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, 2003 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.)

500 Harborview Drive, Third Floor, Baltimore, Maryland          21218
------------------------------------------------------  ------------------------
(Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code          (410) 332-1598

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

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
          ---

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act. Yes      No X
                                               ---    ---

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant as of September 23, 2003 was $1,103,252.

The number of shares of common stock  outstanding  as of September  23, 2003 was
12,179,002

                       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 2003 Annual
Meeting of Shareholders (to be filed).

<PAGE>

                             TARGET LOGISTICS, INC.
                        2003 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        13
Item 8.    Financial Statements and Supplementary Data                       13
Item 9.    Changes in and Disagreements with Accountants
             on Accounting and Financial Disclosures                         13
Item 9A.   Controls and Procedures                                           14


                                    PART III

Item 10.   Directors and Executive Officers of the Registrant                15
Item 11.   Executive Compensation                                            15
Item 12.   Security Ownership of Certain Beneficial Owners and Management    15
Item 13.   Certain Relationships and Related Transactions                    15
Item 14.   Principal Accountant Fees and Services                            15


                                    PART IV

Item 15.   Exhibits, Financial Statement Schedules and
             Reports on Form 8-K                                             16

           Signatures                                                        18




                                       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").  The  Company has a network of offices in 36 cities
throughout  the United  States.  The  Company  was  incorporated  in Delaware in
January 1996 as the successor to operations commenced in 1970.

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 36 cities  throughout  the United  States,
including  exclusive  agency   relationships  in  23  cities.  The  Company  has
international    freight   forwarding   operations   consisting   of   strategic
relationships  in over 20 countries.  The Company has developed  several  niches
including fashion services,  consumer direct logistics of oversized freight, the
distribution of materials for the  entertainment  industry,  and an expertise in
material supply logistics to manufacturing concerns.

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.

     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 subsidiary's  network of offices in the United States.  During the fiscal
year  ended  June 30,  2003,  the  Company's  international  freight  forwarding
accounted for 26.3% of the Company's operating revenue.



                                       3
<PAGE>

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,  2003,  the Company had
approximately 3,500 accounts.

     The Company markets its services  through an organization of  approximately
30 full-time salespersons and 44 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  has and  continues  to develop  expertise  in several  niches:
fashion,  entertainment and media and consumer direct  logistics.  The Company's
fashion  services  division  targets chain retail and department store customers
and provides  specific  expertise  in handling  fashion-related  shipments.  The
fashion  services  division  specializes in the movement of wearing apparel from
manufacturing vendors to their department store customers located throughout the
United  States.  The  Company's  Entertainment  Media  Logistics  (EML)  service
provides logistic solutions to the film, entertainment and broadcast industries.
Until the end of the fiscal year, the Company's  Consumer Direct Logistics (CDL)
operation  specialized in oversize and/or heavy weight shipments  primarily from
manufacturers  and catalogue  sales  distribution  centers  moving direct to the
residential  consumer.  (See "Management's  Discussion and Analysis of Financial
Condition and Results of  Operations - Overview"  for further  discussion of the
Company's CDL operation.)

     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.
Additionally, there is a developing trend among integrated shippers of primarily
small parcels to solicit the shipment of heavy cargo.

     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., SEKO Worldwide and
Stonepath  Group,  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 Exel plc, DHL and Kuehne Nagal International. 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 201 full-time  employees
as of June 30, 2003. 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.



                                       4
<PAGE>

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,  but must adhere to certain rules,
such as security  requirements.  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, 2003, the Company leased terminal  facilities  consisting of
office and warehouse  space in 13 cities located in the United States,  and also
utilized 23 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 Target's  headquarters are 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 2005.  Management
believes that its current  facilities  are more than  sufficient for its planned
growth.

The Company has an additional 12 terminal facilities in the following locations:

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


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

     As  previously  reported,  on October 12,  2000,  Pilot Air  Freight  Corp.
("Pilot"),  a major  competitor  of Target,  sued  Target in the  United  States
District Court for the Eastern  District of Pennsylvania,  Case No.  00-CV-5190,
with  respect to the  termination  by a former  Pilot  freight  forwarder of its
relationship  with Pilot and entering into an exclusive  forwarder  relationship
with Target. Pilot alleged,  among other things,  intentional  interference with
contract,  tortious  interference with business relations,  violation of section
43(a) of the Lanham Act,  violation of  Pennsylvania  state statutes  concerning
stored electronic  communications,  and misappropriation of trade secrets. Pilot
sought an amount "in excess of $100,000" in damages,  punitive  damages,  and an
injunction  against  Target  requiring it to cease  competing  in the  Hartford,
Connecticut  market for six months.  During  subsequent  discovery  proceedings,
Pilot  claimed that its damages  exceed $3 million.  In February,  2003,  Target
settled all of Pilot's claims against Target for $50,000.


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,  2003.  There are no family  relationships  between any  Directors  and
Officers of the Company.

NAME                            AGE       POSITION

Stuart Hettleman............     53      President and Chief Executive
                                         Officer

Philip J. Dubato............     47      Vice President, Chief Financial
                                         Officer and Secretary

Christopher Coppersmith.....     53      President and Chief Executive Officer,
                                         Target Logistic Services, Inc.

STUART HETTLEMAN has been President,  Chief Executive  Officer and a director of
the Company 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") trades on
the Over-The-Counter (OTC) market under the symbol TARG.

     The following table shows the high and low sales prices of the Common Stock
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.


         Fiscal Year Ended June 30, 2003

         First Quarter                          High              $0.30
                                                Low               $0.13

         Second Quarter                         High              $0.40
                                                Low               $0.12

         Third Quarter                          High              $0.47
                                                Low               $0.16

         Fourth Quarter                         High              $0.75
                                                Low               $0.23
         Fiscal Year Ended June 30, 2002

         First Quarter                          High              $0.39
                                                Low               $0.14

         Second Quarter                         High              $0.32
                                                Low               $0.11

         Third Quarter                          High              $0.34
                                                Low               $0.12

         Fourth Quarter                         High              $0.45
                                                Low               $0.14



     On  September  23,  2003  there  were 582  shareholders  of  record  of the
Company's  Common Stock.  The closing price of the Common Stock on that date was
$0.26 per share.




                                       7
<PAGE>

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

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


<CAPTION>
                                                                    Year Ended June 30,
                                                  ---------------------------------------------------------
                                                     2003        2002        2001        2000        1999
Statement  of Operations Data:
<S>                                               <C>         <C>         <C>         <C>         <C>
    Operating revenue                             $113,381    $ 93,484    $ 90,143    $ 84,088    $ 51,720
    Cost of transportation                          75,773      63,174      60,912      56,949      34,790
                                                  --------    --------    --------    --------    --------
    Gross profit                                    37,608      30,310      29,231      27,139      16,930
    Selling, general & administrative expenses
                                                    36,941      29,969      30,655      27,194      20,471
    Depreciation and Amortization                      428       1,017         897         989         833
                                                  --------    --------    --------    --------    --------
    Operating income (loss)                       $    239    $   (676)   $ (2,321)   $ (1,044)   $ (4,374)
    Other Income                                     1,448           -           -           -         119
    Gain on sale of subsidiary                           -           -           -           -      24,832
    Net income (loss)                             $    840    $   (935)   $ (1,772)   $ (1,197)   $ 14,016
    Net income (loss) per common share            $   0.04    $  (0.10)   $  (0.18)   $   0.14)   $   1.63

Balance Sheet Data:
    Total assets                                  $ 37,191    $ 37,388    $ 36,484    $ 36,669    $ 34,932
    Working capital (deficit)                          863          57         336       4,535       5,567
    Current liabilities                             21,551      22,293      20,440      18,474      15,251
    Long-term indebtedness                              61          34          34          92          24
    Shareholders' equity                          $ 15,579    $ 15,061    $ 16,010    $ 18,102    $ 19,657


</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  maintain  operating  profitability,  (ii) the  Company's
ability to increase operating  revenue,  improve gross profit margins and reduce
selling,  general and administrative  costs, (iii) competitive  practices in the
industries  in which the Company  competes,  (iv) the  Company's  dependence  on
current  management,  (v) the impact of current and future laws and governmental
regulations  affecting the transportation  industry in general and the Company's
operations in  particular,  (vi) general  economic  conditions,  and (vii) other
factors  which may be identified  from time to time in the Company's  Securities
and Exchange Commission filings and other public announcements.  There can be no
assurance  that these and other  factors  will not affect the  accuracy  of such
forward-looking  statements.  Forward-looking  statements  are  preceded  by  an
asterisk (*).

Overview
--------

     The Company generated operating revenues of $113.4 million,  $93.5 million,
and $90.1  million,  and had a net  profit of $0.8  million,  a net loss of $0.9
million,  and a net loss of $1.8  million  for the fiscal  years  ended June 30,
2003, 2002, and 2001, respectively.

     The Company had earnings or (losses) before interest,  taxes,  depreciation
and  amortization   (EBITDA)  of   approximately   $2,114,530,   $340,000,   and
($1,424,000),  for the  fiscal  years  ended  June  30,  2003,  2002,  and  2001
respectively.  EBITDA,  is a non-GAAP measure of income and 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


                                       8
<PAGE>

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.

     * For the fiscal year ended June 30,  2003,  the  revenue of the  Company's
Target subsidiary increased by 21.3% when compared to the fiscal year ended June
30, 2002.  Target's gross profit margin (i.e., gross operating revenue less cost
of  transportation  expressed  as  a  percentage  of  gross  operating  revenue)
increased  to 33.2% for the fiscal  year ended June 30,  2003 from 32.4% for the
fiscal year ended June 30, 2002.  This increase is primarily due to increases in
domestic gross profit margins.  Management continues to believe that the Company
must focus on  increasing  revenues and must  increase  gross  profit  margin to
maintain  profitability.  Management  intends  to  continue  to work on  growing
revenue by increasing sales generated by the Company's employed sales personnel,
sales  generated  by  exclusive  forwarders,   and  by  strategic  acquisitions.
Management  also intends to continue to work on improving  Target's gross profit
margins by reducing transportation costs.

     * During the fourth quarter ended June 30, 2003, Target greatly reduced its
CDL  operation  in  response to  Target's  decision  not to lower its charges to
retain  a  principal  customer  of the  CDL  services.  The  CDL  service  was a
self-contained   operation  with  dedicated  overhead  expenses  which  will  be
significantly  reduced  as a  result  of the  reduction  in the  CDL  operation.
Management believes that Target is positioned to increase revenue from its other
services to  significantly  offset the loss of revenue  from the CDL  operation.
Accordingly,  management  believes that the reduction in the CDL operation  will
not have a material adverse impact on the Company's operating results.

     The  Company's  results for the year ended June 30, 2003 have been impacted
by SFAS No. 142, "Goodwill and Other Intangible Assets" (see Note 3). Under this
statement,  from and after  July 1, 2002,  the  Company  may no longer  amortize
goodwill,  including the goodwill  included in the carrying value of investments
accounted  for  using  the  equity  method  of  accounting,  and  certain  other
intangible  assets  deemed to have an  indefinite  useful life.  Therefore,  the
results for the year ended June 30, 2003 are not  comparable  to the results for
the year ended June 30,  2002.  In order to make the  operating  results for the
year ended June 30, 2002 more  comparable to the  presentation  of the operating
results  for the year ended June 30,  2003 and make an analysis of 2003 and 2002
more meaningful,  the following discussion is based on financial information for
the year ended June 30,  2002  prepared  on a pro forma basis as if SFAS No. 142
had been applied for that period. Please refer to the Consolidated Statements of
Operations  contained  in  this  Annual  Report  for  a  reconciliation  of  the
differences between the GAAP and pro forma presentations of this information.

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

Years ended June 30, 2003 and 2002

     Operating  Revenue.  Operating  revenue increased to $113.4 million for the
year ended June 30, 2003 from $93.5  million for the year ended June 30, 2002, a
21.3% increase.  Domestic revenue increased by 20.0% to $83,610,134 for the year
ended June 30, 2003 from  $69,652,711  for the year ended June 30, 2002,  due to
increased domestic freight volume. In addition,  international revenue increased
by 24.9% to $29,771,065  for the year ended June 30, 2003 from  $23,831,028  for
the year ended June 30, 2002,  mainly due to increased  international air import
and export freight volume.

