32,361
                                                                                    ----------         ----------
                Total current assets                                                20,976,361         23,209,700
PROPERTY AND EQUIPMENT, NET                                                            725,138            575,186
OTHER ASSETS                                                                           258,717            268,615
DEFERRED INCOME TAXES                                                                2,688,040            183,694
GOODWILL, net of accumulated amortization of $3,119,239
   and $2,523,371, respectively                                                     11,835,784         12,431,652
                                                                                    ----------         ----------
                                 Total assets                                      $36,484,040        $36,668,847
                                                                                   ===========        ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable                                                                    $5,594,124         $3,908,883
Accrued expenses                                                                     2,197,726          2,030,224
Accrued transportation expenses                                                      6,713,348          7,614,884
Note payable to bank                                                                 5,679,912          4,636,821
Dividends payable                                                                      115,862            116,064
Taxes payable                                                                           65,375             78,830
Lease obligation - current portion                                                      73,909             88,600
                                                                                    ----------         ----------
                Total current liabilities                                           20,440,256         18,474,306
LEASE OBLIGATION -- LONG TERM                                                           33,624             92,374
                                                                                    ----------         ----------
                Total liabilities                                                  $20,473,880        $18,566,680
                                                                                   -----------        -----------

COMMITMENT AND CONTINGENCIES

SHAREHOLDERS EQUITY:
Preferred Stock, $10 par value; 2,500,00 shares authorized,
   320,696 shares issued and outstanding                                             3,206,960          3,206,960
Common Stock, $.01 par value; 30,000,000 shares authorized,
   12,613,953 shares issued and outstanding                                            126,139            126,139
Paid-in capital                                                                     23,905,248         23,905,248
Accumulated deficit                                                                (10,107,172)        (8,491,375)
Less:  Treasury stock, 734,951 shares held at cost
                                                                                    ----------         ----------
                                                                                      (644,805)          (644,805)
                                                                                    ----------         ----------
                Total shareholders' equity                                          16,010,160         18,102,167
                                                                                    ----------         ----------
                Total liabilities and shareholders' equity                         $36,484,040        $36,668,847
                                                                                   ===========        ===========

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




                                      F-2
<PAGE>

<TABLE>
                             TARGET LOGISTICS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS

<CAPTION>
                                                            Year Ended           Year Ended           Year Ended
                                                          June 30, 2001         June 30, 2000        June 30, 1999
                                                          -------------         -------------        -------------

OPERATING REVENUES:
<S>                                                        <C>                   <C>                  <C>
Operating revenues - Target subsidiary                     $90,143,202           $84,088,195          $50,156,285
Operating revenues - Caribbean subsidiary                            -                     -            1,563,298
                                                           -----------           -----------          -----------
  Operating revenues                                        90,143,202            84,088,195           51,719,583

COST OF TRANSPORTATION:
Cost of transportation - Target subsidiary                  60,912,272            56,948,811           33,431,246
Cost of transportation - Caribbean subsidiary                        -                     -            1,358,031
                                                           -----------           -----------          -----------
  Cost of transportation                                    60,912,272            56,948,811           34,789,277

GROSS PROFIT:
Gross profit - Target subsidiary                            29,230,930            27,139,384           16,725,039
Gross profit - Caribbean subsidiary                                  -                     -              205,267
                                                           -----------           ------------          ----------
  Gross profit                                              29,230,930            27,139,384           16,930,306

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
("SG&A"):
SG&A - Target subsidiary                                    15,025,467            13,692,166           12,454,287
SG&A - Target subsidiary
(Exclusive forwarder commissions)                           14,802,994            12,803,075            5,929,533
SG&A - Caribbean subsidiary                                          -                     -              595,338
SG&A - Corporate                                               826,886               698,635            1,491,598
Depreciation and amortization                                  896,610               989,205              833,268
                                                           -----------          ------------           ----------
  Selling, general and administrative expenses              31,551,957            28,183,081           21,304,024

Operating (loss)                                            (2,321,027)           (1,043,697)          (4,373,718)

OTHER INCOME (EXPENSE):
Interest (expense) income                                     (228,451)              (44,013)             291,510
Other income                                                         -                     -              119,291
Gain on sale of subsidiary                                           -                     -           24,832,353
                                                           -----------          ------------           ----------

(Loss) income before income taxes                           (2,549,478)           (1,087,710)          20,869,436
(Benefit) provision for income taxes                          (777,895)              108,895            6,853,000
                                                           -----------          ------------          -----------
Net (loss) income                                          $(1,771,583)         $ (1,196,605)         $14,016,436
                                                           ============         =============         ============

Net (loss) income per share:
  Basic                                                         $(0.18)               $(0.14)               $1.63
                                                                ======                ======                =====
  Diluted                                                       $(0.18)               $(0.14)               $0.99
                                                                =======               =======               =====

Weighted average shares outstanding:
  Basic                                                      11,879,002            11,015,126            8,351,386
                                                             ==========            ==========            =========
  Diluted                                                    11,879,002            11,015,126           14,121,246
                                                             ==========            ==========           ==========

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



                                      F-3
<PAGE>

<TABLE>
                                                             TARGET LOGISTICS, INC.
                                                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                FOR THE YEARS ENDED JUNE 30, 2001, 2000 AND 1999


