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**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-K/T/A**


**(Amendment
      No. 1)**





o Annual
      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934








x Transition
      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934





For
      the
      transition period from January 1, 2006 to June 30, 2006.





*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 o    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. Yes o    No x





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 o





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. o





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





Large
      accelerated filer oAccelerated
      filer oNon-accelerated
      filer x




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 average bid and asked price of
      the
      registrant's common stock as reported on the OTC Bulletin Board on September
      20,
      2006 was $23,328,982.





As
      of
      September 20, 33,611,639 **** shares
      of
      the registrant's common stock were outstanding.





Documents
      Incorporated by Reference: None





Transitional
      Small Business Disclosure Format (check one): Yes o    No x


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  EXPLANTORY
        NOTE
  We
        are
        filing this Amendment no. 1 to our Form 10-K/T for the fiscal year ended
        June
        30, 2006 to correct a typographical error on the consolidated balance sheet,
        page F-3, relating to the deferred tax liability balance as of June 30, 2006
        which should be $816,544. In addition, as required by Rule 12b-15 under the
        Securities Exchange Act of 1934, as amended (the "Exchange Act"), new
        certifications by our principal executive and financial officers are also
        filed
        as exhibits.
  Except
        for matters described in the immediately preceding paragraph, this Form 10-K/T/A
        has not been modified or updated to reflect events that have occurred after
        October 12, 2006, the date the original transition report was filed with
        the
        SEC, nor does it modify or update the disclosures set forth in the original
        transition report. Accordingly, except for matters described in the immediately
        preceding paragraph, this Form 10-K/T/A continues to speak as of June 30,
        2006,
        does not reflect events occurring after October 12, 2006, and does not modify
        or
        update those disclosures, if any, affected by subsequent events. Information
        with respect to any such events has been or will be set forth, as appropriate,
        in our filings with the SEC subsequent to October 12, 2006.
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              Contents**




TABLE
      OF CONTENTS




**PART
                I**ITEM
                1.
            DESCRIPTION
                OF THE BUSINESS
            2ITEM
                1A.
            RISK
                FACTORS
            8ITEM
                2.
            PROPERTIES
            14ITEM
                3.
            LEGAL
                PROCEEDINGS
            14ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY
                HOLDERS
            14**PART
                II**ITEM
                5.
            MARKET
                FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
                ISSUER PURCHASES OF EQUITY SECURITIES
            14ITEM
                6.
            SELECTED
                FINANCIAL DATA
            16ITEM
                7.
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                AND RESULTS OF OPERATIONS
            20ITEM
                7A.
            QUANTIATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET
                RISK
            37ITEM
                8.
            FINANCIAL
                STATEMENTS AND SUPPLEMENTARY
                DATA
            37ITEM
                9.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                AND FINANCIAL DISCLOSURES
            37ITEM
                9A.
            CONTROLS
                AND PROCEDURES
            37ITEM
                9B
            OTHER
                INFORMATION
            38**PART
                III**ITEM
                10.
            DIRECTORS
                AND EXECUTIVE OFFICERS OF THE
                REGISTRANT
            38ITEM
                11.
            EXECUTIVE
                COMPENSATION
            40ITEM
                12.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                MANAGEMENT AND RELATED STOCKHOLDER MATTERS
            43ITEM
                13.
            CERTAIN
                RELATIONSHIPS AND RELATED PARTY
                TRANSACTIONS
            44ITEM
                14.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            45ITEM
                15.
            EXHIBITS
            46Signatures
            47Financial
                Statements
            F-1




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**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
      facts included or incorporated by reference in this report, including, without
      limitation, statements regarding our future financial position, business
      strategy, budgets, projected revenues, projected costs and plans and objective
      of management for future operations, are forward-looking statements. In
      addition, 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, projections
      and assumptions about future events. These forward-looking statements are not
      guarantees and are subject to known and unknown risks, uncertainties and
      assumptions about us that, if not realized, 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: (i)  our ability to use Airgroup as a “platform” upon which we can
      build a profitable global transportation and supply chain management company;
      (ii) our ability to secure the financing necessary to implement our acquisition
      strategy; (iii) our ability to maintain historical levels of transportation
      revenue, net transportation revenue (gross profit margins), and related
      operating expenses at Airgroup; (iv) retention of our exclusive agency
      relationships; (v) competitive practices in the industries in which we compete,
      (vi) our dependence on current management; (vii) the impact of current and
      future laws and governmental regulations affecting the transportation industry
      in general and our operations in particular; and (viii) 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. Furthermore, the general business assumptions used for purposes of
      the
      forward-looking statements included within this report represent estimates
      of
      future events and are subject to uncertainty as to possible changes in economic,
      legislative, industry, and other circumstances. As a result, the identification
      and interpretation of data and other information and their use in developing
      and
      selecting assumptions from and among reasonable alternatives require the
      exercise of judgment. To the extent that the assumed events do not occur, the
      outcome may vary substantially from anticipated or projected results, and,
      accordingly, no opinion is expressed on the achievability of those
      forward-looking statements. Except as required by law, we undertake no
      obligation to publicly release the result of any revision of these
      forward-looking statements to reflect events or circumstances after the date
      they are made or to reflect the occurrence of unanticipated events.


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**PART
      I**





**ITEM
      1. DESCRIPTION OF BUSINESS**





**Change
      in Fiscal Year**





Effective
      June 30, 2006, Radiant
      Logistics, Inc. (formerly known as “Golf Two, Inc”) (“Radiant”, the
“Company” ,
      or as
      used in the context of “we”, “us” or “our”) changed its fiscal year end from
      December 31 to June 30. This change was made in
      order
      to make our fiscal year conform to the June 30 fiscal year of our principal
      operating subsidiary, Airgroup Corporation ***.*** This
      Transition Report on Form  10-K/ T is intended to cover the period January
      1, 2006 through June 30, 2006 (the “Transition Period”). Subsequent to this, our
      Form 10-K will cover the fiscal year July 1 to June 30.





**The
      Company**





The
      Company was formed under the laws of the state of Delaware on March 15, 2001
      and
      from inception through the third quarter of 2005, the Company's principal
      business strategy focused on the development of retail golf stores. In October
      2005, our management team consisting of Bohn H. Crain and Stephen M. Cohen
      completed a change of control transaction when they acquired a majority of
      the
      Company’s outstanding securities from the Company’s former officers and
      directors in privately negotiated transactions. In conjunction with the change
      of control transaction, we: (i) elected to discontinue the Company’s former
      business model; (ii) repositioned ourselves as a global transportation and
      supply chain management company; and (iii) changed our name to
      “Radiant Logistics, Inc.” to, among other things, better align our name with our
      new business focus.




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.





Our
      growth strategy will focus on organic, as well as acquisitive features. 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 the
      retention of existing, and securing of new exclusive agency
      locations.





Our
      acquisition strategy will rely 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. As to our first factor,
      following our acquisition of Airgroup Corporation (“Airgroup”), we have
      identified a number of additional companies that may be suitable acquisition
      candidates and are in preliminary discussions with a select number of them.
      As
      to our second factor, 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, neither of which can be assured.





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. Also, 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.





Successful
      implementation of our growth strategy will rely upon a number of factors,
      including our ability to efficiently integrate the businesses of the companies
      we acquire, generate the anticipated economies of scale from the integration,
      and 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 our ability to
      acquire and profitably manage additional businesses and the intense competition
      in our industry for customers and for the acquisition of additional businesses.
      Certain


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of
      the
      business risks associated with these factors are identified or referred to
      below
      in Item 1A of this Report.




We
      accomplished the first step in our acquisition strategy by completing the
      acquisition of Airgroup effective as of January 1, 2006. Airgroup is a Seattle,
      Washington based non-asset based logistics company that provides domestic and
      international freight forwarding services through a network of 35 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.





**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 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, procures
      shipments from customers and arranges the transportation of the 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, 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.




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·
            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 who can facilitate real-time
                transaction processing and web-based shipment
                monitoring.





**Our
      Business Strategy**





Our
      objective is to provide customers with comprehensive value-added logistics
      solutions. Initially, we plan to achieve this goal through domestic and
      international freight forwarding services offered by Airgroup. Thereafter,
      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 will be our ability
      to retain existing, and secure new exclusive agency locations. 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
      of larger public companies or to independently attempt their own public
      offerings.





**Our
      Acquisition Strategy**





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. We intend
      to pursue an acquisition program to consolidate and enhance our position in
      our
      current markets and to acquire operations in new markets.





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;




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·
            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 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.





Initially,
      we intend to focus our business through acquisitions activities 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 Airgroup .
      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 exclusive agency relationships, 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. As
      we
      execute our acquisition strategy, our revenues will ultimately be 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 will 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.


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**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
      acquisition and 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
      we have 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.





**Our
      Competitive Advantages**





As
      a
      non-asset based third-party logistics provider with an expanding global
      presence, 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 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.





·
            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.




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**Sales
      and Marketing**




We
      principally market our services through the senior management teams in place
      at
      each of our 35 exclusive agent offices located strategically across the United
      States. Each office is staffed with operational employees of the agent to
      provide support for the sales team, develop frequent contact with the customer’s
      traffic department, and maintain customer service. 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.





Sales
      are
      primarily generated by our exclusive agents on a localized basis. However,
      to
      better utilize our available network of agents, we are in the process of
      implementing 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 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.





Although
      we have exclusive and long-term relationships with these agents, the agency
      agreements are terminable by either party on 10-day’s notice. Although we have
      no customers that account for more than 5% of our revenues, there are four
      agency locations that each account for more than 5% of our total gross revenues.




**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. 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


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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 Customs Service. Likewise, any customs brokerage operations
      would also be licensed in and subject to the regulations of their respective
      countries.





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 27 full-time employees. 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 implementing a new business plan.***





We
      have
      recently discontinued our former business model involving the development of
      retail golf stores, and adopted a new model involving the development of
      non-asset based third-party logistics services. We have only recently completed
      our platform acquisition under our new business model. As a result, we have
      a
      very limited operating history under our current business model. Even though
      we
      are being managed by senior executives with significant experience in the
      industry, our limited operating history makes it difficult to predict trends
      that may affect our business and the longer-term success of our business
      model.





***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. Critical to this strategy is an aggressive acquisition program
      which will require the acquisition of a number of diverse companies within
      the
      logistics industry covering a variety of geographic regions and specialized
      service


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offerings.
      As a result of our recently completed acquisition of Airgroup, we have a limited
      amount of cash resources and our ability to make additional acquisitions without
      securing additional financing from outside sources will be limited. This may
      limit or slow our ability to achieve the critical mass we need to achieve our
      strategic objectives.





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





In
      order
      to pursue our acquisition strategy in the longer term, we will require
      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 substantial 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.




***We
      have used a significant amount of our available capital to finance the
      acquisition of Airgroup.***




We
      expect
      to structure our acquisitions with certain amounts paid at closing, and the
      balance paid over a number of years in the form of earn-out installments which
      would be payable based upon the future earnings of the acquired businesses
      payable in cash, Company stock or some combination thereof. As we execute our
      acquisition strategy, we expect that we will be required to make significant
      payments in the future if the earn-out installments under prospective
      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 existing credit 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.





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





We
      have
      obtained a $10 million credit facility from Bank of America, N.A. to provide
      additional funding for acquisitions and for 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 were 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.





***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.





***Due
      to our acquisition strategy, 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


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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. Based on our financial statements, this will create an
      appearance that our intangible assets are diminishing in value, when in fact
      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.





***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.




***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:




·
            a
                failure to agree on the terms necessary for a transaction, such as
                the
                amount of 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.





If
      we are
      unable to successfully compete with other entities in identifying and executing
      possible acquisitions of companies we target, then we will not be able to
      successfully implement our business plan.


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***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
      to a greater extent, through additional acquisitions. Growth by acquisitions
      involve a number of risks, including possible adverse effects on our operating
      results, diversion of management resources, failure to retain key personnel,
      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.





***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, 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.





***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 one such acquisition
      and, therefore, our ability to complete such acquisitions and integrate any
      acquired businesses into our Company 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.


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




We
      currently sell principally all of our services through a network of 35 exclusive
      agent stations located throughout North America. Although we have exclusive
      and
      long-term relationships with these agents, the agency agreements are terminable
      by either party on 10-day’s notice. Although we have no customers that account
      for more than 5% of our revenues, there are four agency locations that each
      account for more than 5% of our 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.




***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 involving
      bids from a number of competitors, including competitors that are larger than
      us.





***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 which 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.





***Provisions
      of our charter, 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.


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**RISKS
      RELATED TO OUR COMMON STOCK**





***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 the private placement of approximately 15.4 million shares of our
      common stock between October 2005 and February 2006. Our prospectus, dated
      June
      22, 2006, covers the public resale of 14,847,461 of these shares which were
      declared effective June 22, 2006. The availability of those shares for sale
      to
      the public 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.




**Our
      acquisition strategy may result in additional dilution to our existing
      stockholders.**





We
      will
      require additional financing to fund our acquisition strategy. At some point
      this may entail the issuance of additional shares of common stock or common
      stock equivalents, which would 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.





***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. 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


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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.





**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 $11,300 per month pursuant to
      the
      lease expiring April 30, 2007. We also maintain approximately 8,125 feet of
      office space at 19320 Des Moines Memorial Drive South, SeaTac, Washington which
      we lease for approximately $5,300 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.





**ITEM
      3. LEGAL PROCEEDINGS**





From
      time
      to time, our operating subsidiary, Airgroup, is involved in legal matters or
      named as a defendant in legal actions arising out of its actions. Management
      believes that these matters will not have a material adverse effect on our
      financial statements.





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





No
      matters were submitted for a vote of the shareholders during the six month
      period ended June 30, 2006.




**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 first reported trade in our common stock occurred on December 27,
      2005. 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 since the first
      reported trade, 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 20, 2006, was $1.01 per
      share.