     Cost of  Transportation.  Cost of  transportation  decreased  to  66.8%  of
operating  revenue  for the year  ended June 30,  2003 from  67.6% of  operating
revenue for the year ended June 30, 2002.  This  decrease was primarily due to a
lower cost of  transportation,  as a percentage  of sales,  on domestic  freight
movements.

     Gross Profit. As a result of the factors described above,  gross profit for
the year ended June 30, 2003 increased to 33.2% from 32.4% of operating  revenue
for the year ended June 30, 2002, a 2.5%  increase.  This  increase is primarily
due to increases in domestic gross profit margins.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative  expenses  increased to 33.0% of  operating  revenue for the year
ended June 30, 2003 from 32.5% of operating revenue for the pro forma year ended
June 30, 2002.  Within the Company's  Target  subsidiary,  selling,  general and
administration  expenses (excluding exclusive forwarder commission expense) were
17.3% of  operating  revenue  for the year ended June 30, 2003 and 16.7% for the
year ended June 30, 2002, a 3.6%  increase.  This  increase was primarily due to


                                       9
<PAGE>

expenses  incurred at Target's new Columbus,  Ohio terminal (see  "Liquidity and
Capital Resources - Asset Purchase  Acquisitions",  below).  Exclusive forwarder
commission  expense was 14.6% of  operating  revenue for each of the years ended
June 30, 2003 and 2002.

     Other Income.  Other income of $1,447,699  for the year ended June 30, 2003
is the result of a non-recurring reversal of accruals for expenses, accruals for
contingencies, and accounts payable of previously closed and sold subsidiaries.

     Net Profit.  For the year ended June 30, 2003,  the Company  realized a net
profit of $839,500,  compared to a net loss of ($338,659) for the pro forma year
ended June 30, 2002.

Years ended June 30, 2002 and 2001

     Operating  Revenue.  Operating  revenue  increased to $93.5 million for the
year ended June 30, 2002 from $90.1  million for the year ended June 30, 2001, a
3.7%  increase,  due to increased  domestic  freight  volume.  Domestic  revenue
increased  by  6.7% to  $69,652,711  for the  year  ended  June  30,  2002  from
$65,255,740  for the year  ended  June 30,  2001,  while  international  revenue
decreased  by  4.2% to  $23,831,028  for the  year  ended  June  30,  2002  from
$24,887,462 for the year ended June 30, 2001, primarily as a result of decreases
in air export freight volume.

     Cost of  Transportation.  Cost of  transportation  was  67.6% of  operating
revenue for each of the years ended June 30, 2002 and 2001.

     Gross  Profit.  As a  result  of the  factors  described  in  the  previous
paragraph,  gross profit was 32.4% of operating revenue for the years ended June
30, 2002 and 2001.

     Selling,  General  and  Administrative  Expenses.   Selling,  general,  and
administrative  expenses  decreased to 33.1% of  operating  revenue for the year
ended June 30, 2002, from 35.0% of operating revenue for the year ended June 30,
2001.   Within  the   Company's   Target   subsidiary,   selling,   general  and
administration  expenses (excluding exclusive forwarder commission expense) were
16.7% of  operating  revenue for each of the years ended June 30, 2002 and 2001.
Exclusive forwarder  commission expense was 14.6% and 16.4% of operating revenue
for the year June 30, 2002 and 2001, respectively,  an 11.0% decrease, resulting
from decreases in forwarder agent freight volume.

     Net Loss. The Company  realized a net loss of ($934,527) for the year ended
June 30, 2002,  compared to a net loss of  ($1,771,583)  for the year ended June
30, 2001. The 2001 results include a $777,895 benefit for income taxes.

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

     General.  During the year ended June 30,  2003,  net cash used in operating
activities  was  $945,185.  Cash  used  in  investing  activities  was  $506,102
representing capital expenditures and asset purchase acquisitions. Cash provided
by financing activities was $1,117,317,  which primarily consisted of borrowings
under the Company's accounts receivable financing facility.

     Capital  expenditures.  Capital expenditures for the fiscal year ended June
30, 2003 were $506,102,  representing  capital  expenditures  and asset purchase
acquisitions.

     GMAC  Facility.  The Company's  Target  subsidiary  maintains 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%,  however,  at any time prior to September 20, 2002,  the interest
rate could not be less than 6.0% and after  September  20,  2002  cannot be less
than 5.0%. 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, 2003, there were outstanding  borrowings of
$7,455,199  under  the  GMAC  Facility  (which  represented  80% of  the  amount
available  thereunder)  out of a total amount  available for borrowing under the
GMAC Facility of approximately $9,357,165.  The GMAC Facility expires on January
14, 2005.  The Company  entered into the GMAC Facility on January 16, 1997,  and
subsequently  extended the facility for an additional  three-year  term and most
recently for an additional two-year term.



                                       10
<PAGE>

     * Asset Purchase Acquisitions. On November 30, 2001, February 11, 2002, and
October 13,  2002,  the  Company's  Target  subsidiary  acquired  the assets and
certain liabilities of SDS Logistics, a Newark, New Jersey based forwarder,  Air
America Freight Service, Inc., an Atlanta,  Georgia based forwarder, and Cassady
Air Transportation,  Inc., a Columbus,  Ohio based forwarder,  respectively,  in
each  instance  for a  combination  of an initial  cash  payment and an earn out
structure over five years.  The earn-out  structures  are strictly  dependent on
future profits achieved at the location acquired, and the Company has no minimum
commitment or obligation. The Company does not expect that the earn-out payments
will have a material impact on its liquidity.

     * Working Capital Requirements. Cash needs of the Company are currently met
by the Company's accounts receivable  financing facility and cash on hand. As of
June 30,  2003,  the  Company  had  $1,901,966  available  under its $10 million
accounts receivable financing facility and approximately $3,999,045 in cash from
operations  and cash on hand.  The Company  believes that its current  financial
resources will be sufficient to finance its operations and obligations  (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.

Critical Accounting Policies
----------------------------

     The Company's accounting policies are more fully described in Note 3 of the
Notes  to the  Consolidated  Financial  Statements,  starting  on page  F-8.  As
discussed  there,  the  preparation of financial  statements in conformity  with
accounting principles generally accepted in the U.S. requires management to make
estimates and assumptions  about future events that affect the amounts  reported
in the financial  statements  and  accompanying  notes.  Since future events and
their effects cannot be determined with absolute certainty, the determination of
estimates  requires the exercise of judgment.  Actual  results could differ from
those  estimates,   and  such  difference  may  be  material  to  the  financial
statements.   The  most  significant   accounting   estimates  inherent  in  the
preparation of the Company's  financial  statements  include estimates as to the
appropriate  carrying  value of  certain  assets and  liabilities  which are not
readily apparent from other sources,  primarily allowance for doubtful accounts,
accruals  for  transportation  and  other  direct  costs,   accruals  for  cargo
insurance,  and  the  classification  of  net  operating  loss  and  tax  credit
carryforwards  between  current  and  long-term  assets.  Management  bases  its
estimates on historical experience and on various assumptions which are believed
to  be  reasonable  under  the  circumstances.  The  Company  reevaluates  these
significant  factors as facts and  circumstances  change.  Historically,  actual
results have not differed significantly from the Company's estimates.

     During the  Company's  fiscal years ended June 30, 1997 through  2001,  the
Company   included   reserves  for  accrued   expenses,   accounts  payable  and
contingencies relating to subsidiaries of the Company that were either closed or
sold.  Following  discussions  with the Company's Audit  Committee,  independent
auditors and Company counsel, the Company determined that those reserves were no
longer necessary.  As a result,  during the fiscal year ended June 30, 2003, the
Company  recognized  $1,447,699  of other  income.  Had the Company not made the
adjustment  during the fiscal year ended June 30, 2003,  the Company  would have
reported a net loss before taxes of $103,790 for the fiscal year.

     The Company's  balance sheet includes an asset in the amount of $11,239,917
for purchased goodwill. In accordance with accounting pronouncements, the amount
of this asset must be reviewed annually for impairment, written down and charged
to  results  of  operations  in the  period(s)  in which the  recorded  value of
goodwill  is more than its fair  value.  The  Company  obtained  an  independent
valuation  analysis completed during the second quarter ended December 31, 2002,
and based on the  valuation,  the Company  determined  that the goodwill was not
impaired.  Had the determination been made that the goodwill asset was impaired,
the value of this asset would have been  reduced by an amount  ranging from zero
to  $11,239,917,  and the  Company's  financial  statements  would  reflect  the
reduction.  For additional description,  please refer to Note 3 to the Company's
Notes to the audited Consolidated  Financial Statements contained in this Annual
Report.



                                       11
<PAGE>

New Accounting Pronouncements
-----------------------------

     In December 2002, the Financial  Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting  Standards  (SFAS) No. 148,  "Accounting  for
Stock-Based  Compensation  - Transition  and  Disclosure".  SFAS 148 amends FASB
Statement  No.  123,  "Accounting  for  Stock-Based   Compensation",   providing
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. SFAS 148 also amends
the  disclosure  provisions of FASB 123 and  Accounting  Principles  Board (APB)
Opinion No. 28, "Interim Financial Reporting",  to require prominent disclosures
in both annual and interim  financial  statements about the method of accounting
for  stock-based  employee  compensation  and the effect of the  method  used on
reported  results.  Amendments to SFAS 123 related to the  transition and annual
disclosures  are  effective  for fiscal year ending  after  December  15,  2002.
Amendments  to  disclosure  requirements  of APB  Opinion 28 are  effective  for
interim  periods  beginning after December 15, 2002. The Company does not expect
the adoption of SFAS 148 will have a material impact on its financial  position,
results of operations or cash flows.

     In  November  2002,   FASB  issued  FASB   Interpretation   (FIN)  No.  45,
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees  of  Indebtedness  of  Others".  FIN 45  requires  that the
guarantor recognize, at the inception of certain guarantees, a liability for the
fair value of the obligation  undertaken in issuing such guarantee.  FIN 45 also
requires additional  disclosure  requirements about the guarantor's  obligations
under  certain  guarantees  that it has  issued.  The  initial  recognition  and
measurement  provisions of this  interpretation  are applicable on a prospective
basis  to  guarantees  issued  or  modified  after  December  31,  2002  and the
disclosure  requirements  are effective for financial  statement  periods ending
after December 15, 2002. The adoption of FIN 45 has not had a material impact on
the Company's financial position, results of operations or cash flows.

     In January  2003,  FASB issued  Interpretation  No. 46,  "Consolidation  of
Variable  Interest  Entities".  FIN 46 changed the criteria by which one company
includes another entity in its consolidated  financial  statements.  Previously,
the criteria were based on control  through voting  interest.  FIN 46 requires a
variable  interest  entity to be  consolidated  by a company if that  company is
subject to a majority of the risk of loss from the  variable  interest  entity's
activities or entitled to receive a majority of the entity's residual returns or
both.  A company  that  consolidates  a variable  interest  entity is called the
primary  beneficiary of that entity.  The  consolidation  requirements of FIN 46
apply  immediately to variable interest entities created after January 31, 2003.
The consolidation  requirements apply to older entities in the first fiscal year
or interim  period  beginning  after June 15,  2003.  Certain of the  disclosure
requirements  apply in all financial  statements  issued after January 31, 2003,
regardless of when the variable interest entity was established. The adoption of
FIN 46 has not had a material  impact on the  Company's  financial  position  or
results of operations.

     In April 2003,  FASB issued SFAS No. 149,  "Amendment  of Statement  133 on
Derivative  Instruments  and  Hedging  Activities.  This  Statement  amends  and
clarifies  financial  accounting  and  reporting  for  derivative   instruments,
including   certain   derivative   instruments   embedded  in  other   contracts
(collectively  referred to as derivatives) and for hedging activities under SFAS
No. 133,  "Accounting for Derivative  Instruments and Hedging Activities" and is
effective  for  contracts  entered into or modified  after June 30,  2003.  This
Statement amends Statement 133 for decisions made (i) as part of the Derivatives
Implementation  Group process that effectively  required amendments to Statement
133,  (ii) in  connection  with  other  FASB  projects  dealing  with  financial
instruments, and (3) in connection with implementation issues raised in relation
to the application of the definition of a derivative, in particular, the meaning
of an initial net  investment  that is smaller  than would be required for other
types of contracts that would be expected to have a similar  response to changes
in market  factors,  the meaning of  underlying,  and the  characteristics  of a
derivative that contains financing  components.  The Company does not anticipate
that the  adoption  of this  pronouncement  will have a  material  effect on the
financial statements.