<CAPTION>
                                  Preferred Stock        Common Stock     Additional    Treasury Stock
                                  ---------------        ------------      Paid-In      --------------     Accumulated
                                 Shares     Amount     Shares    Amount    Capital     Shares     Amount      Deficit      Total
                                 ------     ------     ------    ------    -------     ------     ------      -------      -----
<S>           <C> <C>           <C>     <C>          <C>        <C>     <C>          <C>        <C>       <C>           <C>
Balance, June 30, 1998          621,387 $6,213,870   8,419,094  $84,190 $22,546,331  (106,304)  $(11,250) $(20,509,373) $ 8,323,768

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Cash dividends associated
  with the Class A and C
  Preferred Stock                     -          -           -        -           -         -          -      (320,424)    (320,424)
Net loss                              -          -           -        -           -         -          -    (1,771,583)  (1,771,583)
                               -------- ----------  ---------- -------- -----------  -------- ----------  ------------  -----------
Balance, June 30, 2001          320,696 $3,206,960  12,613,953 $126,139 $23,905,248  (734,951) $(644,805) $(10,583,382) $16,010,160
                               ======== ==========  ========== ======== ===========  ======== ==========  ============  ===========


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


                                      F-4
<PAGE>

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

<CAPTION>
                                                                                     Year Ended       Year Ended        Year Ended
                                                                                   June 30, 2001    June 30, 2000     June 30, 1999
                                                                                   -------------    -------------     -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                 <C>              <C>               <C>
  Net (loss) income                                                                 $(1,771,583)     $(1,196,605)      $14,016,436
  Bad debt expense                                                                     (239,611)         312,659           803,567
  Depreciation and amortization                                                         896,610          989,205           833,268
  Gain on sale of CAS                                                                         -                -       (24,832,353)
  Deferred income tax                                                                  (777,895)         108,895         5,624,987
  Adjustments to reconcile net loss to net cash used in operating activities-
     Decrease (increase) in accounts receivable                                         334,062       (4,609,167)        2,898,268
     (Increase) decrease in prepaid expenses and other current assets                  (155,774)         120,579           245,395
     Decrease (increase) in other assets                                                  9,898            9,767          (113,962)
     Increase (decrease) in accounts payable and accrued expenses                       937,752          (44,945)       (1,716,369)
                                                                                    -----------       ----------        ----------
                  Net cash used in operating activities                                (766,541)      (4,309,612)       (2,240,763)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment                                                  (450,694)        (435,787)         (605,092)
  Proceeds from sale of CAS, net of closing costs                                             -                -        25,762,397
  Acquisition of Target                                                                       -                -           (77,000)
                                                                                    -----------       ----------        ----------
                  Net cash (used in) provided by investing activities                  (450,694)        (435,787)       25,080,305

CASH FLOWS FROM FINANCING ACTIVITIES:
  Dividends paid                                                                       (320,626)        (409,788)         (340,660)
  Stock options exercised                                                                     -                -            64,005
  Purchase of treasury stock                                                                  -           (1,120)         (643,685)
  Redemption of Class E Preferred Stock                                                       -                -        (1,141,750)
  Borrowing from note payable to bank                                                83,376,995       76,853,359        43,737,733
  Repayment of note payable to bank                                                 (82,333,904)     (73,566,516)      (49,133,608)
  Repayment of long-term debt due to affiliates                                               -                -        (7,332,126)
  Repayment of long-term debt                                                                 -          (10,500)          (50,000)
  Repayment of revolving loan due to affiliate                                                -                -          (905,913)
  (Payment) proceeds of lease obligations                                               (73,441)          53,473           (91,740)
                                                                                    -----------      -----------       -----------
                  Net cash provided by (used in) financing activities                   649,024        2,918,908       (15,837,744)
                                                                                    -----------      -----------       -----------

                  Net (decrease) increase in cash and cash equivalents                 (568,211)      (1,826,491)        7,001,798

CASH AND CASH EQUIVALENTS, beginning of year                                          6,055,104        7,881,595           879,797
                                                                                     ----------       ----------       -----------
CASH AND CASH EQUIVALENTS, end of year                                               $5,486,893       $6,055,104        $7,881,595
                                                                                     ==========       ==========        ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
  Interest                                                                           $  506,793       $  361,349        $  105,157
  Income taxes                                                                       $    2,499       $   19,934        $1,243,022

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



                                      F-5
<PAGE>



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

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

<CAPTION>
                                                                                     Year Ended       Year Ended        Year Ended
                                                                                    June 30, 2001   June 30, 2000     June 30, 1999
                                                                                    -------------   -------------     -------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

TIA, Inc. conversion of 106,511 Class D Preferred Shares                                      -      $(1,065,110)                -
Issuance of Common Stock for TIA, Inc. conversion of 106,511
   Class D Preferred Shares                                                                   -      $    25,821                 -
Retirement of Treasury Stock                                                                  -      $    11,250                 -
Conversion of 36,000 and 23,750, respectively, Class C Preferred Shares                       -                -         $(360,000)
Issuance of Common Stock for Conversion of 36,000 and 23,750,
   respectively, Class C Preferred Shares                                                     -                -         $   3,600
Issuance of Common Stock for Stock Options exercised                                          -                -         $   1,749
Issuance of Common Stock in connection with the acquisition of Target                         -                -         $  10,779

























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



                                      F-6
<PAGE>

                             TARGET LOGISTICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   BUSINESS

In January  1996,  Target  Logistics,  Inc.  ("Holding"  or the  "Company")  was
incorporated  in the state of  Delaware.  Effective  February  7, 1996,  Holding
concluded an Asset Exchange  Agreement (the  "Agreement") with TIA, Inc. ("TIA")
and Caribbean  Freight  System,  Inc.  ("CFS"),  among  others.  As part of this
transaction,  Holding  received the air freight  forwarding  business of TIA and
CFS. Holding then contributed the air freight forwarding business of TIA and CFS
to  Caribbean  Air  Services,  Inc.  ("CAS") in return for all of the issued and
outstanding shares of CAS. TIA and CFS received 2,100,000 shares of common stock
of the Company  and a  $10,000,000  promissory  note in addition to stock in the
Company.