**High**
            
            **Low**Six
                Months Ended June 30, 2006 (Transition Period):Quarter
                ended March 31, 2006
            
            $
            1.05
            
            $
            .95Quarter
                ended June 30, 2006
            
            $
            1.05
            
            $
            .85Year
                Ended December 31, 2005:Quarter
                ended March 31, 2005
            
            
            n/a
            
            
            n/aQuarter
                ended June 30, 2005
            
            
            n/a
            
            
            n/aQuarter
                ended September 30, 2005
            
            
            n/a
            
            
            n/a


Quarter
                ended December 31, 2005
            
            $
            1.05
            
            $
            .95




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**Holders**





As
      of
      September 26, 2006, the number of stockholders of record of our common stock
      was
      81. **** We
      believe that 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**





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




**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,
      2006.




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
            
            
            2,425,000
            
            $
            0.593
            
            
            2,575,000Total
            
            
            2,425,000
            
            $
            0.593
            
            
            2,575,000





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.





**Recent
      Sale of Unregistered Securities**





1. In
      October
      2005, we issued an aggregate of 2,272,728 shares of our common stock at a
      purchase price of $0.44 per share for gross cash consideration of $1.0 million
      with the proceeds available to the Company on an unrestricted basis. The shares
      were issued in transactions exempt from registration under the Securities Act
      of
      1933, as amended (the “Securities Act”) in reliance on Section 4(2) of
      the


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Securities
      Act and the safe-harbor private offering exemption provided by Rule 506
      promulgated under the Securities Act, without the payment of underwriting
      discounts or commissions to any person.





2. In
      December,
      2005, we issued 10,098,943 shares to a limited number of accredited investors
      in
      a transaction exempt from registration under the Securities Act in reliance
      on
      Section 4(2) of the Securities Act and the safe harbor offering exemption
      provided by Rule 506 and Regulation S promulgated under the Securities Act.
      6,054,545 of the shares were sold to seven (7) U.S. accredited investors for
      gross proceeds of approximately $2.6 million; from which no underwriting
      discounts or commissions were paid. 4,044,398 of the Shares were sold to 6
      non-U.S. accredited investors for gross proceeds of approximately $1.8 million;
      from which approximately $142,000 was deducted as financial advisory fees paid
      to a non-U.S. person. The Shares sold to non-U.S. investors were sold in
      reliance on Regulation S, with each investor representing that, among other
      things, it is not a U.S. person within the meaning of Regulation S, with
      appropriate legends contained within the Offering Documents and to be placed
      on
      the Shares, and with no selling efforts made within the U.S. There were other
      costs of $64,000 incurred in issuing the shares relating to legal fees and
      the
      like.




3. In
      December
      2005, we issued 500,000 shares of common stock to a financial advisor for
      financial advisory and investment banking services provided in connection with,
      among other things, our transition to a third-party logistics company. These
      shares were issued in a transaction exempt from registration under the
      Securities Act in reliance on Section 4(2) of the Securities Act.




4. In
      January
      2006, in conjunction with our acquisition of Airgroup, we issued 1,009,093
      shares of our common stock to a limited number of Airgroup shareholders and
      employees are accredited investors for gross proceeds of $444,000, without
      the
      payment of underwriting discounts or commissions to any person. These shares
      were issued in a transaction exempt from registration under the Securities
      Act
      in reliance on Section 4(2) of the Securities Act and the safe harbor offering
      exemption provided by Regulation D of Rule 506.




5. In
      February
      2006, ** we
      issued
      1,466,697 shares of our common stock to a limited number of Airgroup exclusive
      sales agents and their employees, key Airgroup employees and a limited number
      of
      other investors all of whom are accredited investors for gross proceeds of
      $645,341, without the payment of underwriting discounts or commissions to any
      person. These shares were issued in a transaction exempt from registration
      under
      the Securities Act in reliance on Section 4(2) of the Securities Act and the
      safe harbor offering exemption provided by Regulation D of Rule
      506.





**ITEM
      6. SELECTED FINANCIAL INFORMATION**





Effective
      on June 30, 2006, we changed our fiscal year end from December 31 to June 30.
      This change was made in
      order
      to make our fiscal year conform to the June 30 fiscal year of our principal
      operating subsidiary, Airgroup Corporation. The six month results being reported
      below by the Company relate to the transitional six month fiscal period ended
      June 30, 2006.





The
      selected financial data that appears below has been presented utilizing a
      combination of historical and, where relevant, pro forma information to include
      the effects on our consolidated financial statements of our recently completed:
      (i) equity offerings; and (ii) acquisition of Airgroup Corporation. Historical
      financial data has been supplemented, where appropriate, with pro forma
      financial data since historical data which merely reflects the prior period
      results of the Company on a stand-alone basis, would provide no meaningful
      data
      with respect to our ongoing operations since we were in the development stage
      prior to our acquisition of Airgroup. The pro forma results are also adjusted
      to
      reflect a consolidation of the historical results of operations of Airgroup
      and
      Radiant as adjusted to reflect the amortization of acquired intangibles.
      Similarly, pro forma statements of income have been presented for six months
      June 30, 2006 and 2005 as if we had completed our equity offerings and acquired
      Airgroup as of July 1, 2004, effectively the beginning of fiscal year
      2005.





The
      pro
      forma financial data presented is not necessarily indicative of results of
      operations that would have occurred had this acquisition been consummated at
      the
      beginning of the periods presented or that might be obtained in the
      future.


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The
      following table sets forth selected historical financial data as of and for
      the
      periods ended June 30, 2006 (historic and audited) and 2005 (historic and
      unaudited), respectively and are not complete. The data is derived from our
      consolidated financial statements. The selected financial data should be read
      in
      conjunction with “Management’s Discussion and Analysis of Financial Condition
      and Results of Operations,” the Financial Statements and the Notes to Financial
      Statements included elsewhere in this report.





Consolidated
      Statements of Operations Data for the transitional six months ending June 30,
      2006 (historic and audited) and 2005 (historic and unaudited); (in thousands,
      except per share amounts):




**Historic**
              **Six
                Months Ended**
              **June
                30,****2006**
            
            **2005**
              (unaudited)**Consolidated
                Statement Of Operations Data: (In Thousands, Except Per Share
                Amounts)**Total
                revenue
            
            $
            26,469
            
            $
            —Cost
                of transportation
            
            
            16,966
            
            
            —Net
                revenue
            
            
            9,503
            
            
            —Operating
                expenses
            
            
            9,457
            
            
            22Income
                (loss) from operations
            
            
            46
            
            
            (22
            )Other
                income (expense)
            
            
            (14
            )
            
            (1
            )Income
                (loss) before income taxes
            
            
            32
            
            
            (23
            )Income
                tax expense (benefit)
            
            
            (39
            )
            
            —Net
                income (loss)
            
            $
            71
            
            $
            (23
            )Net
                income (loss) per common share(1):Basic
            
            $
            —
            
            $
            —Diluted
            
            $
            —
            
            $
            —Weighted
                average common shares:Basic
                shares outstanding
            
            
            33,186
            
            
            25,964Dilutedshares
                outstanding
            
            
            34,585
            
            
            25,964





(1)
            For
                all periods presented, the weighted average common shares outstanding
                have
                been adjusted to reflect 3.5:1 stock split effected in October of
                2005.




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**Historic**
              **Six
                Months Ended**
              **June
                30,****Consolidated
                Balance Sheet Data (In Thousands)**
            
            **2006**
            
            **2005**
              **(unaudited)**Cash
                and cash equivalents
            
            $
            511
            
            $
            23Working
                capital
            
            
            1,985
            
            
            20


Total
                assets
            
            
            17,045
            
            
            23Long-term
                debt
            
            
            2,470
            
            
            75Stockholders'
                equity
            
            
            6,334
            
            
            (55
            )





The
      following table sets forth selected historical financial data as of and for
      the
      years ended December 31, 2005, 2004, 2003, 2002 and 2001. The data is derived
      from our audited financial statements. The selected financial data should be
      read in conjunction with “Management’s Discussion and Analysis of Financial
      Condition and Results of Operations,” the Financial Statements and the Notes to
      Financial Statements included elsewhere in this report.





Consolidated
      Statement of Operations Data for the prior Five Years ended December 31
      (historical and audited); (in thousands, except per share amounts):







**Selected
                Financial Data**
              **Year
                ended December 31,****2005**
            
            **2004**
            
            **2003**
            
            **2002**
            
            **2001****Consolidated
                Statement Of Operations Data:**
              **(In
                Thousands, Except Per Share Amounts)**Total
                revenue
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —Cost
                of transportation
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Net
                revenue
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Operating
                expenses
            
            
            162
            
            
            23
            
            
            30
            
            
            124
            
            
            14Loss
                from operations
            
            
            (162
            )
            
            (23
            )
            
            (30
            )
            
            (124
            )
            
            (14
            )Other
                income (expense)
            
            
            13
            
            
            (2
            )
            
            —
            
            
            —
            
            
            —Income
                (loss) from continuing operations before income tax expense
            
            
            (149
            )
            
            (25
            )
            
            (30
            )
            
            (124
            )
            
            (14
            )Income
                tax expense
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Net
                income (loss)
            
            $
            (149
            )
            $
            (25
            )
            $
            (30
            )
            $
            (124
            )
            $
            (14
            )Net
                income (loss) per common share:Basic
                and diluted
            
            $
            (0.01
            )
            $
            0.00
            
            $
            0.00
            
            $
            (0.01
            )
            $
            0.00Weighted
                average common shares(1):Basic
                and diluted
            
            
            26,490
            
            
            25,964
            
            
            25,964
            
            
            22,424
            
            
            8,138





(1)
            For
                all periods presented, the weighted average common shares outstanding
                have
                been adjusted to reflect 3.5:1 stock split effected in October of
                2005.





**December
                31,**Consolidate
                Balance Sheet Data (In Thousands)
            
            **2005**
            
            **2004**
            
            **2003**
            
            **2002**
            
            **2001**Cash
                and cash equivalents
            
            $
            5,266
            
            $
            19
            
            $
            51
            
            $
            27
            
            $
            —Working
                capital
            
            
            5,143
            
            
            17
            
            
            42
            
            
            20
            
            
            (10
            )Total
                assets
            
            
            5,307
            
            
            19
            
            
            51
            
            
            27
            
            
            —Long-term
                debt
            
            
            —
            
            
            50
            
            
            50
            
            
            —
            
            
            —


Stockholders'
                equity
            
            $
            5,159
            
            $
            (33
            )
            $
            (8
            )
            $
            20
            
            $
            (10
            )




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  **Supplemental
        Pro Forma Financial Information**





Consolidated
      Statements of Operations Data for the years ended June 30, 2006 and 2005 (pro
      forma and unaudited); (in thousands, except per share amounts)




Supplemental
      pro forma information is being provided since historical data which merely
      reflects the prior period results of the Company on a stand-alone basis prior
      to
      the acquisition of Airgroup would provide no meaningful data with respect to
      our
      ongoing operations.




**Pro
                Forma****and
                unaudited**
              **Years
                Ended**
              **June
                30,****2006**
            
            **2005****Consolidated
                Statement Of Operations Data: (In Thousands, Except Per Share
                Amounts)**Total
                revenue
            
            $
            54,580
            
            $
            51,521Cost
                of transportation
            
            
            35,192
            
            
            29,957Net
                revenue
            
            
            19,388
            
            
            21,564Operating
                expenses
            
            
            19,175
            
            
            21,523Income
                (loss) from operations
            
            
            213
            
            
            41Other
                income (expense)
            
            
            (22
            )
            
            13Income
                before income tax expense
            
            
            191
            
            
            54Income
                tax expense
            
            
            217
            
            
            19Net
                income (loss)
            
            $
            (26
            )
            $
            35Net
                income (loss) per common share:Basic
            
            $
            0.00
            
            $
            0.00Diluted
            
            $
            0.00
            
            $
            0.00Weighted
                average common shares(2):Basic
                shares outstanding
            
            
            30,072
            
            
            25,964Diluted shares outstanding
            
            
            30,607
            
            
            25,964





(1)
            The
                pro forma income from operations provided above includes the costs
                associated with the continuing operations of the Company (approximately
                $21,000 for 2006 and $29,000 for 2005), plus the historical results
                of
                Airgroup, adjusted to reflect amortization of acquired
                intangibles.(2)
            For
                all periods presented, the weighted average common shares outstanding
                have
                been adjusted to reflect 3.5:1 stock split effected in October of
                2005.




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





On
      July
      31, 2006, the Board of Directors of the Company resolved to change our fiscal
      year from December 31 to June 30 effective for the fiscal year 2006 resulting
      in
      a six month fiscal year ending June


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30.
      This
      change is being made in order to make the Company’s fiscal year conform to the
      June 30 fiscal year of the Company’s principal operating subsidiary, Airgroup
      Corporation. The six month results, reported below, relate to the transitional
      six months ended June 30, 2006.





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**





In
      conjunction with a change of control transaction completed during October 2005
      and discussed under Part 1 Item 1, of this Report, we: (i) discontinued our
      former business model; (ii) adopted a new business strategy focused on building
      a global transportation and supply chain management company; (iii) changed
      our
      name to “Radiant Logistics, Inc.” to, among other things, better align our name
      with our new business focus; and (iv) completed our first acquisition within
      the
      logistics industry.




We
      accomplished the first step in our new business strategy by completing the
      acquisition of Airgroup effective as of January 1, 2006. Airgroup is a
      Seattle-Washington based non-asset based logistics company providing 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.





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.





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


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results
      of operations and cash flows of acquired companies for periods subsequent to
      the
      date of acquisition.




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.




**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. In the future, we will perform
      our annual impairment test during our fiscal fourth quarter unless events or
      circumstances indicate an impairment may have occurred before that
      time.


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Under
      the
      provisions of Statement of Position 98-1, *“Accounting
      for the Costs of Computer Software Developed or Obtained for Internal
      Use”* ,
      we
      capitalize 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.
      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.