     In May 2003, FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with Characteristics of both Liabilities and Equity". This Statement
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics of both liabilities and equity, and
is effective for financial  instruments  entered into or modified  after May 31,
2003,  and otherwise is effective at the  beginning of the first interim  period
beginning  after June 15,  2003.  SFAS 150  requires  that an issuer  classify a
financial  instrument  that is within its scope as a  liability  (or an asset in
some  circumstances).  Many of those  instruments were previously  classified as
equity. Some of the provisions of this Statement are consistent with the current
definition  of  liabilities  in FASB  Concepts  Statement  No. 6,  "Elements  of
Financial Statements". The remaining provisions of this Statement are consistent


                                       12
<PAGE>

with FASB's proposal to revise that definition to encompass certain  obligations
that a reporting  entity can or must  settle by issuing  its own equity  shares,
depending on the nature of the relationship  established  between the holder and
the  issuer.  While  FASB  still  plans to revise  that  definition  through  an
amendment to Concepts  Statement 6, FASB decided to defer issuing that amendment
until it has concluded its deliberations on the next phase of this project. That
next phase  will deal with  certain  compound  financial  instruments  including
puttable shares, convertible bonds, and dual-indexed financial instruments.  The
Company does not anticipate that the adoption of this  pronouncement will have a
material effect on the financial statements.


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% with a
minimum  interest  rate of 6.0%  prior to  September  20,  2002,  and a  minimum
interest  rate of 5.0% after  September  20,  2002.  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, 2003, an aggregate
principal  amount of $7,455,199 was outstanding  under the GMAC Facility bearing
interest at an annual rate of 5.0%. 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 $37,226 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 15(a) of this Annual Report.


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

     On April 22, 2002,  the Company filed a Current  Report on Form 8-K. Item 4
of Form 8-K,  "Changes in  Registrant's  Certifying  Accountant" was reported as
follows:

     On April 18, 2002, Target Logistics,  Inc. (the "Company") determined,  for
itself and on behalf of its subsidiaries,  to dismiss its independent  auditors,
Arthur  Andersen  LLP  ("Arthur  Andersen"),  and  to  engage  the  services  of
Stonefield  Josephson,  Inc.  ("Stonefield  Josephson")  as its new  independent
auditors.   The  change  in  auditors   became   effective   immediately.   This
determination followed the Company's decision to seek proposals from independent
accountants to audit the financial  statements of the Company,  and was approved
by the  Company's  Board of  Directors  upon  the  recommendation  of its  Audit
Committee.  Stonefield  Josephson was engaged to review the financial statements
of the Company beginning with the fiscal quarter ended March 31, 2002.

     During the two most recent fiscal years of the Company ended June 30, 2002,
and the  subsequent  interim  period  through  April  18,  2002,  there  were no
disagreements  between  the  Company  and  Arthur  Andersen  on  any  matter  of
accounting principles or practices,  financial statement disclosure, or auditing
scope or procedure,  which  disagreements,  if not resolved to Arthur Andersen's
satisfaction, would have caused Arthur Andersen to make reference to the subject
matter of the disagreement in connection with its reports.

     None  of  the  reportable  events  described  under  Item  304(a)(1)(v)  of
Regulation  S-K occurred  within the two most recent fiscal years of the Company
ended June 30, 2002 or within the interim period through April 18, 2002.

     The  audit  reports  of  Arthur  Andersen  on  the  consolidated  financial
statements of the Company as of and for the fiscal years ended June 30, 2000 and
2001 did not contain any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or accounting principles. A
letter from Arthur Andersen was attached as Exhibit 16.1 to the Form 8-K filing.



                                       13
<PAGE>

     During the two most recent fiscal years of the Company ended June 30, 2002,
and the subsequent  interim  period through April 18, 2002,  neither the Company
nor any of its subsidiaries consulted with Stonefield Josephson regarding any of
the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.


ITEM 9A. CONTROLS AND PROCEDURES
         -----------------------

     The Company  maintains a system of disclosure  controls and procedures that
is designed to provide reasonable assurance that information,  which is required
to be disclosed by the Company in the reports that it files or submits under the
Securities and Exchange Act of 1934, as amended, is accumulated and communicated
to management in a timely  manner.  The Company's  Chief  Executive  Officer and
Chief  Financial  Officer have evaluated this system of disclosure  controls and
procedures  as of the end of the  period  covered  by this  annual  report,  and
believe  that  the  system  is  operating   effectively  to  ensure  appropriate
disclosure.  There have been no changes in the Company's  internal  control over
financial  reporting  during the most recent  fiscal  year that have  materially
affected,  or are reasonably likely to materially affect, the Company's internal
control over financial reporting.







                                       14
<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 2003  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 2003
Annual Meeting of Shareholders.


ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS
          ----------------------------------------------------------------------

     Equity   Compensation  Plan  Information.   The  following  table  provides
information,  as of June 30, 2003, with respect to all compensation arrangements
maintained by the Company under which shares of Common Stock may be issued:

<TABLE>
<CAPTION>
Plan Category                        Number of securities     Weighted-average exercise      Number of securities
                                       to be issued upon        price of outstanding        remaining available for
                                          exercise of           options, warrants and        future issuance under
                                     outstanding options,              rights              equity compensation plans
                                      warrants and rights                                    (excluding securities
                                                                                           reflected in column (a))

<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                              (a)                         (b)                         (c)

Equity compensation plans
approved by security holders               596,957*                     $1.22                       910,000

Equity compensation plans not
approved by security holders                     0                          0                             0

              Total                        596,957*                     $1.22                       910,000
</TABLE>


     * Of this amount,  590,000 shares are issuable  pursuant to options granted
under the  Company's  1996 Stock  Option  Plan,  and 6,957  shares are  issuable
pursuant to options  otherwise  granted  prior to the Company's  initial  public
offering in 1996.

     The balance of the  information  required by this item is  incorporated  by
reference  from  the  Company's  definitive  Proxy  Statement  to be  issued  in
conjunction with the 2003 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 2003
Annual Meeting of Shareholders.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
         --------------------------------------

     The information required by this item is incorporated by reference from the
Company's  definitive  Proxy Statement to be issued in conjunction with the 2003
Annual Meeting of Shareholders.




                                       15
<PAGE>

                                     PART IV


ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8 - K
         -----------------------------------------------------------------

(a)  1.  Financial Statements
         --------------------
                                                                           Page
                                                                           ----
Report of Independent Public Accountants                                    F-1
Report of Independent Public Accountants                                    F-2
Consolidated Balance Sheets as of June 30, 2003 and 2002                    F-3
Consolidated Statements of Operations for the Years Ended
 June 30, 2003, 2002, and 2001                                              F-4
Consolidated Statements of Shareholders' Equity for the Years Ended
 June 30, 2003, 2002, and 2001                                              F-5
Consolidated Statements of Cash Flows for the Years Ended
 June 30, 2003, 2002, and 2001                                              F-6
Notes to Consolidated Financial Statements                                  F-8

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

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

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

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

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

3.1       Certificate of Incorporation of Registrant,  as amended  (incorporated
          by reference to Exhibit 3.1 to the Registrant's Current Report on Form
          8-K dated November 30, 1998, File No. 0-29754)
3.2       By-Laws  of  Registrant,  as amended  (incorporated  by  reference  to
          Exhibit 3.2 to the Registrant's  Quarterly Report on Form 10-Q for the
          Quarter Ended December 31, 1998, File No. 0-29754)
4.1       Warrant Agent Agreement  (incorporated  by reference to Exhibit 4.3 to
          the Registrant's  Registration Statement on Form S-1, Registration No.
          333-03613)
4.2       Form of Amendment No. 1 to Warrant Agent Agreement dated June 13, 1997
          (incorporated   by  reference  to  Exhibit  4.7  to  the  Registrant's
          Registration Statement on Form S-1, Registration No. 333-30351)
4.3       Certificate of Designations  with respect to the Registrant's  Class A
          Preferred Stock (contained in Exhibit 3.1)
4.4       Certificate of Designations  with respect to the Registrant's  Class B
          Preferred Stock (contained in Exhibit 3.1)
4.5       Certificate of Designations  with respect to the Registrant's  Class C
          Preferred Stock (contained in Exhibit 3.1)
4.6       Certificate of Designations  with respect to the Registrant's  Class D
          Preferred Stock (contained in Exhibit 3.1)
4.7       Certificate of Designations  with respect to the Registrant's  Class E
          Preferred Stock (contained in Exhibit 3.1)
10.1      1996 Stock Option Plan  (incorporated  by reference to Exhibit 10.1 to
          the  Registrant's  Quarterly Report on Form 10-Q for the Quarter Ended
          march 31, 2003, 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,  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)


                                       16
<PAGE>

10.4      Amendment  to  GMAC  Facility  Agreement,  dated  September  20,  2002
          (incorporated by reference to Exhibit 10.4 to the Registrant's  Annual
          Report on Form 10-K for the Fiscal Year Ended June 30, 2002,  File No.
          0-29754)
10.5      Amendment  to  GMAC  Facility  Agreement,   dated  February  12,  2003
          (incorporated  by  reference  to  Exhibit  10.4  to  the  Registrant's
          Quarterly  Report on Form 10-Q for the Quarter  Ended March 31,  2003,
          File No. 0-29754)
10.6      Employment  Agreement  dated June 24, 1996 between the  Registrant and
          Stuart  Hettleman,  as amended  (incorporated by reference to Exhibits
          10.5, 10.6 and 10.7 of the Registrant's Annual Report on Form 10-K for
          the Fiscal Year Ended June 30, 2002, File No. 0-29754)
10.7      Addendum  to  Employment  Agreement  dated June 30,  2003  between the
          Registrant and Stuart Hettleman
10.8(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)
10.9      Amendment to Lease Agreement for Los Angeles Facility (incorporated by
          reference to Exhibit 10.9 to the  Registrant's  Annual  Report on Form
          10-K for the Year Ended June 30, 2002, File No. 0-29754)
21        Subsidiaries of Registrant (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 Stonefield Josephson, Inc.
31.1      Rule 15d-14(a) Certification of Chief Executive Officer
31.2      Rule 15d-14(a) Certification of Chief Financial Officer
32.1      Section 1350 Certifications
99.1      Press Release issued September 26, 2003

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

        None.



                                       17
<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 26, 2003                   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 26, 2003
---------------------------    Officer and Director
Stuart Hettleman


/s/ Michael Barsa              Director                       September 26, 2003
---------------------------
Michael Barsa


/s/ Brian K. Coventry          Director                       September 26, 2003
---------------------------
Brian K. Coventry


/s/ Christopher Coppersmith    Director                       September 26, 2003
---------------------------
Christopher Coppersmith


/s/ Philip J. Dubato           Vice President, Chief          September 26, 2003
---------------------------    Financial Officer,
Philip J. Dubato               Principal Accounting Officer
                               and Director








                                       18
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



The Board of Directors
Target Logistics, Inc.
Baltimore, Maryland

We have audited the  consolidated  balance  sheet of Target  Logistics,  Inc. (a
Delaware  corporation) and  subsidiaries,  as of June 30, 2003 and 2002, and the
related  consolidated  statements of operations,  shareholders'  equity and cash
flows for the years then ended. These consolidated  financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits 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 consolidated financial position of Target
Logistics, Inc. and subsidiaries,  as of June 30, 2003 and 2002, and the results
of their consolidated operations and their consolidated cash flows for the years
ended June 30, 2003 and 2002, in conformity with accounting principles generally
accepted in the United States of America.

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 audits 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.


STONEFIELD JOSEPHSON, INC.

Santa Monica, California
September 5, 2003





                                      F-1
<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


                      EXPLANATORY NOTE REGARDING REPORT OF
                         INDEPENDENT PUBLIC ACCOUNTANTS

     On April 18, 2002, the Company  decided to no longer engage Arthur Andersen
LLP ("Andersen") as its independent  public  accountants and engaged  Stonefield
Josephson,  Inc. to serve as its  independent  public  accountants  for the year
ending  June 30,  2002.  More  information  regarding  the  Company's  change in
independent  public  accountants  is contained  in a Current  Report on Form 8-K
filed with the Securities and Exchange Commission on April 22, 2002.