The  Company's  freight  forwarding  services  involve  arranging  for the total
transport of customers'  freight from the shipper's  location to the  designated
recipients, including the preparation of shipping documents and the providing of
handling,  packing and  containerization  services.  The Company concentrates on
cargo shipments weighing more than 50 pounds and generally requiring  second-day
delivery. The Company also assembles bulk cargo and arranges for insurance.  The
Company  has a network  of offices in 31 cities  throughout  the United  States,
including  exclusive  agency   relationships  in  17  cities.  The  Company  has
international    freight   forwarding   operations   consisting   of   strategic
relationships  in over 20 countries  including  share ownership in its exclusive
agents in China, Hong Kong, Philippines and Singapore. The Company has developed
an  expertise  in material  supply  logistics  to  manufacturing  concerns,  and
expanded its facilities  and  capabilities  to accommodate  rapid growth in this
specialty.  Currently,  the Company maintains  material supply warehouses in Los
Angeles and El Paso, and through its agents in Wuxi/China,  Penang/Malaysia, and
Singapore.  Current trends in electronic  manufacturing show that this area will
continue to rapidly grow worldwide and the Company has  established an excellent
reputation as a supply chain specialist.

2.   DISPOSITION OF ASSETS

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

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

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

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Principles of Consolidation

For the  fiscal  years  ended June 30,  2001,  2000 and 1999,  the  consolidated
financial statements include the accounts of Holding,  Target Logistic Services,
Inc.  ("Target"),   CAS  and  other  inactive   subsidiaries.   All  significant
intercompany balances and transactions have been eliminated upon consolidation.





                                      F-7
<PAGE>

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


Property and Equipment

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

Accounting for Long-Lived Assets

The Company accounts for long-lived  assets in accordance with the provisions of
Statement of Financial  Accounting  Standards ("SFAS") No. 121,  "Accounting for
the  Impairment of Long-Lived  Assets and for  Long-Lived  Assets to be Disposed
Of." This statement establishes financial accounting and reporting standards for
the  impairment of long-lived  assets,  certain  identifiable  intangibles,  and
goodwill related to those assets to be held and used, and for long-lived  assets
and certain identifiable intangibles to be disposed of. Management has performed
a review of all long-lived  assets and has determined  that no impairment of the
respective carrying value has occurred as of June 30, 2001.

Goodwill

Goodwill represents the excess of cost over net assets acquired and is amortized
on a straight-line basis over 25 years.

Income Taxes

The Company accounts for income taxes under SFAS No. 109, "Accounting for Income
Taxes."' Under SFAS No. 109, deferred tax asserts and liabilities are recognized
for  the  future  tax  consequences  attributable  to  differences  between  the
financial  statement  carrying  amounts of existing  assets and  liabilities and
their 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 or liabilities of a change in tax rates is recognized in the
period that the tax change occurs.

Stock Options

The Company  accounts for its employee stock option plan in accordance  with the
provisions of Accounting  Principles  Board ("APB") Opinion NO. 25,  "Accounting
for Stock  Issued  to  Employees,"  and  related  interpretations.  Compensation
expense  relating to employee  stock options is recorded only if, on the date of
grant,  the fair value of the underlying  stock exceeds the exercise price.  The
Company adopted the  disclosure-only  requirements of SFAS No. 123,  "Accounting
for  Stock-Based  Compensation,"  which allows entities to continue to apply the
provisions of APB Opinion No. 25 for transactions with employees and provide pro
forma net income and pro forma earnings per share disclosures for employee stock
options as if the fair value based method of accounting in SFAS No. 123 had been
applied to these transactions.

The  Company  accounts  for  non-employee  stock-based  awards in which goods or
services are the consideration  received for the equity instruments issued based
on the fair value of the consideration  received or the fair value of the equity
instrument issued, whichever is more readily determinable.

Revenue Recognition

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



                                      F-8
<PAGE>

Cash and Cash Equivalents

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

Per Share Data

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

A  reconciliation  between  the  numerators  and  denominators  of the basic and
diluted EPS computations for net earnings for the year ended June 30, 2001, 2000
and 1999 is as follows:

<TABLE>
<CAPTION>
                                                         Year Ended June 30,                     Year Ended June 30,
                                               -----------------------------------     -------------------------------------
                                                               2001                                    2000
                                                               -----                                   ----
                                                 Income        Shares      Per Share     Income        Shares      Per Share
                                               (Numerator)  (Denominator)   Amounts    (Numerator)  (Denominator)   Amounts
                                               -----------  -------------   -------    -----------  -------------   -------

<S>                                           <C>                                     <C>
Net earnings                                  $(1,771,583)                            $(1,196,605)
Preferred stock dividends                       $(320,424)                              $(357,172)

BASIC EPS
Net earnings attributable to common stock     $(2,092,007)   11,879,002     $(0.18)   $(1,553,777)    11,015,126    $(0.14)
                                              ===========    ==========     =======   ============    ==========    =======
stock