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.





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**




***Basis
      of Presentation***





The
      results of operations discussion that appears below has been presented utilizing
      a combination of historical and, where relevant, pro forma information to
      include the effects on our consolidated financial


-22-
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          to Table of Contents**


statements
      of our recently completed: (i) equity offerings; and (ii) acquisition of
      Airgroup Corporation. Historical financial data has been supplemented, where
      appropriate, with pro forma financial data since historical data which merely
      reflects the prior period results of the Company on a stand-alone basis, would
      provide no meaningful data with respect to our ongoing operations since we
      were
      in the development stage prior to our acquisition of Airgroup. The pro forma
      information has been presented for fiscal years ended June 30, 2006 and 2005
      as
      if we had completed our equity offerings and acquired Airgroup as of July 1,
      2004. The pro forma results are also adjusted to reflect a consolidation of
      the
      historical results of operations of Airgroup and the Company as adjusted to
      reflect the amortization of acquired intangibles and are also provided in the
      Financial Statements included within this report.




The
      pro
      forma financial data presented is not necessarily indicative of results of
      operations that would have occurred had this acquisition been consummated at
      the
      beginning of the periods presented or that might be attained in the
      future.




***Six
      months ended June 30, 2006 (historic and audited) compared to six months ended
      June 30, 2005 (historic and unaudited) and June 30, 2006 (historic and audited)
      compared to December 31, 2005 (historic and audited) and December 31, 2005
      (historic and audited) compared to December 31, 2004 (historic and
      audited)***





We
      generated transportation revenue of $26.5 million and net transportation revenue
      of $9.5 million for the six months ended June 30, 2006. This reflects the
      revenues derived from the operation of Airgroup, as of January 1, 2006. We
      had
      no revenues for the comparative prior year period as we remained in the
      developmental stage prior to the acquisition of Airgroup. Net income was $71,000
      for the six months ended June 30, 2006 compared to a net loss of $23,000 for
      the
      six months ended June 30, 2005.





We
      had
      adjusted earnings (loss) before interest, taxes, depreciation and amortization
      (EBITDA) of $552,000 and ($23,000) for six months ended June 30, 2006 and 2005,
      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 six months ended June 30, 2006
      (historic and audited) and six months ended June 30, 2005(historic and
      unaudited) adjusted EBITDA to net income:*





**Six
                months ended June 30,**
            
            **Change****2006**
            
            **2005**
            
            **Amount**
            
            **Percent**Net
                income (loss)
            
            $
            71
            
            $
            (23
            )
            $
            94
            
            
            NMIncome
                tax expense (benefit)
            
            
            (39
            )
            
            —
            
            
            (39
            )
            
            NMNet
                interest expense
            
            
            11
            
            
            1
            
            
            10
            
            
            NMDepreciation
                and amortization
            
            
            423
            
            
            —
            
            
            423
            
            
            NMEBITDA
                (Earnings before interest, taxes, depreciation and
                amortization)
            
            $
            466
            
            $
            (22
            )
            $
            488
            
            
            NM—Share
                based compensation and other non-cash costs
            
            
            86
            
            
            —
            
            
            86
            
            
            NMAdjusted
                EBITDA
            
            $
            552
            
            $
            (22
            )
            $
            574
            
            
            NM




-23-
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          to Table of Contents**




*The
      following table provides a reconciliation of six months ended June 30, 2006
      (historic and audited) and year ended December 31, 2005(historic and audited)
      adjusted EBITDA to net income:*





**Six
                months ended Year ended**
            
            **Change****June
                30, 2006**
            
            **Dec.
                31, 2005**
            
            **Amount**
            
            **Percent**Net
                income (loss)
            
            $
            71
            
            $
            (149
            )
            $
            220
            
            
            NMIncome
                tax expense (benefit)
            
            
            (39
            )
            
            —
            
            
            (39
            )
            
            NMNet
                Interest (income) expense
            
            
            11
            
            
            (13
            )
            
            24
            
            
            NMDepreciation
                and amortization
            
            
            423
            
            
            —
            
            
            423
            
            
            NMEBITDA
                (Earnings before interest, taxes, depreciation and
                amortization)
            
            $
            466
            
            $
            (162
            )
            $
            628
            
            
            NMShare
                based compensation and other non-cash costs
            
            
            86
            
            
            —
            
            
            86
            
            
            NMAdjusted
                EBITDA
            
            $
            552
            
            $
            (162
            )
            $
            714
            
            
            NM




*The
      following table provides a reconciliation of six months ended December 31,
      2005
      (historic and audited) and year ended December 31, 2004 (historic and audited)
      adjusted EBITDA to net income:*





**Year
                ended December 31,**
            
            **Change****2005**
            
            **2004**
            
            **Amount**
            
            **Percent**Net
                income (loss)
            
            $
            (149
            )
            $
            (25
            )
            $
            (124
            )
            
            NMIncome
                tax expense (benefit)
            
            
            —
            
            
            —
            
            
            —
            
            
            NMInterest
                expense
            
            
            (13
            )
            
            2
            
            
            (15
            )
            
            NMDepreciation
                and amortization
            
            
            —
            
            
            —
            
            
            —
            
            
            NMEBITDA
                (Earnings before interest, taxes, depreciation and
                amortization)
            
            $
            (162
            )
            $
            (23
            )
            $
            (139
            )
            
            NMShare
                based compensation and other non-cash costs
            
            
            —
            
            
            —
            
            
            —
            
            
            NMAdjusted
                EBITDA
            
            $
            (162
            )
            $
            (23
            )
            $
            (139
            )
            
            NM




*The
      following table summarizes six months ended June 30, 2006 (historic and audited)
      and six months ended June 30, 2005 (historic and unaudited) transportation
      revenue, cost of transportation and net transportation revenue (in
      thousands):*




**Six
                months ended June 30,**
            
            **Change****2006**
            
            **2005**
            
            **Amount**
            
            **Percent**Transportation
                revenue
            
            $
            26,469
            
            $
            —
            
            $
            26,469
            
            
            NMCost
                of transportation
            
            
            16,966
            
            
            —
            
            
            16,966
            
            
            NM


Net
                transportation revenue
            
            $
            9,503
            
            $
            —
            
            $
            9,503
            
            
            NM*Net
                transportation margins*
            
            
            35.9
            %
            
            —
            
            
            35.9
            %
            
            NM




-24-
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          to Table of Contents**




Transportation
      revenue was $26.5 million for the six months ended June 30, 2006. Domestic
      and
      International transportation revenue was $15.0 million and $11.5 million,
      respectively. There were no revenues for the comparable prior year
      period.




Cost
      of
      transportation was 64.1% of transportation revenue for the six months ended
      June
      30, 2006 with no comparable data for the prior year period.




Net
      transportation margins were 35.9% of transportation revenue for the six months
      ended June 30, 2006 with no comparable data for the prior year
      period.




*The
      following table compares certain six months ended June 30, 2006 (historic and
      audited) and six months ended June 30, 2005 (historic and unaudited) condensed
      consolidated statement of income data as a percentage of our net transportation
      revenue (in thousands):*




**Six
                months ended June 30,****2006**
            
            
            **2005**
            
            
            **Change****Amount**
            
            
            **Percent**
            
            
            **Amount**
            
            
            **Percent**
            
            
            **Amount**
            
            
            **Percent**Net
                transportation revenue
            
            $
            9,503
            
            
            100.0
            %
            $
            —
            
            
            NM
            
            $
            9,503
            
            
            NMAgent
                commissions
            
            
            7,037
            
            
            74.1
            %
            
            —
            
            
            NM
            
            
            7,037
            
            
            NMPersonnel
                costs
            
            
            1,154
            
            
            12.1
            %
            
            —
            
            
            NM
            
            
            1,154
            
            
            NMOther
                selling, general and administrative
            
            
            843
            
            
            8.8
            %
            
            22
            
            
            NM
            
            
            821
            
            
            NMDepreciation
                and amortization
            
            
            423
            
            
            4.5
            %
            
            —
            
            
            NM
            
            
            423
            
            
            NMTotal
                operating costs
            
            
            9,457
            
            
            99.5
            %
            
            22
            
            
            NM
            
            
            9,435
            
            
            NMIncome
                (loss) from operations
            
            
            46
            
            
            0.5
            %
            
            (22
            )
            
            NM
            
            
            68
            
            
            NMOther
                expense
            
            
            (14
            )
            
            -0.2
            %
            
            (1
            )
            
            NM
            
            
            (13
            )
            
            NMIncome
                (loss) before income taxes
            
            
            32
            
            
            0.3
            %
            
            (23
            )
            
            NM
            
            
            55
            
            
            NMIncome
                tax expense (benefit)
            
            
            (39
            )
            
            -0.4
            %
            
            —
            
            
            NM
            
            
            (39
            )
            
            NMNet
                income (loss)
            
            $
            71
            
            
            0.7
            %
            $
            (23
            )
            
            NM
            
            $
            94
            
            
            NM




Agent
      commissions were $7.0 million and 74.1% of net revenues for the six months
      ended
      June 30, 2006. There were no similar costs for the comparable prior year
      period.




Personnel
      costs were $1.2 million and 12.1% of net revenues for the six months ended
      June
      30, 2006. There were no similar costs for the comparable prior year
      period.




Other
      selling, general and administrative costs were $843,000 and 8.8% of net revenues
      for the six months ended June 30, 2006 compared to $22,000 for the six months
      ended June 30, 2005




Depreciation
      and amortization costs were approximately $423,000 and 4.5% of net revenues
      for
      the six months ended June 30, 2006. There were no similar costs for the
      comparable prior year period.


-25-
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          to Table of Contents**





Income
      from operations was $46,000 for the six months ended June 30, 2006 compared
      to a
      loss from operations of $22,000 for the six months ended June 30,
      2005.




Net
      income was $71,000 for the six months ended June 30, 2006, compared to a net
      loss of $23,000 for the six months ended June 30, 2005.




***Supplemental
      pro forma information for the six months ended June 30, 2006 (historic and
      audited) compared to the six months ended June 30, 2005 (pro forma and
      unaudited)***




We
      generated transportation revenue of $26.5 million and $27.6 million and net
      transportation revenue of $9.5 million and $10.9 million for the six months
      ended June 30, 2006 and 2005, respectively. Net income was $71,000 for the
      six
      months ended June 30, 2006 compared to a loss of $11,000 for the six months
      ended June 30, 2005.





We
      had
      adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)
      of approximately $522,000 and $366,000 for six months ended June 30, 2006 and
      2005, 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 six months ended June 30, 2006
      (historic and audited) and six months ended June 30, 2005 (pro forma and
      unaudited) adjusted EBITDA to net income, the most directly comparable GAAP
      measure in accordance with SEC Regulation G (in thousands):*





**Six
                months ended June 30,**
            
            **Change****2006**
            
            **2005**
            
            **Amount**
            
            **Percent**Net
                income (loss)
            
            $
            71
            
            $
            (11
            )
            $
            82
            
            
            NMIncome
                tax expense (benefit)
            
            
            (39
            )
            
            (7
            )
            
            (32
            )
            
            NMInterest
                expense (benefit)
            
            
            11
            
            
            (13
            )
            
            24
            
            
            —Depreciation
                and amortization
            
            
            423
            
            
            397
            
            
            26
            
            
            6.5
            %EBITDA
                (Earnings before interest, taxes, depreciation and
                amortization)
            
            $
            466
            
            $
            366
            
            $
            100
            
            
            27.3
            %Share
                based compensation and other non-cash costs
            
            
            86
            
            
            —
            
            
            86
            
            
            NM
            %Adjusted
                EBITDA
            
            $
            552
            
            $
            366
            
            $
            186
            
            
            50.8
            %


*The
      following table summarizes the six months ended June 30, 2006 (historic and
      audited) and the six months ended June 30, 2005 (pro forma and unaudited)
      transportation revenue, cost of transportation and net transportation revenue
      (in thousands):*




**Six
                months ended June 30,**
            
            **Change****2006**
            
            **2005**
            
            **Amount**
            
            **Percent**Transportation
                revenue
            
            $
            26,469
            
            $
            27,603
            
            $
            (1,134
            )
            
            -4.1
            %Cost
                of transportation
            
            
            16,966
            
            
            16,696
            
            
            270
            
            
            1.6
            %


Net
                transportation revenue
            
            $
            9,503
            
            $
            10,907
            
            $
            (1,404
            )
            
            -12.9
            %*Net
                transportation margins*
            
            
            35.9
            %
            
            39.5
            %
            
            —




-26-
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          to Table of Contents**




Transportation
      revenue was $26.5 million for the six months ended June 30, 2006, a decrease
      of
      4.1% over total transportation revenue of $27.6 million for the six months
      ended
      June 30, 2005. Domestic transportation revenue decreased by 13.8% to $15.6
      million for the six months ended June 30, 2006 from $18.1 million for the six
      months ended June 30, 2005. The decrease was due primarily to project services
      work performed in 2005 which was nearly completed by June 2005. International
      transportation revenue increased by 14.4% to $10.9 million for the six months
      ended June 30, 2006 from $9.5 million for the comparable prior year period,
      due
      mainly to increased air and ocean import freight volume.




Cost
      of
      transportation increased to 64.1% of transportation revenue for the six months
      ended June 30, 2006 from 60.5% of transportation revenue for the six months
      ended June 30, 2005. This increase was primarily due to increased international
      ocean import freight volume which historically reflects a higher cost of
      transportation as a percentage of sales.




Net
      transportation margins decreased to 35.9% of transportation revenue for the
      six
      months ended June 30, 2006 from 39.5% of transportation revenue for the six
      months ended June 30, 2005 as a result of the factors described
      above.