     We could not obtain  permission of Andersen to the inclusion in this Annual
Report on Form 10-K of their Report of Independent  Public  Accountants,  above.
Accordingly,  the  above  Report of  Independent  Public  Accountants  is merely
reproduced from the Company's Annual Report on Form 10-K for the year ended June
30, 2002 (although the  consolidated  balance sheet as of June 30, 2000, and the
consolidated  statements of operations,  shareholders' equity and cash flows for
the year ended June 30, 1999 referred to in that report are not included herein)
and does not include the manual signature of Andersen.

     Because  Andersen has not  consented to the inclusion of its report in this
Annual Report,  it may be more difficult to seek remedies  against  Andersen and
the ability to seek relief against Andersen may be impaired.





                                      F-2
<PAGE>

<TABLE>
                             TARGET LOGISTICS, INC.
                          CONSOLIDATED BALANCE SHEETS


<CAPTION>
                                     ASSETS                                       June 30, 2003      June 30, 2002
                                                                                  -------------      -------------
CURRENT ASSETS:
<S>                                                                                <C>                <C>
Cash and cash equivalents                                                          $ 3,999,045        $ 4,333,015
Accounts receivable, net of allowance for doubtful accounts of
   $882,132 and $995,245, respectively                                              17,600,722         17,012,677
Deferred income taxes                                                                  668,000            694,333
Prepaid expenses and other current assets                                              146,329
                                                                                   -----------
                                                                                                          310,543
                                 Total current assets                               22,414,096         22,350,568
PROPERTY AND EQUIPMENT, NET                                                            508,876            615,606
OTHER ASSETS                                                                         1,266,772            942,110
DEFERRED INCOME TAXES                                                                1,761,591          2,239,667
GOODWILL, net of accumulated amortization of $3,715,106
   and $3,715,106, respectively                                                     11,239,917         11,239,917
                                                                                   -----------        -----------
                                 Total assets                                      $37,191,252        $37,387,868
                                                                                   ===========        ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable                                                                   $ 3,890,138        $ 5,834,820
Accrued expenses                                                                     1,724,643          1,783,136
Accrued transportation expenses                                                      8,262,487          8,430,078
Note payable to bank                                                                 7,455,199          5,993,475
Dividends payable                                                                      110,270            110,270
Taxes payable                                                                           81,909             64,576
Lease obligation - current portion                                                      26,144             76,982
                                                                                   -----------        -----------
                                 Total current liabilities                          21,550,790         22,293,337
LEASE OBLIGATION -- LONG TERM                                                           61,130             34,002
                                                                                   -----------        -----------
                                 Total liabilities                                 $21,611,920        $22,327,339
                                                                                   -----------        -----------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
Preferred Stock, $10 par value; 2,500,000 shares authorized,
   320,696 shares issued and outstanding                                             3,206,960          3,206,960
Common Stock, $.01 par value; 30,000,000 shares authorized,
   12,913,953 and 12,913,953 shares issued and outstanding, respectively               129,139            129,139
Paid-in capital                                                                     24,202,248         24,202,248
Accumulated deficit                                                                (11,314,210)       (11,833,013)
Less:  Treasury stock, 734,951 shares held at cost                                    (644,805)          (644,805)
                                 Total shareholders' equity                         15,579,332         15,060,529
                                                                                   -----------        -----------
                                 Total liabilities and shareholders' equity        $37,191,252        $37,387,868
                                                                                   ===========        ===========

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


                                      F-3
<PAGE>

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

<CAPTION>
                                                                       Year Ended                     Year Ended
                                                      Year Ended     June 30, 2002    Year Ended    June 30, 2001     Year Ended
                                                     June 30, 2003     Pro Forma*    June 30, 2002    Pro Forma*    June 30, 2001
                                                     -------------   -------------   -------------  -------------   -------------

<S>                                                  <C>              <C>             <C>            <C>             <C>
OPERATING REVENUES:                                  $113,381,199     $93,483,739     $93,483,739    $90,143,202     $90,143,202

COST OF TRANSPORTATION:                                75,773,354      63,173,982      63,173,982     60,912,272      60,912,272
                                                     ------------     -----------     -----------    -----------     -----------

GROSS PROFIT:                                          37,607,845      30,309,757      30,309,757     29,230,930      29,230,930
                                                     ------------     -----------     -----------    -----------     -----------

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
("SG&A"):
SG&A - Target subsidiary                               19,654,757      15,600,538      15,600,538     15,025,467      15,025,467
SG&A - Target subsidiary
(Exclusive forwarder commissions)                      16,502,352      13,620,593      13,620,593     14,802,994      14,802,994
SG&A - Corporate                                          783,905         748,411         748,411        826,886         826,886
Depreciation and amortization                             428,031       420,819**        1,016,687     300,742**         896,610
                                                     ------------     -----------     -----------    -----------     -----------
  Selling, general and administrative expenses         37,369,045      30,390,361      30,986,229     30,956,089      31,551,957
                                                     ------------     -----------     -----------    -----------     -----------

Operating income (loss)                                   238,800         (80,604)       (676,472)    (1,725,159)     (2,321,027)

OTHER INCOME (EXPENSE):
Interest (expense)                                       (342,590)       (258,055)       (258,055)      (228,451)       (228,451)
Other income                                            1,447,699               -               -              -               -
                                                     ------------     -----------     -----------    -----------     -----------


Income (loss) before income taxes                       1,343,909        (338,659)       (934,527)    (1,953,610)     (2,549,478)
Provision (benefit) for income taxes                      504,409               -               -      ( 777,895)      ( 777,895)
                                                     ------------     -----------     -----------    -----------     -----------
Net income (loss)                                    $    839,500     $  (338,659)    $  (934,527)   $(1,175,715)    $(1,771,583)
                                                     ============     ===========     ===========    ===========     ===========

Income (loss) per share attributable to common
shareholders:
     Basic                                                  $0.04          ($0.05)         ($0.10)        ($0.13)         ($0.18)
                                                            =====          ======          ======         ======          ======
     Diluted                                                $0.04               -               -              -               -
                                                            =====          ======          ======         ======          ======

Weighted average shares outstanding:
     Basic                                             12,179,002      11,953,797      11,953,797     11,879,002      11,879,002
                                                       ==========      ==========      ==========     ==========      ==========
     Diluted                                           20,673,589               -               -              -               -
                                                       ==========      ==========      ==========     ==========      ==========



*    Pro Forma.  Under FASB No. 142 (see Note 3), adopted by the Company on July
     1, 2002, goodwill and certain intangibles are not amortized into results of
     operations.  In order to enhance  comparability of the years ended June 30,
     2003,  2002,  and 2001,  pro forma  statements for the years ended June 30,
     2002 and 2001 are presented  supplementally as if FASB 142 had been applied
     for that period.

**   Reflects the  exclusion of goodwill  amortization  expense in the amount of
     $595,868 for the years ended June 30, 2002 and 2001.

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


                                      F-4
<PAGE>

<TABLE>
                                                             TARGET LOGISTICS, INC.
                                                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                FOR THE YEARS ENDED JUNE 30, 2003, 2002 AND 2001



<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, 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

Cash dividends associated
 with the Class A and C
 Preferred Stock                   -           -           -         -           -         -          -      (315,104)    (315,104)

  Common Stock issued
  pursuant to
  Subscription Agreements          -          -      300,000     3,000     297,000         -          -             -      300,000

Net loss                           -          -            -         -           -         -          -      (934,527)    (934,527)
                             -------  ----------  ----------  --------  ----------- -------- ----------  ------------  -----------

Balance, June 30, 2002       320,696  $3,206,960  12,913,953  $129,139  24,202,248  (734,951) $(644,805) $(11,833,013) $15,060,529

Cash dividends associated
 with the Class A and C
 Preferred Stock                   -           -           -         -           -         -          -      (320,697)    (320,697)

Net income                         -           -           -         -           -         -          -       839,500      839,500
                             -------  ----------  ----------  --------  ----------- --------  ---------  ------------  -----------
Balance, June 30, 2003       320,696  $3,206,960  12,913,953  $129,139  $24,202,248 (734,951) $(644,805) $(11,314,210) $15,579,332
                             =======  ==========  ==========  ========  =========== ========  =========  ============  ===========


              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

<CAPTION>

                                                                           Year Ended                    Year Ended
                                                            Year Ended   June 30, 2002   Year Ended     June 30, 2001   Year Ended
                                                          June 30, 2003    Pro Forma*   June 30, 2002     Pro Forma*   June 30, 2001
                                                          -------------  -------------  -------------   -------------  -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                           <C>          <C>           <C>            <C>             <C>
  Net income (loss)                                           $839,500     $(338,659)**  $ (934,527)    $(1,175,715)**  $(1,771,583)
  Bad debt expense                                             702,446       341,090        341,090        (239,611)       (239,611)
  Depreciation and amortization                                428,031       420,819**    1,016,687         300,742**       896,610
  Deferred income tax                                          504,409             -              -        (777,895)       (777,895)
  Adjustments to reconcile net income (loss) to net
   cash used in operating activities-
     (Increase) decrease in accounts receivable             (1,199,069)   (2,498,395)    (2,498,395)        334,062         334,062
     Decrease (increase) in prepaid expenses and other         164,214      (122,408)      (122,408)       (155,774)       (155,774)
     current assets
     Increase (decrease) in other assets                      (179,142)       45,270         45,270           9,898           9,898
     (Decrease) increase in accounts payable and accrued    (2,209,574)    1,836,445      1,836,445         937,752         937,752
     expenses                                               ----------     ---------     ----------     -----------     -----------

                  Net cash used for operating activities      (945,185)     (315,838)      (315,838)       (766,541)       (766,541)
                                                            ----------     ---------     ----------     -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment                         (265,160)     (311,287)      (311,287)       (450,694)       (450,694)
  Asset Purchase Acquisitions (Note 5)                        (240,942)     (528,663)      (528,663)              -               -
                                                            ----------     ---------     ----------     -----------     -----------
                  Net cash used for investing activities      (506,102)     (839,950)      (839,950)       (450,694)       (450,694)
                                                            ----------     ---------     ----------     -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Dividends paid                                              (320,697)     (315,104)      (315,104)       (320,626)       (320,626)
  Borrowing from note payable to bank                      113,843,212    87,585,081     87,585,081      83,376,995      83,376,995
  Repayment of note payable to bank                       (112,381,488)  (87,271,518)   (87,271,518)    (82,333,904)    (82,333,904)
  Proceeds (payment) of lease obligations                      (23,710)        3,451          3,451         (73,441)        (73,441)
                                                            ----------     ---------     ----------     -----------     -----------
                  Net cash provided by financing             1,117,317         1,910          1,910         649,024         649,024
                  activities                                ----------     ---------     ----------     -----------     -----------

                  Net decrease in cash and cash               (333,970)   (1,153,878)    (1,153,878)       (568,211)       (568,211)
                  equivalents

CASH AND CASH EQUIVALENTS, beginning of year                 4,333,015     5,486,893      5,486,893       6,055,104       6,055,104
                                                            ----------     ---------     ----------     -----------     -----------
CASH AND CASH EQUIVALENTS, end of year                      $3,999,045    $4,333,015     $4,333,015     $ 5,486,893     $ 5,486,893
                                                            ==========    ==========     ==========     ===========     ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
  Interest                                                    $412,334      $382,320       $382,320        $506,793       $506,793
  Income taxes                                                $  3,740      $    800       $    800        $  2,499       $  2,499

*    Pro Forma.  Under FASB No. 142 (see Note 3), adopted by the Company on July
     1, 2002, goodwill and certain intangibles are not amortized into results of
     operations.  In order to enhance  comparability of the years ended June 30,
     2003,  2002,  and 2001,  pro forma  statements for the years ended June 30,
     2002 and 2001 are presented  supplementally as if FASB 142 had been applied
     for that period.

**   Reflects the  exclusion of goodwill  amortization  expense in the amount of
     $595,868 for the years ended June 30, 2002 and 2001.

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


                                      F-6
<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, 2003    June 30, 2002   June 30, 2001
                                                                                   -------------    -------------   -------------

<S>         <C>                                                                                          <C>
Issuance of 300,000 shares of Common Stock pursuant to Subscription Agreements                 -         $300,000               -






















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

</TABLE>




                                      F-7
<PAGE>

                             TARGET LOGISTICS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                            YEAR ENDED JUNE 30, 2003


1.       BUSINESS

Target Logistics,  Inc.  ("Company")  provides freight  forwarding  services and
logistics  services,  through  its  wholly  owned  subsidiary,  Target  Logistic
Services,  Inc.  ("Target").  The  Company has a network of offices in 36 cities
throughout  the United  States.  The  Company  was  incorporated  in Delaware in
January 1996 as the successor to operations commenced in 1970.