DILUTED EPS
Add back Preferred Stock dividends            $   320,424                             $   357,172
Net earnings  attributable  to common
stock and assumed preferred conversions
and option exercises                          $(1,771,583)  $11,879,002     $(0.18)   $(1,196,605)    11,015,126    $(0.14)
                                              ===========   ===========     =======   ============    ==========    =======
ANTI-DILUTIVE SECURITIES
Convertible Preferred Stock                                   6,951,166                                5,127,730
Stock Options                                                     6,434                                    6,389
                                                              ---------                                ---------
Total Anti-Dilutive Securities                                6,957,600                                5,134,119
                                                              =========                                =========
</TABLE>


<TABLE>
<CAPTION>
                                                  Year Ended June 30, 1999
                                                  ------------------------
                                               Income        Shares    Per Share
                                            (Numerator)  (Denominator)  Amounts
                                            -----------  ------------- ---------

<S>                                        <C>
Net earnings                               $14,016,436
Preferred stock dividends                  $  (444,661)

BASIC EPS
Net earnings attributable to common stock  $13,571,775    8,351,386      $1.63
                                           ===========    =========      =====

EFFECT OF DILUTIVE SECURITIES
Convertible Preferred Stock                               5,698,663
Stock Options                                                71,197
                                                          ---------
DILUTED EPS
Add back Preferred Stock dividends
Net earnings  attributable  to common
stock and assumed preferred conversions
and option exercises                       $14,121,246  $14,121,246      $0.99
                                           ===========  ===========      =====

</TABLE>


                                      F-9
<PAGE>

Options to purchase 570,000,  450,000 and 440,000 shares of common stock for the
years ended June 30, 2001, 2000 and 1999, respectively, were not included in the
computation  of diluted EPS because the  exercise  prices of those  options were
greater  than the  average  market  price of the  common  shares,  thus they are
anti-dilutive. The options were still outstanding at the end of the period.

Warrants to purchase 109,448, 5,183,731 and 5,183,731 shares of common stock for
the years ended June 30, 2001, 2000 and 1999, respectively, were not included in
the computation of diluted EPS because they were also anti-dilutive.

Derivative Instruments and Hedging Activities

In July 1999, the Financial  Accounting  Standards Board ("FASB")  approved SFAS
No. 137 "Accounting for Derivative Instruments and Hedging Activities - Deferral
of the Effective date of FASB Statement No. 133." SFAS No. 133,  "Accounting for
Derivative  Instruments  and  Hedging  Activities"  establishes  accounting  and
reporting  standards  requiring  that  every  derivative  instrument,  including
certain derivative  instruments embedded in other contracts,  be recorded in the
balance  sheet as either an asset or liability  measured at its fair value.  The
statement  also  requires  that  changes  in  the  derivative's  fair  value  be
recognized in earnings  unless specific hedge  accounting  criteria are met. The
adoption  of SFAS  No.  133 did not  have a  material  effect  on the  Company's
Consolidated Financial Statements.

Fair Value of Financial Instruments

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

Foreign Currency Transactions

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

Reclassifications

Certain amounts in the prior years' consolidated  financial statements have been
reclassified to conform with the 2001 presentation.

Comprehensive Income

During 1998,  the Company  adopted the  provisions  of SFAS No. 130,  "Reporting
Comprehensive  Income," which establishes standards for reporting and displaying
comprehensive  income  and  its  components  in a full  set of  general  purpose
financial  statements.  The  adoption of this  standard has had no impact on the
Company's financial  statements.  Accordingly,  the Company's  comprehensive net
income  (loss) is equal to its  reported  net income  (loss) for the years ended
June 30, 2001, 2000, and 1999.

Recent Accounting Pronouncements

In December 1999, the Securities and Exchange  Commission ("SEC") released Staff
Accounting   Bulletin  ("SAB")  No.  101,  "Revenue   Recognition  in  Financial
Statements,"  which  provides  guidance  on the  recognition,  presentation  and
disclosure of revenue in financial statements filed with the SEC.  Subsequently,
the SEC released SAB 101B, which delayed the implementation  date of SAB 101 for
registrants with fiscal years that begin between December 16, 1999 and March 15,
2000.  The Company was required to be in conformity  with the  provisions of SAB
101, as amended by SAB 101B, no later than October 1, 2000.  The adoption of SAB
101,  as amended by SAB 101B,  did not have a material  effect on the  Company's
consolidated financial position, results of operations or cash flows.



                                      F-10
<PAGE>

In March 2000, the Financial  Accounting  Standards Board issued  Interpretation
No.  44  (FIN.  44),  "Accounting  for  Certain  Transactions   Involving  Stock
Compensation, and Interpretation of APB Opinion No. 25." The FIN. 44 is intended
to clarify  certain  problems that have arisen in practice since the issuance of
APB No. 25,  "Accounting  for Stock Issued to Employees."  The effective date of
the interpretation was July 1, 2000. The provisions of the interpretation  apply
prospectively,  but they will also cover certain events occurring after December
15, 1998 and after  January  12,  2000.  The  adoption of FIN. 44 did not have a
material  adverse  effect on the Company's  current or  historical  consolidated
financial  statements,  but may affect future accounting  regarding stock option
transactions.

In July 2001, the FASB issued SFAS No. 141 "Business Combinations:" and SFAS No.
142 "Goodwill and Other  Intangible  Assets." SFAS No. 141 requires all business
combinations  initiated  after  June 30,  2001 to be  accounted  for  using  the
purchase  method.  Under SFAS No.  142,  goodwill  and  intangible  assets  with
indefinite  lives are no longer  amortized  but are  reviewed  annually (or more
frequently if impairment indicators arise) for impairment.  Separable intangible
assets  that  are not  deemed  to have  indefinite  lives  will  continue  to be
amortized over their useful lives (but with no maximum life).  The  amortization
provisions  of SFAS No. 142 apply to goodwill  and  intangible  assets  acquired
after June 30, 2001.  With respect to goodwill and  intangible  assets  acquired
prior to July 1, 2001,  the Company is required to adopt SFAS No. 142 as of July
1, 2002.  The Company is currently  evaluating  the effect that  adoption of the
provisions  of SFAS No.  142 that are  effective  July 1,  2002 will have on its
results of operations and financial position.

