**U.S.
      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, 2008





 ̈ 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 000-50283*




**RADIANT
      LOGISTICS, INC.**


(Name
      of
      Registrant as Specified in Its Charter)





Delaware
            
            04-3625550(State
                or other jurisdiction of
            
            (IRS
                Employer Identification Number)incorporation
                or organization)





1227
      120 th Avenue
      N.E


Bellevue,
      WA 98005


(Address
        of Principal Executive Offices) (Zip Code)





(425)
      943-4599





Registrant’s
      Telephone Number, Including Area Code)





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





Title
                of Each Class
            
            Name
                of Exchange on which RegisteredCommon
                Stock , $.001 Par Value
            
            None





**Securities
      registered under Section 12(g) of the Exchange Act** **:**





Common
      Stock, $.001 Par Value per Share





Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      rule 405 of the Securities Act. Yes  ̈ No x





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Exchange Act.  ̈





Indicate
      by check mark whether the issuer (1) filed all reports required to be filed
      by
      Section 13 or 15(d) of the Exchange Act during the past 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 the 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 statements
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this
      form 10-K.  ̈





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer or a smaller reporting company.
      See
      definitions of "large accelerated filer”, “accelerated filer" and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large
                accelerated filer ̈
            Accelerated
                filer ̈Non-accelerated
                filer ̈
            Smaller
                Reporting Companyx





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o No x





The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates of the registrant based on the closing share price of the
      registrant's common stock on December 31, 2007 as reported on the OTC Bulletin
      Board was $7,196.24. Shares of common stock held by each current executive
      officer and director and by each person who is known by the registrant to own
      5%
      or more of the outstanding common stock have been excluded from this computation
      in that such persons may be deemed to be affiliates of the registrant. This
      determination of affiliate status is not a conclusive determination for other
      purposes.





As
      of
      September 24, 2008, 34,701,960 **** shares
      of
      the registrant's common stock were outstanding.


Documents
      Incorporated by Reference: None





TABLE
      OF
      CONTENTS





**PART
                I**ITEM
                1.
            BUSINESS
            
            2ITEM
                1A.
            RISK
                FACTORS
            
            9ITEM
                2.
            PROPERTIES
            
            16ITEM
                3.
            LEGAL
                PROCEEDINGS
            
            17ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            18**PART
                II**ITEM
                5.
            MARKET
                FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
                PURCHASES OF EQUITY SECURITIES
            
            18ITEM
                7.
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS
            
            19ITEM
                8.
            FINANCIAL
                STATEMENTS AND SUPPLEMENTARY DATA
            
            30ITEM
                9.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURES
            
            30ITEM
              9A(T)
            CONTROLS
                AND PROCEDURES
            
            30ITEM
                9B
            OTHER
                INFORMATION
            
            31**PART
                III**ITEM
                10.
            DIRECTORS,
                EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
            
            31ITEM
                11.
            EXECUTIVE
                COMPENSATION
            
            33ITEM
                12.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                MANAGEMENT AND RELATED STOCKHOLDER MATTERS
            
            37ITEM
                13.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
                INDEPENDENCE
            
            38ITEM
                14.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            
            39ITEM
                15.
            EXHIBITS
                AND FINANCIAL STATEMENT SCHEDULES
            
            40Signatures
            
            42Financial
                Statements
            
            F-1


i





**CAUTIONARY
      STATEMENT ABOUT FORWARD-LOOKING STATEMENTS**




**Cautionary
      Statement for Forward-Looking Statements**




This
      report includes forward-looking statements within the meaning of Section 27A
      of
      the Securities Act of 1933 as amended, and Section 21E of the Securities
      Exchange Act of 1934, as amended, regarding future operating performance,
      events, trends and plans. All statements other than statements of historical
      fact contained herein, including, without limitation, statements regarding
      the
      our future financial position, business strategy, budgets, projected revenues
      and costs, and plans and objectives of management for future operations, are
      forward-looking statements. Forward-looking statements generally can be
      identified by the use of forward-looking terminology such as “may,” “will,”
“expects,” “intends,” “plans,” “projects,” “estimates,” “anticipates,” or
“believes” or the negative thereof or any variation thereon or similar
      terminology or expressions. We have based these forward-looking statements
      on
      our current expectations and projections about future events. These
      forward-looking statements are not guarantees and are subject to known and
      unknown risks, uncertainties and assumptions about us that may cause our actual
      results, levels of activity, performance or achievements to be materially
      different from any future results, levels of activity, performance or
      achievements expressed or implied by such forward-looking statements. While
      it
      is impossible to identify all of the factors that may cause our actual operating
      performance, events, trends or plans to differ materially from those set forth
      in such forward-looking statements, such factors include the inherent risks
      associated with our ability to: (i) to use Airgroup as a “platform” upon which
      we can build a profitable global transportation and supply chain management
      company; (ii) retain and build upon the relationships we have with our exclusive
      agency offices; (iii) continue the development of our back office infrastructure
      and transportation and accounting systems in a manner sufficient to service
      our
      expanding revenues and base of exclusive agency locations; (iv) maintain the
      future operations of Adcom in a manner consistent with its past practices,
      (v)
      integrate the operations of Adcom with our existing operations, (vi) continue
      growing our business and maintain historical or increased gross profit margins;
      (vii) locate suitable acquisition opportunities; (viii) secure the financing
      necessary to complete any acquisition opportunities we locate; (ix) assess
      and
      respond to competitive practices in the industries in which we compete, (x)
      mitigate, to the best extent possible, our dependence on current management
      and
      certain of our larger exclusive agency locations; (xi) assess and respond to
      the
      impact of current and future laws and governmental regulations affecting the
      transportation industry in general and our operations in particular; and (xii)
      assess and respond to such other factors which may be identified from time
      to
      time in our Securities and Exchange Commission (SEC) filings and other public
      announcements including those set forth below in Part 1 Item 1A. All subsequent
      written and oral forward-looking statements attributable to us, or persons
      acting on our behalf, are expressly qualified in their entirety by the
      foregoing.  Readers are cautioned not to place undue reliance on our
      forward-looking statements, as they speak only as of the date made. Except
      as
      required by law, we assume no duty to update or revise our forward-looking
      statements.


1


**PART
      I**





**ITEM
      1. BUSINESS**





**The
      Company**





Radiant
      Logistics, Inc. (the “Company,” “we” or “us”) was incorporated in the State of
      Delaware on March 15, 2001. We are executing a strategy to build a global
      transportation and supply chain management company through organic growth and
      the strategic acquisition of best-of-breed non-asset based transportation and
      logistics providers to offer its customers domestic and international freight
      forwarding and an expanding array of value added supply chain management
      services, including order fulfillment, inventory management and
      warehousing.





We
      completed the first step in this business strategy through the acquisition
      of
      Airgroup Corporation (“Airgroup”), effective as of January 1, 2006. Airgroup is
      a Bellevue, Washington based non-asset based logistics company providing
      domestic and international freight forwarding services through a network which
      includes a combination of company-owned and exclusive agent offices across
      North
      America.  Airgroup has a diversified account base including manufacturers,
      distributors and retailers using a network of independent carriers and
      international agents positioned strategically around the world.





By
      implementing a growth strategy based on the operations of Airgroup as a
      platform, we are building a leading global transportation and supply-chain
      management company offering a full range of domestic and international freight
      forwarding and other value added supply chain management services, including
      order fulfillment, inventory management and warehousing.





Our
      growth strategy will focus on both organic growth and acquisitions. From an
      organic perspective, we will focus on strengthening existing and expanding
      new
      customer relationships. One of the drivers of our organic growth will be
      retaining existing, and securing new exclusive agency locations. Since our
      acquisition of Airgroup in January 2006, we have focused our efforts on the
      build-out of our network of exclusive agency offices, as well as enhancing
      its
      back-office infrastructure and transportation and accounting
      systems.





As
      we
      continue to build out our network of exclusive agent locations to achieve a
      level of critical mass and scale, we are executing an acquisition strategy
      to
      develop additional growth opportunities. Our acquisition strategy relies upon
      two primary factors: first, our ability to identify and acquire target
      businesses that fit within our general acquisition criteria; and second, the
      continued availability of capital and financing resources sufficient to complete
      these acquisitions.





We
      continue to identify a number of additional companies as suitable acquisition
      candidates and have completed two material acquisitions over the past twelve
      months. In November 2007, we purchased certain assets in Detroit, Michigan
      to
      service the automotive industry. In September 2008, we acquired Adcom Express,
      Inc. d/b/a Adcom Worldwide (“Adcom”). Adcom is a Minneapolis, Minnesota based
      logistics company contributing an additional 30 locations across North America
      and augmenting our overall domestic and international freight forwarding
      capabilities.





We
      will
      continue to search for targets that fit within our acquisition criteria. Our
      ability to secure additional financing will rely upon the sale of debt or equity
      securities, and the development of an active trading market for our securities.
      Although we can make no assurance as to our long term access to debt or equity
      securities or our ability to develop an active trading market, in connection
      with our acquisition of Adcom we were successful in increasing our credit
      facility from $10.0 million to $15.0 million.





Our
      growth strategy has been designed to take advantage of shifting market dynamics.
      The third party logistics industry continues to grow as an increasing number
      of
      businesses outsource their logistics functions to more cost effectively manage
      and extract value from their supply chains. The industry is positioned for
      further consolidation as it remains highly fragmented, and as customers are
      demanding the types of sophisticated and broad reaching service offerings that
      can more effectively be handled by larger more diverse organizations. In
      addition, we believe that there are a number of participants within agent-based
      forwarding community that will be seeking liquidity within the next several
      years as these owners approach retirement age. We believe there is significant
      growth opportunity in supporting these logistics entrepreneurs in
      transition.


2


Successful
      implementation of our growth strategy depends upon a number of factors,
      including our ability to: (i) continue developing new agency locations; (ii)
      locate acquisition opportunities; (iii) secure adequate funding to finance
      identified acquisition opportunities; (iv) efficiently integrate the businesses
      of the companies acquired; (v) generate the anticipated economies of scale
      from
      the integration; and (vi) maintain the historic sales growth of the acquired
      businesses in order to generate continued organic growth. There are a variety
      of
      risks associated with our ability to achieve our strategic objectives, including
      the ability to acquire and profitably manage additional businesses and the
      intense competition in the industry for customers and for acquisition
      candidates.. Certain of these business risks are identified or referred to
      below
      in Item 1A of this Report.




*Industry
      Overview*




As
      business requirements for efficient and cost-effective logistics services have
      increased, so has the importance and complexity of effectively managing freight
      transportation. Businesses increasingly strive to minimize inventory levels,
      perform manufacturing and assembly operations in the lowest cost locations,
      and
      distribute their products in numerous global markets. As a result, companies
      are
      increasingly looking to third-party logistics providers to help them execute
      their supply chain strategies.





Customers
      have two principal third-party alternatives: a freight forwarder or a
      fully-integrated carrier. A freight forwarder, such as Airgroup and Adcom,
      procures shipments from customers and arranges the transportation of cargo
      on a
      carrier. A freight forwarder may also arrange pick-up from the shipper to the
      carrier and delivery of the shipment from the carrier to the recipient. Freight
      forwarders often tailor shipment routing to meet the customer’s price and
      service requirements. Fully-integrated carriers, such as FedEx Corporation,
      DHL
      Worldwide Express, Inc. and United Parcel Service (“UPS”), provide pick up and
      delivery service, primarily through their own captive fleets of trucks and
      aircraft.  Because freight forwarders select from various transportation
      options in routing customer shipments, they are often able to serve customers
      less expensively and with greater flexibility than integrated carriers.
 Freight forwarders, generally handle shipments of any size and can offer a
      variety of customized shipping options.





Most
      freight forwarders, like Airgroup and Adcom, focus on heavier cargo and do
      not
      generally compete with integrated shippers of primarily smaller parcels. In
      addition to the high fixed expenses associated with owning, operating and
      maintaining fleets of aircraft, trucks and related equipment, integrated
      carriers often impose significant restrictions on delivery schedules and
      shipment weight, size and type.  On occasion, integrated shippers serve as
      a source of cargo space to forwarders. Additionally, most freight forwarders
      do
      not generally compete with the major commercial airlines, which, to some extent,
      depend on forwarders to procure shipments and supply freight to fill cargo
      space
      on their scheduled flights.





We
      believe there are several factors that are increasing demand for global
      logistics solutions. These factors include:





·
            Outsourcing
                of non-core activities.
                Companies increasingly outsource freight forwarding, warehousing
                and other
                supply chain activities to allow them to focus on their respective
                core
                competencies. From managing purchase orders to the timely delivery
                of
                products, companies turn to third party logistics providers to manage
                these functions at a lower cost and greater efficiency.





·
            Globalization
                of trade.
                As barriers to international trade are reduced or substantially
                eliminated, international trade is increasing. In addition, companies
                increasingly are sourcing their parts, supplies and raw materials
                from the
                most cost competitive suppliers throughout the world. Outsourcing
                of
                manufacturing functions to, or locating company-owned manufacturing
                facilities in, low cost areas of the world also results in increased
                volumes of world trade.


3


·
            Increased
                need for time-definite delivery.
                The need for just-in-time and other time-definite delivery has increased
                as a result of the globalization of manufacturing, greater implementation
                of demand-driven supply chains, the shortening of product cycles
                and the
                increasing value of individual shipments. Many businesses recognize
                that
                increased spending on time-definite supply chain management services
                can
                decrease overall manufacturing and distribution costs, reduce capital
                requirements and allow them to manage their working capital more
                efficiently by reducing inventory levels and inventory
                loss.





·
            Consolidation
                of global logistics providers.
                Companies are decreasing the number of freight forwarders and supply
                chain
                management providers with which they interact. We believe companies
                want
                to transact business with a limited number of providers that are
                familiar
                with their requirements, processes and procedures, and can function
                as
                long-term partners. In addition, there is strong pressure on national
                and
                regional freight forwarders and supply chain management providers
                to
                become aligned with a global network. Larger freight forwarders and
                supply
                chain management providers benefit from economies of scale which
                enable
                them to negotiate reduced transportation rates and to allocate their
                overhead over a larger volume of transactions. Globally integrated
                freight
                forwarders and supply chain management providers are better situated
                to
                provide a full complement of services, including pick-up and delivery,
                shipment via air, sea and/or road transport, warehousing and distribution,
                and customs brokerage.





·
            Increasing
                influence of e-business and the internet.
                Technology advances have allowed businesses to connect electronically
                through the Internet to obtain relevant information and make purchase
                and
                sale decisions on a real-time basis, resulting in decreased transaction
                times and increased business-to-business activity. In response to
                their
                customers' expectations, companies have recognized the benefits of
                being
                able to transact business electronically. As such, businesses increasingly
                are seeking the assistance of supply chain service providers with
                sophisticated information technology systems which can facilitate
                real-time transaction processing and web-based shipment
                monitoring.





**Our
      Growth Strategy**





Our
      objective is to provide customers with comprehensive value-added logistics
      solutions. We plan to achieve this goal through domestic and international
      freight forwarding services offered by Airgroup and Adcom. We expect to grow
      our
      business organically and by completing acquisitions of other companies with
      complementary geographical and logistics service offerings. Our organic growth
      strategy involves strengthening existing and expanding new customer
      relationships. One of the drivers of this strategy is our ability to retain
      existing, and secure new exclusive agency locations. Since our acquisition
      of
      Airgroup, we have focused our efforts on the organic build-out of our network
      of
      exclusive agency locations, as well as the enhancement of our back office
      infrastructure and transportation and accounting systems. Through our recent
      acquisition of Adcom we have made further progress in our acquisition strategy
      and intend to pursue further acquisition opportunities to consolidate and
      enhance our position in current markets and acquire operations in new markets.





We
      believe there are many attractive acquisition candidates in our industry because
      of the highly fragmented composition of the marketplace, the industry
      participants' need for capital and their owners' desire for liquidity. Our
      target acquisition candidates are generally expected to have earnings of $1.0
      to
      $5.0 million. Companies in this range of earnings may be receptive to our
      acquisition program since they are often too small to be identified as
      acquisition targets by larger public companies or to independently attempt
      their
      own public offerings.


4


On
      a
      longer-term basis, we believe we can successfully implement our acquisition
      strategy due to the following factors:





·
            the
                highly fragmented composition of our
                market;


·
            our
                strategy for creating an organization with global reach should enhance
                an
                acquired target company’s ability to compete in its local and regional
                markets through an expansion of offered services and lower operating
                costs;


·
            the
                potential for increased profitability as a result of our centralization
                of
                certain administrative functions, greater purchasing power and economies
                of scale;


·
            our
                centralized management capabilities should enable us to effectively
                manage
                our growth and the integration of acquired
                companies;


·
            our
                status as a public corporation may ultimately provide us with a liquid
                trading currency for acquisitions;
                and


·
            the
                ability to utilize our experienced management to identify, acquire
                and
                integrate acquisition
                opportunities.





We
      will
      be opportunistic in executing our acquisition strategy with a bias towards
      completing transactions in key gateway locations such as Los Angeles, New York,
      Chicago, Seattle, Miami, Dallas, and Houston to expand our international base
      of
      operations. We believe that our domestic and expanded international
      capabilities, when taken together, will provide significant competitive
      advantage in the marketplace.




**Our
      Operating Strategy**




Leverage
      the People, Process and Technology Available through a Central
      Platform .
      A key
      element of our operating strategy is to maximize our operational efficiencies
      by
      integrating general and administrative functions into the back-office of our
      platform acquisition and reducing or eliminating redundant functions and
      facilities at acquired companies. This is designed to enable us to quickly
      realize potential savings and synergies, efficiently control and monitor
      operations of acquired companies, and allow acquired companies to focus on
      growing their sales and operations.





Develop
      and Maintain Strong Customer Relationships .
      We seek
      to develop and maintain strong interactive customer relationships by
      anticipating and focusing on our customers' needs. We emphasize a
      relationship-oriented approach to business, rather than the transaction or
      assignment-oriented approach used by many of our competitors. To develop close
      customer relationships, we and our network of exclusive agents regularly meet
      with both existing and prospective clients to help design solutions for, and
      identify the resources needed to execute, their supply chain strategies. We
      believe that this relationship-oriented approach results in greater customer
      satisfaction and reduced business development expense.




**Operations**





Through
      our Airgroup and Adcom stations, we offer domestic and international air, ocean
      and ground freight forwarding for shipments that are generally larger than
      shipments handled by integrated carriers of primarily small parcels such as
      Federal Express Corporation and United Parcel Service. Our revenues are
      generated from a number of diverse services, including air freight forwarding,
      ocean freight forwarding, customs brokerage, logistics and other value-added
      services.





Our
      primary business operations involve obtaining shipment or material orders from
      customers, creating and delivering a wide range of logistics solutions to meet
      customers' specific requirements for transportation and related services, and
      arranging and monitoring all aspects of material flow activity utilizing
      advanced information technology systems. These logistics solutions include
      domestic and international freight forwarding and door-to-door delivery services
      using a wide range of transportation modes, including air, ocean and truck.
      As a
      non-asset based provider we do not own the transportation equipment used to
      transport the freight. We expect to neither own nor operate any aircraft and,
      consequently, place no restrictions on delivery schedules or shipment size.
       We arrange for transportation of our customers’ shipments via commercial
      airlines, air cargo carriers, and other assets and non-asset based third-party
      providers. We select the carrier for a shipment based on route, departure time,
      available cargo capacity and cost.  We charter cargo aircraft from time to
      time depending upon seasonality, freight volumes and other factors. We make
      a
      profit or margin on the difference between what we charge to our customers
      for
      the totality of services provided to them, and what we pay to the transportation
      provider to transport the freight.


5




**Information
      Services**





The
      regular enhancement of our information systems and ultimate migration of
      acquired companies and additional exclusive agency locations to a common set
      of
      back-office and customer facing applications is a key component of our growth
      strategy. We believe that the ability to provide accurate real-time information
      on the status of shipments will become increasingly important and that our
      efforts in this area will result in competitive service advantages. In addition,
      we believe that centralizing our transportation management system (rating,
      routing, tender and financial settlement processes) will drive significant
      productivity improvement across our network.





We
      utilize a web-enabled third-party freight forwarding software (Cargowise) which
      is currently integrated to our third-party accounting system (SAP) that combine
      to form the foundation of our supply-chain technologies which we call
“Globalvision”. Globalvision provides us with a common set of back-office
      operating, accounting and customer facing applications used across the network.
      We have and will continue to assess technologies obtained through our
      acquisition strategy and expect to develop a “best-of-breed” solution set using
      a combination of owned and licensed technologies. This strategy will require
      the
      investment of significant management and financial resources to deliver these
      enabling technologies. Adcom also relies on the Cargowise platform for its
      transportation system which is facilitating the integration process. However,
      Cargowise uses an alternative third-party accounting system, Great Plains,
      for
      its operations. As part of our overall integration plan, we will be benchmarking
      the SAP and Great Plains systems to determine which accounting package best
      meets our on-going financial reporting requirements.





**Our
      Competitive Advantages**





As
      a
      non-asset based third-party logistics provider, we believe that we will be
      well-positioned to provide cost-effective and efficient solutions to address
      the
      demand in the marketplace for transportation and logistics services.  We
      believe that the most important competitive factors in our industry are quality
      of service, including reliability, responsiveness, expertise and convenience,
      scope of operations, geographic coverage, information technology and price.
       We believe our primary competitive advantages are:  (i) our low cost;
      non-asset based business model; (ii) our information technology resources;
      and
      (iii) our diverse customer base.





·
            Non-asset
                based business model.
                 With relatively no dedicated or fixed operating costs, we are able
                to leverage our network of exclusive agency offices and offer competitive
                pricing and flexible solutions to our customers.  Moreover, our
                balanced product offering provides us with revenue streams from multiple
                sources and enables us to retain customers even as they shift from
                priority to deferred shipments of their products.  We believe our
                model allows us to provide low-cost solutions to our customers while
                also
                generating revenues from multiple modes of transportation and logistics
                services.


6


·
            Intention
                to develop a global network.
                 We intend to focus on expanding our network on a global basis. Once
                accomplished, this will enable us to provide a closed-loop logistics
                chain
                to our customers worldwide.  Within North America, our capabilities
                consist of our pick up and delivery network, ground and air networks,
                and
                logistics capabilities. Our ground and pick up and delivery networks
                enable us to service the growing deferred forwarding market while
                providing the domestic connectivity for international shipments once
                they
                reach North America.  In addition, our heavyweight air network
                provides for competitive costs on shipments, as we have no dedicated
                charters or leases and can capitalize on available capacity in the
                market
                to move our customers’ goods.





·
            Information
                technology resources.
                 A primary component of our business strategy is the continued
                development of advanced information systems to continually provide
                accurate and timely information to our management and customers.
 Our
                customer delivery tools enable connectivity with our customers’ and
                trading partners’ systems, which leads to more accurate and up-to-date
                information on the status of shipments.





·
            Diverse
                customer base.
                 We have a well diversified base of customers that includes
                manufacturers, distributors and retailers. As of the date of this
                Report,
                no single customer represented more than 5% of our business reducing
                risks
                associated with any particular industry or customer concentration.





**Sales
      and Marketing**





We
      principally market our services through the senior management teams in place
      at
      each of our 65 company owned and exclusive independent agent offices located
      across North America. Each office is staffed with operational employees to
      provide support for the sales team, develop frequent contact with the customer’s
      traffic department, and maintain customer service. Our current network is
      predominantly represented by exclusive agent operations that rely on us for
      operating authority, technology, sales and marketing support, access to working
      capital and our carrier network and collective purchasing power. Through the
      agency relationship, the agent has the ability to focus on the operational
      and
      sales support aspects of the business without diverting costs or expertise
      to
      the structural aspect of its operations and provides the agent with the
      regional, national and global brand recognition that they would not otherwise
      be
      able to achieve by serving their local markets.





Although
      we have exclusive and long-term relationships with these agents, the Airgroup
      agency agreements are generally terminable by either party subject to requisite
      notice provisions that generally range from ten to thirty days. The Adcom agency
      agreements carry a fixed term and can range from one to 25 years and generally
      include a first-right-of refusal to acquire the location. Although we have
      no
      customers that account for more than 5% of our revenues, there are three agency
      locations that each account for more than 5% of our total gross revenues.





As
      we
      continue to grow, we expect to implement a national accounts program which
      is
      intended to increase our emphasis on obtaining high-revenue national accounts
      with multiple shipping locations. These accounts typically impose numerous
      requirements on those competing for their freight business, including electronic
      data interchange and proof of delivery capabilities, the ability to generate
      customized shipping reports and a nationwide network of terminals. These
      requirements often limit the competition for these accounts to a very small
      number of logistics providers. We believe that our anticipated future growth
      and
      development will enable us to more effectively compete for and obtain these
      accounts.


7


**Competition
      and Business Conditions**





The
      logistics business is directly impacted by the volume of domestic and
      international trade. The volume of such trade is influenced by many factors,
      including economic and political conditions in the United States and abroad,
      major work stoppages, exchange controls, currency fluctuations, acts of war,
      terrorism and other armed conflicts, United States and international laws
      relating to tariffs, trade restrictions, foreign investments and taxation.





The
      global logistics services and transportation industries are intensively
      competitive and are expected to remain so for the foreseeable future. We will
      compete against other integrated logistics companies, as well as transportation
      services companies, consultants, information technology vendors and shippers'
      transportation departments. This competition is based primarily on rates,
      quality of service (such as damage-free shipments, on-time delivery and
      consistent transit times), reliable pickup and delivery and scope of operations.
      Most of our competitors will have substantially greater financial resources
      than
      we do.




**Regulation**





There
      are
      numerous transportation related regulations. Failure to comply with the
      applicable regulations or to maintain required permits or licenses could result
      in substantial fines or revocation of operating permits or authorities. We
      cannot give assurance as to the degree or cost of future regulations on our
      business. Some of the regulations affecting our current and prospective
      operations are described below.





Air
      freight forwarding businesses are subject to regulation, as an indirect air
      cargo carrier, under the Federal Aviation Act by the U.S. Department of
      Transportation and by the Department of Homeland Security and the Transportation
      Security Administration.  However,
      air freight forwarders are exempted from most of the Federal Aviation Act's
      requirements by the Economic Aviation Regulations. The air freight forwarding
      industry is subject to regulatory and legislative changes that 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.





Surface
      freight forwarding operations are subject to various federal statutes and are
      regulated by the Surface Transportation Board. This federal agency has broad
      investigatory and regulatory powers, including the power to issue a certificate
      of authority or license to engage in the business, to approve specified mergers,
      consolidations and acquisitions, and to regulate the delivery of some types
      of
      domestic shipments and operations within particular geographic
      areas.