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 36 cities  throughout  the United  States,
including  exclusive  agency   relationships  in  23  cities.  The  Company  has
international    freight   forwarding   operations   consisting   of   strategic
relationships  in over 20 countries.  The Company has developed  several  niches
including fashion services,  the distribution of materials for the entertainment
industry,  an expertise in material supply logistics to manufacturing  concerns,
and consumer direct logistics of oversized freight.

2.     CHANGE IN AUDITORS

On April 18,  2002,  the  Company  determined,  for  itself and on behalf of its
subsidiaries,  to dismiss its independent auditors,  Arthur Andersen LLP, and to
engage the services of Stonefield Josephson,  Inc.  ("Stonefield  Josephson") as
its  new  independent   auditors.   The  change  in  auditors  became  effective
immediately.   This  determination  followed  the  Company's  decision  to  seek
proposals from independent  accountants to audit the financial statements of the
Company,  and  was  approved  by the  Company's  Board  of  Directors  upon  the
recommendation of its Audit Committee.

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,  2003,  2002 and 2001,  the  consolidated
financial  statements  include the  accounts of the Company,  Target,  and other
inactive  subsidiaries.  All significant  intercompany balances and transactions
have been eliminated upon consolidation.

Use of Estimates

In the process of preparing its consolidated  financial statements,  the Company
estimates the appropriate carrying value of certain assets and liabilities which
are not readily  apparent from other sources.  Management bases its estimates on
historical  experience  and on  various  assumptions  which are  believed  to be
reasonable  under  the  circumstances.  The  primary  estimates  underlying  the
Company's  consolidated  financial  statements  include  allowance  for doubtful
accounts, accruals for transportation and other direct costs, accruals for cargo
insurance,  and the classification of NOL and tax credit  carryforwards  between
current and long-term assets.

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


                                      F-8
<PAGE>

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. 144,  "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 or disposal of long-lived  assets.  The statement  requires that
long-lived  assets be  reviewed  for  impairment  whenever  events or changes in
circumstances indicate that its carrying amount may be not be recoverable and is
measured by a  comparison  of the  carrying  amount of an asset to  undiscounted
future net cash flows  expected to be  generated  by the asset.  If the carrying
amount of an asset  exceeds its estimated  future  undiscounted  cash flows,  an
impairment  charge is recognized for the amount by which the carrying  amount of
the asset exceeds the fair value of the asset.  SFAS No. 144 requires  companies
to separately  report  discontinued  operations  and extends that reporting to a
component of an entity that either has been  disposed of (by sales,  abandonment
or in a distribution to owners) or is classified as held for sale.  Assets to be
disclosed  are reported at the lower of the  carrying  amount or fair value less
costs to sell. The Company adopted SFAS No. 144 on July 1, 2002.  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, 2003.

Goodwill

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

In July 2001,  the FASB  issued  SFAS No. 142,  "Goodwill  and Other  Intangible
Assets",  which requires the use of a  non-amortization  approach to account for
purchased  goodwill and certain  intangibles.  This  statement is effective  for
fiscal  years  beginning  after  December  15,  2001.  The Company  adopted this
statement on July 1, 2002.  Under the  non-amortization  approach,  goodwill and
certain  intangibles  will not be  amortized  into  results of  operations,  but
instead will be reviewed for impairment,  written down and charged to results of
operations  only in periods in which the recorded  value of goodwill and certain
intangibles  is more than its fair value.  The Company  obtained an  independent
valuation  analysis completed during the second quarter ended December 31, 2002,
and based on the  valuation,  the Company  determined  that the goodwill was not
impaired;  however, future impairment reviews may result in periodic write-downs
ranging from zero to $11,239,917.  The Company amortized  approximately $596,000
of  goodwill  for  each of the  fiscal  years  ended  June 30,  2002  and  2001,
respectively.

The independent valuation analysis is substantially  dependent on three separate
analyses:  (1) discounted  seven-year cash flow analysis,  (2) comparable public
companies analysis and (3) comparable transactions analysis.

The  discounted  cash  flow  analysis  is  dependent  on the  Target  subsidiary
achieving certain future results. These include the following major assumptions:
(a) Revenue  growth of 20% for fiscal  2003,  7.5% for fiscal 2004 thru 2006 and
4.5% for fiscal 2007 thru 2009;  (b) Gross  Profit  percentage  increasing  from
32.7% in  fiscal  2003 to 33.1% in fiscal  2006 and  thereafter;  (c)  Operating
expenses (excluding forwarder commissions) reducing from 16.5% in fiscal 2003 to
16.2% in fiscal  2007 and  thereafter;  and (d) a 17.68%  discount  rate.  While
management  believes that these are achievable,  any downward variation in these
major  assumptions or in any other portion of the discounted  cash flow analysis
could negatively impact the overall valuation analysis.

The  comparable  public  company  analysis is  dependent  on the future value of
companies in the same business as Target.  While  management  believes that this
industry  segment is growing,  any  reduction in growth rates or trends or other
factors  impacting on comparable  public companies could  negatively  impact the
overall valuation analysis.

The comparable  transactions analysis is dependent on future transactions in the
industry that Target is engaged. While management believes that based on current
transactions  and  trends  these  values  are  maintaining,   any  reduction  in
comparable transactions could negatively impact the overall valuation analysis.



                                      F-9
<PAGE>

The  Company  intends  to  perform an annual  valuation  analysis.  Based on the
results of these annual  valuation  analyses,  the Company's  financial  results
could be impacted by  impairment  of  goodwill,  which could  result in periodic
write-downs ranging from zero to $11,239,917.

Income Taxes

The Company accounts for income taxes under SFAS No. 109, "Accounting for Income
Taxes".  Under SFAS No. 109,  deferred tax assets 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

In  accordance  with EITF 91-9  "Revenue  and  Expense  Recognition  for Freight
Services in  Process",  revenue  from  freight  forwarding  is  recognized  upon
completed  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.

The Company  recognizes  revenue on a gross basis,  in accordance  with Emerging
Issues Task Force (EITF)  99-19,  "Reporting  Revenue  Gross  versus Net",  as a
result of the following: Target is the primary obligor responsible for providing
the  service  desired  by the  customer  and  is  responsible  for  fulfillment,
including  the  acceptability  of the  service(s)  ordered or  purchased  by the
customer. The prices charged by Target to its customers are set by Target in its
sole  discretion  and Target is not required to obtain  approval or consent from
any other party in establishing  its prices.  Target has multiple  suppliers for
the  services it sells to a customer  and Target has the  absolute  and complete
discretion  and right to select the supplier that will provide the product(s) or
service(s) ordered by a customer,  including changing the supplier on a shipment
by shipment  basis.  Target,  in most cases,  does  determine the nature,  type,
characteristics,  and  specifications of the service(s) ordered by the customer.
Target assumes credit risk for the amount billed to the customer.

Cash and Cash Equivalents

The  Company  considers  all  highly  liquid  investments  that  are not held as
collateral, and which are purchased with an original maturity of three months or
less, to be cash equivalents.

Per Share Data

Basic  income  (loss) per share is  calculated  by  dividing  net income  (loss)
attributable  to common  shareholders  less preferred  stock  dividends,  by the
weighted average number of shares of common stock outstanding during the period.


                                      F-10
<PAGE>

Diluted  income per share is calculated by dividing net income  attributable  to
common shareholders by the weighted average number of common shares outstanding,
adjusted for  potentially  dilutive  securities.  Diluted loss per share has not
been presented for the years ended June 30, 2002 and 2001 since the inclusion of
outstanding convertible preferred stock and stock options would be antidilutive.

The following table  summarizes the equivalent  number of common shares assuming
the related  securities  that were  outstanding as of June 30, 2002 and 2001 had
been converted, but not included in the calculation of diluted loss per share as
such shares are antidilutive:

<TABLE>
<CAPTION>
                                                                           June 30,
                                                                      2002          2001
                                                                      ----          ----

<S>                                                                <C>           <C>
     Convertible preferred stock.............................      9,983,626     6,951,166
     Stock Options...........................................        576,957       576,957
     Stock Warrants..........................................              -       109,448
                                                                  ----------     ---------
     Antidilutive securities                                      10,560,583     7,637,571
                                                                  ==========     =========
</TABLE>

Options to purchase 590,000,  576,957,  and 576,957,  shares of common stock for
the years ended June 30, 2003, 2002 and 2001, 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 shares of common stock for the year ended June 30,
2001 were not included in the  computation of diluted EPS because they were also
anti-dilutive.

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 2003 presentation.

Recent Accounting Pronouncements

In December  2002, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards  (SFAS) No. 148,  "Accounting  for
Stock-Based  Compensation  - Transition  and  Disclosure".  SFAS 148 amends FASB
Statement  No.  123,  "Accounting  for  Stock-Based   Compensation",   providing
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. SFAS 148 also amends
the  disclosure  provisions of FASB 123 and  Accounting  Principles  Board (APB)
Opinion No. 28, "Interim Financial Reporting",  to require prominent disclosures
in both annual and interim  financial  statements about the method of accounting
for  stock-based  employee  compensation  and the effect of the  method  used on
reported  results.  Amendments to SFAS 123 related to the  transition and annual


                                      F-11
<PAGE>

disclosures  are  effective  for fiscal year ending  after  December  15,  2002.
Amendments  to  disclosure  requirements  of APB  Opinion 28 are  effective  for
interim  periods  beginning after December 15, 2002. The Company does not expect
the adoption of SFAS 148 will have a material impact on its financial  position,
results of operations or cash flows.

In November 2002,  FASB issued FASB  Interpretation  (FIN) No. 45,  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Indebtedness  of  Others".  FIN 45 requires  that the  guarantor
recognize,  at the  inception of certain  guarantees,  a liability  for the fair
value of the  obligation  undertaken  in  issuing  such  guarantee.  FIN 45 also
requires additional  disclosure  requirements about the guarantor's  obligations
under  certain  guarantees  that it has  issued.  The  initial  recognition  and
measurement  provisions of this  interpretation  are applicable on a prospective
basis  to  guarantees  issued  or  modified  after  December  31,  2002  and the
disclosure  requirements  are effective for financial  statement  periods ending
after December 15, 2002. The adoption of FIN 45 has not had a material impact on
the Company's financial position, results of operations or cash flows.

In January 2003, FASB issued  Interpretation No. 46,  "Consolidation of Variable
Interest  Entities".  FIN 46 changed the criteria by which one company  includes
another  entity  in  its  consolidated  financial  statements.  Previously,  the
criteria  were based on  control  through  voting  interest.  FIN 46  requires a
variable  interest  entity to be  consolidated  by a company if that  company is
subject to a majority of the risk of loss from the  variable  interest  entity's
activities or entitled to receive a majority of the entity's residual returns or
both.  A company  that  consolidates  a variable  interest  entity is called the
primary  beneficiary of that entity.  The  consolidation  requirements of FIN 46
apply  immediately to variable interest entities created after January 31, 2003.
The consolidation  requirements apply to older entities in the first fiscal year
or interim  period  beginning  after June 15,  2003.  Certain of the  disclosure
requirements  apply in all financial  statements  issued after January 31, 2003,
regardless of when the variable interest entity was established. The adoption of
FIN 46 has not had a material  impact on the  Company's  financial  position  or
results of operations.

In April  2003,  FASB  issued  SFAS No.  149,  "Amendment  of  Statement  133 on
Derivative  Instruments  and  Hedging  Activities.  This  Statement  amends  and
clarifies  financial  accounting  and  reporting  for  derivative   instruments,
including   certain   derivative   instruments   embedded  in  other   contracts
(collectively  referred to as derivatives) and for hedging activities under SFAS
No. 133,  "Accounting for Derivative  Instruments and Hedging Activities" and is
effective  for  contracts  entered into or modified  after June 30,  2003.  This
Statement amends Statement 133 for decisions made (i) as part of the Derivatives
Implementation  Group process that effectively  required amendments to Statement
133,  (ii) in  connection  with  other  FASB  projects  dealing  with  financial
instruments, and (3) in connection with implementation issues raised in relation
to the application of the definition of a derivative, in particular, the meaning
of an initial net  investment  that is smaller  than would be required for other
types of contracts that would be expected to have a similar  response to changes
in market  factors,  the meaning of  underlying,  and the  characteristics  of a
derivative that contains financing  components.  The Company does not anticipate
that the  adoption  of this  pronouncement  will have a  material  effect on the
financial statements.