4.   PROPERTY AND EQUIPMENT, NET
<TABLE>
<CAPTION>
                                                                        June 30, 2001           June 30, 2000
                                                                        -------------           -------------

     Property and Equipment consists of the following:
<S>                                                                       <C>                     <C>
          Furniture and fixtures                                          $ 821,553               $ 760,655
          Computer Equipment                                                212,821                 186,098
          Computer Equipment - Capital Lease                                499,398                 462,709
          Computer Software                                                 394,551                  84,638
          Leasehold Improvements                                            363,935                 347,465
          Vehicles                                                          116,036                 116,036
                                                                          ---------               ---------
                                                                          2,408,294               1,957,601
          Less:  Accumulated depreciation and amortization (a)            1,683,156               1,382,415
                                                                          ---------               ---------
                                                                          $ 725,138               $ 575,186
                                                                          =========               =========

</TABLE>
(a) Includes  accumulated  depreciation and amortization of capital lease assets
of  $386,377   and  $203,936  for  the  year  ended  June  30,  2001  and  2000,
respectively.

5.   DEBT

As of June 30, 2001 and 2000,  long-term and  short-term  debt  consisted of the
following:

<TABLE>
<CAPTION>
                                                                        June 30, 2001           June 30, 2000
                                                                         -------------          -------------

<S>                                                                       <C>                    <C>
         Asset-based financing                                            $5,679,912             $4,636,821

         Less:  Current portion                                           (5,679,912)            (4,636,821)
                                                                          ----------             ----------
         Long-term debt                                                   $        -             $        -
                                                                          ==========             ==========
</TABLE>

During the years ended June 30, 2001 and 2000, the Company's  Target  subsidiary
("Borrower") maintained an Accounts Receivable Management and Security Agreement
with GMAC  Commercial  Credit LLC  ("GMAC")  whereby  the  Borrower  can receive
advances  of up to  85% of the  net  amounts  of  eligible  accounts  receivable
outstanding to a maximum of  $10,000,000.  The credit line ("GMAC  Facility") is
subject to interest at a rate of 1% and 2.0% per annum over the prevailing prime
rate as  defined  by GMAC  (6.75%  and  9.5%)  as of June  30,  2001  and  2000,


                                      F-11
<PAGE>

respectively.  At June 30, 2001 and 2000,  the  outstanding  balance on the GMAC
Facility was  $5,679,912  and $4,636,821  which  represented  82% and 74% of the
approximate  $6,967,000 and $6,241,000 available  thereunder,  respectively.  At
June 30,  2001,  the  remaining  amount  available  under the GMAC  Facility was
approximately $1,287,000. GMAC has a security interest in all present and future
accounts  receivable,  machinery  and equipment and other assets of the Borrower
and the GMAC Facility is guaranteed by the Company. The GMAC Facility expires on
January 14, 2003. In connection with the CAS Sale, the  outstanding  obligations
then due from the  Target  and CAS  subsidiaries  under the GMAC  Facility  were
repaid on July 13,  1998 by CAS with the  proceeds  from the CAS  Sale,  and CAS
acquired a closed subsidiary's portion of the debt.

6.   SHAREHOLDERS' EQUITY

Preferred Stock

As of June 30, 2001, the authorized  preferred stock of the Company is 2,500,000
shares.  As of June 30, 2001,  320,696 shares of preferred stock are outstanding
as follows:

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

<S>             <C> <C>               <C>            <C>               <C>              <C>               <C>
Balance at June 30, 1998              122,946        233,750           106,511          158,180           621,387
     Issuances                              -              -                 -                -                 -
     Conversions                            -        (36,000)                          (158,180)         (194,180)
                                      -------        --------         --------         --------         ---------
                                                                             -
Balance at June 30, 1999              122,946        197,750           106,511                -           427,207
     Issuances                              -              -                 -                -                 -
     Conversions                            -              -          (106,511)               -          (106,511)
                                      -------        -------          ---------        --------          ---------

Balance at June 30, 2000              122,946        197,750                 -                -           320,696
     Issuances                              -              -                 -                -                 -
     Conversions                            -              -                 -                -                 -
                                      -------        -------          --------         --------           -------

Balance at June 30, 2001              122,946        197,750                 -                -           320,696
                                      =======        =======          ========         ========           =======

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

     The Class A Preferred Stock will pay cumulative cash dividends at an annual
rate of $1.00 per share in cash or, at the option of the  Company,  in shares of
Class A  Preferred  Stock,  at the rate of $10.00  per  share.  The  Company  is
prohibited  from paying any cash  dividends  on common stock unless all required
Class A  Preferred  Stock  dividends  have  been  paid.  Each  share  of Class A
Preferred Stock may be converted at any time, at the option of the holder,  into
common stock at a conversion  price  (subject to adjustment) of the lower of (i)
$6.00 per share,  or (ii) 80% of the  average of the closing bid and asked price
per  share of  Common  Stock on the day prior to the  conversion  date.  Class A
Preferred  Stock holders are entitled to a liquidation  preference of $10.00 per
share plus all accrued and unpaid dividends.