The
      Surface Transportation Board and U.S. Department of Transportation also have
      the
      authority to regulate interstate motor carrier operations, including the
      regulation of certain rates, charges and accounting systems, to require periodic
      financial reporting, and to regulate insurance, driver qualifications, operation
      of motor vehicles, parts and accessories for motor vehicle equipment, hours
      of
      service of drivers, inspection, repair, maintenance standards and other safety
      related matters. The federal laws governing interstate motor carriers have
      both
      direct and indirect application to the Company. The breadth and scope of the
      federal regulations may affect our operations and the motor carriers which
      are
      used in the provisioning of the transportation services. In certain locations,
      state or local permits or registrations may also be required to provide or
      obtain intrastate motor carrier services.





The
      Federal Maritime Commission, or FMC, regulates and licenses ocean forwarding
      operations. Indirect ocean carriers (non-vessel operating common carriers)
      are
      subject to FMC regulation, under the FMC tariff filing and surety bond
      requirements, and under the Shipping Act of 1984, particularly those terms
      proscribing rebating practices.





United
      States customs brokerage operations are subject to the licensing requirements
      of
      the U.S. Treasury and are regulated by the U.S. Customs Service. As we broaden
      our capabilities to include customs brokerage operations, we will be subject
      to
      regulation by the U.S. Customs Service. Likewise, any customs brokerage
      operations would also be licensed in and subject to the regulations of their
      respective countries.


8


In
      the
      United States, we are subject to federal, state and local provisions relating
      to
      the discharge of materials into the environment or otherwise for the protection
      of the environment. Similar laws apply in many foreign jurisdictions in which
      we
      may operate in the future. Although current operations have not been
      significantly affected by compliance with these environmental laws, governments
      are becoming increasingly sensitive to environmental issues, and we cannot
      predict what impact future environmental regulations may have on our business.
      We do not anticipate making any material capital expenditures for environmental
      control purposes.





**Personnel**





As
      of the
      date of this report, we have approximately 120 employees, of which 117 are
      full
      time. None of these employees are currently covered by a collective bargaining
      agreement. We have experienced no work stoppages and consider our relations
      with
      our employees to be good.





**ITEM
      1A. RISK FACTORS**





**RISKS
      PARTICULAR TO OUR BUSINESS**




***We
      are largely dependent on the efforts of our exclusive agents to generate our
      revenue and service our customers.***





We
      currently sell our services through a network predominantly represented by
      exclusive agent stations located throughout North America. Although we have
      exclusive and long-term relationships with these agents, our Airgroup agency
      agreements are terminable by either party subject to requisite notice provisions
      that generally range from 10-30 days. The Adcom agency agreements carry a fixed
      term and can range from 1 to 25 years and generally include a first-right-of
      refusal to acquire the location. Although we have no customers that account for
      more than 5% of our revenues, there are three agency locations that each account
      for more than 5% of our total gross revenues. The loss of one or more of these
      exclusive agents could negatively impact our ability to retain and service
      our
      customers. We will need to expand our existing relationships and enter into
      new
      relationships in order to increase our current and future market share and
      revenue. We cannot be certain that we will be able to maintain and expand our
      existing relationships or enter into new relationships, or that any new
      relationships will be available on commercially reasonable terms. If we are
      unable to maintain and expand our existing relationships or enter into new
      relationships, we may lose customers, customer introductions and co-marketing
      benefits and our operating results may suffer.





***If
      we fail to develop and integrate information technology systems or we fail
      to
      upgrade or replace our information technology systems to handle increased
      volumes and levels of complexity, meet the demands of our agents and customers
      and protect against disruptions of our operations, we may suffer a loss in
      our
      business.***





Increasingly,
      we compete for business based upon the flexibility, sophistication and security
      of the information technology systems supporting our services. The failure
      of
      the hardware or software that supports our information technology systems,
      the
      loss of data contained in the systems, or the inability to access or interact
      with our web site or connect electronically, could significantly disrupt our
      operations, prevent clients from placing orders, or cause us to lose inventory
      items, orders or clients. If our information technology systems are unable
      to
      handle additional volume for our operations as our business and scope of
      services grow, our service levels, operating efficiency and future transaction
      volumes will decline. In addition, we expect our agents to continue to demand
      more sophisticated, fully integrated information technology systems from us
      as
      customers demand the same from their supply chain services providers. If we
      fail
      to hire qualified persons to implement, maintain and protect our information
      technology systems or we fail to upgrade or replace our information technology
      systems to handle increased volumes and levels of complexity, meet the demands
      of our agents and customers and protect against disruptions of our operations,
      we may lose suffer a loss in our business.


9


***Because
      our freight forwarding and domestic ground transportation operations are
      dependent on commercial airfreight carriers and air charter operators, ocean
      freight carriers, major U.S. railroads, other transportation companies,
      draymen and longshoremen, changes in available cargo capacity and other changes
      affecting such carriers, as well as interruptions in service or work stoppages,
      may negatively impact our business.***




We
      rely
      on commercial airfreight carriers and air charter operators, ocean freight
      carriers, trucking companies, major U.S. railroads, other transportation
      companies, draymen and longshoremen for the movement of our clients’ cargo.
      Consequently, our ability to provide services for our clients could be adversely
      impacted by shortages in available cargo capacity; changes by carriers and
      transportation companies in policies and practices such as scheduling, pricing,
      payment terms and frequency of service or increases in the cost of fuel, taxes
      and labor; and other factors not within our control. Reductions in airfreight
      or
      ocean freight capacity could negatively impact our yields. Material
      interruptions in service or stoppages in transportation, whether caused by
      strike, work stoppage, lock-out, slowdown or otherwise, could adversely impact
      our business, results of operations and financial condition.





***Our
      profitability depends on our ability to effectively manage our cost structure
      as
      we grow the business.***





As
      we
      continue to expand our revenues through the expansion of our network of
      exclusive agency locations, we must maintain an appropriate cost structure
      to
      maintain and expand our profitability. While we intend to continue to work
      on
      growing revenue by increasing the number of our exclusive agency locations,
      by
      strategic acquisitions, and by continuing to work on maintaining and expanding
      our gross profit margins by reducing transportation costs, our ultimate
      profitability will be driven by our ability to manage our agent commissions,
      personnel and general and administrative costs as a function of our net
      revenues. There can be no assurances that we will be able to increase revenues
      or maintain profitability.





***We
      face intense competition in the freight forwarding, logistics and supply chain
      management industry.***





The
      freight forwarding, logistics and supply chain management industry is intensely
      competitive and is expected to remain so for the foreseeable future. We face
      competition from a number of companies, including many that have significantly
      greater financial, technical and marketing resources. There are a large number
      of companies competing in one or more segments of the industry, although the
      number of firms with a global network that offer a full complement of freight
      forwarding and supply chain management services is more limited. Depending
      on
      the location of the customer and the scope of services requested, we must
      compete against both the niche players and larger entities. In addition,
      customers increasingly are turning to competitive bidding situations soliciting
      bids from a number of competitors, including competitors that are larger than
      us.





***Our
      business is subject to seasonal trends.***




Historically,
      our operating results have been subject to seasonal trends when measured on
      a
      quarterly basis. Our first and fourth fiscal quarters are traditionally weaker
      compared with our second and third fiscal quarters. This trend is dependent
      on
      numerous factors, including the markets in which we operate, holiday seasons,
      climate, economic conditions and numerous other factors. A substantial portion
      of our revenue is derived from clients in industries whose shipping patterns
      are
      tied closely to consumer demand which can sometimes be difficult to predict
      or
      are based on just-in-time production schedules. Therefore, our revenue is,
      to a
      larger degree, affected by factors that are outside of our control. There can
      be
      no assurance that our historic operating patterns will continue in future
      periods as we cannot influence or forecast many of these factors.





***Our
      industry is consolidating and if we cannot gain sufficient market presence
      in
      our industry, we may not be able to compete successfully against larger, global
      companies in our industry.***





There
      currently is a marked trend within our industry toward consolidation of the
      niche players into larger companies that are attempting to increase global
      operations through the acquisition of regional and local freight forwarders.
      If
      we cannot gain sufficient market presence or otherwise establish a successful
      strategy in our industry, we may not be able to compete successfully against
      larger companies in our industry with global operations.


10


***Our
      information technology systems are subject to risks which we cannot
      control.***




Our
      information technology systems are dependent upon third party communications
      providers, web browsers, telephone systems and other aspects of the Internet
      infrastructure which have experienced significant system failures and electrical
      outages in the past. Our systems are susceptible to outages due to fire, floods,
      power loss, telecommunications failures, break-ins and similar events. Despite
      our implementation of network security measures, our servers are vulnerable
      to
      computer viruses, break-ins and similar disruptions from unauthorized tampering
      with our computer systems. The occurrence of any of these events could disrupt
      or damage our information technology systems and inhibit our internal
      operations, our ability to provide services to our customers.





***If
      we are not able to limit our liability for customers’ claims through contract
      terms and limit our exposure through the purchase of insurance, we could be
      required to pay large amounts to our clients as compensation for their claims
      and our results of operations could be materially adversely
      affected.***




In
      general, we seek to limit by contract and/or International Conventions and
      laws
      our liability to our clients for loss or damage to their goods to $20 per
      kilogram (approximately $9.07 per pound) and $500 per carton or
      customary unit, for ocean freight shipments, again depending on the
      International Convention. For truck/land based risks there are a variety of
      limits ranging from a nominal amount to full value. However, because a freight
      forwarder’s relationship to an airline or ocean carrier is that of a shipper to
      a carrier, the airline or ocean carrier generally assumes the same
      responsibility to us as we assume to our clients. When we act in the capacity
      of
      an authorized agent for an air or ocean carrier, the carrier, rather than us,
      assumes liability for the safe delivery of the client’s cargo to its ultimate
      destination, unless due to our own errors and omissions.




We
      have,
      from time to time, made payments to our clients for claims related to our
      services and may make such payments in the future. Should we experience an
      increase in the number or size of such claims or an increase in liability
      pursuant to claims or unfavorable resolutions of claims, our results could
      be
      adversely affected. There can be no assurance that our insurance coverage will
      provide us with adequate coverage for such claims or that the maximum amounts
      for which we are liable in connection with our services will not change in
      the
      future or exceed our insurance levels. As with every insurance policy, there
      are
      limits, exclusions and deductibles that apply and we could be subject to claims
      for which insurance coverage may be inadequate or even disputed and which claims
      could adversely impact our financial condition and results of operations. In
      addition, significant increases in insurance costs could reduce our
      profitability.




***Our
      failure to comply with, or the costs of complying with, government regulation
      could negatively affect our results of operation.***





Our
      freight forwarding business as an indirect air cargo carrier is subject to
      regulation by the United States Department of Transportation (DOT) under the
      Federal Aviation Act, and by the Department of Homeland Security and the
      Transportation Security Administration (TSA). Our overseas independent agents’
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.
      We do not believe that costs of regulatory compliance have had a material
      adverse impact on our operations to date. However, our failure to comply with
      any applicable regulations could have an adverse effect. There can be no
      assurance that the adoption of future regulations would not have a material
      adverse effect on our business.


11


***Our
      present levels of capital may limit the implementation of our business
      strategy.***





The
      objective of our business strategy is to build a global logistics services
      organization. One element of this strategy is an acquisition program which
      contemplates the acquisition of a number of diverse companies within the
      logistics industry covering a variety of geographic regions and specialized
      service offerings. We have a limited amount of cash resources and our ability
      to
      make additional acquisitions without securing additional financing from outside
      sources is limited. This may limit or slow our ability to achieve the critical
      mass we need to achieve our strategic objectives.





***Our
      credit facility contains financial covenants that may limit its current
      availability*** *.*





The
      terms
      of our credit facility are subject to certain financial covenants which may
      limit the amount otherwise available under that facility. Principal among these
      are financial covenants that limit funded debt to a multiple of our consolidated
      earnings before interest, taxes, depreciation and amortization, or “EBITDA”.
      Under this covenant, our funded debt is limited to a multiple of 3.25 of our
      EBITDA measured on a rolling four quarter basis. Our ability to generate EBITDA
      will be critical to our ability to use the full amount of the credit
      facility.





***Dependence
      on key personnel.***





For
      the
      foreseeable future our success will depend largely on the continued services
      of
      our Chief Executive Officer, Bohn H. Crain, as well as certain of the other
      key
      executives of Airgroup and Adcom, because of their collective industry
      knowledge, marketing skills and relationships with major vendors and owners
      of
      our exclusive agent stations. We have secured employment arrangements with
      each
      of these individuals, which contain non-competition covenants which survive
      their actual term of employment. Nevertheless, should any of these individuals
      leave the Company, it could have a material adverse effect on our future results
      of operations.





***Terrorist
      attacks and other acts of violence or war may affect any market on which our
      shares trade, the markets in which we operate, our operations and our
      profitability.***





Terrorist
      acts or acts of war or armed conflict could negatively affect our operations
      in
      a number of ways. Primarily, any of these acts could result in increased
      volatility in or damage to the U.S. and worldwide financial markets and economy
      and could lead to increased regulatory requirements with respect to the security
      and safety of freight shipments and transportation. They could also result
      in a
      continuation of the current economic uncertainty in the United States and
      abroad. Acts of terrorism or armed conflict, and the uncertainty caused by
      such
      conflicts, could cause an overall reduction in worldwide sales of goods and
      corresponding shipments of goods. This would have a corresponding negative
      effect on our operations. Also, terrorist activities similar to the type
      experienced on September 11, 2001 could result in another halt of trading of
      securities, which could also have an adverse affect on the trading price of
      our
      shares and overall market capitalization. ****





**RISKS
      RELATED TO OUR ACQUISITION STRATEGY**





***There
      is a scarcity of and competition for acquisition
      opportunities*** *.*




There
      are
      a limited number of operating companies available for acquisition which we
      deem
      to be desirable targets. In addition, there is a very high level of competition
      among companies seeking to acquire these operating companies. We are and will
      continue to be a very minor participant in the business of seeking acquisitions
      of these types of companies. A large number of established and well-financed
      entities are active in acquiring interests in companies which we may find to
      be
      desirable acquisition candidates. Many of these entities have significantly
      greater financial resources, technical expertise and managerial capabilities
      than us. Consequently, we will be at a competitive disadvantage in negotiating
      and executing possible acquisitions of these businesses. Even if we are able
      to
      successfully compete with these entities, this competition may affect the terms
      of completed transactions and, as a result, we may pay more than we expected
      for
      potential acquisitions. We may not be able to identify operating companies
      that
      complement our strategy, and even if we identify a company that complements
      our
      strategy, we may be unable to complete an acquisition of such a company for
      many
      reasons, including:


12





·
            failure
                to agree on the terms necessary for a transaction, such as the purchase
                price;


·
            incompatibility
                between our operational strategies and management philosophies and
                those
                of the potential acquiree;


·
            competition
                from other acquirers of operating
                companies;


·
            a
                lack of sufficient capital to acquire a profitable logistics company;
                and


·
            the
                unwillingness of a potential acquiree to work with our
                management.





***Risks
      related to acquisition financing*** **.**





In
      order
      to continue to pursue our acquisition strategy in the longer term, we may be
      required to obtain additional financing. We intend to obtain such financing
      through a combination of traditional debt financing or the placement of debt
      and
      equity securities. We may finance some portion of our future acquisitions by
      either issuing equity or by using shares of our common stock for all or a
      portion of the purchase price for such businesses. In the event that our common
      stock does not attain or maintain a sufficient market value, or potential
      acquisition candidates are otherwise unwilling to accept common stock as part
      of
      the purchase price for the sale of their businesses, we may be required to
      utilize more of our cash resources, if available, in order to maintain our
      acquisition program. If we do not have sufficient cash resources, we will not
      be
      able to complete acquisitions and our growth could be limited unless we are
      able
      to obtain additional capital through debt or equity financings.




***Our
      credit facility places certain limits on the type and number of acquisitions
      we
      may make.***





In
      September of 2008, we increased our credit facility with Bank of America, N.A.
      from $10.0 million to $15.0 million to facilitate our acquisition of Adcom
      and
      to provide additional funding for further acquisitions and our on-going working
      capital requirements. Under the terms of the credit facility, we are subject
      to
      a number of financial and operational covenants which may limit the number
      of
      additional acquisitions we make without the lender’s consent. In the event that
      we are not able to satisfy the conditions of the credit facility in connection
      with a proposed acquisition, we would have to forego the acquisition unless
      we
      either obtained the lender’s consent or retired the credit facility. This may
      prevent us from completing acquisitions which we determine are desirable from
      a
      business perspective and limit or slow our ability to achieve the critical
      mass
      we need to achieve our strategic objectives.





***To
      the extent we make any material acquisitions, our earnings will be adversely
      affected by non-cash charges relating to the amortization of intangibles which
      may cause our stock price to decline.***





Under
      applicable accounting standards, purchasers are required to allocate the total
      consideration paid in a business combination to the identified acquired assets
      and liabilities based on their fair values at the time of acquisition. The
      excess of the consideration paid to acquire a business over the fair value
      of
      the identifiable tangible assets acquired must be allocated among identifiable
      intangible assets and goodwill. The amount allocated to goodwill is not subject
      to amortization. However, it is tested at least annually for impairment. The
      amount allocated to identifiable intangibles, such as customer relationships
      and
      the like, is amortized over the life of these intangible assets. We expect
      that
      this will subject us to periodic charges against our earnings to the extent
      of
      the amortization incurred for that period. Because our business strategy focuses
      on growth through acquisitions, our future earnings will be subject to greater
      non-cash amortization charges than a company whose earnings are derived
      organically. As a result, we will experience an increase in non-cash charges
      related to the amortization of intangible assets acquired in our acquisitions.
      Our financial statements will show that our intangible assets are diminishing
      in
      value, when, in fact, we believe they may be increasing because we are growing
      the value of our intangible assets (e.g. customer relationships). Because of
      this discrepancy, we believe our earnings before interest, taxes, depreciation
      and amortization, otherwise known as “EBITDA”, a non GAAP measure of financial
      performance, provides a meaningful measure of our financial performance.
      However, the investment community generally measures a public company’s
      performance by its net income. Further, the financial covenants of our credit
      facility adjust EBITDA to exclude costs related to share based compensation
      and
      other non-cash charges. Thus, we believe EBITDA, and adjusted EBITDA, provide
      a
      meaningful measure of our financial performance. If the investment community
      elects to place more emphasis on net income, the future price of our common
      stock could be adversely affected.


13


***We
      are not obligated to follow any particular criteria or standards for identifying
      acquisition candidates.***





Even
      though we have developed general acquisition guidelines, we are not obligated
      to
      follow any particular operating, financial, geographic or other criteria in
      evaluating candidates for potential acquisitions or business combinations.
      We
      will target companies which we believe will provide the best potential long-term
      financial return for our stockholders and we will determine the purchase price
      and other terms and conditions of acquisitions. Our stockholders will not have
      the opportunity to evaluate the relevant economic, financial and other
      information that our management team will use and consider in deciding whether
      or not to enter into a particular transaction.




***We
      may be required to incur a significant amount of indebtedness in order to
      successfully implement our acquisition strategy.***





We
      may be
      required to incur a significant amount of indebtedness in order to complete
      future acquisitions. If we are not able to generate sufficient cash flow from
      the operations of acquired companies to make scheduled payments of principal
      and
      interest on the indebtedness, then we will be required to use our capital for
      such payments. This will restrict our ability to make additional acquisitions.
      We may also be forced to sell an acquired company in order to satisfy
      indebtedness. We cannot be certain that we will be able to operate profitably
      once we incur this indebtedness or that we will be able to generate a sufficient
      amount of proceeds from the ultimate disposition of such acquired companies
      to
      repay the indebtedness incurred to make these acquisitions.





***Risks
      related to our acquisition strategy*** **.**





We
      intend
      to continue to build our business through a combination of organic growth,
      and
      if possible, through additional acquisitions. Growth by acquisition involves
      a
      number of risks, including possible adverse effects on our operating results,
      diversion of management resources, failure to retain key personnel, failure
      to
      effectively integrate acquired businesses, and risks associated with
      unanticipated liabilities, some or all of which could have a material adverse
      effect on our business, financial condition and results of
      operations.





***We
      may experience difficulties in integrating the operations, personnel and assets
      of companies that we acquire which may disrupt our business, dilute stockholder
      value and adversely affect our operating results.***





A
      core
      component of our business plan is to acquire businesses and assets in the
      transportation and logistics industry. We have only made a limited number of
      acquisitions and, therefore, our ability to complete such acquisitions and
      integrate any acquired businesses into our operations is unproven. Increased
      competition for acquisition candidates may develop, in which event there may
      be
      fewer acquisition opportunities available to us as well as higher acquisition
      prices. There can be no assurance that we will be able to identify, acquire
      or
      profitably manage businesses or successfully integrate acquired businesses
      into
      the Company without substantial costs, delays or other operational or financial
      problems. Such acquisitions also involve numerous operational risks,
      including:




·
              difficulties
                  in integrating operations, technologies, services and
                  personnel;
 ·
              the
                  diversion of financial and management resources from existing
                  operations;
 ·
              the
                  risk of entering new markets;
 ·
              the
                  potential loss of key employees;
                  and
 ·
              the
                  inability to generate sufficient revenue to offset acquisition
                  or
                  investment costs.





As
      a
      result, if we fail to properly evaluate and execute any acquisitions or
      investments, our business and prospects may be seriously
      harmed.


14


**RISKS
      RELATED TO OUR COMMON STOCK**





***Provisions
      of our certificate of incorporation, bylaws and Delaware law may make a
      contested takeover of our Company more difficult.***





Certain
      provisions of our certificate of incorporation, bylaws and the General
      Corporation Law of the State of Delaware (the “DGCL”) could deter a change in
      our management or render more difficult an attempt to obtain control of us,
      even
      if such a proposal is favored by a majority of our stockholders. For example,
      we
      are subject to the provisions of the DGCL that prohibit a public Delaware
      corporation from engaging in a broad range of business combinations with a
      person who, together with affiliates and associates, owns 15% or more of the
      corporation’s outstanding voting shares (an “interested stockholder”) for three
      years after the person became an interested stockholder, unless the business
      combination is approved in a prescribed manner. Our certificate of incorporation
      provides that directors may only be removed for cause by the affirmative vote
      of
      75% of our outstanding shares and that amendments to our bylaws require the
      affirmative vote of holders of two-thirds of our outstanding shares. Our
      certificate of incorporation also includes undesignated preferred stock, which
      may enable our Board of Directors to discourage an attempt to obtain control
      of
      us by means of a tender offer, proxy contest, merger or otherwise. Finally,
      our
      bylaws include an advance notice procedure for stockholders to nominate
      directors or submit proposals at a stockholders meeting.





***Trading
      in our common stock has been limited and there is no significant trading market
      for our common stock.***





Our
      common stock is currently eligible to be quoted on the OTC Bulletin Board,
      however, trading to date has been limited. Trading on the OTC Bulletin Board
      is
      often characterized by low trading volume and significant price fluctuations.
      Because of this limited liquidity, stockholders may be unable to sell their
      shares. The trading price of our shares may from time to time fluctuate widely.
      The trading price may be affected by a number of factors including events
      described in the risk factors set forth in this report as well as our operating
      results, financial condition, announcements, general conditions in the industry,
      and other events or factors. In recent years, broad stock market indices, in
      general, and smaller capitalization companies, in particular, have experienced
      substantial price fluctuations. In a volatile market, we may experience wide
      fluctuations in the market price of our common stock. These fluctuations may
      have a negative effect on the market price of our common stock.




***The
      influx of additional shares of our common stock onto the market may create
      downward pressure on the trading price of our common
      stock.***





We
      completed private placements of approximately 15.4 million shares of our common
      stock between October 2005 and February 2006. The availability of those shares
      for sale to the public under Rule 144 of the Securities Act of 1933, as amended,
      and sale of such shares in public markets could have an adverse effect on the
      market price of our common stock. Such an adverse effect on the market price
      would make it more difficult for us to sell our equity securities in the future
      at prices which we deem appropriate or to use our shares as currency for future
      acquisitions which will make it more difficult to execute our acquisition
      strategy.




***The
      issuance of additional shares in connection with potential acquisitions may
      result in additional dilution to our existing
      stockholders.***





We
      have
      issued, and may be required to issue, additional shares of common stock or
      common stock equivalents in payment of the purchase price of companies we have
      acquired. This will have the effect of further increasing the number of shares
      outstanding. In connection with future acquisitions, we may undertake the
      issuance of more shares of common stock without notice to our then existing
      stockholders. We may also issue additional shares in order to, among other
      things, compensate employees or consultants or for other valid business reasons
      in the discretion of our Board of Directors, and could result in diluting the
      interests of our existing stockholders.


15


***We
      may issue shares of preferred stock with greater rights than our common
      stock.***





Although
      we have no current plans or agreements to issue any preferred stock, our
      certificate of incorporation authorizes our board of directors to issue shares
      of preferred stock and to determine the price and other terms for those shares
      without the approval of our shareholders. Any such preferred stock we may issue
      in the future could rank ahead of our common stock, in terms of dividends,
      liquidation rights, and voting rights.




***As
      we do not anticipate paying dividends, investors in our shares will not receive
      any dividend income.***





We
      have
      not paid any cash dividends on our common stock since our inception and we
      do
      not anticipate paying cash dividends in the foreseeable future. Any dividends
      that we may pay in the future will be at the discretion of our Board of
      Directors and will depend on our future earnings, any applicable regulatory
      considerations, covenants of our debt facility, our financial requirements
      and
      other similarly unpredictable factors. Our ability to pay dividends is further
      limited by the terms of our credit facility with Bank of America, N.A. For
      the
      foreseeable future, we anticipate that we will retain any earnings which we
      may
      generate from our operations to finance and develop our growth and that we
      will
      not pay cash dividends to our stockholders. Accordingly, investors seeking
      dividend income should not purchase our stock.





***We
      are not subject to certain of the corporate governance provisions of the
      Sarbanes-Oxley Act of 2002***





Since
      our
      common stock is not listed for trading on a national securities exchange, we
      are
      not subject to certain of the corporate governance requirements established
      by
      the national securities exchanges pursuant to the Sarbanes-Oxley Act of 2002.
      These include rules relating to independent directors, and independent director
      nomination, audit and compensation committees. Unless we voluntarily elect
      to
      comply with those obligations, investors in our shares will not have the
      protections offered by those corporate governance provisions. As of the date
      of
      this report, we have not elected to comply with any regulations that do not
      apply to us. While we may make an application to have our securities listed
      for
      trading on a national securities exchange, which would require us to comply
      with
      those obligations, we can not assure that we will do so or that such application
      will be approved.





***We
      are required to comply with Section 404 of the Sarbanes-Oxley Act of 2002 and
      if
      we fail to comply in a timely manner, our business could be harmed and our
      stock
      price could decline.***





Rules
      adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002
      require annual assessment of our internal controls over financial reporting,
      and
      attestation of this assessment by our independent registered public accountants.
      Starting with our fiscal year ended June 30, 2008, we became subject to the
      requirements of Section 404 of the Sarbanes-Oxley Act which requires us to
      make
      annual assessments of our internal control over financial reporting. The first
      attestation report of our assessment that our independent registered public
      accounting firm will need to complete will be required in connection with the
      preparation of our annual report for our fiscal year ending June 30, 2010.
      Any
      failure to maintain adequate controls could result in delays or inaccuracies
      in
      reporting financial information or non-compliance with SEC reporting and other
      regulatory requirements, any of which could adversely affect our business and
      stock price.