*The
      following table compares certain six months ended June 30, 2006 (historic and
      audited) and six months ended June 30, 2005 (pro forma and unaudited) condensed
      consolidated statement of income data as a percentage of our net transportation
      revenue (in thousands):*




**Six
                months ended June 30,****2006**
            
            
            **2005**
            
            
            **Change****Amount**
            
            
            **Percent**
            
            
            **Amount**
            
            
            **Percent**
            
            
            **Amount**
            
            
            **Percent**Net
                transportation revenue
            
            $
            9,503
            
            
            100.0
            %
            $
            10,907
            
            
            100.0
            %
            $
            (1,404
            )
            
            -12.9
            %Agent
                commissions
            
            
            7,037
            
            
            74.1
            %
            
            7,906
            
            
            72.5
            %
            
            (869
            )
            
            -11.0
            %Personnel
                costs
            
            
            1,154
            
            
            12.1
            %
            
            1,946
            
            
            17.8
            %
            
            (792
            )
            
            -40.7
            %Other
                selling, general and administrative
            
            
            843
            
            
            8.8
            %
            
            694
            
            
            6.4
            %
            
            149
            
            
            21.5
            %Depreciation
                and amortization
            
            
            423
            
            
            4.5
            %
            
            397
            
            
            3.6
            %
            
            26
            
            
            6.5
            %Total
                operating costs
            
            
            9,457
            
            
            99.5
            %
            
            10,943
            
            
            100.3
            %
            
            (1,486
            )
            
            -13.6
            %Income
                (loss) from operations
            
            
            46
            
            
            0.5
            %
            
            (36
            )
            
            -0.3
            %
            
            82
            
            
            227.8
            %Other
                (income)expense
            
            
            (14
            )
            
            -0.2
            %
            
            18
            
            
            0.2
            %
            
            (32
            )
            
            -177.8
            %Income
                (loss) before income taxes
            
            
            32
            
            
            0.3
            %
            
            (18
            )
            
            -0.1
            %
            
            50
            
            
            277.8
            %Income
                tax expense (benefit)
            
            
            (39
            )
            
            -0.4
            %
            
            (7
            )
            
            -0.0
            %
            
            (32
            )
            
            NMNet
                income (loss)
            
            $
            71
            
            
            0.7
            %
            
            (11
            )
            
            -0.1
            %
            $
            82
            
            
            NM





Agent
      commissions were $7.0 million for the six months ended June 30, 2006, a decrease
      of 11.0% from $7.9 million for the six months ended June 30, 2005. Agent
      commissions as a percentage of net revenue increased to 74.1% for six months
      ended June 30, 2006 from 72.5% for the comparable prior year period as a result
      an adjustment of freight costs in 2005 which increased net transportation
      margin, or net transportation revenue, yielding a lower commission percentage
      for 2005.


-27-
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          to Table of Contents**




Personnel
      costs were $1.2 million for the six months ended June 30, 2006, a decrease
      of
      40.7% from $1.9 million for the six months ended June 30, 2005. Personnel costs
      as a percentage of net revenue decreased to 12.1% for six months ended June
      30,
      2006 from 17.8% for the comparable prior year period as a result of contractual
      reductions in compensation paid to certain of the selling shareholders of
      Airgroup.




Other
      selling, general and administrative costs were $843,000 for the six months
      ended
      June 30, 2006, an increase of 21.5% from $694,000 for the six months ended
      June
      30, 2005. As a percentage of net revenue, other selling, general and
      administrative costs increased to 8.8% for six months ended June 30, 2006 from
      6.4% for the comparable prior year period primarily as a result of transaction
      costs incurred by Airgroup in connection with the sale of the company to us
      and
      the incremental costs associated with operating as a public
      company.





Depreciation
      and amortization costs were $423,000 for the six months ended June 30, 2006,
      an
      increase of 6.5% from $397,000 for the six months ended June 30, 2005. Personnel
      costs as a percentage of net revenue increased to 4.5% for six months ended
      June
      30, 2006 from 3.6% for the comparable prior year period.




Income
      from operations was $46,000 for the six months ended June 30, 2006 compared
      to a
      loss from operations of $36,000 for the six months ended June 30,
      2005.





Net
      income was $71,000 for the six months ended June 30, 2006, compared to a net
      loss of $11,000 for the six months ended June 30, 2005.




***Year
      ended December 31, 2005 (historic and audited) compared to year ended December
      31, 2004 (historic and audited)***





*The
      following table compares year ended December 31, 2005 and 2004 (historic and
      audited) consolidated statement of income data as a percentage of our net
      transportation revenue (in thousands):*




**Year
                ended December 31,****2005**
            
            
            **2004**
            
            
            **Change****Amount**
            
            
            **Percent**
            
            
            **Amount**
            
            
            **Percent**
            
            
            **Amount**
            
            
            **Percent**Net
                revenue
            
            $
            —
            
            
            NM
            
            $
            —
            
            
            NM
            
            $
            —
            
            
            NMOther
                selling, general and administrative
            
            
            162
            
            
            NM
            
            
            23
            
            
            NM
            
            
            139
            
            
            NMTotal
                operating costs
            
            
            162
            
            
            NM
            
            
            23
            
            
            NM
            
            
            139
            
            
            NMLoss
                from operations
            
            
            (162
            )
            
            NM
            
            
            (23
            )
            
            NM
            
            
            (139
            )
            
            NMOther
                income (expense)
            
            
            13
            
            
            NM
            
            
            (2
            )
            
            NM
            
            
            15
            
            
            NMLoss
                before income taxes
            
            
            (149
            )
            
            NM
            
            
            (25
            )
            
            NM
            
            
            (124
            )
            
            NMIncome
                tax expense
            
            
            —
            
            
            NM
            
            
            —
            
            
            NM
            
            
            —
            
            
            NMNet
                loss
            
            $
            (149
            )
            
            NM
            
            $
            (25
            )
            
            NM
            
            
            (124
            )
            
            NM





As
      we
      remained in the development stage for all of 2005 and 2004, we had no
      transportation revenue for these years and incurred operating costs of
      approximately $162,000 for the year ended December 31, 2005 compared to
      operating costs of approximately $23,000 for the year ended December 31,
      2004.





The
      year
      over year increase in operating costs resulted from our increased activities
      in
      the fourth quarter of 2005 in connection with the Company’s change in management
      and strategy to enter into the logistics


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business.
      Net loss for the year ended December 31, 2005 was approximately $149,000
      compared to a net loss of approximately $25,000 for the year ended December
      31,
      2004.





***Year
      ended December 31, 2004 (historic and audited) compared to year ended December
      31, 2003 (historic and audited)***





*The
      following table compares certain December 31, 2004 and 2003 (historic and
      audited) consolidated statement of income data as a percentage of our net
      transportation revenue (in thousands):*




**Year
                ended December 31,****2004**
            
            
            **2003**
            
            
            **Change****Amount**
            
            
            **Percent**
            
            
            **Amount**
            
            
            **Percent**
            
            
            **Amount**
            
            
            **Percent**Net
                revenue
            
            $
            —
            
            
            NM
            
            $
            —
            
            
            NM
            
            $
            —
            
            
            NMOther
                selling, general and administrative
            
            
            23
            
            
            NM
            
            
            30
            
            
            NM
            
            
            (7
            )
            
            -23.3
            %Total
                operating costs
            
            
            23
            
            
            NM
            
            
            30
            
            
            NM
            
            
            (7
            )
            
            -23.3
            %Loss
                from operations
            
            
            (23
            )
            
            NM
            
            
            (30
            )
            
            NM
            
            
            7
            
            
            -23.3
            %Other
                income (expense)
            
            
            (2
            )
            
            NM
            
            
            —
            
            
            NM
            
            
            (2
            )
            
            NMLoss
                before income taxes
            
            
            (25
            )
            
            NM
            
            
            (30
            )
            
            NM
            
            
            5
            
            
            16.7
            %Income
                tax expense
            
            
            —
            
            
            NM
            
            
            —
            
            
            NM
            
            
            —
            
            
            NMNet
                loss
            
            $
            (25
            )
            
            NM
            
            $
            (30
            )
            
            NM
            
            $
            5
            
            
            16.7
            %





As
      we
      remained in the development stage for all of 2004 and 2003, we had no
      transportation revenue for these years and operating costs remained relatively
      unchanged at approximately $23,000 for the year ended December 31, 2004 compared
      to operating costs of approximately $30,000 for the year ended December 31,
      2003.





Net
      loss
      also remained relatively unchanged at approximately $25,000 for the year ended
      December 31, 2004 compared to a net loss of approximately $30,000 for the year
      ended December 31, 2003.





***Supplemental
      Pro Forma Information for year ended June 30, 2006 (historical and unaudited)
      compared to the year ended June 30, 2005 (pro forma and
      unaudited)***





We
      generated transportation revenue of $54.6 million and $51.5 million, and net
      transportation revenue of $19.4 million and $21.6 million for the twelve month
      periods ended June 30, 2006 and 2005, respectively. Net income was $10,000
      for
      the year ended June 30, 2006 compared to net income of $35,000 for the six
      months ended June 30, 2005.





We
      had
      earnings before interest, taxes, depreciation and amortization (EBITDA) of
      $1,061,000 and $835,000 for fiscal years ended June 30, 2006 and 2005,
      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 useful in analyzing our results, it is not
      intended to replace any presentation included in our consolidated financial
      statements.


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*The
      following table provides a reconciliation of years ended June 30, 2006 and
      2005
      (pro forma and unaudited) EBITDA to net income, the most directly comparable
      GAAP measure in accordance with SEC Regulation G (in
      thousands):*




**Year
                ended June 30,**
            
            
            **Change****2006**
            
            
            **2005**
            
            
            **Amount**
            
            
            **Percent**Net
                income
            
            $
            (26
            )
            $
            35
            
            $
            (61
            )
            
            NMIncome
                tax expense (benefit)
            
            
            217
            
            
            19
            
            
            198
            
            
            NMInterest
                expense (benefit)
            
            
            (9
            )
            
            (13
            )
            
            4
            
            
            -23.1
            %Depreciation
                and amortization
            
            
            793
            
            
            794
            
            
            (1
            )
            
            6.5
            %EBITDA
                (Earnings before interest, taxes, depreciation and
                amortization)
            
            $
            975
            
            $
            835
            
            $
            140
            
            
            16.8
            %Share
                based compensation and other non-cash costs
            
            
            86
            
            
            —
            
            
            86
            
            
            NM
            %Adjusted
                EBITDA
            
            $
            1,061
            
            $
            835
            
            $
            226
            
            
            27.1
            %




*The
      following table summarizes years ended June 30, 2006 and 2005 (pro forma and
      unaudited) transportation revenue, cost of transportation and net transportation
      revenue (in thousands):*




**Year
                ended June 30,**
            
            
            **Change****2006**
            
            
            **2005**
            
            
            **Amount**
            
            
            **Percent**Transportation
                revenue
            
            $
            54,580
            
            $
            51,521
            
            $
            3,059
            
            
            5.9
            %Cost
                of transportation
            
            
            35,192
            
            
            29,957
            
            
            5,235
            
            
            17.5
            %Net
                transportation revenue
            
            $
            19,388
            
            $
            21,564
            
            $
            (2,176
            )
            
            -10.1
            %Net
                transportation margins
            
            
            35.5
            %
            
            41.9
            %




Transportation
      revenue was $54.5 million for the year ended June 30, 2006, an increase of
      5.9%
      over total transportation revenue of $51.5 million for the year ended June
      30
      2005. Domestic transportation revenue decreased by 15.7% to $33.2 million for
      the year ended June 30, 2006 from $38.4 million for the prior fiscal year as
      a
      result of project services work performed in 2005 that was nearly completed
      by
      June 2005, decline in customer volume, and closure of a station. International
      transportation revenue increased by 69.1% to $22.3 million for the 2006 fiscal
      year from $13.2 million for the 2005 fiscal year, due mainly to increased air
      and ocean import freight volume.




Cost
      of
      transportation increased to 64.5% of transportation revenue for the year ended
      June 30, 2006 from 58.1% of transportation revenue for the year ended June
      30,
      2005. This increase was primarily due to increased international ocean import
      freight volume which historically reflects a higher cost of transportation
      as a
      percentage of sales.




Net
      transportation margins decreased to 35.9% of transportation revenue for the
      fiscal year ended June 30, 2006 from 41.9% of transportation revenue for the
      2005 fiscal year as a result of the factors described above.




*The
      following table compares certain year ended June 30, 2006 and 2005 (pro forma
      and unaudited) consolidated statement of income data as a percentage of our
      net
      transportation revenue (in thousands):*


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**Year
                ended June 30,****2006**
            
            **2005**
            
            **Change****Amount**
            
            **Percent**
            
            **Amount**
            
            **Percent**
            
            **Amount**
            
            **Percent**Net
                transportation revenue
            
            $
            19,388
            
            
            100.0
            %
            $
            21,564
            
            
            100.0
            %
            $
            (2,176
            )
            
            -10.1
            %Agent
                commissions
            
            
            14,341
            
            
            74.0
            %
            
            15,988
            
            
            74.1
            %
            
            (1,647
            )
            
            -10.3
            %Personnel
                costs
            
            
            2,313
            
            
            11.9
            %
            
            3,399
            
            
            15.8
            %
            
            (1,086
            )
            
            -32.0
            %Other
                selling, general and administrative
            
            
            1,728
            
            
            8.9
            %
            
            1,342
            
            
            6.2
            %
            
            386
            
            
            28.8
            %Depreciation
                and amortization
            
            
            793
            
            
            4.1
            %
            
            794
            
            
            3.7
            %
            
            (1
            )
            
            -0.1
            %Total
                operating costs
            
            
            19,175
            
            
            98.9
            %
            
            21,523
            
            
            99.8
            %
            
            (2,348
            )
            
            -10.9
            %Income
                from operations
            
            
            213
            
            
            1.1
            %
            
            41
            
            
            0.2
            %
            
            172
            
            
            419.5
            %Other
                income (expense)
            
            
            (22
            )
            
            -0.8
            %
            
            13
            
            
            0.1
            %
            
            (35
            )
            
            -269.2
            %Income
                before income taxes
            
            
            191
            
            
            1.0
            %
            
            54
            
            
            0.3
            %
            
            137
            
            
            253.7
            %Income
                tax expense
            
            
            217
            
            
            1.0
            %
            
            19
            
            
            -0.1
            %
            
            198
            
            
            NM
            %Net
                income
            
            $
            (26
            )
            
            0.0
            %
            $
            35
            
            
            0.2
            %
            $
            (61
            )
            
            NM
            %




Agent
      commissions were $14.3 million for the year ended June 30, 2006, a decrease
      of
      10.3% over $16.0 million for the year ended June 30 2005. Agent commissions
      as a
      percentage of net revenue remained relatively unchanged at approximately
      74.0%.