     On December 31, 1996,  June 30, 1997,  December 31, 1997 and June 30, 1998,
the Company issued 10,000, 10,500, 6,887 and 5,809 respectively, shares of Class
A,  non-voting,  cumulative,  convertible  preferred  stock  with a par value of
$10.00  representing  the  semi-annual   dividend  due  the  Class  A  preferred
shareholders.

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



                                      F-12
<PAGE>

     There  were no  shares  of  Class A  Preferred  Stock  converted  into  the
Company's Common Stock during fiscal years ending June 30, 2001 and 2000.

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

     The Class C Preferred Stock will pay cumulative cash dividends at an annual
rate of $1.00 per share  payable the last day of each  calendar  quarter in cash
or,  at the  option  of the  Company,  in shares  of  common  stock  provided  a
registration  statement with respect to the underling  shares of common stock is
in effect.  The Company is prohibited  from paying any dividends on common stock
or Class A Preferred Stock unless all required Class C Preferred Stock dividends
have been paid.  Each share of Class C Preferred  Stock may be  converted at any
time, at the option of the holder, into 10 shares of common stock. There were no
shares of Class C Preferred  Stock  converted  into the  Company's  Common Stock
during fiscal year ending June 30, 2001 and 2000.

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

(d)  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 a closed  subsidiary,  whereby
$1,581,799 of trade debt of the closed 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. On September 24, 1998 the Company
announced the redemption of the Class E Preferred Shares.

Warrants

As of June 30, 2001, the Company had a warrant  outstanding to purchase  109,448
shares of common stock at $1.56 per share. This warrant was issued in connection
with the CAS Sale. The warrants are exercisable.

On June 28, 2001, warrants to purchase 5,074,283 shares of Common Stock at $6.00
per share  expired.  These  warrants were in  connection  with (i) the Company's
February  1996  and May 1996  bridge  financings,  whereby  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, (ii) with the IPO of July
3,  1996,  whereby  the  Company  issued  2,300,000  shares of common  stock and
2,300,000  warrants.  Each warrant  entitled the holder  thereof to purchase one
share of common stock for $6.00 during the four-year period  commencing June 28,
1997, and (iii) with the Private Placement of June 13, 1997, whereby the Company
issued 257,500 shares of Class C Preferred  Stock and 1,387,500  warrants.  Each
warrant  entitled  the holder  thereof to purchase one share of common stock for
$6.00 during the four-year period commencing June 28, 1997.

Stock Option Plan

In June 1996,  the Board of  Directors  of the  Company  adopted  the  Amertranz
Worldwide  Holding  Corp.  1996  Stock  Option  Plan  ("1996  Plan"),  which was
subsequently approved by shareholders.  The 1996 Plan authorizes the granting of
awards, the exercise of which would allow up to an aggregate of 1,000,000 shares
of the Company's common stock to be acquired by the holders of said awards.  The
awards can take the form of incentive  stock  options  ("ISOs") or  nonqualified
stock options ("NSOs") and may be granted to key employees,  officers, directors
and  consultants.  Any plan participant who is granted an Incentive Stock Option
and possesses  more than 10% of the voting  rights of the Company's  outstanding
common  stock must be granted an option  price at least 110% of the fair  market
value on the date of grant and the option  must be  exercised  within five years
from the date of grant.  Under the 1996 Plan, stock options have been granted to


                                      F-13
<PAGE>

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,  2001,
259,290 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 income (loss) and net income  (loss) per share would have been  increased to
the following pro forma amounts:

<TABLE>
<CAPTION>
                                                      Year Ended            Year Ended           Year Ended
                                                     June 30, 2001        June 30, 2000         June 30, 1999
                                                     -------------        -------------         -------------
    Net income (loss):
<S>                                                  <C>                   <C>                   <C>
                            As Reported              $(1,771,583)          $(1,196,605)          $14,016,436
                            Pro Forma                $(1,914,581)          $(1,270,152)          $13,463,612

    Basic EPS:              As Reported                   $(0.18)               $(0.14)                $1.63
                            Pro Forma                     $(0.19)               $(0.15)                $1.61

    Diluted EPS:            As Reported                   $(0.18)               $(0.14)                $0.99
                            Pro Forma                     $(0.19)               $(0.15)                $0.98

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

Prior to the adoption of the 1996 Plan,  there were 224,399  options  granted to
purchase  common stock at exercise  prices ranging from $0.048 to $0.408.  These
options were granted pursuant to the terms of the Asset Exchange  Agreement.  At
each of June 30, 2001,  2000 and 1999,  6,957 of these options were  outstanding
and 6,957 were exercisable.

The following table reflects  activity under the plan for the three-year  period
ended June 30, 2001:

<TABLE>
<CAPTION>
                                      Year Ended June 30, 2001   Year Ended June 30, 2000   Year Ended June 30, 1999
                                      ------------------------   ------------------------   ------------------------
                                                    Weighted                  Weighted                   Weighted
                                                     Average                   Average                    Average
                                      Shares     Exercise Price   Shares   Exercise Price   Shares     Exercise Price
                                      ------     --------------   ------   --------------   ------     --------------

<S>                                  <C>              <C>        <C>             <C>       <C>              <C>
Outstanding at beginning of year     456,957          1.99       446,957         2.00      407,609          3.16
Granted                              455,000          0.50        10,000         1.25      415,000          1.22
Exercised                                  -             -             -            -     (174,852)         0.37
Forfeited                            (25,000)         1.25             -            -     (200,800)         4.16
Cancelled                           (310,000)         1.25             -            -            -             -