**ITEM
      2. PROPERTIES**





**Principal
      Executive Offices**





Our
      offices are located at 1227 120 th Avenue
      N.E., Bellevue, Washington 98005 and consist of approximately 14,500 feet of
      office space which we lease for approximately $16,300 per month pursuant to
      the
      lease expiring April 30, 2009. We also maintain approximately 8,125 feet of
      office space at 19320 Des Moines Memorial Drive South, SeaTac, Washington which
      we lease for approximately $5,650 per month pursuant to lease that expires
      December 31, 2010. In addition, we own a small parcel of undeveloped acreage
      located at Grays Harbor, Washington, which is not material to our business.
      We
      believe our current offices are adequately covered by insurance and are
      sufficient to support our operations for the foreseeable future.


16


**ITEM
      3. LEGAL PROCEEDINGS**





From
      time
      to time, our operating subsidiaries are involved in legal matters or named
      as a
      defendant in legal actions arising in its ordinary course of business.
      Management believes that these matters will not have a material adverse effect
      on our financial statements.





*Team
      Air Express Proceeding*





On
      or
      about February 21, 2007, Team Air Express, Inc. d/b/a Team Worldwide ("Team")
      commenced an action against the Company, as well as Texas Time Express, Inc.,
      Douglas K. Tabor, and Michael E. Staten, in the District Court of the State
      of
      Texas, Tarrant County (the “Court”) captioned Cause No. 017 222706 07; Team Air
      Express, Inc. d/b/a Team Worldwide v. Airgroup Corporation, Texas Time Express,
      Inc., Douglas K. Tabor, individually and as officer of Texas Time Express,
      Inc.,
      and Michael E. Staten, individually and as officer of Texas Time Express, Inc.





In
      its
      complaint, Team alleges that we, in conjunction with the other named defendants,
      tortiously interfered with an existing contract Team had in place with VRC
      Express, Inc. ("VRC"), its then existing Chicago, Illinois station location.
      In
      their petition, Team alleges that we and other defendants caused VRC to leave
      the Team network of companies, and become a branch office of Airgroup
      Corporation. The suit seeks damages for the loss of business opportunity and
      profits as a result of VRC leaving the Team system. We have tentatively
      concluded that no interference of the VRC contract occurred, and we intend
      to
      vigorously defend the matter.





*Automotive
      Garnishment Proceeding*





On
      June
      15, 2007, writs of garnishment issued by Douglas Burke (“Burke”), a judgment
      creditor of Stonepath Logistics, Domestic Services, Inc. (“Stonepath”), were
      directed to, among others, the automotive customers being serviced by our
      Radiant Logistics Global Services, Inc. (“RLGS”) subsidiary pursuant to the
      Management Services Agreement between RLGS and Mass Financial Corp. (“Mass”).
      Together with Mass, we intervened in the matter and objected to the writs of
      garnishment for the reason that Mass’s interest in the former Stonepath assets
      originated as the result of a prior perfected security interest that was
      properly foreclosed upon by Mass. The matter is pending in the Circuit Court
      for
      the County of Wayne, State of Michigan, Case No. 04-433025-CA. On August 14,
      2007, a Stipulated Order Regarding Writs of Garnishment was entered whereby
      Mass
      posted a letter of credit in the amount of $2,750,000 for the benefit of the
      Stonepath judgment creditor. Upon posting of that letter of credit, the
      garnished customers were released from the writs of garnishment and directed
      to
      release all garnished funds and make all future payments as directed to Mass
      and
      our RLGS subsidiary. Further, the Stonepath judgment creditor was ordered to
      refrain from further garnishments and enforcement action against the former
      assets of Stonepath. Discovery is proceeding regarding the superiority of Mass’s
      security interest in the former Stonepath assets.





*Burke
      Proceeding*





On
      or
      about January 18, 2007, Burke filed a separate against RLGS in the 3rd Circuit
      Court, Wayne County, Michigan. In the complaint, Burke sought to enforce
      against RLGS a $2.2 million judgment Burke obtained against the former owners
      of
      the assets RLGS purchased from Mass under legal theories sounding in successor
      liability, alter-ego, piercing the corporate veil, and implied or express
      agreement. The amount at issue is currently secured by a $2.75 million letter
      of
      credit provided by Mass in connection with the acquisition of the purchased
      assets. RLGS removed the matter to the Federal District Court sitting in the
      Eastern District of Michigan and filed a motion to dismiss or stay the
      proceedings pending the outcome of the related Automotive Garnishment Proceeding
      described above. The court issued a stay of proceedings pending the outcome
      of
      the related Automotive Garnishment Proceeding. If Burke is successful in the
      Automotive Garnishment Proceeding, we expect that this related action will
      be
      deemed moot and dismissed. If Burke is unsuccessful in the related Automotive
      Garnishment Proceeding, we expect that the stay will be lifted and this action
      will resume.


17







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





None.





**PART
      II**





**ITEM
      5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES**





**Market
      Information**





Our
      common stock currently trades on the OTC Bulletin Board under the symbol
“RLGT.OB.” The following table states the range of the high and low bid-prices
      per share of our common stock for each of the calendar quarters during our
      past
      two fiscal years, as reported by the OTC Bulletin Board. These quotations
      represent inter-dealer prices, without retail mark-up, markdown, or commission,
      and may not represent actual transactions. The last price of our common stock
      as
      reported on the OTC Bulletin Board on September 24, 2008, was $0.249 per
      share.




**High**
            
            **Low**Year
                Ended June 30, 2008:Quarter
                ended June 30, 2008
            
            $
            .38
            
            $
            .16Quarter
                ended March 31, 2008
            
            
            .55
            
            
            .28Quarter
                ended December 31, 2007
            
            
            .64
            
            
            .35Quarter
                ended September 30, 2007
            
            
            .83
            
            
            .49Year
                Ended June 30, 2007:Quarter
                ended June 30, 2007
            
            $
            .66
            
            $
            .47Quarter
                ended March 31, 2007
            
            
            .80
            
            
            .51Quarter
                ended December 31, 2006
            
            
            .70
            
            
            .55Quarter
                ended September 30, 2006
            
            
            1.05
            
            
            .85





**Holders**





As
      of
      September 24, 2008, the number of stockholders of record of our common stock
      was
      113. **** We
      believe there are additional beneficial owners of our common stock who hold
      their shares in street name.




**Dividend
      Policy**





We
      have
      not paid any cash dividends on our common stock to date, and we have no
      intention of paying cash dividends in the foreseeable future. Whether we declare
      and pay dividends will be determined by our board of directors at their
      discretion, subject to certain limitations imposed under Delaware law. The
      timing, amount and form of dividends, if any, will depend on, among other
      things, our results of operations, financial condition, cash requirements and
      other factors deemed relevant by our Board of Directors. Our ability to pay
      dividends is limited by the terms of our Bank of America, N.A. credit
      facility.





**Transfer
      Agent**





Pacific
      Stock Transfer Company, 500 East Warm Springs, Suite 240, Las Vegas, Nevada
      89119, serves as our transfer agent.




18





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





The
      following discussion and analysis of our financial condition and result of
      operations should be read in conjunction with the consolidated financial
      statements and the related notes and other information included elsewhere in
      this report.





**Overview**





We
      are a
      Bellevue Washington based non-asset based logistics company providing domestic
      and international freight forwarding services through a network of exclusive
      agent offices across North America. Our operations are conducted primarily
      through Airgroup, our wholly-owned subsidiary. Airgroup services a diversified
      account base including manufacturers, distributors and retailers using a network
      of independent carriers and international agents positioned strategically around
      the world. As a result of our recent acquisition of Adcom, operations in future
      periods will also be conducted through Adcom, another wholly-owned
      subsidiary.





By
      implementing a growth strategy, we intend to build a leading global
      transportation and supply-chain management company offering a full range of
      domestic and international freight forwarding and other value added supply
      chain
      management services, including order fulfillment, inventory management and
      warehousing.





As
      a
      non-asset based provider of third-party logistics services, we seek to limit
      our
      investment in equipment, facilities and working capital through contracts and
      preferred provider arrangements with various transportation providers who
      generally provide us with favorable rates, minimum service levels, capacity
      assurances and priority handling status. Our non-asset based approach allows
      us
      to maintain a high level of operating flexibility and leverage a cost structure
      that is highly variable in nature while the volume of our flow of freight
      enables us to negotiate attractive pricing with our transportation
      providers.





**Performance
      Metrics**





Our
      principal source of income is derived from freight forwarding services. As
      a
      freight forwarder, we arrange for the shipment of our customers’ freight from
      point of origin to point of destination. Generally, we quote our customers
      a
      turn key cost for the movement of their freight. Our price quote will often
      depend upon the customer’s time-definite needs (first day through fifth day
      delivery), special handling needs (heavy equipment, delicate items,
      environmentally sensitive goods, electronic components, etc.) and the means
      of
      transport (truck, air, ocean or rail). In turn, we assume the responsibility
      for
      arranging and paying for the underlying means of transportation.




Our
      transportation revenue represents the total dollar value of services we sell
      to
      our customers. Our cost of transportation includes direct costs of
      transportation, including motor carrier, air, ocean and rail services. We act
      principally as the service provider to add value in the execution and
      procurement of these services to our customers. Our net transportation revenue
      (gross transportation revenue less the direct cost of transportation) is the
      primary indicator of our ability to source, add value and resell services
      provided by third parties, and is considered by management to be a key
      performance measure. In addition, management believes measuring its operating
      costs as a function of net transportation revenue provides a useful metric,
      as
      our ability to control costs as a function of net transportation revenue
      directly impacts operating earnings.




Our
      operating results will be affected as acquisitions occur. Since all acquisitions
      are made using the purchase method of accounting for business combinations,
      our
      financial statements will only include the results of operations and cash flows
      of acquired companies for periods subsequent to the date of
      acquisition.




19




Our
      GAAP
      based net income will be affected by non-cash charges relating to the
      amortization of customer related intangible assets and other intangible assets
      arising from completed acquisitions. Under applicable accounting standards,
      purchasers are required to allocate the total consideration in a business
      combination to the identified assets acquired and liabilities assumed based
      on
      their fair values at the time of acquisition. The excess of the consideration
      paid over the fair value of the identifiable net assets acquired is to be
      allocated to goodwill, which is tested at least annually for impairment.
      Applicable accounting standards require that we separately account for and
      value
      certain identifiable intangible assets based on the unique facts and
      circumstances of each acquisition. As a result of our acquisition strategy,
      our
      net income will include material non-cash charges relating to the amortization
      of customer related intangible assets and other intangible assets acquired
      in
      our acquisitions. Although these charges may increase as we complete more
      acquisitions, we believe we will actually be growing the value of our intangible
      assets (e.g., customer relationships). Thus, we believe that earnings before
      interest, taxes, depreciation and amortization, or EBITDA, is a useful financial
      measure for investors because it eliminates the effect of these non-cash costs
      and provides an important metric for our business. Further, the financial
      covenants of our credit facility adjust EBITDA to exclude costs related to
      share
      based compensation expense and other non-cash charges. Accordingly, we intend
      to
      employ EBITDA and adjusted EBITDA as a management tools to measure our
      historical financial performance and as a benchmark for future financial
      flexibility.




Our
      operating results are also subject to seasonal trends when measured on a
      quarterly basis. The impact of seasonality on our business will depend on
      numerous factors, including the markets in which we operate, holiday seasons,
      consumer demand and economic conditions. Since our revenue is largely derived
      from customers whose shipments are dependent upon consumer demand and
      just-in-time production schedules, the timing of our revenue is often beyond
      our
      control. Factors such as shifting demand for retail goods and/or manufacturing
      production delays could unexpectedly affect the timing of our revenue. As we
      increase the scale of our operations, seasonal trends in one area of our
      business may be offset to an extent by opposite trends in another area. We
      cannot accurately predict the timing of these factors, nor can we accurately
      estimate the impact of any particular factor, and thus we can give no assurance
      that historical seasonal patterns will continue in future periods.




**Recent
        Developments**
 
 In
        September of 2008, we completed the acquisition of Adcom, a Minneapolis,
        Minnesota-based, privately held company that provides a full range of domestic
        and international transportation and logistics services across North America.
        The transaction is valued at up to $11.1 million, consisting of cash of $5.0
        million paid at closing with an additional $6.1 million payable over the
        next
        four years in a combination of cash and Company stock based on the future
        performance of the acquired operation.
  Founded
        in 1978, Adcom services a diversified account base including manufacturers,
        distributors and retailers through a combination of three company owned and
        twenty seven exclusive agent offices across North America. Based on unaudited
        financial statements provided from management, Adcom generated **** approximately
        $58.0 Million in revenues for the twelve months ended June 30, 2008. Adcom
        will
        operate as a wholly owned subsidiary of the Company.


**Financial
      Outlook**





Our
      revenues increased approximately $24.7 million, or 33%, in the year ended June
      30, 2008. We expect to continue growing our revenues both organically and
      as the result of strategic acquisitions. Our primary operating objective in
      fiscal 2009 is to continue to expand both our Adcom and Airgroup brands while
      leveraging the substantial purchasing power of the combined group. We expect
      this will translate into improved profitability and strategic advantage for
      all
      of our stations. We expect the combined group to generate approximately $4.0
      million in adjusted EBITDA on $160 million in revenues on an annualized basis.
      This does not account for an additional $1.0 million in estimated cost synergies
      which we believe can be achieved over the next 12-18 months.





Our
      estimate of future revenues and profits is based on the assumption that the
      cumulative historical financial results of operations of the Company and Adcom
      for the most recent 12 months ended June 30, 2008 are indicative of the future
      financial performance of the combined group.




A
      reconciliation of annualized adjusted EBITDA amounts to net income, the
      most directly comparable GAAP measure, projected for the combined group is
      as
      follows:





*(Amounts
      in 000’s)*


ProjectedNet income
            
            $
            1,100Interest
                expense - net
            
            
            400Income
                tax expense
            
            
            750Depreciation
                and amortization
            
            
            1,500EBITDA
            
            
            3,750Stock-based
                compensation and other non-cash charges
            
            
            250Adjusted
                EBITDA
            
            $
            4,000




20




**Critical
      Accounting Policies**




Accounting
      policies, methods and estimates are an integral part of the consolidated
      financial statements prepared by management and are based upon management’s
      current judgments. Those judgments are normally based on knowledge and
      experience with regard to past and current events and assumptions about future
      events. Certain accounting policies, methods and estimates are particularly
      sensitive because of their significance to the financial statements and because
      of the possibility that future events affecting them may differ from
      management’s current judgments. While there are a number of accounting policies,
      methods and estimates that affect our financial statements, the areas that
      are
      particularly significant include the assessment of the recoverability of
      long-lived assets, specifically goodwill, acquired intangibles, and revenue
      recognition.




We
      follow
      the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 142,
      Goodwill and Other Intangible Assets. SFAS No. 142 requires an annual impairment
      test for goodwill and intangible assets with indefinite lives. Under the
      provisions of SFAS No. 142, the first step of the impairment test requires
      that
      we determine the fair value of each reporting unit, and compare the fair value
      to the reporting unit’s carrying amount. To the extent a reporting unit’s
      carrying amount exceeds its fair value, an indication exists that the reporting
      unit’s goodwill may be impaired and we must perform a second more detailed
      impairment assessment. The second impairment assessment involves allocating
      the
      reporting unit’s fair value to all of its recognized and unrecognized assets and
      liabilities in order to determine the implied fair value of the reporting unit’s
      goodwill as of the assessment date. The implied fair value of the reporting
      unit’s goodwill is then compared to the carrying amount of goodwill to quantify
      an impairment charge as of the assessment date. We perform our annual impairment
      test during our fiscal fourth quarter unless events or circumstances indicate
      an
      impairment may have occurred before that time, and we have found no
      impairment.





Acquired
      intangibles consist of customer related intangibles and non-compete agreements
      arising from our acquisition. Customer related intangibles will be amortized
      using accelerated methods over approximately 5 years and non-compete agreements
      will be amortized using the straight line method over a 5 year
      period.





We
      follow
      the provisions of SFAS No. 144, Accounting for the Impairment or Disposal of
      Long-Lived Assets, which establishes accounting standards for the impairment
      of
      long-lived assets such as property, plant and equipment and intangible assets
      subject to amortization. We review long-lived assets to be held-and-used for
      impairment whenever events or changes in circumstances indicate that the
      carrying amount of the assets may not be recoverable. If the sum of the
      undiscounted expected future cash flows over the remaining useful life of a
      long-lived asset is less than its carrying amount, the asset is considered
      to be
      impaired. Impairment losses are measured as the amount by which the carrying
      amount of the asset exceeds the fair value of the asset. When fair values are
      not available, we estimated fair value using the expected future cash flows
      discounted at a rate commensurate with the risks associated with the recovery
      of
      the asset. Assets to be disposed of are reported at the lower of carrying amount
      or fair value less costs to sell.





As
      a
      non-asset based carrier, we do not own transportation assets. We generate the
      major portion of our air and ocean freight revenues by purchasing transportation
      services from direct (asset-based) carriers and reselling those services to
      our
      customers. In accordance with Emerging Issues Task Force (“EITF”) 91-9 “Revenue
      and Expense Recognition for Freight Services in Process”, revenue from freight
      forwarding and export services is recognized at the time the freight is tendered
      to the direct carrier at origin, and direct expenses associated with the cost
      of
      transportation are accrued concurrently. These accrued purchased transportation
      costs are estimates based upon anticipated margins, contractual arrangements
      with direct carriers and other known factors. The estimates are routinely
      monitored and compared to actual invoiced costs. The estimates are adjusted
      as
      deemed necessary to reflect differences between the original accruals and actual
      costs of purchased transportation.




21




We
      recognize revenue on a gross basis, in accordance with EITF 99-19, “Reporting
      Revenue Gross versus Net”, as a result of the following: We are the primary
      obligor responsible for providing the service desired by the customer and are
      responsible for fulfillment, including the acceptability of the service(s)
      ordered or purchased by the customer. We, at our sole discretion, set the prices
      charged to our customers, and are not required to obtain approval or consent
      from any other party in establishing our prices. We have multiple suppliers
      for
      the services we sell to our customers, and have 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. In most cases, we determine the nature, type,
      characteristics, and specifications of the service(s) ordered by the customer.
      We also assume credit risk for the amount billed to the customer.





**Results
      of Operations**





***Fiscal
      year ended June 30, 2008 compared to fiscal year ended June 30,
      2007.***





Overview





We
      generated transportation revenue of $100.2 million and net transportation
      revenue of $35.8 million for the year ended June 30, 2008 as compared to
      transportation revenue of $75.5 million and net transportation revenue of $26.7
      million for the year ended June 30, 2007. Net income was $1,413,000 for the
      year
      ended June 30, 2008 compared to net income of $163,000 for the year ended June
      30, 2007.





We
      had
      adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)
      of $1,808,000 and $1,412,000 for years ended June 30, 2008 and 2007,
      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
      calculation. We exclude all depreciation charges related to property, plant
      and
      equipment, and all amortization charges, including amortization of goodwill,
      leasehold improvements and other intangible assets. We then further adjust
      EBITDA to exclude costs related to share based compensation expense and other
      non-cash charges consistent with the financial covenants of our credit facility.
      While management considers EBITDA and adjusted EBITDA useful in analyzing our
      results, it is not intended to replace any presentation included in our
      consolidated financial statements.





*The
      following table provides a reconciliation of adjusted EBITDA to net income
      for
      the fiscal years ended June 30, 2008 and June 30, 2007:*





**Years ended June 30,**
            
            **Change****2008**
            
            **2007**
            
            **Amount**
            
            **Percent**Net
                income
            
            $
            1,413
            
            $
            163
            
            $
            1,250
            
            
            766.9
            %Income
                tax expense
            
            
            908
            
            
            156
            
            
            752
            
            
            481.1
            %Net
                interest expense
            
            
            117
            
            
            6
            
            
            111
            
            
            1,850.0
            %Depreciation
                and amortization
            
            
            964
            
            
            830
            
            
            134
            
            
            16.2
            %EBITDA
                (Earnings before interest, taxes, depreciation and
                amortization)
            
            $
            3,402
            
            $
            1,155
            
            $
            2,247
            
            
            194.6
            %Share
                based compensation and other non-cash costs
            
            
            330
            
            
            257
            
            
            73
            
            
            28.4
            %Change
                in estimate of liabilities assumed in Airgroup acquisition
            
            
            (1,431
            )
            
            -
            
            
            (1,431
            )
            
            NMTax
                Indemnity
            
            
            (487
            )
            
            -
            
            
            (487
            )
            
            NMAdjusted
                EBITDA
            
            $
            1,814
            
            $
            1,412
            
            $
            402
            
            
            28.5
            %





22




*The
      following table summarizes transportation revenue, cost of transportation and
      net transportation revenue (in thousands) for the fiscal years ended June 30,
      2008 and June 30, 2007:*




**Years ended June 30,**
            
            **Change****2008**
            
            **2007**
            
            **Amount**
            
            **Percent**Transportation
                revenue
            
            $
            100,202
            
            $
            75,527
            
            $
            24,675
            
            
            32.7
            %Cost
                of transportation
            
            
            64,374
            
            
            48,813
            
            
            15,561
            
            
            31.9
            %Net
                transportation revenue
            
            $
            35,828
            
            $
            26,714
            
            $
            9,114
            
            
            34.1
            %*Net
                transportation margins*
            
            
            35.8
            %
            
            35.4
            %
            
            36.9
            %




We
      generated transportation revenue of $100.2 million and net transportation
      revenue of $35.8 million for the year ended June 30, 2008 as compared to
      transportation revenue of $75.5 million and net transportation revenue of $26.7
      million for the year ended June 30, 2007. Domestic and international
      transportation revenue was $62.2 million and $40.0 million, respectively, for
      the year ended June 30, 2008 compared with $49.1 million and $26.4 million,
      respectively, for the year ended June 30, 2007. Transportation revenues and
      costs of transportation increased in fiscal year 2008 primarily due to several
      agent based stations that joined the network in fiscal 2007 were included in
      the
      network for all of fiscal 2008.





Cost
      of
      transportation was 64.2% and 64.6% of transportation revenue for the years
      ended
      June 30, 2008 and 2007, respectively.




Net
      transportation margins were 35.8% and 35.4% of transportation revenue for the
      years ended June 30, 2008 and 2007, respectively.




*The
      following table compares condensed consolidated statement of income data as
      a
      percentage of our net transportation revenue (in thousands) for the fiscal
      years
      ended June 30, 2008 and June 30, 2007:*




**Years ended June 30,****2008**
            
            **2007**
            
            **Change****Amount**
            
            **Percent**
            
            **Amount**
            
            **Percent**
            
            **Amount**
            
            **Percent**Net
                transportation revenue
            
            $
            35,828
            
            
            100.0
            %
            $
            26,714
            
            
            100.0
            %
            $
            9,114
            
            
            34.1
            %Agent
                commissions
            
            
            25,210
            
            
            70.4
            %
            
            20,048
            
            
            75.1
            %
            
            5,162
            
            
            25.7
            %Personnel
                costs
            
            
            5,304
            
            
            14.8
            %
            
            2,916
            
            
            10.9
            %
            
            2,388
            
            
            81.9
            %Other
                selling, general and administrative
            
            
            3,801
            
            
            10.6
            %
            
            2,507
            
            
            9.4
            %
            
            1,294
            
            
            51.6
            %Depreciation
                and amortization
            
            
            964
            
            
            2.7
            %
            
            830
            
            
            3.1
            %
            
            134
            
            
            16.1
            %Total
                operating costs
            
            
            35,279
            
            
            98.5
            %
            
            26,301
            
            
            98.5
            %
            
            8,978
            
            
            34.1
            %Income
                from operations
            
            
            549
            
            
            1.5
            %
            
            413
            
            
            1.5
            %
            
            136
            
            
            32.9
            %Other
                (expense) income
            
            
            1,703
            
            
            4.8
            %
            
            (49
            )
            
            -0.1
            
            
            1,752
            
            
            N/MIncome
                before income taxes and minority interest
            
            
            2,252
            
            
            6.3
            %
            
            364
            
            
            1.4
            %
            
            1,888
            
            
            518.7
            %Income
                tax expense (benefit)
            
            
            908
            
            
            2.5
            %
            
            156
            
            
            0.6
            %
            
            752
            
            
            482.1
            %Income
                before minority interest
            
            
            1,344
            
            
            3.7
            %
            
            208
            
            
            .8
            %
            
            1,136
            
            
            546.2
            %Minority
                interest
            
            
            (69
            )
            
            .2
            %
            
            45
            
            
            .2
            
            
            114
            
            
            253.3
            %Net
                income
            
            $
            1,413
            
            
            3.9
            %
            $
            163
            
            
            .6
            %
            $
            1,250
            
            
            766.9
            %




23




Agent
      commissions **** were
      $25.2 million for the year ended June 30, 2008, an increase of 25.7% from $20.0
      million for the year ended June 30, 2007 as a direct result of our revenue
      growth. As a percentage of net revenues, agent commissions decreased to 70.4%
      for the year ended June 30, 2008 from 75.1% for the year ended June 30, 2007,
      due to an increase in the number of Company owned stations where commissions
      are
      not paid.




Personnel
      costs consist of payroll, payroll taxes, benefits and stock compensation
      expense. **** Personnel
      costs **** were
      $5.3
      million for the year ended June 30, 2008, an increase of 81.9% from $2.9 million
      for the year ended June 30, 2007 as a result of the general growth in our
      business and the addition of two Company owned stations. As a percentage of
      net
      revenues, personnel costs increased to 14.8% for the year ended June 30, 2008
      from 10.9% for the year ended June 30, 2007.




Selling,
      general and administrative costs consists primarily of marketing, rent,
      professional services, insurance and travel expenses. Selling, general and
      administrative costs were $3.8 million for the year ended June 30, 2008, an
      increase of 51.8% from $2.5 million for the year ended June 30, 2007 as a result
      of the general growth in our business and the inclusion of costs associated
      with
      the increased number of Company owned stations. As a percentage of net
      revenues, other selling, general and administrative costs increased to 10.6%
      for
      the year ended June 30, 2008 from 9.4% for the year ended June 30, 2007,
      primarily due to the addition of two Company owned stations.





Depreciation
      and amortization costs were approximately $964,000 for the year ended June
      30,
      2008, an increase of 16.2% from $830,000 for the year ended June 30, 2007 as
      a
      result of increased amortization and depreciation costs associated with the
      addition of two Company owned stations. As a percentage of net revenues,
      depreciation and amortization decreased to 2.7% for the year ended June 30,
      2008
      from 3.1% for the year ended June 30, 2007, due to an increase in our net
      transportation revenue.