Personnel
      costs were $2.3 million for the year ended June 30, 2006, a decrease of 32.0%
      over $3.4 million for the twelve month period. Personnel costs as a percentage
      of net revenue decreased to 11.9% for the 2006 fiscal year from 15.8% for the
      2005 fiscal year. For the year ended June 30, 2006 compared to the prior year,
      headcount decreased by 7, to a total of 34, individuals who primarily provide
      finance and administrative services for the benefit of the agent
      offices.




Other
      selling, general and administrative costs were $1.7 million for the year ended
      June 30, 2006, an increase of 28.8% over $386,000 for the year ended June 30,
      2005. This increase was primarily the result of increased costs associated
      with
      operating as a public company. As a percentage of net revenue, other selling,
      general and administrative costs increased to 8.9% for the fiscal year ended
      2006 from 6.2% for the 2005 fiscal year.




Depreciation
      and amortization remained relatively unchanged at $793,000 for year ended June
      30, 2006 and $794,000 for 2005. Depreciation and amortization as a percentage
      of
      net revenue increased to 4.1% for the year ended June 30, 2006 from 3.7% for
      the
      2005 fiscal year.





Income
      from operations was $213,000 for the year ended June 30, 2006, an increase
      of
      419.5% over $41,000 for the 2005 fiscal year. Income from operations as a
      percentage of net revenue decreased to 1.1% for the 2006 fiscal year from 0.2%
      for the 2005 fiscal year.




Net
      income (loss) was a loss of $26,000 and income of $35,000 for years
      ended June 30, 2006 and 2005.




**Liquidity
      and Capital Resources**





Effective
      January 1, 2006, we acquired 100 percent of the outstanding stock of Airgroup.
      The transaction was valued at up to $14.0 million and consisted of: (i) $9.5
      million payable in cash at closing; (ii) an additional base payment of $0.6
      million payable in cash on the one-year anniversary of the closing,


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provided
      at least 31 of Airgroup’s locations remain operational through the first
      anniversary of the closing (the “Additional Base Payment”); (iii) a subsequent
      cash payment of $0.5 million in cash on the two-year anniversary of the closing;
      (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.


In
      preparation for, and in conjunction with, the Airgroup transaction, we secured
      financing proceeds through several private placements of our common stock to
      a
      limited number of accredited investors as follows:


**Date**
            
            **Shares
                Sold**
            
            **Gross
                Proceeds**
            
            **Price
                Per Share**●
                October 2005
            
            
            2,272,728
            
            $
            1,000,000
            
            $
            0.44●
                December 2005
            
            
            10,098,934
            
            $
            4,400,000
            
            $
            0.44●
                January 2006
            
            
            1,009,093
            
            $
            444,000
            
            $
            0.44●
                February 2006
            
            
            1,446,697
            
            $
            645,000
            
            $
            0.44





Net
      proceeds for the above was $986,222, $4,153,150 (net of $63,153 of costs arising
      in 2006), $441,637 and $640,022 respectively.





In
      January 2006, we entered into a $10.0 million secured credit facility with
      Bank
      of America, N.A with a term of two years (the “Facility”). The Facility is
      collateralized by our 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 prime minus 1.00% or LIBOR
      plus 1.55% 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 75% of our eligible accounts receivable with
      the
      facility expiring in October 2007.





As
      of
      August 31, 2006, we had approximately $250,000 outstanding under the Facility
      and we had eligible accounts receivable sufficient to support approximately
      $3.6
      million in borrowings. The terms of our Facility are subject to certain
      financial and operational covenants which may limit the amount otherwise
      available under the Facility. The first covenant limits our 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 70.0%). 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 us 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, 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 our historical business and acquisition model, (iv) after
      giving effect for the funding of the acquisition, we must have undrawn
      availability of at least $2.0 million under the Facility, (v) the lender must
      be
      reasonably satisfied with projected financial statements 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


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proposed
      acquisition, we would have to 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 we may need to achieve our strategic objectives.








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) :




**Year
                Ending June 30,****2007**
            
            **2008**
            
            **2009**
            
            **2010**
            
            **2011**
            
            **Total**Earn-out
              payments:Cash
            
            $
            600
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            600Equity
            
            
            —
            
            
            633
            
            
            633
            
            
            634
            
            
            —
            
            
            1,900Total
                earn-out Payments
            
            $
            600
            
            $
            633
            
            $
            633
            
            $
            634
            
            $
            —
            
            $
            2,500Prior
                year earnings targets (income from continuing operations)(3)Total
                earnings targets
            
            $
            —
            
            $
            2,500
            
            $
            2,500
            
            $
            2,500
            
            $
            —
            
            $
            7,500Earn-outs
                as a percentage of prior year earnings targets:Total
            
            
            —
            
            
            25.3
            %
            
            25.3
            %
            
            25.3
            %
            
            —
            
            
            33.3
            %





(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)
            Payable
                in cash on the one-year anniversary of the closing, as long as at
                least 31
                of Airgroup’s agent operations remain operational through the first
                anniversary of the closing.(3)
            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.





Net
      cash
      used by operating activities for the six months ended June 30, 2006 was $974,000
      compared to $21,000 for the comparable six month period ended June 30, 2005.
      The
      change was principally driven by our transition to logistics and greater
      reduction in accounts payable than growth in accounts receivable since the
      acquisition of Airgroup





Net
      cash
      used for investing was $7.2 million for six months ended June 30, 2006 while
      there was no activity for the same comparable time frame in 2005. $10.1 million
      was used for the acquisition of Airgroup which had a cash balance of $2.8
      million at the time it was acquired by the company at January 1, 2006 and is
      netted against cash used for the acquisition for purposes of the consolidated
      statement of cash flows.





Net
      cash
      provided by financing activity for six months ended June 30, 2006, was $3.4
      million compared to $25,000 for the same period in 2005. Financing activities
      in
      2006 consisted of issuing 2,475,790 shares of


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common
      stock for $1.1 million. During January and February 2006, respectively, $444,000
      of shares was issued to certain shareholders and employees of Airgroup, while
      $645,000 of the shares were issued to other accredited investors for cash.
      Also
      associated with the acquisition of Airgroup, there is $500,000 due to Airgroup
      in 2007. The Company also has a credit facility which it drew down $942,000
      and
      used for operations.




**Disclosures
      About 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, 2006:




**Payments
                due by period****Total**
            
            **Less
                than 1 year**
            
            **1-3
                years**
            
            **3-5
                years**
            
            **More
                than 5 years****Contractual
                Obligations**Long-Term
                Debt
            
            $
            2,400
            
            $
            —
            
            $
            2,400
            
            $
            —
            
            $
            —Capital
                Leases
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Operating
                Leases
            
            
            511
            
            
            228
            
            
            251
            
            
            32
            
            
            —Purchase
                Obligations
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Other
                Long-Term Liabilities
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Total
                Contractual Obligations
            
            $
            2,911
            
            $
            228
            
            $
            2,651
            
            $
            32
            
            $
            —




We
      believe that our current working capital and anticipated cash flow from
      operations are adequate to fund existing operations. However, our ability to
      finance further acquisitions is 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
      Airgroup. 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 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.




**Off
      Balance Sheet Arrangements**





As
      of
      June 30, 2006, 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.


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**Recent** **Accounting Pronouncements**





In
      December 2004, the FASB issued SFAS No.152, "Accounting for Real Estate
      Time-Sharing Transactions--an amendment of FASB Statements No. 66 and 67" ("SFAS
      152) The amendments made by Statement 152 This Statement amends FASB Statement
      No. 66, Accounting for Sales of Real Estate, to reference the financial
      accounting and reporting guidance for real estate time-sharing transactions
      that
      is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real
      Estate Time-Sharing Transactions. This Statement also amends FASB Statement
      No.
      67, Accounting for Costs and Initial Rental Operations of Real Estate Projects,
      to state that the guidance for (a) incidental operations and (b) costs incurred
      to sell real estate projects does not apply to real estate time-sharing
      transactions. The accounting for those operations and costs is subject to the
      guidance in SOP 04-2. This Statement is effective for financial statements
      for
      fiscal years beginning after June 15, 2005. We have evaluated the impact of
      the
      adoption of SFAS 152, and do not believe the impact will be significant to
      our
      overall consolidated results of operations or financial position.





In
      December 2004, the FASB issued SFAS No.123 (revised 2004), "Share-Based
      Payment". Statement 123(R) will provide investors and other users of financial
      statements with more complete and neutral financial information by requiring
      that the compensation cost relating to share-based payment transactions be
      recognized in financial statements. That cost will be measured based on the
      fair
      value of the equity or liability instruments issued. Statement 123(R) covers
      a
      wide range of share-based compensation arrangements including share options,
      restricted share plans, performance-based awards, share appreciation rights,
      and
      employee share purchase plans. Statement 123(R) replaces FASB Statement No.
      123,
      Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25,
      Accounting for Stock Issued to Employees. Statement 123, as originally issued
      in
      1995, established as preferable a fair-value-based method of accounting for
      share-based payment transactions with employees. However, that Statement
      permitted entities the option of continuing to apply the guidance in Opinion
      25,
      as long as the footnotes to financial statements disclosed what net income
      would
      have been had the preferable fair-value-based method been used. Non-public
      entities will be required to apply Statement 123(R) as of the first annual
      reporting period that begins after December 15, 2005. We adopted SFAS 123 (R)
      which resulted in an incremental $29,238 of compensation expense included in
      our
      results for the year ended December 31, 2005.





In
      March
      2005, the staff of the SEC issued Staff Accounting Bulletin No. 107 ("SAB 107").
      The interpretations in SAB 107 express views of the staff regarding the
      interaction between SFAS 123(R) and certain SEC rules and regulations and
      provide the staff's views regarding the valuation of share-based payment
      arrangements for public companies. In particular SAB 107 provides guidance
      related to share-based payment transactions with nonemployees, the transition
      from public entity status, valuation methods (including assumptions such as
      expected volatility and expected term), the accounting for certain redeemable
      financial instruments issued under share-based payment arrangements, the
      classification of compensation expense, non-GAAP financial measures, first-time
      adoption of SFAS 123(R) in an interim period, capitalization of compensation
      cost related to share-based payment arrangements, the accounting for income
      tax
      effects of share-based payment arrangements upon adoption of SFAS 123(R) and
      the
      modification of employee share options prior to adoption of SFAS 123(R). Management
      is currently evaluating the impact SAB 107 will have on our consolidated
      financial statements.





In
      March
      2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional
      Asset Retirement Obligations” (“FIN 47”). FIN 47 provides guidance relating to
      the identification of and financial reporting for legal obligations to perform
      an asset retirement activity. The Interpretation requires recognition of a
      liability for the fair value of a conditional asset retirement obligation when
      incurred if the liability’s fair value can be reasonably estimated. FIN 47 also
      defines when an entity would have sufficient information to reasonably estimate
      the fair value of an asset retirement obligation. The provision is effective
      no
      later than the end of fiscal years ending after December 15, 2005. We have
      adopted FIN 47 beginning the first quarter of fiscal year 2006 and do not
      believe the adoption will have a material impact on our financial position
      or
      results of operations or cash flows.


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In
      May
      2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections”
which replaces Accounting Principles Board Opinion No. 20 "Accounting Changes"
      and SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements-An
      Amendment of APB Opinion No. 28." SFAS 154 provides guidance on the accounting
      for and reporting of accounting changes and error corrections. SFAS 154 is
      effective for accounting changes and corrections of errors made in fiscal years
      beginning after December 15, 2005, and adopted it in the first quarter of fiscal
      2006.





In
      June
      2005, the Emerging Issues Task Force (EITF) reached a consensus on Issue 05-6,
      “Determining *the
      Amortization Period for Leasehold Improvements* ”,
      which
      requires that leasehold improvements acquired in a business combination or
      purchased subsequent to the inception of a lease be amortized over the lesser
      of
      the useful life of the assets or a term that includes renewals that are
      reasonably assured at the date of the business combination or purchase. EITF
      05-6 is effective for periods beginning after July 1, 2005. The Company does
      not
      expect the provisions of this consensus to have any impact on its consolidated
      financial position, results of operations or cash flows.





In
      February 2006, the FASB decided to move forward with the issuance of a final
      FSP
      FAS 123R-4 *“Classification
      of Options and Similar Instruments Issued as Employee Compensation That Allow
      for Cash Settlement upon the Occurrence of a Contingent Event”* . The
      guidance in FSP FAS 123R-4 amends paragraphs 32 and A229 of FASB Statement
      No.
      123R to incorporate the concept articulated in footnote 16 of FAS 123R. That
      is,
      a cash settlement feature that can be exercised only upon the occurrence of
      a
      contingent event that is outside the employee’s control does not meet the
      condition in paragraphs 32 and A229 until it becomes probable that the event
      will occur. Originally under FAS 123R, a provision in a share-based payment
      plan
      that required an entity to settle outstanding options in cash upon the
      occurrence of any contingent event required classification and accounting for
      the share based payment as a liability. This caused an issue under certain
      awards that require or permit, at the holder’s election, cash settlement of the
      option or similar instrument upon (a) a change in control or other liquidity
      event of the entity or (b) death or disability of the holder. With this new
      FSP,
      these types of cash settlement features will not require liability accounting
      so
      long as the feature can be exercised only upon the occurrence of a contingent
      event that is outside the employee’s control (such as an initial public
      offering) until it becomes probable that event will occur. The guidance in
      this
      FSP shall be applied upon initial adoption of Statement 123(R). An entity that
      adopted Statement 123(R) prior to the issuance of the FSP shall apply the
      guidance in the FSP in the first reporting period beginning after February
      2006.
      Early application of FSP FAS 123R-4 is permitted in periods for which financial
      statements have not yet been issued. The Company does not expect that this
      new
      FSP will have any impact upon its consolidated financial position, results
      of
      operations or cash flows.