Outstanding at end of year           576,957         $1.24       456,957        $1.99      446,957         $2.00
Exercisable at end of year           259,290         $2.15       193,624        $2.99       81,957         $5.49

</TABLE>
The per share weighted  average fair value of stock options granted during 2001,
2000 and 1999 was $0.22, $0.72 and $3.96, 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:

                                      2001          2000           1999
                                      ----          ----           ----
       Risk-Free Interest Rates       4.35%         6.34%          4.67%
       Expected Lives                    5             5              5
       Expected Volatility          368.23%        72.28%         77.60%
       Expected Dividend Yields       0.00%         0.00%          0.00%


                                      F-14
<PAGE>
The following table summarizes  information  about stock options  outstanding at
June 30, 2001:

<TABLE>
<CAPTION>
                            Options Outstanding                                 Options Exercisable
                      -------------------------------                    --------------------------------
                         Number      Weighted Average     Weighted          Number
                      Outstanding        Remaining         Average       Exercisable     Weighted Average
Exercise Prices       at 6/30/01     Contractual Life   Exercise Price   at 6/30/01       Exercise Price
---------------       ----------     ----------------   --------------   -----------     ----------------

<S>       <C>           <C>                <C>              <C>            <C>                 <C>
  $0.04 - $1.25         501,957            8.06             $0.53          184,290             $0.59
  $4.00 - $6.00          75,000            5.00             $6.00           75,000             $6.00
                        -------                                            -------
  $0.04 - $6.00         576,957            7.75             $1.24           259,290            $2.15
                        =======                                             =======
</TABLE>


7.  COMMITMENTS AND CONTINGENCIES

Leases

As of June 30,  2001,  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>
          2002                                    $79,569                   $924,476
          2003                                     34,511                    359,756
          2004                                          -                    276,661
          2005                                          -                    167,804
          2006                                          -                          -
                                                  -------                 ----------
          Total minimum lease payments           $114,080                 $1,728,697
                                                   (6,547)                ==========
                                                 --------
          Less - Amount representing interest    $107,533

</TABLE>
Employment Agreements

The Company has employment agreements with certain employees expiring at various
times through July 2002. Such  agreements  provide for minimum salary levels and
for  incentive  bonuses  which are  payable if  specified  management  goals are
attained.  The  aggregate  commitment  for  future  salaries  at June 30,  2001,
excluding bonuses, was approximately $630,093.

Litigation

The  Company,  from time to time,  becomes  involved  in various  routine  legal
proceedings in the ordinary  course of its business.  The Company  believes that
the  outcome of all  pending  legal  proceedings  and  unasserted  claims in the
aggregate will not have a material adverse effect on its consolidated results of
operations, consolidated financial position or liquidity.

8.  SEGMENT INFORMATION

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

A reconciliation of the Company's  domestic and international  segment revenues,
gross profit,  and accounts  receivable for the years ended June 30, 2001,  2000
and 1999 is as follows:


                                      F-15
<PAGE>
<TABLE>
<CAPTION>
                                                June 30, 2001          June 30, 2000          June 30, 1999
                                                -------------          -------------          -------------
<S>                                              <C>                    <C>                     <C>
   Domestic revenue                              $65,255,740            $56,093,399             $32,521,826
   International revenue                          24,887,462             27,994,796              19,197,757
                                                 -----------            -----------             -----------
             Total revenue                       $90,143,202            $84,088,195             $51,719,583
                                                 -----------            -----------             -----------

   Domestic gross profit                         $22,900,071            $20,152,072             $12,011,496
   International gross profit                      6,330,859              6,987,312               4,918,810
                                                 -----------            -----------             -----------
             Total gross profit                  $29,230,930            $27,139,384             $16,930,306
                                                 -----------            -----------             -----------

   Domestic accounts receivable                  $13,579,181            $12,731,926             $ 9,549,383
   International accounts receivable               2,867,349              4,048,666               2,622,042
   Less: allowance for doubtful accounts          (1,391,157)            (1,630,768)             (1,318,109)
                                                 -----------            -----------             -----------
            Accounts receivable, net of
            allowance for doubtful accounts      $15,055,373            $15,149,824             $10,853,316
                                                 -----------            -----------             -----------
</TABLE>


9.  QUARTERLY FINANCIAL DATA SCHEDULE (unaudited)

<TABLE>
<CAPTION>
                                                                              Year Ended
                                                                             June 30, 2001
                                             09/30/00         12/31/00         03/31/01          06/30/01       Fiscal Year
                                             --------         --------       ------------        --------       -----------
<S>                                        <C>              <C>               <C>              <C>              <C>
Operating revenue                          $21,380,041      $24,700,710       $22,864,467      $21,197,984      $90,143,202
Cost of transportation                      14,164,019       16,679,273        15,468,266       14,600,714       60,912,272
                                           -----------      -----------       -----------      -----------      -----------
Gross profit                                 7,216,022        8,021,437         7,396,201        6,597,270       29,230,930
Selling, general & administrative
   expense                                   7,476,197        8,127,358         8,199,735        7,748,667       31,551,957
Interest (expense)                             (57,091)         (45,328)          (60,940)         (65,092)        (228,451)
(Benefit) provision for income taxes                 -                -          (255,209)        (522,686)        (777,895)
Net (loss)                                   ($317,266)       ($151,249)        ($609,265)       ($693,803)     ($1,771,583)
Net (loss) per share:
     Basic                                      ($0.03)          ($0.02)           ($0.06)          ($0.07)          ($0.18)
     Diluted                                    ($0.03)          ($0.02)           ($0.06)          ($0.07)          ($0.18)
Weighted average shares outstanding:
     Basic                                   11,879,002      11,879,002        11,879,002       11,879,002       11,879,002
     Diluted                                 11,879,002      11,879,002        11,879,002       11,879,002       11,879,002