Income
      from operations was $544,000 for the year ended June 30, 2008, an increase
      of
      31.7% from income from operations of $413,000 for the year ended June 30, 2007
      as a direct result of our revenue growth. As a percentage of net revenues,
      income from operations remained constant at 1.5% for the years ended June 30,
      2008 and June 30, 2007.





Other
      income was $1,703,000 for year ended June 30, 2008 as compared to other expenses
      of $49,000 during year ended June 30, 2007. The change was primarily due to
      a
      reduced estimate of $1.4 million of accrued transportation costs assumed in
      the
      acquisition of Airgroup and an additional $487,000 of income associated with
      a
      tax indemnity associated with the income recognized in connection with this
      change in estimate. As a percentage of net revenues, other income was 4.8%
      for
      the year ended June 30, 2008 and (.10%) for the year ended June 30,
      2007.





Net
      income for the year ended June 30, 2008 was $1,413,000 as compared to $163,000
      for the year ended June 30, 2007.





**Liquidity
      and Capital Resources**





Net
      cash
      used by operating activities for the year ended June 30, 2008 was $680,000
      compared to net cash provided by operating activities for the year ended June
      30, 2007 of $1,260,000. The change was principally driven by growth resulting
      in
      a reduction in working capital.




24




Net
      cash
      used for investing was $1,731,000 for the year ended June 30, 2008 compared
      to
      $767,000 for the year ended June 30, 2007. Use of cash in 2008 consisted
      primarily of $1.5 million for the acquisition of the assets of United American
      in Detroit, Michigan and an additional $245,000 for technology and equipment.
      During 2007, we spent $524,000 for upgrades to our SAP software and computer
      systems and $242,000 towards the acquisition of the United American Assets
      in
      Detroit, Michigan.





Net
      cash
      provided by financing activities for year ended June 30, 2008 was $2,084,000
      compared to net cash of $283,000 used in financing activities for the year
      ended
      June 30, 2007. The $2,084,000 of cash used in 2008 consisted primarily of
      borrowings from our credit facility which was offset by a payment to former
      Airgroup shareholders of $500,000. The $284,000 for 2007 primarily reflects
      payments to our credit facility.





***Acquisitions***





Below
      are
      descriptions of material acquisitions made since 2006 including a breakdown
      of
      consideration paid at closing and future potential earn-out payments. We define
      “material acquisitions” as those with aggregate potential consideration of $1.0
      million or more.





Effective
      January 1, 2006, we acquired all of the outstanding stock of Airgroup. The
      transaction was valued at up to $14.0
      million. This consisted of: (i) $9.5 million payable in cash at closing; (ii)
      a
      subsequent cash payment of $0.5 million in cash which was paid on December
      31,
      2007; (iii) as amended, an additional base payment of $0.6 million payable
      in
      cash, $300,000 of which was paid on June 30, 2008 and $300,000 is payable on
      January 1, 2009; (iv) a base earn-out payment of $1.9 million payable in Company
      common stock over a three-year earn-out period based upon Airgroup achieving
      income from continuing operations of not less than $2.5 million per year and
      (v)
      as additional incentive to achieve future earnings growth, an opportunity to
      earn up to an additional $1.5 million payable in Company common stock at the
      end
      of a five-year earn-out period (the “Tier-2 Earn-Out”). Under Airgroup’s Tier-2
      Earn-Out, the former shareholders of Airgroup are entitled to receive 50% of
      the
      cumulative income from continuing operations in excess of $15,000,000 generated
      during the five-year earn-out period up to a maximum of $1,500,000. With respect
      to the base earn-out payment of $1.9 million, i n
      the
      event there is a shortfall in income from continuing operations, the earn-out
      payment will be reduced on a dollar-for-dollar basis to the extent of the
      shortfall. Shortfalls may be carried over or carried back to the extent that income
      from continuing operations in
      any
      other payout year exceeds the $2.5 million level. For the year ending June
      30,
      2007, the former shareholders of Airgroup earned $214,000 in base earn-out
      payments. For the year ended June 30, 2008, the former shareholders of Airgroup
      earned and additional $417,000 in base earn-out payments.




During
      the quarter ended December 31, 2007, we
      adjusted the estimate of accrued transportation costs assumed in the acquisition
      of Airgroup which resulted in the recognition of approximately $1.4 million
      in
      non-recurring income. Pursuant to the acquisition agreement, the former
      shareholders of Airgroup have indemnified us for taxes of $487,000 associated
      the income recognized in connection with this change in estimate which has
      been
      reflected as a reduction of the additional base payment otherwise payable to
      the
      former shareholders of Airgroup.




Assuming
          minimum targeted earnings levels are achieved, the following table summarizes
          our contingent base earn-out payments related to the acquisition of Airgroup
          for
          the fiscal years indicated based on results of the prior year (in thousands)
          (1) :
 **2010**Estimated payment for the year ended
                    6/30/2009Earn-out payments:Cash
                  
                  $
                  —Equity
                  
                  
                  634Total
                      potential earn-out payments
                  
                  $
                  634Prior
                      year earnings targets (income from continuing operations)(2)Total
                      earnings actual and targets
                  
                  $
                  2,500Earn-outs
                      as a percentage of prior year earnings targets:Total
                  
                  
                  25.3
  (1)
                During
                    the fiscal year 2007-2011 earn-out period, there is an additional
                    contingent obligation related to tier-two earn-outs that could
                    be as much
                    as $1.5 million if Airgroup generates at least $18.0 million
                    in income
                    from continuing operations during the period.(2)
                Income
                    from continuing operations as presented refers to the uniquely
                    defined
                    earnings targets of Airgroup and should not be interpreted to
                    be the
                    consolidated income from continuing operations of the Company
                    which would
                    give effect to, among other things, amortization or impairment
                    of
                    intangible assets or various other expenses which may not be
                    charged to
                    Airgroup for purposes of calculating
                    earn-outs.


25




In
        May,
        2007, we launched a new logistics service offering focused on the automotive
        industry through our wholly owned subsidiary, Radiant Logistics Global Services,
        Inc. (“RLGS”). We entered into an Asset Purchase Agreement (the “APA”) with Mass
        Financial Corporation (“Mass”) to acquire certain assets formerly used in the
        operations of the automotive division of Stonepath Group, Inc. (the “Purchased
        Assets”). The original agreement of the transaction was valued at up to $2.75 million, and was later reduced due
        to
        indemnity claims asserted against Mass.
  In
        November 2007 , the
        purchase price was reduced to $1.56 million, consisting of cash of $560,000
        and
        a $1.0 million credit in satisfaction of indemnity claims asserted by us
        arising
        from our interim operation of the Purchased Assets since May 22, 2007. Of
        the
        cash component $100,000 was paid in May of 2007, $265,000 was paid at closing,
        and a final payment of $195,000 was to be paid in November of 2008, subject
        to
        off-set of up to $75,000 for certain qualifying expenses incurred by us.
        Net of
        qualifying expenses and a discount for accelerated payment, the final payment
        was reduced to $95,000 and paid in June of 2008. For more information, see
        Note
        6 to our consolidated financial statement included elsewhere herein.


Effective
      September 1, 2008, we acquired all of the outstanding stock of Adcom Express,
      Inc. The transaction was valued at up to $11,050,000, consisting of: (i)
      $4,750,000.00 in cash paid at the closing; (ii) $250,000 in cash payable shortly
      after the closing, subject to adjustment, based upon the working capital of
      Adcom as of August 31, 2008; (iii) up to $2,800,000 in four “Tier-1 Earn-Out
      Payments” of up to $700,000 each, covering the four year earn-out period through
      2012, based upon Adcom achieving certain levels of “Gross Profit Contribution”
(as defined in the agreement), payable 50% in cash and 50% in shares of our
      common stock (valued at delivery date); (iv) a “Tier-2 Earn-Out Payment” of up
      to a maximum of $2,000,000, equal to 20% of the amount by which the Adcom
      cumulative Gross Profit Contribution exceeds $16,580,000 during the four year
      earn-out period; and (v) an “Integration Payment” of $1,250,000 payable on the
      earlier of the date certain integration targets are achieved or 18 months after
      the closing, payable 50% in cash and 50% in our shares of our common stock
      (valued at delivery date).




Assuming
      minimum targeted earnings levels are
      achieved, the following table summarizes our contingent base earn-out payments
      related to the acquisition of Adcom for the fiscal years indicated based on
      results of the prior year (in thousands). (1)




26




Estimated
                payment anticipated for fiscal year:
            
            2010
            
            2011
            
            2012
            
            2013Earn-out period:
            
            9/1/2008 -
              6/30/2009
            
            7/1/2009 -
              6/30/2010
            
            7/1/2010 -
              6/30/2011
            
            7/1/2011 -
              6/30/2012Earn-out
                payments:Cash
            
            $
            350
            
            $
            350
            
            $
            350
            
            $
            350Equity
            
            
            350
            
            
            350
            
            
            350
            
            
            350Total
                potential earn-out payments
            
            $
            700
            
            $
            700
            
            $
            700
            
            $
            700Gross
                margin targets
            
            $
            3,600
            
            $
            4,320
            
            $
            4,320
            
            $
            4,320




(1)
            Earn
                  out payments are paid Oct 1 following each fiscal year
                  end.





***Credit
      Facility***





We
      currently have a $15 million revolving credit facility (“Facility”) with Bank of
      America, NA that expires in 2011.  The
      Facility is collateralized by accounts receivable and other assets of the
      Company and our subsidiaries. Advances under the Facility are available to
      fund
      future acquisitions, capital expenditures or for other corporate purposes.
      Borrowings under the facility bear interest, at our option, at the Bank’s prime
      rate minus .15% to 1.00% or LIBOR plus 1.55% to 2.25%, and can be adjusted
      up or
      down during the term of the Facility based on our performance relative to
      certain financial covenants. The Facility provides for advances of up to 80%
      of
      our eligible accounts receivable.





The
      terms
      of the Facility are subject to certain financial and operational covenants
      which
      may limit the amount otherwise available under the Facility. The first covenant
      limits funded debt to a multiple of 3.00 times our consolidated EBITDA measured
      on a rolling four quarter basis (or a multiple of 3.25 at a reduced advance
      rate
      of 75.0%). The second financial covenant requires that we maintain a basic
      fixed
      charge coverage ratio of at least 1.1 to 1.0. The third financial covenant
      is a
      minimum profitability standard that requires that we not incur a net loss before
      taxes, amortization of acquired intangibles and extraordinary items in any
      two
      consecutive quarterly accounting periods.




Under
      the
      terms of the Facility, we are permitted to make additional acquisitions without
      the lender's consent only if certain conditions are satisfied. The conditions
      imposed by the Facility include the following: (i) the absence of an event
      of
      default under the Facility, (ii) the company to be acquired must be in the
      transportation and logistics industry, (iii) the purchase price to be paid
      must
      be consistent with the our historical business and acquisition model, (iv)
      after
      giving effect for the funding of the acquisition, we must have undrawn
      availability of at least $1.0 million under the Facility, (v) the lender must
      be
      reasonably satisfied with projected financial statements that we provide
      covering a 12 month period following the acquisition, (vi) the acquisition
      documents must be provided to the lender and must be consistent with the
      description of the transaction provided to the lender, and (vii) the number
      of
      permitted acquisitions is limited to three per calendar year and shall not
      exceed $7.5 million in aggregate purchase price financed by funded debt. In
      the
      event that we are not able to satisfy the conditions of the Facility in
      connection with a proposed acquisition, we must either forego the acquisition,
      obtain the lender's consent, or retire the Facility. This may limit or slow
      our
      ability to achieve the critical mass it may need to achieve our strategic
      objectives.


27





Given
      our
      continued focus on the build-out of our network of exclusive agency locations,
      we believe that our current working capital and anticipated cash flow from
      operations are adequate to fund existing operations. However, continued growth
      through strategic acquisitions, will require additional sources of financing
      as
      our existing working capital is not sufficient to finance our operations and
      an
      acquisition program. Thus, our ability to finance future acquisitions will
      be
      limited by the availability of additional capital. We may, however, finance
      acquisitions using our common stock as all or some portion of the consideration.
      In the event that our common stock does not attain or maintain a sufficient
      market value or potential acquisition candidates are otherwise unwilling to
      accept our securities as part of the purchase price for the sale of their
      businesses, we may be required to utilize more of our cash resources, if
      available, in order to continue our acquisition program. If we do not have
      sufficient cash resources through either operations or from debt facilities,
      our
      growth could be limited unless we are able to obtain such additional capital.
      In
      this regard and in the course of executing our acquisition strategy, we expect
      to pursue an additional equity offering within the next twelve
      months.





We
      have
      used a significant amount of our available capital to finance the acquisition
      of
      Adcom. We currently have approximately $7.0 million in remaining availability
      under the Facility to support future acquisitions and our on-going working
      capital requirements. We expect to structure acquisitions with certain amounts
      paid at closing, and the balance paid over a number of years in the form of
      earn-out installments which are payable based upon the future earnings of the
      acquired businesses payable in cash, stock or some combination thereof. As
      we
      continue to execute our acquisition strategy, we will be required to make
      significant payments in the future if the earn-out installments under our
      various acquisitions become due. While we believe that a portion of any required
      cash payments will be generated by the acquired businesses, we may have to
      secure additional sources of capital to fund the remainder of any cash-based
      earn-out payments as they become due. This presents us with certain business
      risks relative to the availability of capacity under our Facility, the
      availability and pricing of future fund raising, as well as the potential
      dilution to our stockholders to the extent the earn-outs are satisfied directly,
      or indirectly, from the sale of equity.





**Contractual
      Obligations**





We
      have
      entered into contracts with various third parties in the normal course of
      business that will require future payments. The following table illustrates
      our
      contractual obligations as of June 30, 2008 (including those relating to Adcom
      acquisition):





**Payments due by period****Total**
            
            **Less than 1**
              **year**
            
            **1-3 years**
            
            **3-5 years**
            
            **More than 5**
              **years****Contractual
                Obligations**Long-Term
                Debt
            
            $
            5,689
            
            $
            1,417
            
            $
            4,272
            
            $
            -
            
            $
            -Capital
                Leases
            
            
            39
            
            
            32
            
            
            7
            
            
            -
            
            
            -Operating
                Leases
            
            
            1,176
            
            
            682
            
            
            438
            
            
            56
            
            
            -Purchase
                Obligations
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Other
                Long-Term Liabilities
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Total
                Contractual Obligations
            
            $
            6,904
            
            $
            2,131
            
            $
            4,717
            
            $
            56
            
            $
            -





**Off
      Balance Sheet Arrangements**





As
      of
      June 30, 2008, we did not have any relationships with unconsolidated entities
      or
      financial partners, such as entities often referred to as structured finance
      or
      special purpose entities, which had been established for the purpose of
      facilitating off-balance sheet arrangements or other contractually narrow or
      limited purposes. As such, we are not materially exposed to any financing,
      liquidity, market or credit risk that could arise if we had engaged in such
      relationships.




28




**Recent** **Accounting Pronouncements**





In September
      2006, the Financial Accounting Standards Board ("FASB") issued SFAS No. 157
      “Fair Value Measurements” which relate to the definition of fair value, the
      methods used to estimate fair value, and the requirement of expanded disclosures
      about estimates of fair value. SFAS No. 157 is effective for financial
      statements issued for fiscal years beginning after November 15, 2007, and
      interim periods within those fiscal years. The
      adoption of SFAS
      No.
      157 is not expected to have any
      impact on our financial position, results of operations or cash
      flows.





In
      February 2007 the Financial Accounting Standards Board ("FASB") issued SFAS
      159
“The Fair Value Option for Financial Assets and Financial Liabilities.” The
      statement permits entities to choose to measure many financial instruments
      and
      certain other items at fair value. The objective is to improve financial
      reporting by providing entities with the opportunity to mitigate volatility
      in
      reported earnings caused by measuring related assets and liabilities differently
      without having to apply complex hedge accounting provisions. This Statement
      is
      expected to expand the use of fair value measurement, which is consistent with
      the Board’s long-term measurement objectives for accounting for financial
      instruments. This
      Statement is effective as of the beginning of an entity’s first fiscal year that
      begins after November 15, 2007. We do not believe SFAS 159 will have a material
      impact on the Company’s financial statements.




In
      December 2007, the FASB issued SFAS No. 141R, Business Combinations , which
      replaces SFAS No. 141. The statement retains the purchase method of
      accounting for acquisitions, but requires a number of changes, including changes
      in the way assets and liabilities are recognized in the purchase accounting.
      It
      also changes the recognition of assets acquired and liabilities assumed arising
      from contingencies, requires the capitalization of in-process research and
      development at fair value, and requires the expensing of acquisition-related
      costs as incurred. SFAS No. 141R is effective for us beginning July 1,
      2009 and will apply prospectively to business combinations completed on or
      after
      that date.




In
      December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
      Consolidated Financial Statements, an amendment of ARB No. 51, which
      changes the accounting and reporting for minority interests. Minority interests
      will be recharacterized as noncontrolling interests and will be reported as
      a
      component of equity separate from the parent’s equity, and purchases or sales of
      equity interests that do not result in a change in control will be accounted
      for
      as equity transactions. In addition, net income attributable to the
      noncontrolling interest will be included in consolidated net income on the
      face
      of the income statement and, upon a loss of control, the interest sold, as
      well
      as any interest retained, will be recorded at fair value with any gain or loss
      recognized in earnings. SFAS No. 160 is effective for the Company beginning
      July 1, 2009 and will apply prospectively, except for the presentation and
      disclosure requirements, which will apply retrospectively. The Company is
      currently assessing the potential impact that adoption of SFAS No. 160 may
      have on our financial statements.




In
      March
      2008, the FASB issued SFAS No. 161, Disclosures about Derivative
      Instruments and Hedging Activities, an amendment of FASB Statement
      No. 133, ** which
      requires additional disclosures about the objectives of the derivative
      instruments and hedging activities, the method of accounting for such
      instruments under SFAS No. 133 and its related interpretations, and a
      tabular disclosure of the effects of such instruments and related hedged items
      on our financial position, financial performance, and cash flows. SFAS
      No. 161 is effective for us beginning January 1, 2009. We are
      currently assessing the potential impact that adoption of SFAS No. 161 may
      have on our financial statements.




In
      May
      2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
      Accounting Principles. This statement identifies the sources of accounting
      principles and the framework for selecting the principles to be used in the
      preparation of financial statements of nongovernmental entities that are
      presented in conformity with generally accepted accounting principles (GAAP)
      in
      the United States. The Company does not expect that this Statement will
      resulting in a change in any of its current accounting practices.




29




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





The
      consolidated financial statements of Radiant Logistics, Inc. including the
      notes
      thereto and the report of our independent accountants are included in this
      report, commencing at page F-1.





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





None.




**ITEM
      9A(T). CONTROLS AND PROCEDURES**





Disclosure
      Controls and Procedures .





An
      evaluation of the effectiveness of our disclosure controls and procedures (as
      defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of
      1934) was carried out by us under the supervision and with the participation
      of
      our Chief Executive Officer (“CEO”), who also serves as our Chief Financial
      Officer. Based upon that evaluation, our CEO concluded that as of June 30,
      2008,
      our disclosure controls and procedures were effective to ensure (i) that
      information we are required to disclose in reports that we file or submit under
      the Securities Exchange Act of 1934 is recorded, processed, summarized and
      reported within the time periods specified in the SEC’s rules and forms and (ii)
      that such information is accumulated and communicated to management, including
      our CEO, in order to allow timely decisions regarding required
      disclosure.





Management’s
      Report on Internal Control over Financial Reporting .





Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting as defined in Rule 13a-15(f) of the Securities
      Exchange Act of 1934.  Our internal control system was designed to
      provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial reporting and the preparation of financial
      statements for external purposes, in accordance with generally accepted
      accounting principals.  Because of its inherent limitations, internal
      control over financial reporting may not prevent or detect
      misstatements.  Also, projections of any evaluation of effectiveness
      to future periods are subject to the risk that controls may become inadequate
      because of changes in conditions, or that the degree of compliance with the
      policies or procedures may deteriorate.





Our
      management, including our Chief Executive Officer who also serves as our Chief
      Financial Officer, conducted an evaluation of the effectiveness of internal
      control over financial reporting using the criteria set forth by the Committee
      of Sponsoring Organizations of the Treadway Commission in Internal Control
–
Integrated Framework.  Based on its evaluation, our management
      concluded that our internal control over financial reporting was effective
      as of
      June 30, 2008.





This
      annual report does not include an attestation report of our registered public
      accounting firm regarding internal control over financial
      reporting.  Management’s report was not subject to attestation by our
      registered public accounting firm pursuant to temporary rules of the Securities
      and Exchange Commission that permit us to provide only management’s report in
      this annual report.





Changes
      in Internal Control Over Financial Reporting .





There
      have not been any changes in our internal control over financial reporting
      (as
      defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act 
of 1934) that occurred during the fiscal quarter ended June 30, 2008 that have
      materially affected, or are reasonably likely to materially affect, our internal
      control over financial reporting.




30




**ITEM
      9B. OTHER INFORMATION**





The
      following information describes certain events required to be disclosed on
      Form
      8-K under Item 2.03, Creation of a Direct Financial Obligation or an Obligation
      Under an Off-Balance Sheet Arrangement of a Registrant, that occurred on June
      28, 2008.





On
      June
      28, 2008, we entered into a second amendment to our secured credit facility
      with
      Bank of America, N.A. (the “Facility”). The
      purpose of this amendment was to accommodate a change in Bank of America’s
      operating platform that required us to “stipulate” what portion of our line was
      to be apportioned for the letters of credit.




The
      foregoing information is intended as a summary of the reported transaction
      and
      is qualified in its entirety by reference to the complete text of
      the second Amendment to Loan Documents dated as of June 28, 2008, by
      and among Bank of America, N.A. and Radiant Logistics, Inc., Airgroup
      Corporation, Radiant Logistics Global Services, Inc., and Radiant Logistics
      Partners, LLC, which is filed as Exhibit 10.11 to this Report.





**PART
      III**





**ITEM
      10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**





Below
      is
      certain information regarding our directors and executive
      officers.





The
      following table sets forth information concerning our executive officers and
      directors. Each of the executive officers will serve until his or her successor
      is appointed by our Board of Directors or such executive officer’s earlier
      resignation or removal. Each of the directors will serve until the next annual
      meeting of stockholders or such director’s earlier resignation or
      removal.





**Name**
            
            **Age**
            
            **Position**Bohn
                H. Crain
            
            44
            
            Chief
                Executive Officer, Chief Financial Officer and Chairman of the Board
                of
                DirectorsStephen
                P. Harrington
            
            50
            
            DirectorDaniel
                Stegemoller
            
            53
            
            Vice
                President and Chief Operating Officer of AirgroupRobert
                F. Friedman
            
            64
            
            President
                – Adcom Express, Inc.





**Bohn
      H. Crain.** Mr.
      Crain
      has served as our Chief Executive Officer, Chief Financial Officer and Chairman
      of our Board of Directors since October 10, 2005. Mr. Crain brings nearly 20
      years of industry and capital markets experience in transportation and
      logistics. Since January 2005, Mr. Crain has served as the Chief Executive
      Officer of Radiant Capital Partners, LLC, an entity he formed to execute a
      consolidation strategy in the transportation/logistics sector. Prior to founding
      Radiant, Mr. Crain served as the executive vice president and the chief
      financial officer of Stonepath Group, Inc. from January 2002 until December
      2004. In 2001, Mr. Crain served as the executive vice president and chief
      financial officer of Schneider Logistics, Inc., a third-party logistics company,
      and from 2000 to 2001, he served as the vice president and treasurer of Florida
      East Coast Industries, Inc., a public company engaged in railroad and real
      estate businesses listed on the New York Stock Exchange. Between 1989 and 2000,
      Mr. Crain held various vice president and treasury positions for CSX Corp.,
      and
      several of its subsidiaries, a Fortune 500 transportation company listed on
      the
      New York Stock Exchange. Mr. Crain earned a Bachelor of Science in Accounting
      from the University of Texas.




31




**Stephen
      P. Harrington.** **** Mr.
      Harrington was appointed as a director on October 26, 2007. Mr. Harrington
      served as the Chairman, Chief Executive Officer, Chief Financial Officer,
      Treasurer and Secretary of Zone Mining Limited, a Nevada corporation, from
      August 2006 until January 2007 and as Chairman, Chief Executive Officer,
      Treasurer and Secretary of Touchstone Resources USA, Inc., a Delaware
      corporation from March 2004 to August 2005. From October 2001 to February 2004,
      Mr. Harrington served as the Chairman and Chief Executive Officer of Endeavour
      International Corporation (f/k/a Continental Southern Resources, Inc.), a
      publicly-traded oil and gas exploration company that merged with NSNV Inc.,
      a
      Texas corporation. Mr. Harrington has served as the President of SPH
      Investments, Inc. and SPH Equities, Inc., each a private investment company,
      since 1992. Mr. Harrington has served as an officer and director of several
      publicly-held corporations, including BPK Resources, Inc., an oil and gas
      exploration company, and Astralis Ltd. (f/k/a Hercules Development Group).
      Mr.
      Harrington graduated with a B.S. from Yale University in 1980.





**Dan
      Stegemoller.** Mr.
      Stegemoller is the Chief Operating Officer of Airgroup and previously held
      the
      position of Vice President since November 2004.  He has over 35 years
      experience in the Transportation Industry.  Prior to joining Airgroup, from
      1993 until 2004, Mr. Stegemoller served as Senior Vice President Sales and
      Marketing at Forward Air, a high-service-level contractor to the air cargo
      industry.  From 1983 to 1992, Mr. Stegemoller served as Vice President of
      Customer Service managing Centralized Call Center for Puralator/Emery Air/CF
      Airfreight.  From 1973 through 1983, he served in numerous positions at
      Federal Express where his last position was Director of Operations in
      Minneapolis, Minnesota. Mr. Stegemoller has an Associated Degree in Business
      from IUPUI in Indianapolis.





**Robert
      F. Friedman.** Mr.
      Freidman has served as **** President
      of Adcom Express, Inc. since its formation in 1978. Mr. Friedman founded Adcom
      in 1978 and over the past 30 years, has overseen the evolution of Adcom from
      a
      provider of small package courier services to a full-service third party
      logistics company that derives over 50% of its revenues from international
      transportation services. Mr. Friedman has served as a Board Member of the XLA
      Express Delivery and Logistics Association for the past 10 years and is a
      15-year member of the Airforwarders Association. He received a Bachelor of
      Arts
      degree from the University of Minnesota.





**Directors’
      Term of Office**





Directors
      hold office until the next annual meeting of shareholders and the election
      and
      qualification of their successors. Officers are elected annually by our board
      of
      directors and serve at the discretion of the board of directors.