In
      February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments”, which is intended to simplify the accounting and improve
      the financial reporting of certain hybrid financial instruments (i.e.,
      derivatives embedded in other financial instruments). The statement amends
      SFAS
      No. 133, “Accounting for Derivative Instruments and Hedging Activities”, and
      SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and
      Extinguishments of Liabilities—a replacement of FASB Statement No. 125.” SFAS
      No. 155 is effective for all financial instruments issued or acquired after
      the
      beginning of an entity's first fiscal year that begins after September 15,
      2006. Management
      does not feel it will have any impact on our consolidated financial
      statements.




In
      March 2006, the FASB issued SFAS No. 156 “Accounting for Servicing of
      Financial Assets an amendment of FASB Statement No. 140”. FASB Statement
      No. 140, “Accounting for Transfers and servicing of Financial Assets and
      Extinguishments of Liabilities” establishing among other things, the accounting
      for all separately recognized servicing assets and servicing liabilities. This
      Statement amends Statement 140 to require that all separately recognized
      servicing assets and servicing liabilities be initially measured at fair value,
      if practicable. This Statement permits, but does not require, the subsequent
      measurement of separately recognized servicing assets and servicing liabilities
      at fair value. SFAS No. 156 is effective as of the beginning of the
      fiscal year that begins after September 15, 2006. The Company is currently
      evaluating the impact this new Standard, but believes that it will not have
      a
      material impact on the Company’s financial position, results of operations, or
      cash flows. The company will adopt SFAS 156 on January 1,
      2007.


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In July
      2006, the Financial Accounting Standards Board ("FASB") issued FASB
      Interpretation ("FIN") No. 48, *Accounting
      for Uncertainty in Income Taxes* ,
      with
      respect to FASB Statement No. 109, *Accounting
      for Income Taxes* ,
      regarding accounting for and disclosure of uncertain tax positions. FIN No.
      48 is intended to reduce the diversity in practice associated with the
      recognition and measurement related to accounting for uncertainty in income
      taxes. This interpretation is effective for fiscal years beginning after
      December 15, 2006. We are currently evaluating the impact this interpretation
      will have on our consolidated financial statements.





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. We are currently evaluating the
      impact this interpretation will have on our consolidated financial
      statements.





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




The
      Company’s exposure to market risk for changes in interest rates relates
      primarily to the Company’s short-term cash investments and its line of credit.
      The Company is averse to principal loss and ensures the safety and preservation
      of its invested funds by limiting default risk, market risk and reinvestment
      risk. The Company invests its excess cash in institutional money market
      accounts. The Company does not use interest rate derivative instruments to
      manage its exposure to interest rate changes. If market interest rates were
      to
      change by 10% from the levels at January 1, 2006, the change in interest expense
      would have had an immaterial impact on the Company’s consolidated results of
      operations and cash flows.





**ITEM
      8. FINANCIAL STATEMENTS**





The
      consolidated financial statements of Radiant Logistic, Inc. including the notes
      thereto and the report of the independent accountants therein, commence at
      page
      F-1 of this Report.





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





None.




**ITEM
      9A. CONTROLS AND PROCEDURES**




An
      evaluation of the effectiveness of our "disclosure controls and procedures"
      (as
      such term is defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange
      Act of 1934, as amended (the "Exchange Act")) was carried out by us under the
      supervision and with the participation of our Chief Executive Officer
      ("CEO")/Chief Financial Officer ("CFO"). Based upon that evaluation, our CEO/CFO
      concluded that, as of the end of the period covered by this Annual Report,
      our
      disclosure controls and procedures were effective to provide reasonable
      assurance that information we are required to disclose in reports that we file
      or submit under the Exchange Act is recorded, processed, summarized and reported
      within the time periods specified in the Securities and Exchange Commission
      rules and forms. We will continue to evaluate our internal controls and
      procedures to identify any required improvements. T here
      were
      no changes to the Company's internal control over financial reporting for the
      six months ended June 30, 2006 that materially affected, or are reasonably
      likely to materially affect, the Company's internal control over financial
      reporting.




**ITEM
      9B. OTHER INFORMATION**




None


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**PART
      III**





**ITEM
      10. DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT**





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
            
            42
            
            Chief
                Executive Officer, Chief Financial Officer and ChairmanStephen
                M. Cohen
            
            49
            
            General
                Counsel, Secretary and DirectorRodney
                Eaton
            
            52
            
            Vice
                President, Chief Accounting Officer and ControllerWilliam
                H. Moultrie
            
            64
            
            President
                and Chief Operating Officer of
                Airgroup





**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
      over
      15 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. Stonepath is a global non-asset based provider of third party logistics
      services listed on the American Stock Exchange. 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.





**Stephen
      M. Cohen.** Mr.
      Cohen has served in a part-time capacity as our General Counsel and Secretary
      since October 10, 2005. He has also been a member of our Board of Directors
      since October 10, 2005. In 2004, Mr. Cohen founded SMC Capital Advisors, Inc.
      (“SMC”) which provides business and legal consulting services focusing on
      corporate finance and federal securities matters. In connection with matters
      handled for SMC, Mr. Cohen serves as the Director of Legal Affairs/Corporate
      Counsel for Maverick Oil and Gas, Inc, an early stage independent energy
      company. From 2000 until 2004, Mr. Cohen served as senior vice president,
      general counsel and secretary of Stonepath Group, Inc., a global non-asset
      based
      provider of third party logistics services listed on the American Stock
      Exchange, where he helped transition that company from a venture investor in
      early stage technology businesses to a global logistics company and assisted
      in
      the acquisition of domestic and international logistics companies in the United
      States, Asia and South America. Prior to 2000, Mr. Cohen practiced law,
      including having been a shareholder of Buchanan Ingersoll P.C., from 1996 to
      2000, and a partner at Clark, Ladner, Fortenbaugh & Young from 1990 to 1996.
      Mr. Cohen earned a Bachelor of Science in Accounting from the School of Commerce
      and Finance of Villanova University in 1977, a Juris Doctor from Temple
      University in 1980, and an LLM in Taxation from Villanova University School
      of
      Law. Mr. Cohen is licensed to practice law in Pennsylvania.


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**Rodney
      Eaton.** Mr.
      Eaton
      has served as our Vice President and Controller since April 17, 2006 and our
      Chief Accounting Officer since July 17, 2006. Before joining Radiant, Mr. Eaton
      was VP - Chief Financial Officer and Treasurer for Chemithon Corporation, from
      2001 to 2005, which manufactures process chemical equipment. From 1998 until
      2000, Mr. Eaton consulted in a CFO capacity to various hi-tech, consumer goods,
      and telecommunications companies with some companies traded on NASDAQ. Prior
      to
      that, from 1994 to 1997, Mr. Eaton was with Resource Group International (RGI)
      as VP of Finance, Secretary, and Treasurer and served on the board of directors
      for RGI and several of its subsidiaries. RGI, listed on the Oslo Stock Exchange,
      was a $1.4 billion conglomerate with concentrations in seafood, heavy
      industries, consumer goods, and real estate companies listed on NASDAQ. Prior
      to
      RGI, during 1991-1994, Mr. Eaton was CFO for Derby Cycle Corporation, an
      international manufacturer and distributor of Raleigh bicycles. From 1974 to
      1991, Mr. Eaton has served in a CFO and/or Controller capacity for various
      companies including Baker Hughes, Philip Morris/Seven-Up, and Lockheed Martin
      all of whom are listed on NYSE. Mr. Eaton has an MBA and a Bachelor of Science
      in Finance and Accounting from Westminster College.





**William
      H. Moultrie** .
      Mr.
      Moultrie serves as the President and Chief Operating Officer of Airgroup
      Corporation. Mr. Moultrie co-founded Airgroup in March of 1987. Over the
      past 18 years, he built Airgroup into a non-asset based logistics company
      providing domestic and international freight forwarding to a diversified account
      base of manufacturers, distributors and retailers using a network of independent
      carriers and over 100 international agents positioned strategically around
      the
      world with over $50.0 million in annual revenues, and 34 agent offices across
      North America. Mr. Moultrie has over thirty-five years of logistics
      experience in the both the domestic and international markets. Mr. Moultrie
      received a Bachelor of Science from Eastern Washington University.


**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 and Audit Committee Financial Expert**





Our
      Board
      of Directors acts as our audit committee. No member of our Board of Directors
      has been designated as an “audit committee financial expert,” as that term is
      defined in Item 401(e) of Regulation S-B promulgated under the Securities Act.
      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: (i) we have no Audit Committee; and (ii) Mr. Crain does not satisfy
      the
“independence” standards adopted by the American Stock Exchange.





Our
      Board
      of Directors consists of only two members, both of whom are executive officers
      of the Company. In addition, to date, we have conducted limited operations,
      having only concluded our first acquisition during January 2006. In light of
      the
      foregoing, and upon evaluating the Company’s internal controls, our Board of
      Directors determined that our internal controls are adequate to insure that
      financial information is recorded, processed, summarized and reported in a
      timely and accurate manner in accordance with applicable rules and regulations
      of the Securities and Exchange Commission. Accordingly, our Board of Directors
      concluded that the benefits of retaining an individual who qualifies as an
      “audit committee financial expert” would be outweighed by the costs of retaining
      such a person.





**Code
      of Ethics**





We
      have
      adopted a Code of Ethics that applies to 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


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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.





**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 2005 and 2006 all reporting persons timely complied with
      all
      filing requirements applicable to them.





**ITEM
      11. EXECUTIVE COMPENSATION**




The
      following table sets forth a summary of the compensation paid or accrued for
      the
      year ended December 31, 2005 and for 6 months ended June 30, 2006, to or for,
      the benefit of our Chief Executive Officer and our four most highly compensated
      executive officers whose total annual salary and bonus compensation exceeded
      $100,000 (the “Named Executive Officers”).




SUMMARY
      COMPENSATION TABLE





**Annual
                Compensation**
            
            **Long-Term**
              **Compensation
                Awards****Name
                and Principal Position**
            
            
            
            **Salary**
            
            **Bonus**
            
            **Restricted**
              **Stock
                Awards**
            
            **Number
                of Options**
            
            **All
                Other Compensation**Bohn
                H. Crain, Chief(1)
              Chief
                Executive Officer
            
            
            2005
              2006
            
            $
            20,833
              133,000
            
            
            **—**
              **—**
            
            
            **—**
              **—**
            
            
            2,000,000
              **—**
            
            
            **—**
              **—**Stephen
                M. Cohen(2)
              General
                Counsel and Secretary
            
            
            2005
              2006
            
            
            **—**
              **—**
            
            
            **—**
              **—**
            
            
            **—**
              **—**
            
            
            **—**
              **—**
            
            
            **—**
              **—**Rodney
                Eaton, Vice President,
              Chief
                Accounting Officer and Controller
            
            
            2005
              2006
            
            
            **—**
              20,833
            
            
            **—**
              **—**
            
            
            **—**
              **—**
            
            
            **—**
              **—**
            
            
            **—**
              **—**William
                H. Moultrie,
              President(3)and Chief Operating Officer
              of
                Airgroup Corporation
            
            
            2005
              2006
            
            
            **—**
              64,500
            
            
            **—**
              **—**
            
            
            **—**
              **—**
            
            
            **—**
              50,000
            
            
            **—**
              **—**





(1)
            Mr.
                Crain has served as our Chief Executive Officer since October 18,
                2005.
                During the fiscal years ended December 31, 2003 and 2004 and from
                January
                1, 2005 until October 17, 2005, we did not pay any compensation to
                any of
                our executive officers, except that in 2003 we issued shares of common
                stock to our former president valued at
                $90,000.


(2)****
            Mr.
                Cohen serves as our General Counsel, Secretary and Director. SMC
                Capital
                Advisors, a legal and financial advisory firm owned by Mr. Cohen,
                provides
                outside legal services to the Company. Please see “Certain Relationships
                and Related Transactions” below.


(3)****
            No
                amounts are present for Mr. Moultrie prior to January 1, 2006 as
                any such
                compensation relates to periods prior to the Company’s acquisition of
                Airgroup.





The
      following table sets forth information concerning options granted during our
      transitional six month period ended June 30, 2006


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**OPTION
      GRANTS IN LAST SIX MONTHS ENDED JUNE 30, 2006**




**Number
                of Options**
            
            **%
                of Total Options Granted to**
              **Employees
                in**
            
            **Exercise**
            
            **Market**
              **Price
                on Date of**
            
            **Expiration**
            
            **Potential
                Realization Value at Annualized Annual rates of Stock Price Appreciation
                for Option Term****Name**
            
            **Granted**
            
            **Fiscal-Year**
            
            **Price**
            
            **Grant**
            
            **Date**
            
            **5%**
            
            **10%**William
                H. Moultrie
            
            
            50,000(1)
            
            
            33
            %
            $
            0.44
            
            $
            0.44(2)
            
            
            January
                11, 2016
            
            
            13,800
            
            
            35,000




(1)
            These
                options vest in equal annual installments over a five year period
                commencing on the date of grant.