In May 2003,  FASB  issued  SFAS No.  150,  "Accounting  for  Certain  Financial
Instruments with Characteristics of both Liabilities and Equity". This Statement
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics of both liabilities and equity, and
is effective for financial  instruments  entered into or modified  after May 31,
2003,  and otherwise is effective at the  beginning of the first interim  period
beginning  after June 15,  2003.  SFAS 150  requires  that an issuer  classify a
financial  instrument  that is within its scope as a  liability  (or an asset in
some  circumstances).  Many of those  instruments were previously  classified as
equity. Some of the provisions of this Statement are consistent with the current
definition  of  liabilities  in FASB  Concepts  Statement  No. 6,  "Elements  of
Financial Statements". The remaining provisions of this Statement are consistent
with FASB's proposal to revise that definition to encompass certain  obligations
that a reporting  entity can or must  settle by issuing  its own equity  shares,
depending on the nature of the relationship  established  between the holder and
the  issuer.  While  FASB  still  plans to revise  that  definition  through  an
amendment to Concepts  Statement 6, FASB decided to defer issuing that amendment
until it has concluded its deliberations on the next phase of this project. That
next phase  will deal with  certain  compound  financial  instruments  including
puttable shares, convertible bonds, and dual-indexed financial instruments.  The
Company does not anticipate that the adoption of this  pronouncement will have a
material effect on the financial statements.



                                      F-12
<PAGE>

4.      STOCK OPTION PLAN

In June 1996,  the Board of  Directors  of the  Company  adopted  the  Amertranz
Worldwide  Holding  Corp.  1996  Stock  Option  Plan  ("1996  Plan"),  which was
subsequently approved by shareholders.  The 1996 Plan authorizes the granting of
awards, the exercise of which would allow up to an aggregate of 1,000,000 shares
of the Company's common stock to be acquired by the holders of said awards.  The
awards can take the form of incentive  stock  options  ("ISOs") or  nonqualified
stock options ("NSOs") and may be granted to key employees,  officers, directors
and  consultants.  Any plan participant who is granted an Incentive Stock Option
and possesses  more than 10% of the voting  rights of the Company's  outstanding
common  stock must be granted an option  price at least 110% of the fair  market
value on the date of grant and the option  must be  exercised  within five years
from the date of grant.  Under the 1996 Plan, stock options have been granted to
employees and directors for terms of up to 10 years at exercise  prices  ranging
from $.10 to $6.00 and are  exercisable in whole or in part at stated times from
the date of grant up to ten  years  from the date of  grant.  At June 30,  2003,
437,957 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:

                                   Year Ended       Year Ended      Year Ended
                                  June 30, 2003   June 30, 2002    June 30, 2001
                                  -------------   -------------    -------------
    Net income (loss):
        As Reported                  $839,500       $(934,527)     $(1,771,583)
        Pro Forma                    $820,140       $(953,204)     $(1,914,581)

    Basic EPS:
        As Reported                     $0.04          $(0.10)          $(0.18)
        Pro Forma                       $0.04          $(0.10)          $(0.19)

    Diluted EPS:
        As Reported                     $0.04             ---              ---
        Pro Forma                       $0.04             ---              ---

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, 2003,  2002 and 2001,  6,957 of these options were  outstanding
and exercisable.

The following table reflects  activity under the plan for the three-year  period
ended June 30, 2003:


                                      F-13
<PAGE>
<TABLE>
<CAPTION>
                                      Year Ended June 30, 2003  Year Ended June 30, 2002   Year Ended June 30, 2001
                                      ------------------------  ------------------------   ------------------------
                                                   Weighted                   Weighted                  Weighted
                                                    Average                    Average                   Average
                                                   Exercise                   Exercise                  Exercise
                                       Shares        Price       Shares         Price       Shares        Price
                                       ------      --------      ------       --------      ------      --------

<S>                                   <C>            <C>        <C>             <C>        <C>             <C>
Outstanding at beginning of year      576,957        1.22       576,957         1.24       456,957         1.99
Granted                                20,000        0.50             -            -       455,000         0.50
Exercised                                   -           -             -            -             -            -
Forfeited                                   -           -             -            -       (25,000)        1.25
Cancelled                                   -           -             -            -      (310,000)        1.25

Outstanding at end of year            596,957        1.22       576,957        $1.24      576,957         $1.24
Exercisable at end of year            437,957        1.48       356,957        $1.70       259,290        $2.15

</TABLE>
The per share weighted  average fair value of stock options  granted during 2003
and 2001 was $0.20 and $0.22, respectively. No stock options were granted during
2002.

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:

                                          2003         2002         2001
                                          ----         ----         ----
       Risk-Free Interest Rates           4.05%       4.25%        4.35%
       Expected Lives                        5           5            5
       Expected Volatility                 477%        ---          368%
       Expected Dividend Yields           0.00%       0.00%        0.00%


The following table summarizes  information  about stock options  outstanding at
June 30, 2003:


<TABLE>
<CAPTION>
                                  Options Outstanding                            Options Exercisable
                          -------------------------------                    ----------------------------
                             Number      Weighted Average    Weighted           Number       Weighted
                          Outstanding        Remaining        Average        Exercisable      Average
Exercise Prices           at 6/30/03     Contractual Life  Exercise Price     at 6/30/03   Exercise Price
---------------           -----------    ----------------  --------------    -----------   --------------

<C>     <C>                 <C>                <C>             <C>             <C>             <C>
$0.04 - $1.13               521,957            6.89            $0.53           362,957         $0.55
$4.00 - $6.00                75,000            3.00            $6.00            75,000         $6.00
                            -------                                            -------
$0.04 - $6.00               596,957            6.50            $1.22           437,957         $1.48
                            =======                                            =======

</TABLE>

5.      PROPERTY AND EQUIPMENT, NET

<TABLE>
<CAPTION>
                                                                           June 30, 2003         June 30, 2002
                                                                           -------------         -------------
        Property and Equipment consists of the following:
<S>                                                                         <C>                   <C>
             Furniture and fixtures                                         $   883,650           $   864,517
             Furniture and fixtures - Capital Lease                             140,098                63,494
             Computer Equipment                                                 385,617               317,827
             Computer Equipment - Capital Lease                                 499,398               499,398
             Computer Software                                                  437,278               421,117
             Leasehold Improvements                                             381,714               380,114
             Vehicles                                                             2,500                81,036
                                                                            -----------           -----------
                                                                              2,730,255             2,627,503
             Less:  Accumulated depreciation and amortization (a)            (2,221,379)           (2,011,897)
                                                                            -----------           -----------
                                                                            $   508,876           $   615,606
                                                                            ===========           ===========

                                      F-14
<PAGE>
</TABLE>

(a)  Includes accumulated  depreciation and amortization of capital lease assets
     of  $531,260  and  $463,997  for the year  ended  June 30,  2003 and  2002,
     respectively.

6.       ASSET PURCHASE ACQUISITIONS

On October 13, 2002,  the Company's  Target  subsidiary  acquired the assets and
certain liabilities of Casady Air Transportation,  Inc., a Columbus,  Ohio based
forwarder for a combination of an initial cash payment and an earn out structure
over five years.

On February 11, 2002, the company's  Target  subsidiary  acquired the assets and
certain  liabilities of Air America Freight Service,  Inc., an Atlanta,  Georgia
based  forwarder  for a  combination  of an initial cash payment and an earn out
structure over five years.

On November 30, 2001, the Company's  Target  subsidiary  acquired the assets and
certain liabilities of SDS Logistics, a Newark, New Jersey based forwarder for a
combination  of an initial  cash  payment  and an earn out  structure  over five
years.

The earn-out structures are strictly dependent on future profits achieved at the
location acquired, and the Company has no minimum commitment or obligation.  The
Company does not expect that the earn-out  payments will have a material  impact
on its overall financial results.

7.      OTHER ASSETS

As of June 30, 2003 and 2002,  the  Company's  Target  subsidiary  had long-term
other assets of $1,266,772 and $942,110, respectively. The June 30, 2003 balance
includes (i) $236,125 note  receivable,  net of a $95,422  reserve,  due from an
overseas  agent,  (ii) $200,000 note  receivable due from an  independent  sales
organization  representing  the  Company's  Target  subsidiary,  (iii)  $704,120
remaining  amortization  associated with asset purchase  acquisitions  (refer to
Note 5), and (iv) $126,527 of outstanding  security deposits.  The June 30, 2002
balance includes (i) $200,000  long-term note receivable due from an independent
sales organization  representing the Company's Target subsidiary,  (ii) $600,691
remaining  amortization  associated with asset purchase  acquisitions  (refer to
Note 5), and (iii) $141,420 of outstanding security deposits.

The $236,125 note receivable is subject to interest at a rate of 7.0% and is for
a four-year  term.  The $200,000  note  receivable is subject to interest at the
prime rate with principal  repayments made once the monthly commission  payments
earned exceed an established  threshold  defined in the agreement between Target
and the independent sales  organization,  upon termination of the agreement,  or
upon the sale of the rights under the agreement to Target.

8.      DEBT

As of June 30, 2003 and 2002,  long-term and  short-term  debt  consisted of the
following:

                                               June 30, 2003      June 30, 2002
                                               -------------      -------------

         Asset-based financing                   $7,455,199         $5,993,475
                                                 ==========         ==========


During the years ended June 30, 2003 and 2002, 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 1.0% per annum over the  prevailing  prime rate
as defined by GMAC (4.0% and 4.75%) as of June 30, 2003 and 2002,  respectively,
but at no time can the rate be less than 5.0% per annum  (and not less than 6.0%
prior to September 20, 2002). At June 30, 2003 and 2002, the outstanding balance


                                      F-15
<PAGE>

on the GMAC Facility was $7,455,199 and $5,993,475 which represented 80% and 83%
of the approximate $9,347,165 and $7,211,000 available thereunder, respectively.
At June 30, 2003,  the remaining  amount  available  under the GMAC Facility was
approximately $1,901,966. 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, 2005.

9.      SHAREHOLDERS' EQUITY

Preferred Stock

As of June 30, 2003, the authorized  preferred stock of the Company is 2,500,000
shares.  As of June 30, 2003,  320,696 shares of preferred stock are outstanding
as follows:

                                    Class A (a)      Class C (b)        Total
                                    -----------      -----------        -----

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

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

      Balance at June 30, 2002          122,946          197,750       320,696
           Issuances                          -                -             -
           Conversions                        -                -             -
                                    -----------      -----------       -------

      Balance at June 30, 2003          122,946          197,750       320,696
                                    ===========      ===========       =======

 (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.

There were no shares of Class A Preferred  Stock  converted  into the  Company's
Common Stock during fiscal years ending June 30, 2003 and 2002.



                                      F-16
<PAGE>

(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  underlying  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.

During  fiscal  years  ending  June  30,  1997  and  1998,  23,750  and  36,000,
respectively,  shares of Class C Preferred  Stock were converted into 597,500 of
the Company's common stock.

There were no shares of Class C Preferred  Stock  converted  into the  Company's
Common Stock during fiscal year ending June 30, 2003 and 2002.

Warrants

As of June 30, 2003, the Company had no warrants outstanding.

10.    OTHER INCOME

Other income of $1,447,699 for the year ended June 30, 2003 is the result of a
non-recurring reversal of accruals for expenses, accruals for contingencies, and
accounts payable of previously closed and sold subsidiaries.

11.    COMMITMENTS AND CONTINGENCIES

Leases

As of June 30, 2003, future minimum lease payments for capital leases and
operating leases relating to equipment and rental premises are as follows:

           YEAR ENDING                   CAPITAL LEASES       OPERATING LEASES
           -----------                   --------------       ----------------

              2004                          $ 33,053             $1,332,254
              2005                            31,708              1,055,801
              2006                            17,548                278,004
              2007                            13,127                 14,472
              2008                             2,370                      -
                                            --------             ----------
    Total minimum lease payments              97,806             $2,680,531
                                                                 ==========
    Less - Amount representing interest      (10,532)
                                            --------
                                             $87,274
                                            ========
Employment Agreements

The Company has employment agreements with certain employees expiring at various
times through June 30, 2008. 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,  2003,
excluding bonuses, was approximately $1,240,000.