                                      F-16
<PAGE>

                                                                              Year Ended
                                                                             June 30, 2000
                                             09/30/99         12/31/99         03/31/00          06/30/00       Fiscal Year
                                             --------         --------       -------------       --------       -----------
Operating revenue                          $19,076,518      $24,858,531       $20,553,649      $19,599,497      $84,088,195
Cost of transportation                      12,620,241       17,595,556        13,712,583       13,020,431       56,948,811
                                           -----------      -----------       -----------      -----------      ----------
Gross profit                                 6,456,277        7,262,975         6,841,066        6,579,066       27,139,384
Selling, general & administrative
expense                                      6,852,777        7,031,017         7,325,395        6,973,892       28,183,081
Interest income (expense)                       25,751          (16,821)          (33,122)         (19,821)         (44,013)
(Benefit) provision for income taxes          (133,470)          77,450          (186,283)         351,198          108,895
Net (loss) income                            ($237,279)        $137,687         ($331,168)       ($765,845)     ($1,196,605)
Net (loss) income per share:
     Basic                                      ($0.03)           $0.00            ($0.03)          ($0.07)          ($0.13)
     Diluted                                    ($0.03)           $0.01            ($0.03)          ($0.07)          ($0.12)
Weighted average shares outstanding:
     Basic                                   9,299,917       11,024,364        11,879,002       11,879,002       11,879,002
     Diluted                                 9,299,917       16,731,376        11,879,002       11,879,002       11,879,002
</TABLE>

10.      INCOME TAXES

The Company utilized approximately $14,300,000 of net operating losses to offset
its regular taxable income for the year ended June 30, 1999. The Company has tax
net operating loss  carryforwards  of  approximately  $12.2  million,  which are
available to offset future regular taxable  income.  The losses expire from 2011
through 2021. Some of the losses are limited to annual maximum amounts, due to a
prior  ownership  change,  as defined in  regulations  under  Section 382 of the
Internal Revenue Code.

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

<TABLE>
<CAPTION>
                                                                   Year Ended          Year Ended         Year Ended
                                                                  June 30, 2001      June 30, 2000       June 30, 1999
                                                                  -------------      -------------       -------------
        (In thousands)
        Current:

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

        Deferred:
        State                                                           -                   -                     -
        Federal                                                      (778)                106                 5,793
                                                                     ----                 ---                 -----

        Net income tax expense (benefit)                            ($778)               $109                $6,853
                                                                    =====                ====                ======
</TABLE>




                                      F-17
<PAGE>

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

<TABLE>
<CAPTION>
                                                                   Year Ended         Year Ended          Year Ended
                                                                 June 30, 2001      June 30, 2000        June 30, 1999
                                                                 -------------      -------------        -------------

(In thousands)
<S>                                                                <C>                <C>                    <C>
Income tax (benefit) expense at U.S. statutory rate                $ (867)            $  (370)               $7,100

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

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

AMT Credit                                                              -                 (17)                    -

Valuation Allowance                                                     -                   -                  1730

Non-deductible expenses                                              (114)                290                    20
                                                                    -----               -----                 -----
                                                                    ($778)               $109                $6,853
                                                                    =====                ====                ======
</TABLE>

The components of deferred income taxes are as follows:


<TABLE>
<CAPTION>
                                                                       Year Ended                  Year Ended
                                                                      June 30, 2001               June 30, 2000
                                                                      -------------               -------------

(In thousands)

<S>                                                                       <C>                         <C>
NOLs                                                                      $4,170                      $3,250
Tax credits                                                                  286                         286
Accrued amounts and other                                                    877                         920
                                                                          ------                      ------
                                                                           5,333                       4,456

Depreciation and amortization                                                 85                         184
                                                                          ------                      ------
                                                                           5,418                       4,640

Valuation allowance                                                       (2,484)                     (2,484)
                                                                         --------                    --------
                                                                          $2,934                      $2,156
                                                                          ======                      ======
</TABLE>

                                      F-18
<PAGE>

                                                                     SCHEDULE II

<TABLE>
                 SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

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

For the fiscal year ended June 30, 1999

<S>                                                    <C>            <C>           <C>           <C>           <C>
  Allowance for doubtful accounts                      $   515        $  957        $     -       $  (154)      $  1,318
                                                       =======        ======        =======       =======       ========

  Reserve for restructuring                            $   264        $    -        $     -       $  (242)      $     22
                                                       =======        ======        =======       =======       ========


For the fiscal year ended June 30, 2000

  Allowance for doubtful accounts                      $ 1,318       $   536        $     -       $     -       $  1,631
                                                       =======       =======        =======       =======       ========

  Reserve for restructuring                            $    22       $     -        $     -       $     -       $      -
                                                       =======       =======        =======       =======       ========


For the fiscal year ended June 30, 2001

  Allowance for doubtful accounts                      $ 1,631       $   180        $     -       $  (420)      $  1,391
                                                       =======       =======        =======       =======       ========
</TABLE>



                                      S-1
<PAGE>

                                                                      EXHIBIT 23



                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the incorporation of our
report  included  in  this  Form  10-K,  into  the  Company's  previously  filed
Registration  Statements on Form S-3, File No. 333-30351 and File No. 333-03613,
and Registration Statement on Form S-8, File No. 333-71197.


                                                 ARTHUR ANDERSEN LLP



New York, New York
September 28, 2001