**Audit
      Committee Financial Expert**





Our
      board
      of directors has not created a separately-designated standing audit committee
      or
      a committee performing similar functions. Accordingly, our full board of
      directors acts as our audit committee. Although
      Bohn H. Crain, our Chief Executive Officer, has the requisite background and
      professional experience to qualify as an audit committee financial expert,
      he
      has not been designated as such by our Board of Directors since he does not
      satisfy the “independence” standards adopted by the American Stock
      Exchange.




We
      currently have a small number of employees and centralized operations. In
      light of the foregoing, our board of directors concluded that the benefits
      of
      retaining an individual who qualifies as an “audit committee financial expert,”
as that term is defined in Item 407(d)(5)(ii) of Regulation S-K promulgated
      under the Securities Act, would be outweighed by the costs of retaining such
      a
      person. As a result, no member of our board of directors is an “audit committee
      financial expert.”





**Code
      of Ethics**





We
      have
      adopted a Code of Ethics that applies to all employees including our principal
      executive officer, principal financial officer, principal accounting officer
      or
      controller, or persons performing similar functions. Our Code of Ethics is
      designed to deter wrongdoing and promote: (i) honest and ethical conduct,
      including the ethical handling of actual or apparent conflicts of interest
      between personal and professional relationships; (ii) full, fair, accurate,
      timely and understandable disclosure in reports and documents that we file
      with,
      or submit to, the SEC and in our other public communications; (iii) compliance
      with applicable governmental laws, rules and regulations; (iv) the prompt
      internal reporting of violations of the code to an appropriate person or persons
      identified in the code; and (v) accountability for adherence to the code. Our
      Code of Ethics has been filed as an exhibit hereto or may be obtained without
      charge upon written request directed to Attn: Human Resources, Radiant
      Logistics, Inc., 1227 120 th Avenue,
      Bellevue, Washington 98005.




32




**Section
      16 Beneficial Ownership Reporting Compliance**





Section
      16(a) of the U.S. Securities and Exchange Act of 1934, as amended (the "Exchange
      Act"), requires our officers and directors and persons who own more than ten
      percent (10%) of our common stock to file with the SEC initial reports of
      ownership and reports of changes in ownership of our common stock. Such
      officers, directors and ten percent (10%) stockholders are also required by
      applicable SEC rules to furnish copies of all forms filed with the SEC pursuant
      to Section 16(a) of the Exchange Act. Based solely on our review of copies
      of
      forms filed pursuant to Section 16(a) of the Securities Exchange Act of 1934
      as
      amended and written representations from certain reporting persons, we believe
      that during fiscal 2008, all reporting persons timely complied with all filing
      requirements applicable to them, except that Daniel Stegemoller failed to file
      a
      Form 3 upon his appointment as an executive officer and a Form 4 for options
      granted in 2008.





**ITEM
      11. EXECUTIVE COMPENSATION**





**Summary
      Compensation Table**





The
      following summary compensation table reflects total compensation for our chief
      executive officer/chief financial officer, and our two most highly compensated
      executive officers (each a “named executive officer”) whose compensation
      exceeded $100,000 during the fiscal year ended June 30, 2008 and June 30,
      2007.


Name and Principal
                Position
              
              Year
              
              Salary
                ($)
              
              Bonus
                ($)
              
              Stock
                Awards
                ($)(1)
              
              Option
                Awards
                ($)(2)
              
              All other
                compensation
                ($)
              
              Total
                ($)Bohn H.
                  Crain, Chief Executive Officer and Chief Financial Officer
              
              
              2008
                2007
              
              
              250,000
                250,000
              
              
              -
                -
              
              
              -
                -
              
              
              -
                -
              
              
              16,418
                54,401
              (3)
                (4)
              
              266,418
                304,401Dan
                  Stegemoller, Vice President, Chief Operating Officer of Airgroup
                  Corporation
              
              
              2008
                2007
              
              
              180,000
                180,000
              
              
              -
                -
              
              
              -
                30,300
              (7)
              
              9,924
                -
              (5)
              
              71,133
                60,010
              (6)
                (8)
              
              261,057
                270,310





(1)
      The
      assumptions used in calculating the value of the stock awards are located in
      note 14 of our consolidated financial statements.


(2)
      The
      assumptions used in calculating the value of the option awards are located
      in
      note 14 of our consolidated financial statements.


(3)
      For
      the year ended June 30, 2008, Mr. Crain had other compensation consisting of
      $12,000 for automobile allowance, $1,501 for company provided life &
disability insurance premiums, and $2,917 for Company 401k match.


(4)
      For
      the year ended June 30, 2007, Mr. Crain had other compensation consisting of
      $12,000 for automobile allowance, $2,085 for company provided life insurance
      premiums, and $40,316 for relocation expenses.


(5)
      Mr.
      Stegemoller was granted options to purchase 100,000 shares on June 24, 2008
      at
      an exercise price $.18 **** per
      share.


(6)
      For
      the year ended June 30, 2008, Mr. Stegemoller had other compensation consisting
      of $6,000 for automobile allowance, $1,501 for company provided life &
disability insurance premiums, $1,200 for Company 401k match, and $62,432
      relating to amortization of moving expenses, per his December 2005 relocation
      agreement, comprised of $40,000 for the principal, and $22,432 for gross up
      for
      tax & interest payments.


(7)
        Mr.
        Stegemoller received 30,000 shares of restricted stock on October 16, 2006
        as
        incentive compensation, at a market value of $1.01 a share.




33




(8)
        For
        the year ended June 30, 2007, Mr. Stegemoller had other compensation consisting
        of $2,010 for company provided life insurance premiums and $58,000 relating
        to
        amortization of moving expenses, per his December 2005 relocation agreement,
        comprised of $40,000 for the principal and $18,000 for gross up for tax
        purposes.
 
 **Outstanding
        Equity Awards at Fiscal Year-End**
 
 The
        following table sets forth for each named executive officer information
        regarding outstanding unexercised options that had not vested as of June
        30,
        2008.
  Option
                      AwardsName
                  
                  Number of
                    securities
                    underlying
                    unexercised
                    options
                    exercisable(#)
                  
                  Number of
                    securities
                    underlying
                    unexercised
                    options
                    Unexercisable (#)
                  
                  Option exercise
                    price
                    ($)
                  
                  Option
                    expiration dateBohn
                      H. Crain
                  
                  
                  400,000
                    400,000
                  
                  
                  600,000
                    600,000
                  
                  
                  0.50
                    0.75
                  
                  
                  10/20/2015(1
                    10/20/2015(1
                  )
                    )Dan
                      Stegemoller
                  
                  
                  120,000
                    0
                  
                  
                  180,000
                    100,000
                  
                  
                  0.44
                    0.18
                  
                  
                  1/11/2016(2
                    6/24/2018(3
                  )
                    )
 
 (1)
        The
        stock options were granted on October 20, 2005 and vest in equal annual
        installments over a five year period commencing on the date of
        grant.
 (2)
        The
        stock options were granted on January 11, 2006 and vest in equal annual
        installments over a five year period commencing on the date of grant.
 (3)
        The
        stock options were granted on June 24, 2008 and vest in equal annual
        installments over a five year period commencing on the date of grant.
 
 **Director
        Compensation**
 
 The
        following table sets forth compensation paid to our directors during the
        fiscal
        year ended June 30, 2008.
 
 Name(1)
              
              All
                  other
                compensation
                ($)
              
              Total
                ($)Stephen
                  M. Cohen
              
              
              25,000(2
              )
              
              25,000
 
 (1)
        Bohn
        Crain and Stephen Harrington are not listed in the above table because neither
        receives any additional compensation for serving on our board of directors.
 (2)
        Mr.
        Cohen served as our General Counsel, Secretary and member of our Board of
        Directors from October 10, 2005 until his resignation on December 4, 2007.
        Mr.
        Cohen’s compensation consisted entirely of payment for legal and consulting
        services provided to the Company.
 
 **Narrative
        Disclosure of Executive Compensation**
 
 **Employment
        and Option Agreements**
 
 Bohn
        H. Crain . **** On
        January 13, 2006, we entered into an employment agreement with Bohn H. Crain
        to
        serve as our Chief Executive Officer. The agreement has an initial employment
        term of five years and automatically renews for consecutive one-year terms
        thereafter, subject to certain notice provision. The agreement provides for
        an
        annual base salary of $250,000, a performance bonus of up to 50% of the base
        salary based upon the achievement of certain target objectives, and
        discretionary merit bonus that can be awarded at the discretion of our board
        of
        directors. We may terminate the agreement at any time for cause. If we terminate
        the agreement due to Mr. Crain’s disability, Mr. Crain’s options shall
        immediately vest and we must continue to pay Mr. Crain his base salary and
        bonuses as well as fringe benefits including participation in pension, profit
        sharing and bonus plans as applicable, and life insurance, hospitalization,
        major medical, paid vacation and expense reimbursement for an additional
        one
        year period. If Mr. Crain terminates the agreement for good reason or we
        terminate for any reason other than for cause, Mr. Crain’s options shall
        immediately vest and we must continue to pay Mr. Crain his base salary and
        bonuses as well as fringe benefits for the remaining term of the agreement.
        The
        employment agreement contains standard and customary non-solicitation,
        non-competition, work made for hire, and confidentiality provisions.
  34
 
 On
        October 20, 2005, we issued an option to Mr. Crain to purchase 2,000,000
        shares
        of common stock, 1,000,000 of which are exercisable at $0.50 per share and
        the
        balance of which are exercisable at $0.75 per share. The options have a term
        of
        10 years and vest in equal annual installments over the five year period
        commencing on the date of grant.
 
 Robert
        F. Friedman .
        On
        September 5, 2008, we entered into an employment agreement with Robert F.
        Friedman to serve as President of Adcom Express, Inc., our wholly-owned
        subsidiary. The agreement expires on June 30, 2011 or until the employment
        relationship is terminated, unless extended upon the mutual agreement of
        us and
        Mr. Friedman. The agreement provides for an annual base salary of $125,000
        and
        automatically terminates upon Mr. Friedman’s death or disability. We may
        terminate the agreement at any time for cause. If Mr. Friedman terminates
        the
        agreement for “Good Reason”, we must continue to pay Mr. Friedman his base
        salary and bonuses as well as fringe benefits including participation in
        pension, profit sharing and bonus plans as applicable, and life insurance,
        hospitalization, major medical, paid vacation and expense reimbursement for
        an
        additional one year period only upon receiving a written release of liability
        from Mr. Friedman. The employment agreement contains standard and customary
        non-solicitation, non-competition, work made for hire, and confidentiality
        provisions.
 
 **Change
        in Control Arrangements**
 
 The
        options granted to Mr. Crain contain a change in control provision which
        is
        triggered in the event that we are acquired by merger, share exchange or
        otherwise, sell all or substantially all of our assets, or all of the stock
        of
        the Company is acquired by a third party (each, a “Fundamental Transaction”). In
        the event of a Fundamental Transaction, all of the options will vest and
        Mr.
        Crain shall have the full term of such Options in which to exercise any or
        all
        of them, notwithstanding any accelerated exercise period contained in any
        such
        Option.
 
 The
        employment agreement with Mr. Crain contains a change in control provision.
        If
        his employment is terminated following a change in control (other than for
        cause), then we must pay him a termination payment equal to 2.99 times his
        base
        salary in effect on the date of termination of his employment, any bonus
        to
        which he would have been entitled for a period of three years following the
        date
        of termination, any unpaid expenses and benefits, and for a period of three
        years provide him with all fringe benefits he was receiving on the date of
        termination of his employment or the economic equivalent. In addition, all
        of
        his unvested stock options shall immediately vest as of the termination date
        of
        his employment due to a change in control. A change in control is generally
        defined as the occurrence of any one of the following:
  ·
              any
                  “Person” (as the term “Person” is used in Section 13(d) and Section 14(d)
                  of the Securities Exchange Act of 1934), except for our chief executive
                  officer, becoming the beneficial owner, directly or indirectly,
                  of our
                  securities representing 50% or more of the combined voting power
                  of our
                  then outstanding securities;
 
 ·
              a
                  contested proxy solicitation of our stockholders that results in
                  the contesting party obtaining the ability to vote securities
                  representing 50% or more of the combined voting power of our
                  then-outstanding securities;
 
 ·
              a
                  sale, exchange, transfer or other disposition of 50% or more in
                  value of
                  our assets to another Person or entity, except to an entity controlled
                  directly or indirectly by us;
  35
 
 ·
              a
                  merger, consolidation or other reorganization involving us in which
                  we are
                  not the surviving entity and in which our stockholders prior to
                  the
                  transaction continue to own less than 50% of the outstanding securities
                  of
                  the acquirer immediately following the transaction, or a plan involving
                  our liquidation or dissolution other than pursuant to bankruptcy
                  or
                  insolvency laws is adopted; or
 
 ·
              during
                  any period of twelve consecutive months, individuals who at the
                  beginning
                  of such period constituted the board cease for any reason to constitute
                  at
                  least the majority thereof unless the election, or the nomination
                  for
                  election by our stockholders, of each new director was approved
                  by a vote
                  of at least a majority of the directors then still in office who were
                  directors at the beginning of the
                  period.
 
 Notwithstanding
        the foregoing, a “change in control” is not deemed to have occurred (i) in the
        event of a sale, exchange, transfer or other disposition of substantially
        all of
        our assets to, or a merger, consolidation or other reorganization involving,
        us
        and any entity in which our chief executive officer has, directly or indirectly,
        at least a 25% equity or ownership interest; or (ii) in a transaction otherwise
        commonly referred to as a “management leveraged buy-out.”
 
 **Directors’
        Compensation**
 
 We
        do not
        have any standard arrangements regarding payment of any cash or other
        compensation to our current directors for their services as directors, as
        members of any committee of our board of directors or for any special
        assignments, other than to reimburse them for their cost of travel and other
        out-of-pocket costs incurred to attend board or committee meetings or to
        perform
        any special assignment on behalf of the Company.
 
 **Stock
        Incentive Plan**
  On
        October 20, 2005, we adopted the Radiant Logistics, Inc. 2005 Stock Incentive
        Plan (the "Plan"). Awards may be made under the Plan for up to 5,000,000
        shares
        of our common stock in the form of stock options or restricted stock awards.
        Awards may be made to our employees, officers or directors as well as our
        consultants or advisors. The Plan is administered by our Board of Directors
        which has full and final authority to interpret the Plan, select the persons
        to
        whom awards may be granted, and determine the amount, vesting and all other
        terms of any awards. To the extent permitted by applicable law, our Board
        may
        delegate any or all of its powers under the Plan to one or more committees
        or
        subcommittees of the Board. The Plan is not subject to the provisions of
        the
        Employee Retirement Income Security Act of 1974, as amended, and is not a
        "qualified plan" under Section 401(a) of the Internal Revenue Code of 1986,
        as
        amended. The Plan has not been approved by our shareholders. As a result,
        "incentive stock options" as defined under Section 422 of the Internal Revenue
        Code may not be granted under the Plan until our shareholders approve the
        Plan.
  All
        stock
        options granted under the Plan are exercisable for a period of up to ten
        years
        from the date of grant, are subject to vesting as determined by the Board
        upon
        grant, and have an exercise price equal to not less than the fair market
        value
        of our common stock on the date of grant. Unless otherwise determined by
        the
        Board, awards may not be transferred except by will or the laws of descent
        and
        distribution. The Board has discretion to determine the effect on any award
        granted under the Plan of the death, disability, retirement, resignation,
        termination or other change in employment or other status of any participant
        in
        the Plan. The maximum number of shares of common stock for which awards may
        be
        granted to a participant under the Plan in any calendar year is
        2,500,000.
  The
        Plan
        states that a "Change of Control" occurs when (i) any "person" (as such term
        is
        used in Section 13(d) and 14(d) of the Exchange Act) acquires "beneficial
        ownership" (as defined in Rule 13d-3 under the Exchange Act), directly or
        indirectly, of securities of the Company representing fifty percent (50%)
        or
        more of the voting power of the then outstanding securities of the Company
        except where the acquisition is approved by the Board; or (ii) if the Company
        is
        to be consolidated with or acquired by another entity in a merger or other
        reorganization in which the holders of the outstanding voting stock of the
        Company immediately preceding the consummation of such event, shall, immediately
        following such event, hold, as a group, less than a majority of the voting
        securities of the surviving or successor entity or in the event of a sale
        of all
        or substantially all of the Company's assets or otherwise.
  36
  Unless
        otherwise provided in option or employment agreements, if the Plan is terminated
        as a result of or following a “Change of Control”, all vested awards may be
        exercised for 30 days from the date of notice of the termination. All
        participants will be credited with an additional six months of service for
        the
        purpose of unvested awards. If the Plan is assumed or not terminated upon
        the
        occurrence of a “Change of Control”, all participants will be credited with an
        additional six months of service if, during the remaining term of such
        participant’s awards, any participant is terminated without cause.
  As
        of
        September 15, 2008, there were outstanding options to purchase 3,410,000
        shares
        of common stock, 1,000,000 of which are exercisable at $0.50 per share,
        1,000,000 of which are exercisable at $0.75 per share, 375,000 of which are
        exercisable at $0.44 per share, 45,000 of which are exercisable at $1.01
        per
        share, 150,000 of which are exercisable at $0.55 per share, 190,000 of which
        are
        exercisable at $.062 per share, 175,000 of which are exercisable at $.48
        per
        share, 50,000 of which are exercisable at $.35 per share, and 425,000 of
        which
        are exercisable at $.18 per share.
  **ITEM
        12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
        MANAGEMENT****AND RELATED STOCKHOLDER MATTERS**
 
 The
        following table indicates how many shares of our common stock were beneficially
        owned as of September 24, 2008, by (1) each person known by us to be the
        owner of more than 5% of our outstanding shares of common stock, (2) our
        directors, (3) our executive officers, and (4) all of our directors
        and executive officers as a group. Unless otherwise indicated, each person
        named
        below has sole voting and investment power with respect to all common stock
        beneficially owned by that person or entity, subject to the matters set forth
        in
        the footnotes to the table below. Unless otherwise provided, the address
        of each
        of the persons listed below is c/o Airgroup, 1227 120th Avenue N.E., Bellevue,
        Washington 98005.
 
 **Name
                  of Beneficial Owner**
              
              **Amount****(1)**
              
              **Percent
                  of**
                **Class**Bohn
                  H. Crain
              
              
              8,550,000
              (2)
              
              24.1
              %Stephen
                  P. Harrington
              
              
              1,734,849
              (3)
              
              5.0
              %Dan
                  Stegemoller
              
              
              218,182
              (4)
              
              *Robert
                  F. Friedman
              
              
              **—**
              
              
              —Stephen
                  M. Cohen
                c/o
                  Fox Rothschild LLP
                2000
                  Market Street, 10thFloor
                Philadelphia,
                  PA 19103
              
              
              2,500,000
              (5)
              
              7.2
              %All
                  officers and directors as a group (4 persons)
              
              
              10,503,031
              
              
              29.9
              %
 
 (*)
                  Less
                      than one percent
  (1)
              The
                  securities “beneficially owned” by a person are determined in accordance
                  with the definition of “beneficial ownership” set forth in the rules and
                  regulations promulgated under the Securities Exchange Act of 1934,
                  and
                  accordingly, may include securities owned by and for, among others,
                  the
                  spouse and/or minor children of an individual and any other relative
                  who
                  has the same home as such individual, as well as other securities
                  as to
                  which the individual has or shares voting or investment power or
                  which
                  such person has the right to acquire within 60 days of September
                  24, 2008
                  pursuant to the exercise of options, or otherwise. Beneficial ownership
                  may be disclaimed as to certain of the securities. This table has
                  been
                  prepared based on 34,701,960 shares****of
                  common stock outstanding as of September 24, 2008.
  37
  (2)
              Consists
                  of 7,750,000 shares held by Radiant Capital Partners, LLC over
                  which Mr.
                  Crain has sole voting and dispositive power and 800,000 shares
                  issuable
                  upon exercise of options. Does not include 1,200,000 shares issuable
                  upon
                  exercise of options which are subject to vesting.
  (3)
              Consists
                  of shares held by SPH Investments, Inc. over which Mr. Harrington
                  has sole
                  voting and dispositive power.
  (4)
              Includes
                  120,000 shares issuable upon exercise of options. Does not include
                  280,000
                  shares issuable upon exercise of options which are subject to vesting.
  (5)
              Consists
                  of shares held of record by Mr. Cohen’s wife over which he shares voting
                  and dispositive power.
 
 **Equity
        Compensation Plan Information**
  The
        following table sets forth certain information regarding compensation plans
        under which our equity securities are authorized for issuance as of June
        30,
        2008.
 Plan Category
                
                Number of securities to
                  be issued upon exercise
                  of outstanding warrants
                  and rights
                  (a)
                
                Weighted-average
                  exercise price of
                  outstanding options,
                  warrants and rights
                  (b)
                
                Number of securities
                  remaining available for
                  future issuance under
                  equity compensation
                  plans (excluding
                  securities reflected in
                  column (a))
                  (c)Equity
                    Compensation Plans approved by security holders
                
                
                0
                
                
                —
                
                
                0Equity
                    compensation plans not approved by security holders
                
                
                3,410,000
                
                $
                0.539
                
                
                1,590,000Total
                
                
                3,410,000
                
                $
                0.539
                
                
                1,590,000
 
 A
        description of the material terms of The Radiant Logistics, Inc. 2005 Stock
        Incentive Plan is set forth in
 Item
        11.
        EXECUTIVE COMPENSATION- Stock Incentive Plan.
  **ITEM
        13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS****AND DIRECTOR INDEPENDENCE**
 
 **Review,
        Approval or Ratification of Transactions with Related
        Persons**
 
 Our
        board
        is responsible for reviewing and approving all related party transactions.
        Before approving such a transaction, the board takes into account all relevant
        factors that it deems appropriate, including whether the related party
        transaction is on terms no less favorable to us than terms generally available
        from an unaffiliated third party. **** Any
        request for us to enter into a transaction with an executive officer, director,
        principal stockholder or any of such persons' immediate family members or
        affiliates in which the amount involved exceeds $120,000 must first be presented
        to our board for review, consideration and approval.  All of our directors,
        executive officers and employees are required to report to our board any
        such
        related party transaction.  In approving or rejecting the proposed
        agreement, our board considers the facts and circumstances available and
        deemed
        relevant to the board, including, but not limited to the risks, costs and
        benefits to us, the terms of the transaction, the availability of other sources
        for comparable services or products and, if applicable, the impact on a
        director's independence.  Our board approves only those agreements that, in
        light of known circumstances, are in, or are not inconsistent with, our best
        interests, as our board determines in the good faith exercise of its
        discretion.  Although the policies and procedures described above are not
        written, the board applies the foregoing criteria in evaluating and approving
        all such transactions. Each of the transactions described below were approved
        by
        our board of directors in accordance with the foregoing.
  38
  **Transactions**
 
 On
        June
        28, 2006, we joined Radiant Capital Partners LLC (“Radiant Capital”), an
        affiliate of Bohn H. Crain to form Radiant Logistics Partners, LLC (“RLP”).
        Radiant Capital and the Company contributed $12,000 and $8,000, respectively,
        for their respective 60% and 40% interests in RLP. RLP has been certified
        as a
        minority business enterprise by the Northwest Minority Business Council.
        As
        currently structured, Mr. Crain’s ownership interest entitles him to a majority
        of the profits and distributable cash, if any, generated by RLP. The operations
        of RLP commenced in February of 2007 and are intended to provide certain
        benefits to us, including expanding the scope of services offered by us and
        participating in supplier diversity programs not otherwise available to us.
        As
        the RLP operations mature, we will evaluate and approve all related service
        agreements between us and RLP, including the scope of the services to be
        provided by us to RLP and the fees payable to us by RLP, in accordance with
        our
        corporate governance principles and applicable Delaware corporation law.
        This
        process may include seeking the opinion of a qualified third party concerning
        the fairness of any such agreement.
  For
          the
          year ended June 30, 2008, and net of ordinary and customary management
          fees paid
          to Airgroup, RLP reported a loss of $115,000. For the year ended June 30,
          2007,
          and net of ordinary and customary management fees paid to Airgroup, RLP
          reported
          income of $76,000. The profits and losses of RLP are shared 40% by Airgroup
          and
          60% by Radiant Capital.
 
 **Director
        Independence**
  Mr.
        Harrington satisfies the definition of “independent” established by the American
        Stock Exchange as set forth in Section 121A of the American Stock Exchange
        (“AMEX”) Company Guide. Mr. Crain does not satisfy the definition of
“independent” established by the American Stock Exchange as set forth in Section
        121A of the American Stock Exchange Company Guide. As of the date of the
        report,
        we do not maintain a separately designated audit, compensation or nominating
        committee. In applying the “independence standards” established by AMEX, our
        board of directors has determined that Mr. Crain is not “independent” for
        purposes of Section 803 of the AMEX Company Guide, applicable to audit,
        compensation and nominating committee members.
 
 **ITEM
        14. PRINCIPAL ACCOUNTANTS FEE AND SERVICES**
 
 The
        following table presents fees for professional audit services performed by
        for
        the audit of our annual financial statements for the years ended June 30,
        2008
        and 2007 and fees billed and unbilled for other services rendered by it during
        those periods.
 
 **2008**
              
              ******2007**Audit
                  Fees:
              
              $
              83,000
              
              $
              70,000Audit
                  Related Fees:
              
              
              2,000
              
              
              1,412Tax
                  Fees:
              
              
              8,500
              
              
              7,632All
                  Other Fees:
              
              
              0
              
              
              0Total:
              
              $
              93,500
              
              $
              79,044
 
 **Audit
        Fees**
 
 Audit
        Fees consist of fees billed and unbilled for professional services rendered
        for
        the audit of our consolidated financial statements and review of the interim
        financial statements included in quarterly reports and services that are
        normally provided by our independent registered public accountants in connection
        with statutory and regulatory filings or engagements.
 
 **Audit
        Related Fees**
 
 Audit-Related
        Fees consist of fees billed for assurance and related services that are
        reasonably related to the performance of the audit or review of the Company's
        consolidated financial statements and are not reported under "Audit Fees."
  39
 
 **Tax
        Fees**
 
 Tax
        Fees
        consists of fees billed for professional services for tax compliance, tax
        advice
        and tax planning. These services include assistance regarding federal and
        state
        tax compliance, tax audit defense, customs and duties, and mergers and
        acquisitions.
 
 **All
        Other Fees**
 
 All
        Other
        Fees consist of fees billed for products and services provided not described
        above.
 
 **Audit
        Committee Pre-Approval Policies and Procedures**
  Our
        Board
        of Directors serves as our audit committee. Our Board of Directors approves
        the
        engagement of our independent auditors, and meets with our independent auditors
        to approve the annual scope of accounting services to be performed and the
        related fee estimates. It also meets with our independent auditors, on a
        quarterly basis, following completion of their quarterly reviews and annual
        audit and prior to our earnings announcements, if any, to review the results
        of
        their work. During the course of the year, our chairman has the authority
        to
        pre-approve requests for services that were not approved in the annual
        pre-approval process. The chairman reports any interim pre-approvals at the
        following quarterly meeting. At each of the meetings, management and our
        independent auditors update the Board of Directors with material changes
        to any
        service engagement and related fee estimates as compared to amounts previously
        approved. During 2007 and 2008, all audit and non-audit services performed
        by
        our independent registered public accountants were pre-approved by the Board
        of
        Directors in accordance with the foregoing procedures.
 