                                      F-17
<PAGE>

Litigation

On October 12, 2000,  Pilot Air Freight Corp.  ("Pilot"),  a major competitor of
Target, sued Target in the United States District Court for the Eastern District
of  Pennsylvania,  Case No.  00-CV-5190,  with respect to the  termination  by a
former Pilot freight  forwarder of its relationship with Pilot and entering into
an exclusive  forwarder  relationship  with Target.  Pilot alleged,  among other
things,  intentional  interference  with contract,  tortious  interference  with
business  relations,  violation of section 43(a) of the Lanham Act, violation of
Pennsylvania  state statutes  concerning stored electronic  communications,  and
misappropriation  of trade  secrets.  Pilot  sought  an  amount  "in  excess  of
$100,000"  in  damages,  punitive  damages,  and an  injunction  against  Target
requiring it to cease  competing  in the  Hartford,  Connecticut  market for six
months. During subsequent discovery proceedings,  Pilot claimed that its damages
exceed $3 million.  In  February,  2003,  Target  settled all of Pilot's  claims
against Target for $50,000.

12. 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, 2003,  2002
and 2001 is as follows:

<TABLE>
<CAPTION>
                                                     June 30, 2003         June 30, 2002          June 30, 2001
                                                     -------------         -------------          -------------

<S>                                                   <C>                   <C>                    <C>
      Domestic revenue                                $83,610,134           $69,652,711            $65,255,740
      International revenue                            29,771,065            23,831,028             24,887,462
                                                     ------------           -----------            -----------
                Total revenue                        $113,381,199           $93,483,739            $90,143,202
                                                     ------------           -----------            -----------

      Domestic gross profit                           $30,671,475           $23,876,294            $22,900,071
      International gross profit                        6,936,370             6,433,463              6,330,859
                                                     ------------           -----------            -----------
                Total gross profit                    $37,607,845           $30,309,757            $29,230,930
                                                     ------------           -----------            -----------

      Domestic accounts receivable                    $17,405,552            16,194,974            $13,579,181
      International accounts receivable                 1,077,292             1,812,948              2,867,349
      Less: allowance for doubtful accounts             (977,544)             (995,245)            (1,391,157)
                                                     ------------           -----------            -----------
               Accounts receivable, net of
               allowance for doubtful accounts        $17,505,300           $17,012,677            $15,055,373
                                                     ------------           -----------            -----------
</TABLE>




                                      F-18
<PAGE>

13. QUARTERLY FINANCIAL DATA SCHEDULE (unaudited)

<TABLE>
<CAPTION>
                                                                         Year Ended
                                                                         ----------
                                                                        June 30, 2003
                                                                        -------------
                                            09/30/02       12/31/02        03/31/03       06/30/03     Fiscal Year
                                            --------       --------        --------       --------     -----------
<S>                                      <C>             <C>            <C>             <C>           <C>
Operating revenue                        $26,082,685     $32,319,371    $25,657,889     $29,321,154   $113,381,199
Cost of transportation                    17,829,022      21,534,361     16,721,872      19,688,099     75,773,354
                                          ----------      ----------     ----------     -----------     ----------
Gross profit                               8,253,663      10,785,010      8,936,017       9,633,155     37,607,845
Selling, general & administrative
   expense                                 8,622,807      10,530,067      8,731,164       9,485,007     37,369,045
Interest (expense)                           (83,565)        (94,084)       (86,183)        (78,768)      (342,590)
Other income                                       -       1,447,699              -               -      1,447,699
Provision for income taxes                         -         429,434         50,718          24,257        504,409
                                         ------------    -----------     ----------     -----------    -----------
Net income (loss)                         $ (452,709)    $ 1,179,124     $   67,952     $    45,133    $   839,500
                                         ===========     ===========     ==========     ===========    ===========
Income (loss) per share
attributable to common shareholders:
                  Basic                       $(0.04)          $0.09              -          $(0.01)         $0.04
                                             =======           =====     ==========          ======          =====
                  Diluted                          -           $0.05              -               -          $0.04
                                             =======           =====     ==========          ======          =====
Weighted average shares outstanding:
                   Basic                  12,179,002      12,179,002     12,179,002      12,179,002     12,179,002
                                          ==========      ==========     ==========      ==========     ==========

                   Diluted                         -      21,845,657     19,284,660      16,850,538     20,673,589
                                          ==========      ==========     ==========      ==========     ==========


                                                                         Year Ended
                                                                         ----------
                                                                        June 30, 2002
                                                                        -------------
                                            09/30/01       12/31/01        03/31/02       06/30/02     Fiscal Year
                                            --------       --------        --------       --------     -----------
Operating revenue                       $21,552,498    $24,020,827     $21,414,092     $26,526,322    $93,483,739
Cost of transportation                    14,395,369     16,314,144      14,323,881      18,140,588     63,173,982
                                         -----------    -----------     -----------     -----------    ----------
Gross profit                               7,127,129      7,706,683       7,090,211       8,385,734     30,309,757
Selling, general & administrative
   expense                                 7,528,749      7,725,386       7,326,125       8,405,969     30,986,229
Interest (expense)                           (68,482)       (58,760)        (57,308)        (73,505)      (258,055)
                                         -----------      ---------      ----------      ----------     ----------
Net (loss)                                 $(470,102)      $(77,463)      $(293,222)       $(93,740)     $(934,527)
                                         ===========      =========      ==========       =========     ==========
Basic and diluted loss per share
attributable to common shareholders           $(0.04)        $(0.02)         $(0.03)         $(0.02)        $(0.10)
                                              ======         ======          ======          ======         ======
Weighted average shares outstanding       11,879,002     11,879,002      11,879,002      12,179,002     11,953,797
                                          ==========     ==========      ==========      ==========     ==========
</TABLE>


14. INCOME TAXES

The Company has tax net operating  loss  carryforwards  of  approximately  $11.2
million, which are available to offset future regular taxable income. The losses
expire from 2011 through 2023.  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.   Certain  net  operating  loss
carryforwards  for the State of  California  have been  suspended  for the years
ending June 30, 2003 and 2004.

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


                                      F-19
<PAGE>
<TABLE>
<CAPTION>
                                     Year Ended           Year Ended          Year Ended
                                    June 30, 2003       June 30, 2002        June 30, 2001
                                    -------------       -------------        -------------
  (In thousands)
  Current:
<S>                                      <C>                  <C>               <C>
  State                                  $  -                 $ -               $    -
  Federal                                   -                   -                    -

  Deferred:
  State                                     -                   -                    -
  Federal                                 504                   -                 (778)
                                          ---                 ---                 ----

  Net income tax expense (benefit)        504                 $ -                 $778
                                          ---                 ===                 ====

</TABLE>

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, 2003    June 30, 2002      June 30, 2001
                                                                 -------------    -------------      -------------

(In thousands)
<S>                                                                 <C>              <C>                 <C>
Income tax (benefit) expense at U.S. statutory rate                 $ 457            $ (318)             $(867)

Non-deductible goodwill                                                 -               203                203

Valuation Allowance                                                   302              (117)                 -

Utilization of loss carryforward                                     (666)                -                  -

Non-deductible expenses                                               411               232               (114)
                                                                    -----            ------              -----
                                                                    $ 504            $    -              $(778)
                                                                    =====            ======              =====
</TABLE>

The components of deferred income taxes are as follows:

<TABLE>
<CAPTION>
                                                                     Year Ended                  Year Ended
                                                                   June 30, 2003               June 30, 2002
                                                                   -------------               -------------
(In thousands)

<S>                                                                    <C>                         <C>
NOLs                                                                   $3,802                      $4,468
Tax credits                                                               286                         286
Accrued amounts and other                                                 667                         694
                                                                       ------                      ------
                                                                        4,755                       5,448

Depreciation and amortization                                              39                          87
                                                                       ------                      ------
                                                                        4,794                       5,535

Valuation allowance                                                    (2,299)                     (2,601)
                                                                       ------                      ------
                                                                       $2,495                      $2,934
                                                                       ======                      ======
</TABLE>




                                      F-20
<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, 2001

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


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

For the fiscal year ended June 30, 2002

  Allowance for doubtful accounts                     $   1,391       $   341       $      -       $ (737)      $    995
                                                      =========      ========       ========       ======       ========


For the fiscal year ended June 30, 2003

  Allowance for doubtful accounts                      $    995      $    706       $      -       $ (723)      $    978
                                                      =========      ========       ========       ======       ========

</TABLE>



                                      S-1
<PAGE>

                                                                    EXHIBIT 10.7
                                                                    ------------


                        ADDENDUM TO EMPLOYMENT AGREEMENT


          THIS ADDENDUM TO EMPLOYMENT  AGREEMENT (the  "Addendum") is made as of
the 30th day of June,  2003 by and between  TARGET  LOGISTICS,  INC., a Delaware
corporation (the "Company") and STUART HETTLEMAN (the "Executive").

                             INTRODUCTORY STATEMENT

          The Company and Executive  entered into an Employment  Agreement dated
as of June 24, 1996, as amended by Addendums to Employment  Agreement  effective
June 24, 1999 and June 30, 2002,  respectively (the "Original  Agreement").  The
parties  desire to extend the term of the Original  Agreement  for an additional
one-year term, and amend certain other  provisions of the Original  Agreement to
be effective from and after the date hereof.

          NOW, THEREFORE,  for good and valuable consideration,  the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

          A. All capitalized  terms not otherwise defined in this Addendum shall
have the meanings set forth in the Original Agreement.

          B. The first  sentence of Section  2(a) of the  Original  Agreement is
hereby amended in it entirety to read as follows:

          The Executive shall serve as President and Chief Executive  Officer of
the Company and as Executive  Vice  President of each of Amertranz and CAS for a
term commencing on the Commencement Date and expiring on June 30, 2004.

          C. In all other respects,  the Original Agreement,  as amended hereby,
shall remain in full force and effect.

          IN WITNESS WHEREOF,  the parties have executed this Addendum as of the
day and year first above written.

                                            TARGET LOGISTICS, INC.


                                            By:    /s/ Philip J. Dubato
                                               ---------------------------------
                                               Philip J. Dubato, Vice President


                                                   /s/ Stuart Hettleman
                                               ---------------------------------
                                               Stuart Hettleman

<PAGE>

                                                                      EXHIBIT 23
                                                                      ----------



                        CONSENT OF INDEPENDENT AUDITORS


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  Statements  on Form  S-8,  File  No.  333-71197  and File No.
333-107458.


                                            STONEFIELD JOSEPHSON, INC.



Santa Monica, California
September 26, 2003





<PAGE>

                                                                    EXHIBIT 31.1

                                  CERTIFICATION

     I, Stuart Hettleman, certify that:

     1. I have  reviewed  this Annual  Report on Form 10-K of Target  Logistics,
Inc.;

     2. Based on my knowledge, this report does not contain any untrue statement
of a  material  fact or omit to  state a  material  fact  necessary  to make the
statements made, in light of the circumstances  under which such statements were
made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the Registrant as
of, and for, the periods presented in this report;

     4. The  Registrant's  other  certifying  officer and I are  responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

          (a)  Designed such disclosure controls and procedures,  or caused such
               disclosure  controls  and  procedures  to be  designed  under our
               supervision,  to ensure that material information relating to the
               Registrant,  including  its  consolidated  subsidiaries,  is made
               known to us by others within those entities,  particularly during
               the period in which this report is being prepared;

          (b)  Evaluated  the  effectiveness  of  the  Registrant's   disclosure
               controls  and   procedures  and  presented  in  this  report  our
               conclusions  about the  effectiveness of the disclosure  controls
               and  procedures,  as of the  end of the  period  covered  by this
               report based on such evaluation; and

          (c)  Disclosed in this report any change in the Registrant's  internal
               control  over  financial   reporting  that  occurred  during  the
               Registrant's most recent fiscal quarter (the Registrant's  fourth
               fiscal  quarter  in  the  case  of an  annual  report)  that  has
               materially  affected,  or  is  reasonably  likely  to  materially
               affect,   the   Registrant's   internal  control  over  financial
               reporting; and

     5. The Registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,  to the
Registrant's auditors and the audit committee of Registrant's board of directors
(or persons performing the equivalent function):

          (a)  All  significant  deficiencies  and  material  weaknesses  in the
               design or operation of internal control over financial  reporting
               which are reasonably  likely to adversely affect the Registrant's
               ability  to  record,  process,  summarize  and  report  financial
               information; and

          (b)  Any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  Registrant's
               internal control over financial reporting.