(2)
            As
                of the date of grant, there was no established trading market for
                our
                common stock and there was no trading of our shares on or around
                the date
                the options were granted. On or about the date the options were granted,
                we completed an offering of our common stock at a price of $0.44
                per
                share




The
      following table sets forth information concerning year-end option values for
      fiscal 2005 for the Named Executive Officers. The value of the options was
      based
      on the closing price of our common stock on June 14, 2006 (the most recent
      trade
      leading up to June 30, 2006) of $1.05 and are presented net of the exercise
      price.




**FISCAL
      YEAR END OPTION VALUES**




**Number
                of Unexercised Options**
              **at
                Fiscal Year End**
            
            
            **Value
                of Unexercised In-The-Money**
              **Options
                at Fiscal Year End****Name**
            
            
            **Exercisable**
            
            
            **Unexercisable**
            
            
            **Exercisable**
            
            
            **Unexercisable**Bohn
                H. Crain
            
            
            **—**
            
            
            2,000,000
            
            $
            —
            
            $
            850,000William
                H. Moultrie
            
            
            **—**
            
            
            50,000
            
            
            —
            
            
            30,500




**Employment
      and Option Agreements**





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. Mr. Crain will also be entitled to certain severance benefits upon
      his death, disability or termination of employment, 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. The employment agreement contains standard and
      customary non-solicitation, non-competition, work made for hire, and
      confidentiality provisions.





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.





In
      connection with our acquisition of Airgroup, on January 11, 2006 Airgroup
      entered into an employment agreement with William H. Moultrie to serve as the
      President of Airgroup. The agreement expires on June 30, 2009, provides for
      an
      annual base salary of $120,000, and an annual performance bonus equal to up
      to
      25% of the annual base salary payable at the discretion of the board of
      directors of Airgroup. Mr. Moultrie is entitled to certain severance payments
      in
      the event he is terminated without cause and to certain fringe benefits
      including, participation in pension, profit sharing and bonus plans, as
      applicable, life insurance, hospitalization and major medical as are in effect,
      as well as paid vacation, and expense reimbursement. The agreement contains
      non
      competition and non solicitation covenants which prohibit Mr. Moultrie from
      participating in any activity that is competitive with our business or from
      soliciting any of our customers,


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employees
      or consultants until October 11, 2011. The agreement also contains standard
      and
      customary confidentiality and work made for hire provisions.





On
      January 11, 2006, we issued an option to Mr. Moultrie to purchase 50,000 shares
      of common stock exercisable at $0.44 per share. The options have a term of
      10
      years, vest in equal annual installments over the five year period commencing
      on
      the date of grant, and are otherwise subject to the terms of the Radiant
      Logistics, Inc. 2005 Stock Incentive Plan, the material terms of which are
      described below.





**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;





·
            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 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 of 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."


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**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**




The
      Radiant Logistics, Inc. 2005 Stock Incentive Plan, (the “Stock Incentive Plan”)
      covers 5,000,000 shares of common stock. Under its terms, employees, officers
      and directors of the Company and its subsidiaries are currently eligible to
      receive non-qualified stock options, restricted stock awards and, at such time
      as the Plan is approved by our stockholders, incentive stock options within
      the
      meaning of Section 422 of the Code. In addition, advisors and consultants
      who perform services for the Company or its subsidiaries are eligible to receive
      non-qualified stock options under the Stock Incentive Plan. The Stock Incentive
      Plan is administered by the Board of Directors or a committee designated by
      the
      Board of Directors.





All
      stock
      options granted under the Stock Incentive Plan are exercisable for a period
      of
      up to ten years from the date of grant and are subject to vesting as determined
      by the Board upon grant. We may not grant incentive stock options pursuant
      to
      the Stock Incentive Plan at exercise prices which are less than the fair market
      value of the common stock on the date of grant. The term of an incentive stock
      option granted under the Stock Incentive Plan to a stockholder owning more
      than
      10% of the issued and outstanding common stock may not exceed five years and
      the
      exercise price of an incentive stock option granted to such stockholder may
      not
      be less than 110% of the fair market value of the common stock on the date
      of
      grant. The Stock Incentive Plan contains certain limitations on the maximum
      number of shares of the common stock that may be awarded in any calendar year
      to
      any one individual for the purposes of Section 162(m) of the
      Code.




As
      of
      September 25, 2006, there were outstanding options to purchase 2,570,000 shares
      of common stock, 1,000,000 exercisable at $0.50 per share, 1,000,000 exercisable
      at $0.75 per share, 425,000 of which are exercisable at $0.44 per share, 100,000
      exercisable at $0.74 per share, and 45,000 options exercisable at $1.01 per
      share.




**ITEM
      12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT**





The
      following table indicates how many shares of our common stock were beneficially
      owned as of September 27, 2006, 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. The address of each of the directors and
      executive officers 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
            
            
            7,900,000(2
            )
            
            22.3
            %Stephen
                M. Cohen
            
            
            2,500,000(3
            )
            
            7.4
            %William
                H. Moultrie
            
            
            113,637(4
            )
            
            (*
            )Millennium
                Global High Yield Fund Limited
              64
                St. James Street
              London,
                U.K. SQ1A 1NF
            
            
            2,875,000
            
            
            8.5
            %Michael
                Garnick
              1528
                Walnut Street
              Philadelphia,
                PA 19102
            
            
            2,300,000
            
            
            6.8
            %




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SPH
                Investments, Inc.
              111
                Presidential Blvd., Suite 165
              Bala
                Cynwyd, PA 19004
            
            
            2,068,182
            
            
            6.2
            %All
                officers and directors as a group (3 persons)
            
            
            10,113,637
            
            
            30.0
            %





(*)
                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
                12**,**2006 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 33,611,639 shares****of
                common stock outstanding as of September 12, 2006.(2)
            Consists
                of 7,500,000 shares held by Radiant Capital Partners, LLC over which
                Mr.
                Crain has sole voting and dispositive power and 400,000 shares issuable
                upon exercise of options in October 2006. Does not include 1,600,000
                shares issuable upon exercise of options which are subject to
                vesting.




(3)
            Consists
                of shares held of record by Mr. Cohen’s wife over whom he has sole voting
                and dispositive power.




(4)
            Does
                not include 50,000 shares issuable upon exercise of options which
                are
                subject to vesting.




**ITEM
      13. CERTAIN RELATIONSHIPS AND RELATED PARTY
      TRANSACTIONS**





On
      January 11, 2006, Bohn H. Crain, our Chief Executive Officer and Chairman of
      the
      Board of Directors, and Stephen M. Cohen, our Secretary General Counsel and
      a
      Director, surrendered 5,712,500 and 1,904,166 shares of common stock,
      respectively, to the Company for cancellation.





On
      January 13, 2006 we entered into a five year employment agreement with Bohn
      H.
      Crain to serve as our Chief Executive Officer. On October 20, 2005 we issued
      options to Mr. Crain to purchase 2,000,000 shares of common stock. See
“EXECUTIVE COMPENSATION - Employment and Option Agreements” above.





On
      February 10, 2006, the Company reimbursed Radiant Capital Partners LLC (“Radiant
      Capital”), an affiliate of Bohn H. Crain, $75,000 for amounts Radiant Capital
      had paid on behalf of the Company for financial advisory services paid to a
      financial advisor.





SMC
      Capital Advisors, Inc., a legal and financial advisory firm owned by Stephen
      Cohen, our Secretary, General Counsel and Director, provided approximately
      $50,000 of outside legal services to the Company in connection with the
      acquisition of Airgroup.





On
      June
      28, 2006, the Company joined Radiant Capital, an affiliate of Bohn H. Crain
      (and
      an entity qualified as a minority business enterprise by the Northwest Minority
      Business Council) to form Radiant Logistics Partners LLC (“Logistics Partners”).
      Radiant Capital and the Company contributed $12,000 and $8,000, for their
      respective 60% and 40% interests in Logistics Partners. Logistics Partners
      remains inactive pending a determination with respect to its application with
      the Northwest Minority Business Council made on July 18, 2006 to be certified
      as
      a minority business enterprise. Once approved, the Company intends to work
      through Logistics Partners as one element of its planned national accounts
      sales
      strategy to pursue corporate and government accounts with diversity
      initiatives.


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**ITEM
      14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES**





The
      following table presents fees for professional audit services performed by
      for
      the audit of our annual financial statements for the six months ended June
      30,
      2006 and years ended December 31, 2005 and 2004 and fees billed for other
      services rendered by it during those periods.





**2006**
            
            **2005**
            
            **2004**Audit
                Fees:
            
            $
            80,000
            
            $
            32,266
            
            $
            10,000Audit
                Related Fees:
            
            
            4,767
            
            
            0
            
            
            0Tax
                Fees:
            
            
            —
            
            
            0
            
            
            0All
                Other Fees:
            
            
            —
            
            
            0
            
            
            0Total:
            
            $
            84,767
            
            $
            32,266
            
            $
            10,000





**Audit
      Fees**





Audit
      Fees consist of fees billed 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."





**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.





**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 2005 and 2006, 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.


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**ITEM
      15. EXHIBITS**




Exhibit
                No.
            Exhibit2.1
            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).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 (representing the private placement
                of
                shares of common stock in October 2005) (incorporated by reference
                to
                Exhibit 4.1 to the Registrant's Current Report on Form 8-K dated
                October
                18, 2005).10.2
            Radiant
                Logistics, Inc. 2005 Stock Incentive Plan (incorporated by reference
                to
                Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-QSB
                filed
                November 14, 2005).10.3
            Confidential
                Private Placement Memorandum dated November 1, 2005 (including Form
                of
                Registration Rights Provisions and Subscription Agreement) (incorporated
                by reference to Exhibit 10.1 to the Registrant's Current Report on
                Form
                8-K dated December 21, 2005).10.4
            Executive
                Employment Agreement dated January 11, 2006 by and between Airgroup
                Corporation and William H. Moultrie. (Incorporated by reference to
                the
                Registrant’s Current Report on Form 8-K filed on January 18,
                2006).10.5
            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).10.6
            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).10.7
            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).10.8
            Option
                Agreement dated January 11, 2006 by and between Radiant Logistics,
                Inc.
                and William H. Moultrie (incorporated by reference to the Registrant’s
                Current Report on Form 8-K filed on January 18, 2006).10.9
            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).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. (This exhibit shall not be deemed
              “filed” for purposes of Section 18 of the Securities Exchange Act of 1934,
              as amended, or otherwise subject to the liability of that section.
              Further, this exhibit shall not be deemed to be incorporated by reference
              into any filing under the Securities Act of 1933, as amended, or the
              Securities Exchange Act of 1934, as amended.) (Filed
              herewith)




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**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the
      registrant caused this report to be signed on its behalf by the undersigned,
      thereunto duly authorized.




**RADIANT
              LOGISTICS, INC.**Date: October
              12, 2006
            By:
            /s/ Bohn
              H.
              CrainName: 
Bohn
                H. Crain
              Title:   
                Chief Executive Officer




In
      accordance with the Exchange Act, 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 M. Cohen
            
            Director
                , General Counsel and Secretary
            
            October
                12, 2006Stephen
              M. Crain/s/
                Bohn H. Crain
            
            Chairman
                andChief
                Executive Officer
            
            October
                12, 2006Bohn
              H. Crain/s/
              Rodney Eaton
            
            Vice
                President, Chief Accounting Officer & Controller
            
            October
                12, 2006Rodney
              Eaton




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**FINANCIAL
      STATEMENTS**


**INDEX
      TO THE CONSOLIDATED FINANCIAL
      STATEMENTS**




**RADIANT
      LOGISTICS, INC.**


**(f/k/a
      GOLF TWO, INC.)**




Report
                of Independent Registered Public Accounting
                Firm
            F-2Consolidated
                Balance Sheetsas
                of June 30, 2006, December 31, 2005 and 2004
            F-3ConsolidatedStatements
                of Income (Operations)for
                the six months ended June 30, 2006 and 2005
                (unaudited),and the years ended December 31, 2005, 2004 and
                2003
            F-4Statement
                of Stockholders’ Equityas
                ofJune
                30, 2006
            F-5ConsolidatedStatements
                of Cash flowsfor
                the six months ended June 30, 2006 and 2005 (unaudited),
                and the years ended December 31, 2005, 2004 and
                2003
            F-6-7Notes
                to Consolidated Financial
                Statements
            F-8




F-1
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**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
      FIRM**







To
      the
      Board of Directors and Stockholders


of
      Radiant Logistics, Inc.




We
      have
      audited the accompanying consolidated balance sheets of Radiant Logistics,
      Inc.
      (the “Company,” formerly Golf Two, Inc.) as of June 30, 2006, December 31, 2005
      and 2004, and the related consolidated statements of income (operations),
      stockholders' equity, and cash flows for the six month period ended June 30,
      2006, and years ended December 31, 2005, 2004 and 2003. 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 audit.





We
      conducted our audit in accordance with generally accepted auditing standards
      as
      established by the Auditing Standards Board (United States) and in accordance
      with the auditing 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 is not required to, nor were
      we
      engaged to perform, an audit of its internal control over financial
      reporting. Our audit 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 audit provides a reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the consolidated financial position of Radiant
      Logistics, Inc. as of June 30, 2006, December 31, 2005 and 2004, and the
      consolidated results of its operations and its cash flows for the six month
      period ended June 30, 2006, and years ended December 31, 2005, 2004 and 2003,
      in
      conformity with accounting principles generally accepted in the United States
      of
      America.








/S/
      Stonefield Josephson, Inc.