 **ITEM
        15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**
 
 Exhibit
                  No.
              
              Description2.1
              
              Stock
                  Purchase Agreement by and among Radiant Logistics, Inc., the Shareholders
                  of Airgroup Corporation and William H. Moultrie (as Shareholders’ Agent)
                  dated January 11, 2006, effective as of January 1, 2006. (incorporated
                  by
                  reference to the Registrant’s Current Report on Form 8-K filed on January
                  18, 2006).2.2
              
              Registration
                  Rights Agreement by and among Radiant Logistics, Inc. and the Shareholders
                  of Airgroup Corporation dated January 11, 2006, effective as of
                  January 1,
                  2006. (incorporated by reference to the Registrant’s Current Report on
                  Form 8-K filed on January 18, 2006).2.3
              
              First
                  Amendment to Stock Purchase Agreement (incorporated by reference
                  to the
                  Registrant’s Current Report on Form 8-K filed on January 30,
                  2007).2.4
              
              Stock
                  Purchase Agreement by and between Radiant Logistics, Inc. and Robert
                  F.
                  Friedman dated September 5, 2008 (incorporated by reference to
                  the
                  Registrant’s Current Report on Form 8-K filed on September 11,
                  2008.3.1
              
              Certificate
                  of Incorporation (incorporated by reference to Exhibit 3.1 to the
                  Registrant’s Registration Statement on Form SB-2 filed on September 20,
                  2002).3.2
              
              Amendment
                  to Registrant’s Certificate of Incorporation (Certificate of Ownership and
                  Merger Merging Radiant Logistics, Inc. into Golf Two, Inc. dated
                  October
                  18, 2005) (incorporated by reference to Exhibit 3.1 to the Registrant’s
                  Current Report on Form 8-K dated October 18, 2005).3.3
              
              Bylaws
                  (incorporated by reference to Exhibit 3.2 to the Registrant's Registration
                  Statement on Form SB-2 filed on September 20, 2002)10.1
              
              Form
                  of Securities Purchase Agreement dated January 11, 2006 for the
                  sale of
                  1,009,093 shares of common stock (incorporated by reference to
                  the
                  Registrant’s Current Report on Form 8-K filed on January 18,
                  2006).
  40
 
 10.2
              
              Loan
                  Agreement by and among Radiant Logistics, Inc., Airgroup Corporation
                  and
                  Bank of America, N.A. dated as of January 10, 2006 (incorporated
                  by
                  reference to the Registrant’s Current Report on Form 8-K filed on January
                  18, 2006).10.3
              
              Executive
                  Employment Agreement dated January 13, 2006 by and between Radiant
                  Logistics, Inc. and Bohn H. Crain (incorporated by reference to
                  the
                  Registrant’s Current Report on Form 8-K filed on January 18,
                  2006).10.4
              
              Option
                  Agreement dated October 20, 2005 by and between Radiant Logistics,
                  Inc.
                  and Bohn H. Crain (incorporated by reference to the Registrant’s Current
                  Report on Form 8-K filed on January 18, 2006).10.5
              
              Loan
                  Agreement by and among Radiant Logistics, Inc., Airgroup Corporation,
                  Radiant Logistics Global Services, Inc., Radiant Logistics Partners,
                  LLC
                  and Bank of America, N.A. dated as of February 13, 2007 (incorporated
                  by
                  reference to the Registrant’s Quarterly Report on Form 10-Q filed on
                  February 14, 2007).10.6
              
              Asset
                  Purchase Agreement dated May 21, 2007 by and between Radiant Logistics
                  Global Services, Inc. and Mass Financial Corp. (incorporated by
                  reference
                  to the Registrant’s Current Report on Form 8-K filed on May 24,
                  2007)10.7
              
              Management
                  Services Agreement dated May 21, 2007 by and between Radiant Logistics
                  Global Services, Inc. and Mass Financial Corp. (incorporated by
                  reference
                  to the Registrant’s Current Report on Form 8-K filed on May 24,
                  2007)10.8
              
              Lease
                  Agreement for Bellevue, WA office space dated April 11, 2007 by
                  and
                  between Radiant Logistics, Inc. and Pine Forest Properties, Inc.
                  (incorporated by reference to the Registrant’s Annual Report on Form 10-K
                  filed on October 1, 2007)10.9
              
              Amendment
                  to Asset Purchase Agreement dated as of November 1, 2007 by and
                  between
                  Radiant Logistics Global Services, Inc. and Mass Financial Corp.
                  (incorporated by reference to the Registrant’s Quarterly Report on Form
                  10-Q filed on November 14, 2007)10.10
              
              Amendment
                  No. 1 to Loan Agreement dated as of February 12, 2008 by and among
                  Radiant
                  Logistics, Inc., Airgroup Corporation, Radiant Logistics Global
                  Services,
                  Inc., Radiant Logistics Partners, LLC and Bank of America, N.A.
                  (incorporated by reference to the Registrant’s Quarterly Report on Form
                  10-Q filed on February 14, 2008)10.11
              
              Amendment
                  No. 2 to Loan Agreement dated as of June 24, 2008 by and among
                  Radiant
                  Logistics, Inc., Airgroup Corporation, Radiant Logistics Global
                  Services,
                  Inc., Radiant Logistics Partners, LLC and Bank of America, N.A.
                  (filed
                  herewith)10.12
              
              Third
                  Amendment to Loan Documents dated as of September 2, 2008 by and
                  among
                  Radiant Logistics, Inc., Airgroup Corporation, Radiant Logistics
                  Global
                  Services, Inc., Radiant Logistics Partners, LLC, Adcom Express,
                  Inc. and
                  Bank of America, N.A. (incorporated by reference to the Registrant’s
                  Current Report on Form 8-K filed on September 11, 2008)10.13
              
              Executive
                  Employment Agreement dated September 5, 2008 by and between Radiant
                  Logistics, Inc. and Robert F. Friedman (incorporated by reference
                  to the
                  Registrant’s Current Report on Form 8-K filed on September 11,
                  2008)14.1
              
              Code
                  of Business Conduct and Ethics (incorporated by reference to the
                  Registrant’s Annual Report on Form 10-KSB filed on March 17,
                  2006).21.1
              
              Subsidiaries
                  of the Registrant (filed herewith)31.1
              
              Certification
                  of Chief Executive Officer and Chief Financial Officer Pursuant
                  to Section
                  302 of the Sarbanes-Oxley Act of 2002 (filed herewith)32.1
              
              Certification
                  of Chief Executive Officer and Chief Financial Officer Pursuant
                  to Section
                  906 of the Sarbanes-Oxley Act of 2002 (filed herewith)99.1
              
              Press
                  Release dated September 29, 2008 (filed
                  herewith)
  41
 
 **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, thereunto duly authorized.
 
 **RADIANT
                  LOGISTICS, INC.**Date:
                  September 29, 2008
              By:
              /s/
                  Bohn H. CrainBohn
                  H. CrainChief
                  Executive Officer
 
 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/
                  Stephen P. Harrington
              
              Director
              
              September
                  29, 2008Stephen
                  P. Harrington/s/
                  Bohn H. Crain
              
              Chairman
                  and
              
              September
                  29, 2008Bohn
                  H. Crain
              
              Chief
                  Executive Officer
  42
  **FINANCIAL
        STATEMENTS**
 **INDEX
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 
 **RADIANT
        LOGISTICS, INC.**
 Report
                    of Independent Registered Public Accounting Firm
                F-2Consolidated
                    Balance Sheets as of June 30, 2008 and 2007
                F-3Consolidated
                      Statements of Income (Operations) for the years ended June
                      30, 2008 and
                      2007
                F-4Consolidated
                      Statements of Stockholders’ Equity for the years ended June 30, 2008 and
                      2007
                F-5Consolidated
                        Statements of Cash flows for the years ended June 30, 2008
                        and
                        2007
                F-6
                    - F7Notes
                      to Consolidated Financial Statements
                F-8 –
                    F-24
  F-1
  
 
 **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
  To
          the
          Audit Committee of the Board of Directors
 Radiant
          Logistics, Inc.
 Bellevue,
          Washington
 
 
 We
          have
          audited the accompanying consolidated balance sheets of Radiant Logistics,
          Inc.
          ("the Company") as of June 30, 2008 and 2007, and the related
          statements of income (operations), stockholders' 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 the standards of the Public Company
          Accounting Oversight Board (United States). Those standards require that
          we plan
          and perform the audit to obtain reasonable assurance about whether the
          consolidated financial statements are free of material misstatement. The
          Company
          has determined that it is not required to have, nor were we engaged to
          perform,
          an audit of its internal control over financial reporting. Our audits included
          consideration of internal control over financial reporting as a basis for
          designing audit procedures that are appropriate in the circumstances, but
          not
          for the purpose of expressing an opinion on the effectiveness of the Company's
          internal control over financial reporting. Accordingly, we express no such
          opinion. An audit includes examining, on a test basis, evidence supporting
          the
          amounts and disclosures in the consolidated financial statements. An audit
          also
          includes assessing the accounting principles used and significant estimates
          made
          by management, as well as evaluating the overall consolidated 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 Radiant Logistics,
          Inc. as
          of June 30, 2008 and 2007, and the results of its operations and its cash
          flows for the years then ended, in conformity with accounting principles
          generally accepted in the United States.
 
 
 /S/
          PETERSON SULLIVAN PLLC
 
 
 September 25,
          2008
  F-2
  **RADIANT
        LOGISTICS, INC.**
 **Consolidated
        Balance Sheets**
  June 30,
                
                June 30,2008
                
                2007ASSETSCurrent
                    assets -Cash
                    and cash equivalents
                
                $
                392,223
                
                $
                719,575Accounts
                    receivable, net of allowance June 30, 2008 - $513,479; June, 30 2007
                    - $259,960
                
                
                14,404,002
                
                
                15,062,910Current
                    portion of employee loan receivables and other receivables
                
                
                68,367
                
                
                42,800Prepaid
                    expenses and other current assets
                
                
                425,657
                
                
                59,328Deferred
                    tax asset
                
                
                292,088
                
                
                234,656Total
                    current assets
                
                
                15,582,337
                
                
                16,119,269Furniture
                    and equipment, net
                
                
                717,542
                
                
                844,919Acquired
                    intangibles, net
                
                
                1,242,413
                
                
                1,789,773Goodwill
                
                
                7,824,654
                
                
                5,532,223Employee
                    loan receivable
                
                
                40,000
                
                
                80,000Investment
                    in real estate
                
                
                40,000
                
                
                40,000Deposits
                    and other assets
                
                
                131,496
                
                
                618,153Minority
                    interest
                
                
                24,784
                
                
                -Total
                    long term assets
                
                
                9,303,347
                
                
                8,060,149$
                25,603,226
                
                $
                25,024,337LIABILITIES
                    AND STOCKHOLDERS' EQUITY
                    (DEFICIT)Current
                    liabilities -Notes
                    payable – current portion of long term debt
                
                
                113,306
                
                
                800,000Accounts
                    payable and accrued transportation costs
                
                
                9,914,831
                
                
                13,270,756Commissions
                    payable
                
                
                1,136,859
                
                
                700,020Other
                    accrued costs
                
                
                221,808
                
                
                344,305Income
                    taxes payable
                
                
                498,142
                
                
                224,696Total
                    current liabilities
                
                
                11,884,946
                
                
                15,339,777Long
                    term debt
                
                
                4,272,032
                
                
                1,974,214Deferred
                    tax liability
                
                
                422,419
                
                
                608,523Total
                    long term liabilities
                
                
                4,694,451
                
                
                2,582,737Total
                    liabilities
                
                
                16,579,397
                
                
                17,922,514Commitments
                    & contingencies
                
                
                -
                
                
                -Minority
                    interest
                
                
                -
                
                
                57,482Stockholders'
                    equity:Preferred
                    stock, $0.001 par value, 5,000,000 shares authorized; no shares
                    issued or
                    outstanding
                
                
                -
                
                
                -Common
                    stock, $0.001 par value, 50,000,000 shares authorized. Issued
                    and
                    outstanding: June 30, 2008 – 34,660,293; June 30, 2007 –
                    33,961,639
                
                
                16,116
                
                
                15,417Additional
                    paid-in capital
                
                
                7,703,658
                
                
                7,137,774Retained
                    earnings (deficit)
                
                
                1,304,055
                
                
                (108,850
                )Total
                    stockholders’ equity
                
                
                9,023,829
                
                
                7,044,341$
                25,603,226
                
                $
                25,024,337
  The
        accompanying notes form an integral part of these consolidated financial
        statements.
  F-3
  **RADIANT
        LOGISTICS, INC.**
 **Consolidated
        Statements of Income (Operations)**
  YEAR ENDED
                JUNE 30,
              
              YEAR ENDED
                JUNE 30,2008
              
              2007Revenues
              
              $
              100,201,795
              
              $
              75,526,788Cost
                  of transportation
              
              
              64,373,545
              
              
              48,812,662Net
                  revenues
              
              
              35,828,250
              
              
              26,714,126Agent
                  Commissions
              
              
              25,210,068
              
              
              20,047,536Personnel
                  costs
              
              
              5,303,612
              
              
              2,916,073Selling,
                  general and administrative expenses
              
              
              3,801,085
              
              
              2,507,317Depreciation
                  and amortization
              
              
              963,913
              
              
              830,486Total
                  operating expenses
              
              
              35,278,678
              
              
              26,301,412Income
                  from operations
              
              
              549,572
              
              
              412,714Other
                  income (expense):Interest
                  income
              
              
              4,115
              
              
              16,272Interest
                  expense
              
              
              (121,399
              )
              
              (22,215
              )Other
              
              
              1,819,634
              
              
              (42,686
              )Total
                  other income (expense)
              
              
              1,702,350
              
              
              (48,629
              )Income
                  before income tax expense
              
              
              2,251,922
              
              
              364,085Income
                  tax expense
              
              
              (907,748
              )
              
              (155,867
              )Income
                  before minority interest
              
              
              1,344,174
              
              
              208,218Minority
                  interest
              
              
              68,731
              
              
              (45,482
              )Net
                  income
              
              $
              1,412,905
              
              $
              162,736Net
                  income per common share – basic and diluted
              
              $
              .04
              
              $
              -Weighted
                  average shares outstanding:Basic
                  shares
              
              
              34,126,972
              
              
              33,882,872Diluted
                  shares
              
              
              34,358,746
              
              
              34,324,736
 
 The
        accompanying notes form an integral part of these consolidated financial
        statements.
  F-4
  **RADIANT
        LOGISTICS, INC.**
 **Consolidated
        Statements of Stockholders’ Equity**
  COMMON
                  STOCK
              
              ADDITIONAL
              
              RETAINED
              
              TOTALSHARES
              
              AMOUNT
              
              PAID-IN
                  CAPITAL
              
              EARNINGS
                  (DEFICIT)
              
              STOCKHOLDERS
                EQUITYBalance
                  at June 30, 2006
              
              
              33,611,639
              
              $
              15,067
              
              $
              6,590,355
              
              $
              (271,586
              )
              $
              6,333,836Issuance
                  of common stock for training materials at $1.01 per share (September
                  2006)
              
              
              250,000
              
              
              250
              
              
              252,250
              
              
              -
              
              
              252,500Issuance
                  of common stock for bonus compensation at $1.01 per share (October
                  2006)
              
              
              100,000
              
              
              100
              
              
              100,900
              
              
              -
              
              
              101,000Stock
                  based compensation
              
              
              -
              
              
              -
              
              
              194,269
              
              
              -
              
              
              194,269Net
                  income for the year ended June 30, 2007
              
              
              -
              
              
              -
              
              
              -
              
              
              162,736
              
              
              162,736Balance
                  at June 30, 2007
              
              
              33,961,639
              
              $
              15,417
              
              $
              7,137,774
              
              $
              (108,850
              )
              $
              7,044,341Issuance
                  of common stock to former Airgroup shareholders per earn-out agreement
                  at
                  $.60 per share – (February 2008)
              
              
              356,724
              
              
              357
              
              
              213,677
              
              
              
              
              
              214,034Issuance
                  of common stock forinvestor
                  relations at $.34 per (May 2008)
              
              
              208,333
              
              
              208
              
              
              71,042
              
              
              
              
              
              71,250Issuance
                  of common stock forfinders
                  fees at $.58 per (June 2008)
              
              
              133,597
              
              
              134
              
              
              77,103
              
              
              
              
              
              77,237Stock
                  based compensation
              
              
              -
              
              
              -
              
              
              204,062
              
              
              -
              
              
              204,062Net
                  income for the year ended June 30, 2008
              
              
              
              
              
              
              
              
              
              
              
              1,412,905
              
              
              1,412,905Balance
                  at June 30, 2008
              
              
              34,660,293
              
              $
              16,116
              
              $
              7,703,658
              
              $
              1,304,055
              
              $
              9,023,829
 
 The
        accompanying notes form an integral part of these consolidated financial
        statements.
  F-5
  **RADIANT
        LOGISTICS, INC.**
 **Consolidated
        Statements of Cash Flows**
 
 YEAR
                ENDED
                JUNE 30,
                2008
              
              YEAR
                ENDED
                JUNE 30,
                2007CASH FLOWS
                  PROVIDED BY (USED FOR) OPERATING ACTIVITIES:Net
                  income
              
              $
              1,412,905
              
              $
              162,736ADJUSTMENTS
                  TO RECONCILE NET INCOME TO NET CASH PROVIDED BY (USED FOR) OPERATING
                  ACTIVITIES:non-cash
                  issuance of common stock (services)
              
              
              148,487
              
              
              -non-cash
                  compensation expense (stock options)
              
              
              204,062
              
              
              194,269provision
                  for doubtful accounts
              
              
              253,519
              
              
              57,130amortization
                  of intangibles
              
              
              547,360
              
              
              611,827depreciation
              
              
              396,557
              
              
              230,046deferred
                  income tax benefit
              
              
              (243,536
              )
              
              (165,260
              )minority
                  interest in income (loss) of subsidiaries
              
              
              (68,731
              )
              
              45,482change
                  in estimated accrued transportation costs
              
              
              (1,431,452
              )income
                  tax indemnity
              
              
              (486,694
              )change
                  in fair value of accounts receivable
              
              
              -
              
              
              (6,127
              )CHANGE
                  IN OPERATING ASSETS AND LIABILITIES:accounts
                  receivable
              
              
              405,389
              
              
              (6,632,141
              )employee
                  loan receivable and other receivables
              
              
              39,433
              
              
              (2,471
              )prepaid
                  expenses and other assets
              
              
              (318,406
              )
              
              (238,128
              )accounts
                  payable and accrued transportation costs
              
              
              (2,127,035
              )
              
              7,458,810commissions
                  payable
              
              
              436,839
              
              
              270,708other
                  accrued costs
              
              
              (122,497
              )
              
              141,982income
                  taxes payable
              
              
              273,446
              
              
              (869,300
              )Net
                    cash provided by (used for)operating
                    activities
              
              
              (680,354
              )
              
              1,259,563CASH
                  FLOWS PROVIDED BY (USED FOR) INVESTING ACTIVITIES:Purchase
                  of Detroit Assets (see Note 4), including indemnified costs
                  paid
              
              
              (1,461,266
              )
              
              (242,890
              )Purchase
                  of furniture and equipment
              
              
              (245,015
              )
              
              (524,346
              )Issuance
                  of notes receivable
              
              
              (25,000
              )Net
                  cash used for investing activities
              
              
              (1,731,281
              )
              
              (767,236
              )CASH
                  FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES:Payment
                  to former shareholders of Airgroup
              
              
              (500,000
              )Contribution
                  from minority interest of subsidiary
              
              
              -
              
              
              12,000Distribution
                  to minority interest
              
              
              (13,535
              )
              
              -Proceeds
                  from (payments to) credit facility net of credit fees
              
              
              2,597,818
              
              
              (295,722
              )Net
                  cash provided by (used for) financing activities
              
              
              2,084,283
              
              
              (283,722
              )NET
                  INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
              
              
              (327,352
              )
              
              208,605CASH
                  AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
              
              
              719,575
              
              
              510,970CASH
                  AND CASH EQUIVALENTS AT END OF YEAR
              
              $
              392,223
              
              $
              719,575SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:Income
                  taxes paid
              
              $
              872,786
              
              $
              1,136,784Interest
                  paid
              
              $
              121,399
              
              $
              22,215
  The
        accompanying notes form an integral part of these consolidated financial
        statements.
  F-6




**Supplemental
      disclosure of non-cash investing and financing activities:**





In
      September 2006, the Company issued 250,000 shares of its common stock, at a
      market value of $1.01 per share, in exchange for $252,500 in value, of domestic
      and international freight training materials for the development of its
      employees and exclusive agent offices, and was included in the balance sheet
      as furniture and equipment.





In
      October 2006, the Company issued 100,000 shares of common stock, at a market
      value of $1.01 a share, as incentive compensation to its senior managers which
      was recorded against other accrued costs.





In
      January 2007 the former shareholders of Airgroup agreed with the Company to
      make
      the first contingent payment of $600,000 payable in two installments with
      $300,000 payable on June 30, 2008 and $300,000 on January 1, 2009 resulting
      in
      an increase to goodwill of $600,000.




In
      June
      2007, and based on the operating income for year ended June 30, 2007, $214,034
      was recorded as an accrued payable and increase to goodwill, for the first
      annual earn-out for the former Airgroup shareholders for the Company’s
      acquisition of Airgroup. See Note 4.





In
      November 2007, the Company reclassified $438,734 from long-term other assets
      to
      goodwill related to prior year costs incurred on the Detroit asset acquisition.





In
      February 2008, the Company issued 356,724 shares of common stock at a fair
      value
      of $.60 per share in full satisfaction of the $214,034 earnout payment for
      the
      year ending June 30, 2007.





In
      June
      2008, and based on the operating income for year ended June 30, 2008, $416,596
      was recorded as an accrued payable and increase to goodwill, for the second
      annual earn-out for the former Airgroup shareholders for the Company’s
      acquisition of Airgroup.


F-7





**RADIANT
      LOGISTICS, INC.**


**Notes
      to the Consolidated Financial Statements**





**NOTE
      1 – THE COMPANY AND BASIS OF PRESENTATION**




**The
      Company**





Radiant
      Logistics, Inc. (the “Company”) was incorporated in the State of Delaware on
      March 15, 2001. Currently, the Company is executing a strategy to build a
      global transportation and supply chain management company through organic growth
      and the strategic acquisition of best-of-breed non-asset based transportation
      and logistics providers to offer its customers domestic and international
      freight forwarding and an expanding array of value added supply chain management
      services, including order fulfillment, inventory management and
      warehousing.





The
      Company completed the first step in its business strategy through the
      acquisition of Airgroup Corporation (“Airgroup”) effective as of January 1,
      2006. Airgroup is a Bellevue, Washington based non-asset based logistics company
      providing domestic and international freight forwarding services through a
      network which includes a combination of company-owned and exclusive agent
      offices across North America.  Airgroup has a diversified account base
      including manufacturers, distributors and retailers using a network of
      independent carriers and international agents positioned strategically around
      the world.





By
      implementing a growth strategy based on the operations of Airgroup as a
      platform, the Company is building a leading global transportation and
      supply-chain management company offering a full range of domestic and
      international freight forwarding and other value added supply chain management
      services, including order fulfillment, inventory management and
      warehousing.





The
      Company’s growth strategy will focus on both organic growth and acquisitions.
      From an organic perspective, the Company will focus on strengthening existing
      and expanding new customer relationships. One of the drivers of the Company’s
      organic growth will be retaining existing, and securing new exclusive agency
      locations. Since the Company’s acquisition of Airgroup in January 2006, the
      Company has focused its efforts on the build-out of its network of exclusive
      agency offices, as well as enhancing its back-office infrastructure and
      transportation and accounting systems.





As
      the
      Company continues to build out its network of exclusive agent locations to
      achieve a level of critical mass and scale, it is executing an acquisition
      strategy to develop additional growth opportunities. The Company’s acquisition
      strategy relies upon two primary factors: first, the Company’s ability to
      identify and acquire target businesses that fit within its general acquisition
      criteria and, second, the continued availability of capital and financing
      resources sufficient to complete these acquisitions.





The
      Company continues to identify a number of additional companies as suitable
      acquisition candidates and has completed two material acquisitions over the
      past
      twelve months. In November 2007, the Company purchased certain assets in Detroit
      Michigan to service the automotive industry. In September 2008, the Company
      acquired Adcom Express, Inc. d/b/a Adcom Worldwide (“Adcom”). Adcom is a
      Minneapolis, Minnesota based logistics company contributing an additional 30
      locations across North America and augmenting the Company’s overall domestic and
      international freight forwarding capabilities.





The
      Company will continue to search for targets that fit within its acquisition
      criteria. The Company’s ability to secure additional financing will rely upon
      the sale of debt or equity securities, and the development of an active trading
      market for its securities. Although the Company can make no assurance as to
      its
      long term access to debt or equity securities or its ability to develop an
      active trading market, in connection with its acquisition of Adcom the Company
      was successful in increasing its credit facility from $10.0 million to $15.0
      million.





Successful
      implementation of the Company’s growth strategy depends upon a number of
      factors, including its ability to: (i) continue developing new agency locations;
      (ii) locate acquisition opportunities; (iii) secure adequate funding to finance
      identified acquisition opportunities; (iv) efficiently integrate the businesses
      of the companies acquired; (v) generate the anticipated economies of scale
      from
      the integration; and (vi) maintain the historic sales growth of the acquired
      businesses in order to generate continued organic growth. There are a variety
      of
      risks associated with the Company’s ability to achieve its strategic objectives,
      including the ability to acquire and profitably manage additional businesses
      and
      the intense competition in the industry for customers and for acquisition
      candidates.




F-8




**Basis
      of Presentation**





The
      consolidated financial statements also include the accounts of Radiant
      Logistics, Inc. and its wholly-owned subsidiaries as well as a single
      variable interest entity, Radiant Logistics Partners LLC which is 40% owned
      by
      Airgroup, a wholly owned subsidiary of the Company, whose accounts are included
      in the consolidated financial statements in accordance with Financial Accounting
      Standards Board (“FASB”) Interpretation No. 46(R) consolidation of “Variable
      Interest Entities” (See Note 7). All significant inter-company balances and
      transactions have been eliminated.