Date: September 26, 2003                         /s/ Stuart Hettleman
                                             -----------------------------------
                                             Stuart Hettleman
                                             Chief Executive Officer




<PAGE>

                                                                    EXHIBIT 31.2

                                  CERTIFICATION

     I, Philip J. Dubato, certify that:

     1. I have  reviewed  this Annual  Report on Form 10-K of Target  Logistics,
Inc.;

     2. Based on my knowledge, this report does not contain any untrue statement
of a  material  fact or omit to  state a  material  fact  necessary  to make the
statements made, in light of the circumstances  under which such statements were
made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the Registrant as
of, and for, the periods presented in this report;

     4. The  Registrant's  other  certifying  officer and I are  responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

          (d)  Designed such disclosure controls and procedures,  or caused such
               disclosure  controls  and  procedures  to be  designed  under our
               supervision,  to ensure that material information relating to the
               Registrant,  including  its  consolidated  subsidiaries,  is made
               known to us by others within those entities,  particularly during
               the period in which this report is being prepared;

          (e)  Evaluated  the  effectiveness  of  the  Registrant's   disclosure
               controls  and   procedures  and  presented  in  this  report  our
               conclusions  about the  effectiveness of the disclosure  controls
               and  procedures,  as of the  end of the  period  covered  by this
               report based on such evaluation; and

          (f)  Disclosed in this report any change in the Registrant's  internal
               control  over  financial   reporting  that  occurred  during  the
               Registrant's most recent fiscal quarter (the Registrant's  fourth
               fiscal  quarter  in  the  case  of an  annual  report)  that  has
               materially  affected,  or  is  reasonably  likely  to  materially
               affect,   the   Registrant's   internal  control  over  financial
               reporting; and

     5. The Registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,  to the
Registrant's auditors and the audit committee of Registrant's board of directors
(or persons performing the equivalent function):

          (c)  All  significant  deficiencies  and  material  weaknesses  in the
               design or operation of internal control over financial  reporting
               which are reasonably  likely to adversely affect the Registrant's
               ability  to  record,  process,  summarize  and  report  financial
               information; and

          (d)  Any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  Registrant's
               internal control over financial reporting.


Date: September 26, 2003                         /s/ Philip J. Dubato
                                            ------------------------------------
                                            Philip J. Dubato
                                            Chief Financial Officer






<PAGE>

                                                                    EXHIBIT 32.1



                           SECTION 1350 CERTIFICATIONS

     In  connection  with the  Annual  Report of  Target  Logistics,  Inc.  (the
"Company")  on Form 10-K for the fiscal  year ended June 30,  2003 as filed with
the Securities and Exchange  Commission  and to which this  Certification  is an
exhibit (the "Report"), the undersigned hereby certify,  pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully  complies with the  requirements  of section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
          material respects, the financial condition and result of operations of
          the Company for the periods reflected therein.


Date: September 26, 2003                        /s/ Stuart Hettleman
                                            ------------------------------------
                                            Stuart Hettleman
                                            Chief Executive Officer



                                               /s/ Philip J. Dubato
                                            ------------------------------------
                                            Philip J. Dubato
                                            Chief Financial Officer






<PAGE>

                                                                    Exhibit 99.1
                                                                    ------------


FOR:            TARGET LOGISTICS, INC.

CONTACT:        Stuart Hettleman
                (410) 332-1598

KCSA            Joseph A. Mansi/Robert Greenberg
CONTACT:        (212) 896-1205/(212) 896-1265
                jmansi@kcsa.com / rgreenberg@kcsa.com
                ---------------

                                                           FOR IMMEDIATE RELEASE


                        TARGET LOGISTICS, INC. ANNOUNCES
                  FISCAL FOURTH QUARTER AND FISCAL YEAR RESULTS


BALTIMORE, Md., September 29, 2003-- Target Logistics, Inc. (OTC BB: TARG) today
announced results for the fiscal fourth quarter and year ended June 30, 2003.

     The Company said  operating  revenues for the fiscal  fourth  quarter ended
June 30, 2003 totaled  $29,321,254,  a 10.5 percent  increase  over  revenues of
$26,526,322  reported for the fiscal  fourth  quarter  ended June 30, 2002.  The
operating income for the quarter ended June 30, 2003 was $148,148, compared with
an operating loss of $20,235 reported for the fourth quarter of fiscal 2002. The
Company reported a net income of $45,133,  or $0.00 per basic and diluted shares
for the fourth  quarter,  compared  with a net loss of  $93,740,  or $(0.01) per
basic share, for the fourth quarter ended June 30, 2002.

     Operating  revenues for fiscal 2003 increased 21.3 percent to $113,381,199,
compared with  $93,483,739  for the fiscal year ended June 30, 2002. The Company
reported  operating  income  of  $238,800  for  fiscal  2003,  compared  with an
operating  loss of $676,472 in fiscal 2002.  The Company  reported net income of
$839,500,  or $0.04 per basic and diluted  shares for the fiscal year ended June
30, 2003,  compared with a net loss of $934,527,  or $(0.10) per basic share for
the fiscal year ended June 30, 2002.

     Net  income  for the  year  ended  June 30,  2003  includes  $1,447,699  in
non-recurring reversals of accruals for expenses, accruals for contingencies and
accruals for accounts payable of previously closed and sold  subsidiaries.  On a
pro forma basis, net income for the fourth quarter of fiscal 2002 was $55,227 or
$0.00 per basic and diluted  shares.  For the year ended June 30, 2002 pro forma
net loss was $338,659 or $(0.05) per basic.  Since 2003 results are presented in
accordance with a new accounting  pronouncement  (FASB 142) under which goodwill
and certain  intangibles are not amortized into results of operations,  the 2002
pro forma results are presented  supplementally to enhance comparison as if FASB
142 had been applied at the beginning of the 2002 fiscal year.

     Stuart   Hettleman,   President  and  Chief  Executive  Officer  of  Target
Logistics,  said, "We are pleased that during this stagnant  economic  period we
were able to report our fourth  consecutive  year of operating  revenue  growth.
Fiscal 2003 revenues  increased 21.3% over 2002 and  demonstrated the continuing
success of our growth through our acquisition  strategy and the expansion of our
team of sales  executives.  We are also  pleased  with the  growth  of our gross
profit margins which increased 2.5% in fiscal 2003."


<PAGE>

     Mr. Hettleman continued,  "For fiscal 2004 we are committed to continue our
strategies  for increased  growth in revenue and gross margins while  containing
expenses. As a result of these strategies we expect improved operating income in
fiscal 2004."

     Target Logistics,  Inc. provides freight  forwarding and logistics services
through its wholly-owned subsidiary, Target Logistic Services, Inc.

                               (Table to follow)

Statements  contained in this press  release that are not  historical  facts are
forward-looking  statements  as that term is defined in the  Private  Securities
Litigation  Reform Act of 1995.  Although  Target  Logistics  believes  that the
expectations  reflected in such forward-looking  statements are reasonable,  the
forward-looking  statements  are subject to risks and  uncertainties  that could
cause actual results to differ materially from those projections.


You may view prior  releases,  or register to receive  Target  Logistics  future
press  releases  by  clicking  on  the  "KCSA  Interactive   Platform"  icon  at
www.kcsa.com.



<PAGE>

                             Target Logistics, Inc.
                Consolidated Statement of Operations (unaudited)

<TABLE>
<CAPTION>
                                                          Three Months Ended June 30,
                                                                       2002
                                                        2003        Pro Forma (a)       2002
                                                        ----        -------------       ----
<S>                                                 <C>              <C>            <C>
Operating revenues                                  $29,321,254      $26,526,322    $26,526,322

Cost of transportation                               19,688,099       18,140,588     18,140,588
                                                    -----------      -----------    -----------

Gross profit                                          9,633,155        8,385,734      8,385,734

Selling, general and administrative expenses (SG&A):
     Target subsidiary (exclusive
       forwarder commissions)                         3,944,635        3,718,173      3,718,173
     Target subsidiary                                5,183,736        4,239,103      4,239,103
     Corporate                                          262,465          178,109        178,109
     Depreciation and amortization                       94,171          121,617(b)     270,584
                                                    -----------      -----------    -----------
       Selling, general and
           administrative expenses                    9,485,007        8,257,002      8,405,969

Operating income (loss)                                 148,148          128,732        (20,235)

Other  (expense):
     Interest expense                                   (78,758)         (73,505)       (73,505)

     Other Income (expense)                                   0                0              0
                                                    -----------      -----------    -----------

Income (loss) before income taxes                        69,390           55,227        (93,740)
     Provision for income taxes                          24,257      $----------    $----------
                                                    -----------      -----------    -----------
Net income (loss)                                   $    45,133      $    55,227    $   (93,740)
                                                    ===========      ===========    ===========

Net income (loss) per share
     Basic shares
        Attributable to shareholders                $     (0.01)     $----------    $     (0.01)
                                                    ===========      ===========    ===========
     Diluted shares
        Attributable to shareholders (c)            $----------      $----------    $----------
                                                    ===========      ===========    ===========
Weighted average shares outstanding:
   Basic:                                            12,179,002       12,179,002     12,179,002
                                                    ===========      ===========    ===========

    Diluted:                                         16,850,538       20,392,208     20,392,208
                                                    ===========      ===========    ===========
</TABLE>


a)   Pro Forma.  Under  FASB No.  142,  adopted by the  Company on July 1, 2002,
     goodwill  and  certain  intangibles  are  not  amortized  into  results  of
     operations.  In order to enhance  comparability  of the three months ending
     June 30, 2003 and 2002,  pro forma  statements  for the three months ending
     June 30, 2002 are presented  supplementally as if FASB 142 had been applied
     for that period.

b)   Reflects the  exclusion of goodwill  amortization  expense in the amount of
     $148,967 for the three months ending June 30, 2002, respectively.

c)   Diluted loss per share for the three months  ending June 30, 2003 are anti-
     dilutive.



<PAGE>

                             Target Logistics, Inc.
                Consolidated Statement of Operations (unaudited)

<TABLE>
<CAPTION>
                                                    Twelve Months Ended June 30,
                                                    ----------------------------
                                                                2002
                                                2003       Pro Forma (a)        2002
                                                ----       -------------        ----
<S>                                         <C>             <C>             <C>
Operating revenues                          $113,381,199    $93,483,739     $93,483,739

Cost of transportation                       75,773,354      63,173,982      63,173,982
                                             ----------      ----------     -----------

Gross profit                                 37,607,845      30,309,757      30,309,757

Selling, general and administrative expenses (SG&A):
     Target subsidiary (exclusive
       forwarder commissions)                16,502,352      13,620,593      13,620,593
     Target subsidiary                       19,654,757      15,600,538      15,600,538
     Corporate                                  783,905         748,411         748,411
     Depreciation and amortization              428,031         420,819(b)    1,016,687
                                           ------------     -----------     -----------
       Selling, general and
           administrative expenses           37,369,045      30,390,361      30,986,229

Operating income (loss)                         238,800         (80,604)       (676,472)

Other income (expense):
     Interest expense                          (342,590)       (258,055)       (258,055)
     Other Income                             1,447,699      ----------      ----------
                                           ------------     -----------     -----------

Income (loss) before income taxes             1,343,909         (338,659)      (934,527)
     Provision for income taxes                 504,409     ------------     ----------
                                           ------------    -------------    -----------
Net income (loss)                          $    839,500    $    (338,659)   $  (934,527)
                                           ============    =============    ===========

Net income (loss) per share
     Basic shares
        Attributable to shareholders       $       0.04    $       (0.05)   $     (0.10)
                                           ============    =============    ===========
     Diluted shares
        Attributable to shareholders (c)   $       0.04    $     -------    $   -------
                                           ============    =============    ===========

Weighted average shares outstanding:
   Basic:                                    12,179,002       11,953,797     11,953,797
                                           ============    =============    ===========

   Diluted:                                  20,673,589       21,942,757     21,942,757
                                           ============    =============    ===========
</TABLE>


a)   Pro Forma.  Under  FASB No.  142,  adopted by the  Company on July 1, 2002,
     goodwill  and  certain  intangibles  are  not  amortized  into  results  of
     operations.  In order to enhance comparability of the years ending June 30,
     2003 and 2002,  pro forma  statements for the year ending June 30, 2002 are
     presented supplementally as if FASB 142 had been applied for that period.

b)   Reflects the  exclusion of goodwill  amortization  expense in the amount of
     $595,868 for the year ending June 30, 2002, respectively.

c)   Diluted  loss  per  share  for the year  ending  June  30,  2003 are  anti-
     dilutive.

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