**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





**a)**  **Use
      of Estimates**





The
      preparation of financial statements and related disclosures in accordance with
      accounting principles generally accepted in the United States of America
      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
      revenue and expenses during the reporting period. Such estimates include revenue
      recognition, accruals for the cost of purchased transportation, accounting
      for
      the issuance of shares and share based compensation, the assessment of the
      recoverability of long-lived assets (specifically goodwill and acquired
      intangibles), the establishment of an allowance for doubtful accounts and the
      valuation allowance for deferred tax assets. Estimates and assumptions are
      reviewed periodically and the effects of revisions are reflected in the period
      that they are determined to be necessary. Actual results could differ from
      those
      estimates.





**b)**  **Cash
      and Cash Equivalents**





For
      purposes of the statements of cash flows, cash equivalents include all highly
      liquid investments with original maturities of three months or less which are
      not securing any corporate obligations.





**c)**  **Concentration**





The
      Company maintains its cash in bank deposit accounts, which, at times, may exceed
      federally insured limits. The Company has not experienced any losses in such
      accounts.





**d)**  **Accounts
      Receivable**





The
      Company’s receivables are recorded when billed and represent claims against
      third parties that will be settled in cash. The carrying value of the Company’s
      receivables, net of the allowance for doubtful accounts, represents their
      estimated net realizable value.   The Company evaluates the
      collectability of accounts receivable on a customer-by-customer basis. The
      Company records a reserve for bad debts against amounts due to reduce the net
      recognized receivable to an amount the Company believes will be reasonably
      collected. The reserve is a discretionary amount determined from the analysis
      of
      the aging of the accounts receivables, historical experience and knowledge
      of
      specific customers.





**e)****Furniture
      & Equipment**





Technology
      (computer software, hardware, and communications), furniture, and equipment
      are
      stated at cost, less accumulated depreciation over the estimated useful lives
      of
      the respective assets. Depreciation is computed using five to seven year lives
      for vehicles, communication, office, furniture, and computer equipment and
      the
      double declining balance method. Computer software is depreciated over a three
      year life using the straight line method of depreciation. For leasehold
      improvements, the cost is depreciated over the shorter of the lease term or
      useful life on a straight line basis. Upon retirement or other disposition
      of
      these assets, the cost and related accumulated depreciation are removed from
      the
      accounts and the resulting gain or loss, if any, is reflected in other income
      or
      expense. Expenditures for maintenance, repairs and renewals of minor items
      are
      charged to expense as incurred. Major renewals and improvements are capitalized.




Under
      the
      provisions of Statement of Position 98-1, *“Accounting
      for the Costs of Computer Software Developed or Obtained for Internal
      Use”* ,
      the
      Company capitalizes costs associated with internally developed and/or purchased
      software systems that have reached the application development stage and meet
      recoverability tests. Capitalized costs include external direct costs of
      materials and services utilized in developing or obtaining internal-use
      software, payroll and payroll-related expenses for employees who are directly
      associated with and devote time to the internal-use software project and
      capitalized interest, if appropriate. Capitalization of such costs begins when
      the preliminary project stage is complete and ceases no later than the point
      at
      which the project is substantially complete and ready for its intended purpose.




F-9




Costs
      for
      general and administrative, overhead, maintenance and training, as well as
      the
      cost of software that does not add functionality to existing systems, are
      expensed as incurred.





**f)**  **Goodwill**





The
      Company follows the provisions of Statement of Financial Accounting Standards
      ("SFAS") No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 requires
      an
      annual impairment test for goodwill and intangible assets with indefinite lives.
      Under the provisions of SFAS No. 142, the first step of the impairment test
      requires that the Company determines the fair value of each reporting unit,
      and
      compare the fair value to the reporting unit's carrying amount. To the extent
      a
      reporting unit's carrying amount exceeds its fair value, an indication exists
      that the reporting unit's goodwill may be impaired and the Company must perform
      a second more detailed impairment assessment. The second impairment assessment
      involves allocating the reporting unit’s fair value to all of its recognized and
      unrecognized assets and liabilities in order to determine the implied fair
      value
      of the reporting unit’s goodwill as of the assessment date. The implied fair
      value of the reporting unit’s goodwill is then compared to the carrying amount
      of goodwill to quantify an impairment charge as of the assessment date. The
      Company performs its annual impairment test effective as of April 1 of each
      year, unless events or circumstances indicate, an impairment may have occurred
      before that time. As of June 30, 2008, management believes there are no
      indications of an impairment.





**g)**  **Long-Lived
      Assets**




Acquired
      intangibles consist of customer related intangibles and non-compete agreements
      arising from the Company’s acquisitions. Customer related intangibles are
      amortized using accelerated methods over approximately 5 years and non-compete
      agreements are amortized using the straight line method over a 5 year period.
      See Note 4 and 5.





The
      Company follows the provisions of SFAS No. 144, “Accounting for the Impairment
      or Disposal of Long-Lived Assets,” which establishes accounting standards for
      the impairment of long-lived assets such as property, plant and equipment and
      intangible assets subject to amortization. The Company reviews long-lived assets
      to be held-and-used for impairment whenever events or changes in circumstances
      indicate that the carrying amount of the assets may not be recoverable. If
      the
      sum of the undiscounted expected future cash flows over the remaining useful
      life of a long-lived asset is less than its carrying amount, the asset is
      considered to be impaired. Impairment losses are measured as the amount by
      which
      the carrying amount of the asset exceeds the fair value of the asset. When
      fair
      values are not available, the Company estimates fair value using the expected
      future cash flows discounted at a rate commensurate with the risks associated
      with the recovery of the asset. Assets to be disposed of are reported at the
      lower of carrying amount or fair value less costs to sell. 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, 2008.





**h)**  **Commitments**





The
      Company has operating lease commitments for office and warehouse space and
      equipment rentals and are under non-cancelable operating leases expiring at
      various dates through December 2012. Future annual commitments for years ending
      June 30, 2009 through 2013, respectively, are **** $588,258,
      $237,517, $142,203, $32,281 and $23,393. Lease and rent expense for the years
      ended June 30, 2008 and June 30, 2007 approximated $665,003 and $344,757,
      respectively.





**i)**  **Income
      Taxes**




Taxes
      on
      income are provided in accordance with SFAS No. 109, “Accounting for
      Income Taxes.” ** Deferred
      income tax assets and liabilities are recognized for the expected future tax
      consequences of events that have been reflected in the consolidated financial
      statements. Deferred tax assets and liabilities are determined based on the
      differences between the book values and the tax bases of particular assets
      and
      liabilities. Deferred tax assets and liabilities are measured using tax rates
      in
      effect for the years in which the differences are expected to reverse. A
      valuation allowance is provided to offset the net deferred tax assets if, based
      upon the available evidence, it is more likely than not that some or all of
      the
      deferred tax assets will not be realized.




F-10





The
      Company accounts for uncertain income tax positions in accordance with FAS
      interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an
      interpretation of FASB Statement 109” (“FIN 48”), which was adopted by the
      Company on July 1, 2007. Accordingly, the Company reports a liability for
      unrecognized tax benefits resulting from uncertain income tax positions taken
      or
      expected to be taken in an income tax return. Estimated interest and penalties
      are recorded as a component of interest expense or other expense, respectively.
      There was no financial statement impact from the adoption of FIN
      48.





**j)**  **Revenue
      Recognition and Purchased Transportation Costs**





The
      Company recognizes revenue on a gross basis, in accordance with Emerging Issues
      Task Force ("EITF") 91-9, "Reporting Revenue Gross versus Net," as a result
      of
      the following: The Company 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. At
      the
      Company’s sole discretion, it sets the prices charged to its customers, and is
      not required to obtain approval or consent from any other party in establishing
      its prices. The Company has multiple suppliers for the services it sells to
      its
      customers, and 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. In most cases,
      the Company determines the nature, type, characteristics, and specifications
      of
      the service(s) ordered by the customer. The Company also assumes credit risk
      for
      the amount billed to the customer.




As
      a
      non-asset based carrier, the Company does not own transportation assets. The
      Company generates the major portion of its air and ocean freight revenues by
      purchasing transportation services from direct (asset-based) carriers and
      reselling those services to its customers. In accordance with EITF 91-9, revenue
      from freight forwarding and export services is recognized at the time the
      freight is tendered to the direct carrier at origin, and direct expenses
      associated with the cost of transportation are accrued concurrently. At the
      time
      when revenue is recognized on a transportation shipment, the Company records
      costs related to that shipment based on the estimate of total purchased
      transportation costs. The estimates are based upon anticipated margins,
      contractual arrangements with direct carriers and other known factors. The
      estimates are routinely monitored and compared to actual invoiced costs. The
      estimates are adjusted as deemed necessary by the Company to reflect differences
      between the original accruals and actual costs of purchased transportation.





**k)**  **Share
      based Compensation**





The
      Company follows the provisions of SFAS No. 123R, "Share Based Payment,” a
      revision of FASB Statement No. 123 ("SFAS 123R"). This statements requires
      that
      the cost resulting from all share-based payment transactions be recognized
      in
      the Company’s consolidated financial statements. In addition, the Company
      follows the guidance of the Securities and Exchange Commission ("SEC") Staff
      Accounting Bulletin No. 107, "Share-Based Payment" ("SAB 107"). SAB 107 provides
      the SEC’s staff’s position regarding the application of SFAS 123R and certain
      SEC rules and regulations, and also provides the staff’s views regarding the
      valuation of share-based payment arrangements for public companies. SFAS 123R
      requires all share-based payments to employees, including grants of employee
      stock options, to be recognized in the statement of operations based on their
      fair values.





For
      the
      year ended June 30, 2008, the Company recorded a share based compensation
      expense of $204,062, which, net of income taxes, resulted in a $134,681 net
      reduction of net income. For the year ended June 30, 2007, the Company recorded
      a share based compensation expense of $194,269, which, net of income taxes,
      resulted in a $128,218 net reduction of net income.





**l)**  **Basic
      and Diluted Income Per Share**





The
      Company uses SFAS No. 128, "Earnings Per Share" for calculating the basic and
      diluted income (loss) per share. Basic income per share is computed by dividing
      net income attributable to common stockholders by the weighted average number
      of
      common shares outstanding. Diluted income per share is computed similar to
      basic
      income per share except that the denominator is increased to include the number
      of additional common shares that would have been outstanding if the potential
      common shares, such as stock options, had been issued and if the additional
      common shares were dilutive. For the year ended June 30, 2008, the weighted
      average outstanding number of potentially dilutive common shares totaled
      34,358,746 shares of common stock, including options to purchase 3,410,000
      shares of common stock at June 30, 2008, of which 2,985,000 were excluded as
      their effect would have been antidilutive. For the year ended June 30, 2007,
      the
      weighted average outstanding number of potentially dilutive common shares
      totaled 34,324,736 shares of common stock, including options to purchase
      3,150,000 shares of common stock at June 30, 2007, of which 1,575,000 were
      excluded as their effect would have been antidilutive. The following table
      reconciles the numerator and denominator of the basic and diluted per share
      computations for earnings per share as follows.




F-11




Year ended
              June 30, 2008
            
            Year ended
              June 30, 2007Weighted
                average basic shares outstanding
            
            
            34,126,972
            
            
            33,882,872Options
                & other
            
            
            231,774
            
            
            441,864Weighted
                average dilutive shares outstanding
            
            
            34,358,746
            
            
            34,324,736





**m)**  **Fair
      Value of Financial Instruments**




The
      carrying value of the Company's receivables, accounts payable, other accrued
      liabilities, notes payable and long term debt approximate their estimated fair
      values due to the relatively short maturities of those instruments.




**n)****Comprehensive
      Income**




The
      Company has no components of Other Comprehensive Income and, accordingly, no
      Statement of Comprehensive Income has been included in the accompanying
      consolidated financial statements.




**NOTE
      3 - RECENT ACCOUNTING PRONOUNCEMENTS**





In
      September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS
      No. 157 “Fair Value Measurements” which relate to the definition of fair value,
      the methods used to estimate fair value, and the requirement of expanded
      disclosures about estimates of fair value. SFAS No. 157 is effective for
      financial statements issued for fiscal years beginning after November 15, 2007,
      and interim periods within those fiscal years. The adoption of SFAS No. 157
      is
      not expected to have a material impact on the Company’s financial position,
      results of operations or cash flows.





In
      February 2007 the Financial Accounting Standards Board ("FASB") issued SFAS
      159
“The Fair Value Option for Financial Assets and Financial Liabilities.” The
      statement permits entities to choose to measure many financial instruments
      and
      certain other items at fair value. The objective is to improve financial
      reporting by providing entities with the opportunity to mitigate volatility
      in
      reported earnings caused by measuring related assets and liabilities differently
      without having to apply complex hedge accounting provisions. This Statement
      is
      expected to expand the use of fair value measurement, which is consistent with
      the Board’s long-term measurement objectives for accounting for financial
      instruments. This Statement is effective as of the beginning of an entity’s
      first fiscal year that begins after November 15, 2007. The Company does not
      believe that SFAS 159 will have a material impact on the Company’s financial
      statements.




In
      December 2007, the FASB issued SFAS No. 141R, Business Combinations , which
      replaces SFAS No. 141. The statement retains the purchase method of
      accounting for acquisitions, but requires a number of changes, including changes
      in the way assets and liabilities are recognized in the purchase accounting.
      It
      also changes the recognition of assets acquired and liabilities assumed arising
      from contingencies, requires the capitalization of in-process research and
      development at fair value, and requires the expensing of acquisition-related
      costs as incurred. SFAS No. 141R is effective for us beginning July 1,
      2009 and will apply prospectively to business combinations completed on or
      after
      that date.




In
      December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
      Consolidated Financial Statements, an amendment of ARB No. 51, which
      changes the accounting and reporting for minority interests. Minority interests
      will be recharacterized as noncontrolling interests and will be reported as
      a
      component of equity separate from the parent’s equity, and purchases or sales of
      equity interests that do not result in a change in control will be accounted
      for
      as equity transactions. In addition, net income attributable to the
      noncontrolling interest will be included in consolidated net income on the
      face
      of the income statement and, upon a loss of control, the interest sold, as
      well
      as any interest retained, will be recorded at fair value with any gain or loss
      recognized in earnings. SFAS No. 160 is effective for the Company beginning
      July 1, 2009 and will apply prospectively, except for the presentation and
      disclosure requirements, which will apply retrospectively. The Company is
      currently assessing the potential impact that adoption of SFAS No. 160 may
      have on the Company’s financial statements.




In
      March
      2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments
      and
      Hedging Activities, an amendment of FASB Statement No. 133, ** which
      requires additional disclosures about the objectives of the derivative
      instruments and hedging activities, the method of accounting for such
      instruments under SFAS No. 133 and its related interpretations, and a tabular
      disclosure of the effects of such instruments and related hedged items on the
      Company’s financial position, financial performance, and cash flows. SFAS No.
      161 is effective for the Company beginning January 1, 2009. The Company is
      currently assessing the potential impact that adoption of SFAS No. 161 may
      have
      on the Company’s financial statements.




F-12




In
      May
      2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
      Accounting Principles. This statement identifies the sources of accounting
      principles and the framework for selecting the principles to be used in the
      preparation of financial statements of nongovernmental entities that are
      presented in conformity with generally accepted accounting principles (GAAP)
      in
      the United States. The Company does not expect that this Statement will
      resulting in a change in any of its current accounting practices.





**NOTE
      4 – ACQUISITIONS - AIRGROUP**





In
      January of 2006, the Company acquired 100 percent of the outstanding stock
      of
      Airgroup. Airgroup is a Bellevue, Washington based non-asset based logistics
      company that provides domestic and international freight forwarding services
      through a network of 34 exclusive agent offices across North America. Airgroup
      services a diversified account base including manufacturers, distributors and
      retailers using a network of independent carriers and over 100 international
      agents positioned strategically around the world. See the Company’s Form 8-K
      filed on January 18, 2006 for additional information.





The
      transaction was valued at up to $14.0 million. This consists of: (i) $9.5
      million payable in cash at closing (before giving effect for $2.8 million in
      acquired cash); (ii) a
      subsequent cash payment of $0.5 million in cash which was paid on December
      31,
      2007; (iii) as amended, an additional base payment of $0.6 million payable
      in
      cash with $300,000 payable on June 30, 2008 and $300,000 payable on January
      1,
      2009; (iv) a base earn-out payment of $1.9 million payable in Company common
      stock over a three-year earn-out period based upon Airgroup achieving income
      from continuing operations of not less than $2.5 million per year; and
      (v)
      as additional incentive to achieve future earnings growth, an opportunity to
      earn up to an additional $1.5 million payable in Company common stock at the
      end
      of a five-year earn-out period (the “Tier-2 Earn-Out”). Under Airgroup’s Tier-2
      Earn-Out, the former shareholders of Airgroup are entitled to receive 50% of
      the
      cumulative income from continuing operations in excess of $15,000,000 generated
      during the five-year earn-out period up to a maximum of $1,500,000. With respect
      to the base earn-out payment of $1.9 million, in the event there is a shortfall
      in income from continuing operations, the earn-out payment will be reduced
      on a
      dollar-for-dollar basis to the extent of the shortfall. Shortfalls may be
      carried over or carried back to the extent that income from continuing
      operations in any other payout year exceeds the $2.5 million level. For the
      year
      ended June 30, 2007 the former Airgroup shareholders earned approximately
      $214,000. Through June 30, 2008, the former Airgroup shareholders earned a
      total
      of approximately $631,000 in base earn-out payments. Of this amount, $214,034
      was paid during the year ended June 30, 2008 with Company common stock. The
      remaining amount of $416,596 is accrued in accounts payable.





In
      the
      quarter ended December 31, 2007, the Company reduced the estimate of accrued
      transportation costs assumed in the acquisition of Airgroup. This adjustment
      was
      made with the benefit of 2 years of operating experience and resulted in the
      recognition of approximately $1.4 million in non-recurring other income.
      Pursuant to the acquisition agreement, the former shareholders of Airgroup
      have
      indemnified the Company for taxes of $486,694 associated with the income
      recognized in connection with this change in estimate. The tax indemnity has
      been reflected as a reduction of the additional base payment otherwise payable
      to the former shareholders of Airgroup.





**NOTE
      5 – ACQUIRED INTANGIBLE ASSETS**





The
      table
      below reflects acquired intangible assets related to the acquisition of Airgroup
      on January 1, 2006. The information is for the years ended June 30, 2008 and
      June 30, 2007. Prior to the Company’s acquisition of Airgroup, there were no
      intangible assets for prior years as this was the Company’s first
      acquisition.




F-13


Year ended
                June 30, 2008
              
              Year ended
                June 30, 2007Gross
                carrying
                amount
              
              Accumulated
                Amortization
              
              Gross
                carrying
                amount
              
              Accumulated
                AmortizationAmortizable intangible assets:Customer
                  related
              
              $
              2,652,000
              
              $
              1,454,587
              
              $
              2,652,000
              
              $
              925,227Covenants
                  not to compete
              
              
              90,000
              
              
              45,000
              
              
              90,000
              
              
              27,000Total
              
              $
              2,742,000
              
              $
              1,499,587
              
              $
              2,742,000
              
              $
              952,227Aggregate
                  amortization expense:For
                  twelve months ended June 30, 2008
              
              
              
              
              $
              547,360For
                  twelve months ended June 30, 2007
              
              
              
              
              $
              611,827Aggregate
                  amortization expense for the year ended June 30:2009
              
              
              
              
              
              597,0902010
              
              
              
              
              
              483,1232011
              
              
              
              
              
              162,200Total
              
              
              
              
              $
              1,242,413





For
      the
      year ended June 30, 2008, the Company recorded an expense of $547,360 from
      amortization of intangibles and an income tax benefit of $186,104 from
      amortization of the long term deferred tax liability; both arising from the
      acquisition of Airgroup. For the year ended June 30, 2007, the Company recorded
      an expense of $611,827 from amortization of intangibles and an income tax
      benefit of $208,021 from amortization of the long term deferred tax liability;
      both arising from the acquisition of Airgroup. The Company expects the net
      reduction in income, from the combination of amortization of intangibles and
      long term deferred tax liability, will be $394,079 in 2009, $318,862 in 2010,
      and $107,053 in 2011.





**NOTE
      6 – ACQUISITION OF ASSETS - AUTOMOTIVE**





In
      May,
      2007, the Company launched a new logistics service offering focused on the
      automotive industry through its wholly owned subsidiary, Radiant Logistics
      Global Services, Inc. (“RLGS”). The Company entered into an Asset Purchase
      Agreement (the “APA”) with Mass Financial Corporation (“Mass”) to acquire
      certain assets formerly used in the operations of the automotive division of
      Stonepath Group, Inc. (the “Purchased Assets”). The agreement of the transaction
      was valued at up to $2.75 million.





Concurrent
      with the execution of the APA, the Company also entered into a Management
      Services Agreement (“MSA”) with Mass, whereby it agreed to operate the Purchased
      Assets within its automotive services group during the interim period pending
      the closing under the APA. As part of the MSA, Mass agreed to indemnify the
      Company from and against any and all expenses, claims and damages arising out
      of
      or relating to any use by any of the Company’s subsidiaries or affiliates of the
      Purchased Assets and the operation of the business utilizing the Purchased
      Assets.





Shortly
      after commencing operation of the Purchased Assets pursuant to the MSA, a
      judgment creditor of Stonepath (the “Stonepath Creditor”) issued garnishment
      notices to the automotive customers being serviced by the Company disputing
      the
      priority and superiority of the underlying security interests of Mass in the
      Purchased Assets and asserting that the Company was in possession of certain
      accounts receivable of other assets covered by a garnishment notice. This
      resulted in a significant disruption to the automotive business and the Company
      exercised an indemnity claim against Mass resulting in a restructured
      transaction with Mass.





In
      November 2007 **,** the
      purchase price of the Purchased Assets was reduced to $1.56 million,
      consisting of cash of $560,000 and a $1.0 million credit in satisfaction of
      indemnity claims asserted by the Company arising from its interim operation
      of
      the Purchased Assets since May 22, 2007. Of the cash component of the
      transaction, $100,000 was paid in May of 2007, $265,000 was paid at closing
      and
      a final payment of $195,000 was to be paid in November of 2008, subject to
      off-set of up to $75,000 for certain qualifying expenses incurred by the
      Company. Net of qualifying expenses and a discount for accelerated payment,
      the
      final payment was reduced to $95,000 and paid in June of 2008.





The
      total
      purchase price of the acquired assets is $1.9 million, which is comprised of
      the
      $1.56 million purchase price less $25,000 for the early payment of note, and
      an
      additional $365,000 in acquisition expenses. The following table summarizes
      the
      preliminary allocation of the purchase price based on the estimated fair value
      of the acquired assets at November 1, 2007. No liabilities were assumed in
      connection with the transaction:





F-14




Furniture
                and equipment
            
            $
            24,165Goodwill
                and other intangibles
            
            
            1,875,835Total
                acquired assets
            
            
            1,900,000Total
                acquired liabilities
            
            
            -Net
                assets acquired
            
            $
            1,900,000





The
      results of operations related to these assets are included in the Company’s
      statement of income from the date of acquisition in November 2007. The above
      allocation is still preliminary and the Company expects to finalize it prior
      to
      the November 2008 anniversary of the acquisition of Purchased Assets as required
      per SFAS 141.




The
        following information is based on estimated results for the years ending
        June
        30, 2008 and 2007 as if the acquisition of the Detroit assets had occurred
        as of
        the beginning of fiscal year 2007 (in thousands, except earnings per
        share):


Fiscal
                  Year Ended 2008
              
              Fiscal
                  Year Ended 2007Total
                  revenue
              
              $
              102,522
              
              $
              82,487Net
                  income
              
              $
              1,424
              
              $
              195Earnings
                  per shareBasic
              
              $
              .04
              
              $
              .01Diluted
              
              $
              .04
              
              $
              .01


**NOTE
      7 – VARIABLE INTEREST ENTITY**





FIN46(R)
      clarifies the application of Accounting Research Bulletin No. 51 “Consolidated
      Financial Statements,” to certain entities in which equity investors do not have
      the characteristics of a controlling financial interest or do not have the
      sufficient equity at risk for the entity to finance its activities without
      additional subordinated financial support from other parties (“variable interest
      entities”). Radiant Logistics Partners LLC (“RLP”) is 40% owned by Airgroup
      Corporation and qualifies under FIN46(R) as a variable interest entity and
      is
      included in the Company’s consolidated financial statements. RLP commenced
      operations in February 2007. Minority interest recorded on the income statement
      for the year ended June 30, 2008 was a benefit of $68,731 and for the year
      ended
      June 30, 2007 minority interest expense was $45,482.




**NOTE
      8 – RELATED PARTY**





RLP
      is
      owned 40% by Airgroup and 60% by an affiliate of the Chief Executive Officer
      of
      the Company, Radiant Capital Partners (RCP). RLP is a certified minority
      business enterprise which was formed for the purpose of providing the Company
      with a national accounts strategy to pursue corporate and government accounts
      with diversity initiatives. As currently structured, RCP’s ownership interest
      entitles it to a majority of the profits and distributable cash, if any,
      generated by RLP. The operations of RLP are intended to provide certain benefits
      to the Company, including expanding the scope of services offered by the Company
      and participating in supplier diversity programs not otherwise available to
      the
      Company. As the RLP operations mature, the Company will evaluate and approve
      all
      related service agreements between the Company and RLP, including the scope
      of
      the services to be provided by the Company to RLP and the fees payable to the
      Company by RLP, in accordance with the Company’s corporate governance principles
      and applicable Delaware corporation law. This process may include seeking the
      opinion of a qualified third party concerning the fairness of any such agreement
      or the approval of the Company’s shareholders. Under FIN46(R), RLP is
      consolidated in the financial statements of the Company (see Note
      7).





**NOTE
      9 – FURNITURE AND EQUIPMENT**





June 30,
            
            June 30,2008
            
            2007Vehicles
            
            $
            3,500
            
            $
            3,500Communication
                equipment
            
            
            1,353
            
            
            1,353Office
                equipment
            
            
            261,633
            
            
            261,633Furniture
                and fixtures
            
            
            47,191
            
            
            23,379Computer
                equipment
            
            
            290,135
            
            
            232,667Computer
                software
            
            
            738,566
            
            
            570,494Leasehold
                improvements
            
            
            30,526
            
            
            10,6991,372,904
            
            
            1,103,725Less:
                Accumulated depreciation and amortization
            
            
            (655,362
            )
            
            (258,806
            )Furniture
                and equipment – net
            
            $
            717,542
            
            $
            844,919




F-15




Depreciation
      and amortization expense related to furniture and equipment for the year ended
      June 30, 2008 was $396,556, and for the year ended June 30, 2007 was
      $190,046.





**NOTE
      10 - LONG TERM DEBT**





In
      February 2008, the Company’s $10 million revolving credit facility (Facility)
      was extended into 2011. The Facility is collateralized by accounts receivable
      and other assets of the Company and its subsidiaries. Advances under the
      Facility are available to fund future acquisitions, capital expenditures or
      for
      other corporate purposes. Borrowings under the facility bear interest, at the
      Company’s option, at the Bank’s prime rate minus .15% to 1.00% or LIBOR plus
      1.55% to 2.25%, and can be adjusted up or down during the term of the Facility
      based on the Company’s performance relative to certain financial covenants. The
      Facility provides for advances of up to 80% of the Company’s eligible accounts
      receivable. The Facility was increased to $15.0 million in September of 2008.
      See note 17.





The
      terms
      of the Facility are subject to certain financial and operational covenants
      which
      may limit the amount otherwise available under the Facility. The first covenant
      limits funded debt to a multiple of 3.00 times the Company’s consolidated EBITDA
      measured on a rolling four quarter basis (or a multiple of 3.25 at a reduced
      advance rate of 75.0%). The second financial covenant requires the Company
      to
      maintain a basic fixed charge coverage ratio of at least 1.1 to 1.0. The third
      financial covenant is a minimum profitability standard that requires the Company
      not to incur a net loss before taxes, amortization of acquired intangibles
      and
      extraordinary items in any two consecutive quarterly accounting
      periods.




Under
      the
      terms of the Facility, the Company is permitted to make additional acquisitions
      without the lender's consent only if certain conditions are satisfied. The
      conditions imposed by the Facility include the following: (i) the absence of
      an
      event of default under the Facility, (ii) the company to be acquired must be
      in
      the transportation and logistics industry, (iii) the purchase price to be paid
      must be consistent with the Company’s historical business and acquisition model,
      (iv) after giving effect for the funding of the acquisition, the Company must
      have undrawn availability of at least $1.0 million under the Facility, (v)
      the
      lender must be reasonably satisfied with projected financial statements the
      Company provides covering a 12 month period following the acquisition, (vi)
      the
      acquisition documents must be provided to the lender and must be consistent
      with
      the description of the transaction provided to the lender, and (vii) the number
      of permitted acquisitions is limited to three per calendar year and shall not
      exceed $7.5 million in aggregate purchase price financed by funded debt. In
      the
      event that the Company is not able to satisfy the conditions of the Facility
      in
      connection with a proposed acquisition, it must either forego the acquisition,
      obtain the lender's consent, or retire the Facility. This may limit or slow
      the
      Company’s ability to achieve the critical mass it may need to achieve its
      strategic objectives.





The
      co-borrowers of the Facility include Radiant Logistics, Inc., Airgroup
      Corporation, Radiant Logistics Global Services Inc. (“RLGS”) and Radiant
      Logistics Partners, LLC (“RLP”). RLP is owned 40% by Airgroup and 60% by an
      affiliate of the Chief Executive Officer of the Company, Radiant Capital
      Partners. RLP has been certified as a minority business enterprise, and intends
      to focus on corporate and government accounts with diversity initiatives. As
      a
      co-borrower under the Facility, the accounts receivable of RLP and RLGS are
      eligible for inclusion within the overall borrowing base of the Company and
      all
      borrowers will be responsible for repayment of the debt associated with advances
      under the Facility, including those advanced to RLP. At June 30, 2008, the
      Company was in compliance with all of its covenants.





As
      of
      June 30, 2008, the Company had $2,714,026 advances under the Facility and
      $1,558,006 in outstanding checks, which had not yet been presented to the bank
      for payment. The outstanding checks have been reclassed to cash as they will
      be
      advanced from, or against, the Facility when presented for payment to the bank.
      These amounts total long term debt of $4,272,032.





As
      of
      June 30, 2007, the Company had no advances under the Facility and $1,674,214
      in
      outstanding checks, which had not yet been presented to the bank for payment.
      The outstanding checks have been reclassed from cash as they will be advanced
      from, or against, the Facility when presented for payment to the bank. The
      $1,674,214, in addition to a $300,000 payable to the former shareholders of
      Airgroup, totals long term debt of $1,974,214.





At
      June
      30, 2008, based on available collateral and $205,000 in outstanding letter
      of
      credit commitments, there was $5,858,510 available for borrowing under the
      Facility based on advances outstanding. At June 30, 2007, based on available
      collateral and $315,000 in outstanding letter of credit commitments, there
      was
      $6,567,708 available for borrowing under the Facility.




F-16




**NOTE
      11 - PROVISION FOR INCOME TAXES**




Deferred
      income taxes are reported using the liability method. Deferred tax assets are
      recognized for deductible temporary differences and deferred tax liabilities
      are
      recognized for taxable temporary differences. Temporary differences are the
      differences between the reported amounts of assets and liabilities and their
      tax
      bases. Deferred tax assets are reduced by a valuation allowance when, in the
      opinion of management, it is more likely than not that some portion or all
      of
      the deferred tax assets will not be realized. Deferred tax assets and
      liabilities are adjusted for the effects of changes in tax laws and rates on
      the
      date of enactment.





June 30,
            
            June 30,2008
            
            2007Deferred tax assets:Allowance
                for doubtful accounts
            
            $
            174,583
            
            $
            88,386Accruals
            
            
            865,282
            
            
            862,767Stock
                based compensation
            
            
            135,433
            
            
            66,051Total
                deferred tax assets
            
            $
            1,175,298
            
            $
            1,017,204Deferred
                tax liabilities:Accruals
            
            
            883,210
            
            
            782,548Total
                deferred tax liability
            
            $
            883,210
            
            $
            782,548Net
                deferred tax asset – current
            
            $
            292,088
            
            $
            234,656Long
                term deferred tax liability – intangibles – Note
                5
            
            $
            422,419
            
            $
            608,523





The
      acquisition of Airgroup resulted in $932,280 of long term deferred tax liability
      resulting from the acquisition of certain amortizable intangibles, identified
      during the Company’s purchase price allocation, which is not deductible for tax
      purposes. The long term deferred tax liability will be reduced as the
      non-deductible amortization of the intangibles is recognized. See Note 5.





Income
      tax expense attributable to operations is as follows.




Year ended
                  June 30,
                  2008
                
                Year ended June 30,
                  2007Current:Federal
                
                $
                1,146,069
                
                $
                313,627State
                
                
                5,215
                
                
                7,500Deferred:Federal
                
                
                (243,536
                )
                
                (165,260
                )State
                
                
                
                
                
                -Net
                    income tax expense
                
                $
                907,748
                
                $
                155,867




The
      following table reconciles income taxes based on the U.S. statutory tax rate
      to
      the Company’s income tax expense.


Year
                ended June 30,
                2008
              
              Year
                ended June 30,
                2007Tax at statutory rate
              
              $
              789,022
              
              $
              108,325Net tax
                  payment for amended Airgroup 2005 return
              
              
              
              
              
              26,342Permanent
                  differences
              
              
              113,511State
                  income taxes
              
              
              5,215
              
              
              7,500Other
              
              
              -
              
              
              13,700Net
                  income tax expense
              
              $
              907,748
              
              $
              155,867




F-17




**NOTE
      12 - CONTINGENCIES**





The
      Company’s acquisition agreement of Airgroup contains future contingent
      consideration provisions that provide for the selling shareholders to receive
      additional consideration if minimum pre-tax income levels are made in future
      periods. Pursuant to SFAS No. 141, *“Business
      Combinations,”* contingent consideration is accounted for as additional goodwill when
      earned.





Effective
      January 1, 2006, the Company acquired 100% of the outstanding stock of Airgroup.
      The transaction was valued at up to $14.0
      million based on meeting all incentive and contingent factors. This consists
      of:
      (i) $9.5 million payable in cash at closing (before giving effect for $2.8
      million in acquired cash); (ii) a subsequent cash payment of $0.5 million in
      cash which was paid on December 31, 2007; (iii) as amended, an additional base
      payment of $0.6 million payable in cash with $300,000 payable on June 30, 2008
      and $300,000 payable on January 1, 2009; (iv) a base earn-out payment of $1.9
      million payable in Company common stock over a three-year earn-out period based
      upon Airgroup achieving income from continuing operations of not less than
      $2.5
      million per year; and (v) as additional incentive to achieve future earnings
      growth, an opportunity to earn up to an additional $1.5 million payable in
      Company common stock at the end of a five-year earn-out period (the “Tier-2
      Earn-Out”). Under Airgroup’s Tier-2 Earn-Out, the former shareholders of
      Airgroup are entitled to receive 50% of the cumulative income from continuing
      operations in excess of $15,000,000 generated during the five-year earn-out
      period up to a maximum of $1,500,000. With respect to the base earn-out payment
      of $1.9 million, i n
      the
      event there is a shortfall in income from continuing operations, the earn-out
      payment will be reduced on a dollar-for-dollar basis to the extent of the
      shortfall. Shortfalls may be carried over or carried back to the extent that income
      from continuing operations in
      any
      other payout year exceeds the $2.5 million level. For the year ended June 30,
      2007 the former Airgroup shareholders earned approximately $214,000. Through
      June 30, 2008, the former Airgroup shareholders earned a total of approximately
      $631,000 in base earn-out payments. Of this amount, $214,034 was paid during
      the
      year ended June 30, 2008 with Company common stock. The remaining amount of
      $416,596 is accrued in accounts payable.





Assuming
      minimum targeted earnings levels are achieved, the following table summarizes
      the Company’s contingent base earn-out payments related to the acquisition of
      Airgroup that will be paid in the fiscal years indicated based on results of
      the
      prior year (in thousands) (1) :




**2010**Earn-out
                payments:Cash
            
            $
            —Equity
            
            
            634Total
                potential earn-out payments
            
            $
            634Prior
                year earnings targets (income from continuing operations)
                (2)Total
                earnings actual and targets
            
            $
            2,500Earn-outs
                as a percentage of prior year earnings targets:Total
            
            
            25.3
            %





(1)
            During
                the fiscal year 2007-2011 earn-out period, there is an additional
                contingent obligation related to tier-two earn-outs that could be
                as much
                as $1.5 million if Airgroup generates at least $18.0 million in income
                from continuing operations during the period.(2)
            Income
                from continuing operations as presented refers to the uniquely defined
                earnings targets of Airgroup and should not be interpreted to be
                the
                consolidated income from continuing operations of the Company which
                would
                give effect to, among other things, amortization or impairment of
                intangible assets or various other expenses which may not be charged
                to
                Airgroup for purposes of calculating
                earn-outs.




F-18




In
      fiscal
      year 2007, the Company entered into finders fee arrangements with third parties
      to assist the Company in locating logistics businesses that could become
      additional exclusive agent operations of the Company and/or candidates for
      acquisition. Any amounts due under these arrangements are payable as a function
      of the financial performance of any newly acquired operation and are conditioned
      payable upon, among other things, the retention of any newly acquired operations
      for a period of not less than 12 months. Payment of the finders fee may be
      paid
      in cash, Company shares, or a combination of cash and shares. For the year
      ended
      June 30, 2008, the Company paid $77,235 and issued 133,597 shares of stock
      valued at $.58 per share in satisfaction of the finders fee obligation.





**NOTE
      13 - STOCKHOLDERS’ EQUITY**





**Preferred
      Stock**





The
      Company is authorized to issue 5,000,000 shares of preferred stock, par value
      at
      $.001 per share. As of June 30, 2008, none of the shares were issued or
      outstanding.





**Common
      Stock**





In
      September 2006, the Company issued 250,000 shares of common stock, at a market
      value of $1.01 per share, in exchange for $252,500, in value, of domestic and
      international freight training materials for the development of its employees
      and exclusive agent offices.





In
      October 2006, the Company issued of 100,000 shares of common stock, at a market
      value of $1.01 a share, as incentive compensation to its senior
      managers.





In
      February 2008, the Company issued 356,724 shares of common stock, at a market
      value of $.60 a share, in satisfaction of the $214,000 earnout obligation due
      to
      former Airgroup shareholders for the earnout period ending June 30, 2007.





In
      May
      2008, the Company issued 250,000 shares of common stock in to a financial
      advisor who provided investor relations and financial advisory services to
      the
      Company. Shares issued were for services provided February through July 2008,
      and as such, only the value of 208,333 shares has been recorded during the
      year
      ended June 30, 2008.





In
      June
      2008, the Company issued 133,597 shares of common stock, at a market value
      of
      $.58, in satisfaction of half of the finders fees associated with bringing
      on
      new stations. The remaining obligation was paid in cash.





**NOTE
      14 – STOCK OPTION PLAN**





On
      October 20, 2005, the Company’s shareholders approved the Company’s 2005 Stock
      Incentive Plan (“2005 Plan). The 2005 Plan authorizes the granting of awards,
      the exercise of which would allow up to an aggregate of 5,000,000 shares of
      the
      Company’s common stock to be acquired by the holders of said awards. For the
      2005 Plan the awards can take the form of incentive stock options (“ISOs”) or
      nonqualified stock options (“NSOs”) and may be granted to key employees,
      directors and consultants. Unless and until the 2005 Plan is approved by the
      Company’s stockholders, the Company may not issue ISOs. Options shall be
      exercisable at such time or times, or upon such event, or events, and subject
      to
      such terms, conditions, performance criteria, and restrictions as shall be
      determined by the Plan Administrator and set forth in the Option Agreement
      evidencing such Option; provided, however, that (i) no Option shall be
      exercisable after the expiration of ten (10) years after the date of grant
      of
      such Option, (ii) no Incentive Stock Option granted to a participant who owns
      more than 10% of the combined voting power of all classes of stock of the
      Company (or any parent or subsidiary of the Company) shall be exercisable after
      the expiration of five (5) years after the date of grant of such Option, and
      (iii) no Option granted to a prospective employee, prospective consultant or
      prospective director may become exercisable prior to the date on which such
      person commences Service with the Participating Company. Subject to the
      foregoing, unless otherwise specified by the Option Agreement evidencing the
      Option, any Option granted hereunder shall have a term of ten (10) years from
      the effective date of grant of the Option.





The
      price
      at which each share covered by an Option may be purchased shall be determined
      in
      each case by the Plan Administrator; provided, however, that such price shall
      not, in the case of an Incentive Stock Option, be less than the Fair Market
      Value of the underlying Stock at the time the Option is granted. If a
      participant owns (or is deemed to own under applicable provisions of the Code
      and rules and regulations promulgated hereunder) more than ten
      percent (10%) of the combined voting power of all classes of the stock of
      the Company and an Option granted to such participant is intended to qualify
      as
      an Incentive Stock Option, the Option price shall be no less than 110% of the
      Fair Market Value of the Stock covered by the Option on the date the Option
      is
      granted.




F-19




Fair
      market value of the Stock on any given date means (i) if the Stock is listed
      on
      any established stock exchange or a national market system, including without
      limitation the National Market or Small Cap Market of The NASDAQ Stock Market,
      its Fair Market Value shall be the closing sales price for such stock (or the
      closing bid, if no sales were reported) as quoted on such exchange or system
      for
      the last market trading day prior to the time of determination, as reported
      in
      The Wall Street Journal or such other source as the Administrator deems
      reliable; (ii) if the Stock is regularly traded on the NASDAQ OTC Bulletin
      Board
      Service, or a comparable automated quotation system, its Fair Market Value
      shall
      be the mean between the high bid and low asked prices for the Stock on the
      last
      market trading day prior to the day of determination; or (iii) in the absence
      of
      an established market for the Stock, the Fair Market Value thereof shall be
      determined in good faith by the Plan Administrator.





Under
      the
      2005 Plan, stock options were granted to employees up to 10 years at 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. Under the 2005 Plan, during the year ended June
      30, 2008, 650,000 stock options were granted to employees at a weighted average
      exercise price of $.274 per share. During the year ended June 30. 2007, 725,000
      stock options were granted to employees at a weighted average exercise price
      of
      $.646 per share. The Company recorded a compensation expense of $204,062 for
      the
      year ended June 30, 2008, and $194,269 for the year ended June 30,
      2007.





The
      following table reflects activity under the plan for years ended June 30, 2008
      and 2007.




Year ended
              June 30, 2008
            
            Year ended
              June 30, 2007Granted
              Shares
            
            Weighted
              Average
              Exercise
              Price
            
            Granted
              Shares
            
            Weighted
              Average
              Exercise
              PriceOutstanding at beginning of year
            
            
            3,150,000
            
            $
            0.605
            
            
            2,425,000
            
            $
            0.593Granted
            
            
            650,000
            
            $
            0.274
            
            
            725,000
            
            
            0.646Exercised
            
            
            -
            
            
            -
            
            
            -
            
            
            -Forfeited
            
            
            (390,000
            )
            $
            0.628
            
            
            -
            
            
            -Cancelled
            
            
            -
            
            
            -
            
            
            -
            
            
            -Outstanding
                at end of year
            
            
            3,410,000
            
            $
            0.539
            
            
            3,150,000
            
            $
            0.605Exercisable
                at end of year
            
            
            1,027,000
            
            $
            0.596
            
            
            485,000
            
            $
            0.593Non-vested
                at end of year
            
            
            2,383,000
            
            $
            0.514
            
            
            2,665,000
            
            $
            0.607





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:




Year ended
            
            Year endedJune 30, 2008
            
            June 30, 2007Risk-Free Interest Rates
            
            
            0.95%
                - 3.49%
            
            
            5.05%Expected
                Lives
            
            
            5
                yrs
            
            
            5
                yrsExpected
                Volatility
            
            
            66.2%
                - 68.7%
            
            
            102.5%Expected
                Dividend Yields
            
            
            0.00%
            
            
            0.00%Forfeiture
                Rate
            
            
            0.00%
            
            
            0.00%





As
      of
      June 30, 2008, the Company had $629,000 of total unrecognized stock compensation
      costs relating to unvested stock options which is expected to be recognized
      over
      a weighted average period of 3.01 years. The following table summarizes the
      Company’s unvested stock options and changes for the years ended June 30, 2008
      and 2007.





F-20


Shares
              
              Weighted
                Average
                Grant
                Date Fair
                ValueOutstanding at June 30, 2006
              
              
              2,425,000
              
              $
              0.353Granted
                  during the year ended
                June
                  30, 2007
              
              
              725,000
              
              
              0.509Less
                  options vested during 2007
              
              
              (485,000
              )
              
              (0.353
              )Outstanding
                  at June 30, 2007
              
              
              2,665,000
              
              $
              0.395Granted
                  during the year ended
                June
                  30, 2008
              
              
              650,000
              
              
              0.158Less
                  options vested during 2008
              
              
              (542,000
              )
              
              (0.374
              )Less
                  options forfeited during 2008
              
              
              (390,000
              )
              
              (0.498
              )Outstanding
                  at June 30, 2008
              
              
              2,383,000
              
              $
              0.319





The
      following table summarizes outstanding and exercisable options by price range
      as
      of June 30, 2008:




Exercisable OptionsExercise Prices
              
              Number
                Outstanding
                at June 30,
                2008
              
              Weighted
                Average
                Remaining
                Contractual
                Life-Years
              
              Weighted
                Average
                Exercise
                Price
              
              Aggregate
                Intrinsic
                Value
                at June 30,
                2008
              
              Number
                Exercisable
              
              Weighted
                Average
                Exercise
                Price$0.00 - $0.19
              
              
              425,000
              
              
              9.98
              
              $
              0.180
              
              $
              12,750
              
              
              -
              
              $
              -$0.20 -
                  $0.39
              
              
              50,000
              
              
              9.72
              
              $
              0.350
              
              $
              -
              
              
              -
              
              $
              -$0.40
                  - $0.59
              
              
              1,700,000
              
              
              7.69
              
              $
              0.489
              
              $
              -
              
              
              580,000
              
              $
              0.489$0.60
                  - $0.79
              
              
              1,190,000
              
              
              7.57
              
              $
              0.729
              
              $
              -
              
              
              438,000
              
              $
              0.729$1.00
                  - $1.19
              
              
              45,000
              
              
              8.23
              
              $
              1.010
              
              $
              -
              
              
              9,000
              
              $
              1.010Total
              
              
              3,410,000
              
              
              7.97
              
              $
              0.539
              
              $
              12,750
              
              
              1,027,000
              
              $
              0.596





F-21





**NOTE
      15 - QUARTERLY FINANCIAL DATA SCHEDULE (Unaudited)**


**Fiscal Year 2008 - Quarter****E****nded**June 30
              
              March 31
              
              December 31
              
              September 30Revenue
              
              $
              25,770,386
              
              $
              25,765,377
              
              $
              23,108,798
              
              $
              25,557,234Cost
                  of transportation
              
              
              16,280,521
              
              
              16,264,393
              
              
              14,712,256
              
              
              17,116,365Net
                  revenues
              
              
              9,489,865
              
              
              9,500,984
              
              
              8,396,542
              
              
              8,440,859Total
                  operating expenses
              
              
              9,400,595
              
              
              9,317,977
              
              
              8,226,619
              
              
              8,333,487Income
                  from operations
              
              
              89,270
              
              
              183,007
              
              
              169,923
              
              
              107,372Total
                  other income (expense)
              
              
              (63,403
              )
              
              (74,184
              )
              
              1,884,220
              
              
              (44,283
              )Income
                  before income tax and minority interest
              
              
              25,867
              
              
              108,823
              
              
              2,054,143
              
              
              63,089Income
                  tax (benefit)
              
              
              135,369
              
              
              35,841
              
              
              744,269
              
              
              (7,731
              )Income
                  before minority interest
              
              
              (109,502
              )
              
              72,982
              
              
              1,309,874
              
              
              70,820Minority
                  interest
              
              
              23,089
              
              
              13,696
              
              
              14,334
              
              
              17,612Net
                  income (loss)
              
              $
              (86,413
              )
              $
              86,678
              
              $
              1,324,208
              
              $
              88,432Net
                  income (loss) per common share - basic and diluted
              
              $
              -
              
              $
              -
              
              $
              .04
              
              $
              -
  F-22


**Fiscal Year** **2007 - Quarter**
              
              **Ended**June 30
              
              March 31
              
              December 31
              
              September 30Revenue
              
              $
              23,371,733
              
              $
              19,394,026
              
              $
              18,343,928
              
              $
              14,417,101Cost
                  of transportation
              
              
              15,455,623
              
              
              12,278,178
              
              
              11,655,542
              
              
              9,423,319Net
                  revenues
              
              
              7,916,110
              
              
              7,115,848
              
              
              6,688,386
              
              
              4,993,782Total
                  operating expenses
              
              
              7,803,590
              
              
              7,030,185
              
              
              6,641,277
              
              
              4,826,360Income
                  from operations
              
              
              112,520
              
              
              85,663
              
              
              47,109
              
              
              167,422Total
                  other income (expense)
              
              
              (15,114
              )
              
              (24,690
              )
              
              (2,737
              )
              
              (6,088
              )Income
                  before income tax expense (benefit)
              
              
              97,406
              
              
              60,973
              
              
              44,372
              
              
              161,334Income
                  tax (benefit)
              
              
              137,542
              
              
              37,449
              
              
              (20,932
              )
              
              1,808Income
                  before minority interest
              
              
              (40,136
              )
              
              23,524
              
              
              65,304
              
              
              159,526Minority
                  interest
              
              
              45,464
              
              
              18
              
              
              -
              
              
              -Net
                  income (loss)
              
              $
              (85,600
              )
              $
              23,506
              
              $
              65,304
              
              $
              159,526Net
                  income (loss) per common share - basic and diluted
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -





**NOTE
      16 – VALUATION ALLOWANCE AND QUALIFYING ACCOUNTS**


Balance at
                beginning of
                year
              
              Write off to
                expense
              
              Increase in
                reserve
              
              Balance at end of
                yearAllowance for Doubtful Accounts:Year
                  ended June 30, 2007
              
              $
              202,830
              
              $
              (1,148
              )
              $
              58,278
              
              $
              259,960Year
                  ended June 30, 2008
              
              $
              259,960
              
              
              (224,673
              )
              
              478,192
              
              
              513,479
  **NOTE
        17 – SUBSEQUENT EVENTS**




On
      September 5, 2008, the Company concurrently entered into and closed upon a
      Stock
      Purchase Agreement (the “Agreement”) pursuant to which it acquired all of the
      issued and outstanding stock of Adcom Express, Inc., d/b/a Adcom Worldwide
      (“Adcom”), a privately held Minnesota corporation. For financial accounting
      purposes, the transaction was deemed to be effective as of September 1, 2008.
      The stock was acquired from Robert F. Friedman, the sole shareholder of Adcom.
      The total value of the transaction was $11,050,000, consisting of: (i)
      $4,750,000 in cash paid at the closing; (ii) $250,000 in cash payable shortly
      after the closing, subject to adjustment, based upon the working capital of
      Adcom as of August 31, 2008; (iii) up to $2,800,000 in four “Tier-1 Earn-Out
      Payments” of up to $700,000 each, covering the four year earn-out period through
      2012, based upon Adcom achieving certain levels of “Gross Profit Contribution”
(as defined in the Agreement), payable 50% in cash and 50% in shares of Company
      common stock (valued at delivery date); (iv) a “Tier-2 Earn-Out Payment” of up
      to a maximum of $2,000,000, equal to 20% of the amount by which the Adcom
      cumulative Gross Profit Contribution exceeds $16,580,000 during the four year
      earn-out period; and (v) an “Integration Payment” of $1,250,000 payable on the
      earlier of the date certain integration targets are achieved or 18 months after
      the closing, payable 50% in cash and 50% in shares of Company common stock
      (valued at delivery date). The Integration Payment, the Tier-1 Earn-Out Payments
      and certain amounts of the Tier-2 Payments may be subject to acceleration upon
      occurrence of a “Corporate Transaction” (as defined in the Agreement), which
      includes a future sale of Adcom or the Company, or certain changes in corporate
      control. The cash component of the transaction was financed through a
      combination of existing funds and the proceeds from the Company’s revolving
      credit facility.




F-23




Founded
      in 1978, Adcom provides a full range of domestic and international freight
      forwarding solutions to a diversified account base including manufacturers,
      distributors and retailers through a combination of three company-owned and
      twenty-seven independent agency locations across North America.





In
      connection with the acquisition of Adcom, the Company entered into a third
      amendment to the secured credit facility. As amended, and including availability
      for Company letters of credit, the Facility has been increased from $10 million
      to $15 million. The Facility is collateralized by accounts receivable and other
      assets of the Company and its subsidiaries. Advances under the Facility are
      available to fund future acquisitions, capital expenditures or for other
      corporate purposes. The Facility provides for advances of up to 80% of the
      Company’s eligible accounts receivable.




F-24




**EXHIBIT
      INDEX**





Exhibit
                No.
            
            Exhibit10.11
            
            Amendment
                No. 2 to Loan Agreement dated as of June 24, 2008 by and among Radiant
                Logistics, Inc., Airgroup Corporation, Radiant Logistics Global Services,
                Inc., Radiant Logistics Partners, LLC and Bank of America,
                N.A.21.1
            
            Subsidiaries
                of the Registrant31.1
            
            Certification
                of Chief Executive Officer and Chief Financial Officer Pursuant to
                Section
                302 of the Sarbanes-Oxley Act of 200232.1
            
            Certification
                of Chief Executive Officer and Chief Financial Officer Pursuant to
                Section
                906 of the Sarbanes-Oxley Act of
                2002