Los
      Angeles, California


September
      20, 2006


F-2
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**RADIANT
      LOGISTICS, INC.**


**(f/k/a
      Golf Two, Inc.)**


**Consolidated
      Balance Sheets**


June
                30,
            
            December
                31,
            
            December
                31,2006
            
            2005
            
            2004ASSETSCurrent
                assets -Cash
                and cash equivalents
            
            $
            510,970
            
            $
            5,266,451
            
            $
            19,487Accounts
                receivable, net of allowance
            
            
            8,487,899
            
            
            —
            
            
            —June,
                30 2006 - $202,830; December 31, 2005 - $0; December 31, 2004 -
                $0Current
                portion of employee loan receivables and other
              Receivables
            
            
            40,329
            
            
            25,055
            
            
            —Prepaid
                expenses and other current assets
            
            
            93,087
            
            
            —
            
            
            —Deferred
                tax asset
            
            
            277,417
            
            
            —
            
            
            —Total
                current assets
            
            
            9,409,702
            
            
            5,291,506
            
            
            19,487Furniture
                and equipment, net
            
            
            258,119
            
            
            —
            
            
            —Acquired
                intangibles, net
            
            
            2,401,600
            
            
            —
            
            
            —Goodwill
            
            
            4,712,062Employee
                loan receivable
            
            
            120,000
            
            
            —
            
            
            —Investment
                in real estate
            
            
            40,000
            
            
            —
            
            
            —Deposits
                and other assets
            
            
            103,376
            
            
            15,907
            
            
            —Total
                long term assets
            
            
            7,377,038
            
            
            15,907
            
            
            —$
            17,044,859
            
            $
            5,307,413
            
            $
            19,487LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)Current
                liabilities -Accounts
                payable
            
            $
            4,096,538
            
            $
            —
            
            $
            —Accrued
                transportation costs
            
            
            1,501,374
            
            
            —
            
            
            —Commissions
                payable
            
            
            429,312
            
            
            —
            
            
            —Other
                accrued costs
            
            
            303,323
            
            
            148,388
            
            
            2,000Income
                taxes payable
            
            
            1,093,996
            
            
            —
            
            
            —Total
                current liabilities
            
            
            7,424,543
            
            
            148,388
            
            
            2,000Long
                term debt
            
            
            2,469,936
            
            
            —
            
            
            —Note
                Payable
            
            
            —
            
            
            —
            
            
            50,000Deferred
                tax liability
            
            
            816,544
            
            
            —
            
            
            —Total
                long term liabilities
            
            
            3,286,480
            
            
            —
            
            
            50,000Total
                liabilities
            
            
            10,711,023
            
            
            148,388
            
            
            52,000Commitments
                & contingencies
            
            
            —
            
            
            —
            
            
            —Stockholders'
                equity (deficit):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, 2006 - 33,611,639; December 31, 2005 - 31,135,849:
                December 31, 2004 - 25,964,176
            
            
            15,067
            
            
            12,590
            
            
            7,418Additional
                paid-in capital
            
            
            6,590,355
            
            
            5,488,707
            
            
            153,307Accumulated
                deficit
            
            
            (271,586
            )
            
            (342,272
            )
            
            (193,238
            )Total
                Stockholders’ equity (deficit)
            
            
            6,333,836
            
            
            5,159,025
            
            
            (32,513
            )$
            17,044,859
            
            $
            5,307,413
            
            $
            19,487


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


F-3
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          to Table of Contents**




**RADIANT
      LOGISTICS, INC.**


**(f/k/a
      Golf Two, Inc.)**


**Consolidated
      Statements of Income
      (Operations)**


SIX
                MONTHS ENDED
            
            YEAR
                ENDEDJUNE
                30,
            
            DECEMBER
                31,2006
            
            2005
            
            2005
            
            2004
            
            2003(unaudited)Revenues
            
            $
            26,469,049
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —Cost
                of transportation
            
            
            16,965,966
            
            
            —
            
            
            —
            
            
            —
            
            
            —Net
                revenues
            
            
            9,503,083
            
            
            —
            
            
            —
            
            
            —
            
            
            —Agent
                Commissions
            
            
            7,037,363
            
            
            —
            
            
            —
            
            
            —
            
            
            —Personnel
                costs
            
            
            1,154,449
            
            
            —
            
            
            —
            
            
            —
            
            
            —Selling,
                general and administrative expenses
            
            
            842,391
            
            
            21,881
            
            
            161,967
            
            
            23,293
            
            
            29,828Depreciation
                and amortization
            
            
            423,465
            
            
            —
            
            
            —
            
            
            —
            
            
            —Total operating expenses
            
            
            9,457,668
            
            
            21,881
            
            
            161,967
            
            
            23,293
            
            
            29,828Income
                (loss) from operations
            
            
            45,415
            
            
            (21,881
            )
            
            (161,967
            )
            
            (23,293
            )
            
            (29,828
            )Other
                income (expense):Interest
                income
            
            
            14,800
            
            
            —
            
            
            14,433
            
            
            —
            
            
            58Interest
                expense
            
            
            (25,851
            )
            
            (1,000
            )
            
            (1,500
            )
            
            (2,000
            )
            
            (300
            )Other
            
            
            (2,773
            )
            
            —
            
            
            —
            
            
            —
            
            
            —Total
                other income (expense)
            
            
            (13,824
            )
            
            (1,000
            )
            
            12,933
            
            
            (2,000
            )
            
            (242
            )Income
                (loss) before income tax expense (benefit)
            
            
            31,591
            
            
            (22,811
            )
            
            (149,034
            )
            
            (25,293
            )
            
            (30,070
            )Income
                tax expense (benefit)
            
            
            (39,095
            )
            
            —
            
            
            —
            
            
            —
            
            
            —Net
                income (loss)
            
            $
            70,686
            
            $
            (22,811
            )
            $
            (149,034
            )
            $
            (25,293
            )
            $
            (30,070
            )Net
                income (loss) per common share - basic and diluted
            
            $
            —
            
            $
            —
            
            $
            (0.01
            )
            $
            —
            
            $
            —Weighted
                average shares outstanding:Basic
                shares
            
            
            33,185,665
            
            
            25,964,176
            
            
            26,490,427
            
            
            25,964,179
            
            
            25,964,179Diluted
                shares
            
            
            34,584,836
            
            
            25,964,176
            
            
            26,490,427
            
            
            25,964,179
            
            
            25,964,179


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


F-4
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          to Table of Contents**




**RADIANT
      LOGISTICS, INC.**


**(f/k/a
      Golf Two, Inc.)**


**Consolidated
      Statement of Stockholders’
Equity**


TOTALADDITIONAL
            
            
            
            STOCKHOLDERS'COMMON
                STOCK
            
            PAID-IN
            
            ACCUMULATED
            
            EQUITYSHARES
            
            AMOUNT
            
            CAPITAL
            
            DEFICIT
            
            (DEFICIT)Balance
                at December 31, 2002(Reflects
                3.5:1 Stock split; Note 9)
            
            
            25,964,179
            
            $
            7,418
            
            $
            150,607
            
            $
            (137,875
            )
            $
            20,150Capital
                contribution for office space and interest expense
            
            
            —
            
            
            —
            
            
            1,500
            
            
            —
            
            
            1,500Net
                loss for the year ended December 31, 2003
            
            
            —
            
            
            —
            
            
            —
            
            
            (30,070
            )
            
            (30,070
            )Balance
                at December 31, 2003
            
            
            25,964,179
            
            
            7,418
            
            
            152,107
            
            
            (167,945
            )
            
            (8,420
            )Capital
                contribution for office space
            
            
            —
            
            
            —
            
            
            1,200
            
            
            —
            
            
            1,200Net
                loss for the year ended December 31, 2004
            
            
            —
            
            
            —
            
            
            —
            
            
            (25,293
            )
            
            (25,293
            )Balance
                at December 31, 2004
            
            
            25,964,179
            
            
            7,418
            
            
            153,307
            
            
            (193,238
            )
            
            (32,513
            )Issuance
                of common stock for cash at $0.44 per share (October 2005), net of
                issuance costs
            
            
            2,272,728
            
            
            2,273
            
            
            983,949
            
            
            —
            
            
            986,222Issuance
                of common stock for cash at $0.44 per share (December 2005), net
                of
                issuance costs
            
            
            10,098,943
            
            
            10,100
            
            
            4,206,203
            
            
            —
            
            
            4,216,303Issuance
                of common stock for cash at $0.44 per share (December 2005), net
                of
                issuance costs
            
            
            500,000
            
            
            500
            
            
            29,000
            
            
            —
            
            
            29,500Surrender
                of common stock (Note 8)
              (December
                2005)
            
            
            (7,700,001
            )
            
            (7,701
            )
            
            7,701
            
            
            —
            
            
            —Forgiveness
                of debt and related interest in connection with change of control
                (Note 8)
                (October 2005)
            
            
            —
            
            
            —
            
            
            78,409
            
            
            —
            
            
            78,409Capital
                contribution for office space
            
            
            —
            
            
            —
            
            
            900
            
            
            —
            
            
            900Stock
                based compensation
            
            
            —
            
            
            —
            
            
            29,238
            
            
            —
            
            
            29,238Net
                loss for the year ended December 31, 2005
            
            
            —
            
            
            —
            
            
            —
            
            
            (149,034
            )
            
            (149,034
            )Balance
                at December 31, 2005
            
            
            31,135,849
            
            
            12,590
            
            
            5,488,707
            
            
            (342,272
            )
            
            5,159,025Issuance
                of common stock for cash at $0.44 pershare
                (January 2006), net of issuance costs
            
            
            1,009,093
            
            
            1,010
            
            
            440,627
            
            
            —
            
            
            441,637Issuance
                of common stock for cash at $0.44 pershare
                (February 2006), net of issuance costs
            
            
            1,466,697
            
            
            1,467
            
            
            638,555
            
            
            —
            
            
            640,022Costs
                incurred for issuance of prior year shares
            
            
            
            
            
            
            
            
            (63,153
            )
            
            
            
            
            (63,153
            )Stock
                based compensation
            
            
            —
            
            
            —
            
            
            85,619
            
            
            —
            
            
            85,619Net
                income for the six months endedJune
                30, 2006
            
            
            —
            
            
            —
            
            
            —
            
            
            70,686
            
            
            70,686Balance
                at June 30, 2006
            
            
            33,611,639
            
            $
            15,067
            
            $
            6,590,355
            
            $
            (271,586
            )
            $
            6,333,836


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


F-5
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          to Table of Contents**




**RADIANT
      LOGISTICS, INC.**


**(f/k/a
      Golf Two, Inc.)**


**Consolidated
      Statement of Cash Flows**


SIX
                  MONTHS ENDED
                JUNE
                  30,
              
              YEAR
                  ENDED
                DECEMBER
                  31,CASH
                  FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
              
              2006
              
              2005
              
              2005
              
              2004
              
              2003(unaudited)Net
                  income (loss)
              
              $
              70,686
              
              $
              (22,881
              )
              $
              (149,034
              )
              $
              (25,293
              )
              $
              (30,070
              )ADJUSTMENTS
                  TO RECONCILE NET INCOME (LOSS) TO NET CASHPROVIDED
                  BY (USED FOR) OPERATING ACTIVITIES:non-cash
                  issuance of common stock (services)
              
              
              —
              
              
              —
              
              
              29,500
              
              
              —
              
              
              —non-cash
                  contribution to capital (rent)
              
              
              —
              
              
              600
              
              
              900
              
              
              1,200
              
              
              1,200non-cash
                  compensation expense (stock options)
              
              
              85,619
              
              
              —
              
              
              29,238
              
              
              —
              
              
              —non-cash
                  contribution to capital (interest)
              
              
              —
              
              
              —
              
              
              3,500
              
              
              —
              
              
              300amortization
                  of intangibles
              
              
              340,400
              
              
              —
              
              
              —
              
              
              —
              
              
              —depreciation
                  and amortization
              
              
              (32,670
              )
              
              —
              
              
              —
              
              
              —
              
              
              —change
                  in fair value of accounts receivable
              
              
              225,271
              
              
              —
              
              
              —
              
              
              —
              
              
              —CHANGE
                  IN OPERATING ASSETS AND LIABILITIES:accounts
                  receivable
              
              
              1,739
              
              
              —
              
              
              —
              
              
              —
              
              
              —employee
                  receivable and other receivables
              
              
              12,230
              
              
              —
              
              
              (25,054
              )
              
              —
              
              
              —prepaid
                  expenses and other current assets
              
              
              (116,446
              )
              
              —
              
              
              —
              
              
              —
              
              
              —accounts
                  payable
              
              
              (2,590,831
              )
              
              —
              
              
              —
              
              
              —
              
              
              —accrued
                  transportation costs
              
              
              1,501,374
              
              
              —
              
              
              —
              
              
              —
              
              
              —commissions
                  payable
              
              
              9,280
              
              
              —
              
              
              —
              
              
              —
              
              
              —other
                  accrued costs
              
              
              (182,677
              )
              
              —
              
              
              —
              
              
              —
              
              
              —income
                  taxes payable
              
              
              (298,388
              )
              
              1,000
              
              
              146,387
              
              
              (7,150
              )
              
              2,150Total
                  adjustments
              
              
              (1,045,099
              )
              
              1,600
              
              
              184,471
              
              
              (5,950
              )
              
              3,650Net
                  cash provided by (used for)operating
                  activities
              
              
              (974,413
              )
              
              (21,281
              )
              
              35,437
              
              
              (31,243
              )
              
              (26,420
              )CASH
                  FLOWS PROVIDED BY (USED FOR) INVESTING ACTIVITIES:Acquisition
                  of Airgroup, net of acquired cash (See Note 4)
              
              
              (7,358,588
              )
              
              —
              
              
              (15,907
              )
              
              —
              
              
              —Proceeds
                  from sale of investments
              
              
              241,455
              
              
              —
              
              
              —
              
              
              —
              
              
              —Purchase of technology and equipment
              
              
              (95,153
              )
              
              —
              
              
              —
              
              
              —
              
              
              —Net
                  cash used for investing activities
              
              
              (7,212,286
              )
              
              —
              
              
              (15,907
              )
              
              —
              
              
              —CASH
                  FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES:Proceeds
                  from notes payable, stockholders
              
              
              —
              
              
              24,909
              
              
              24,909
              
              
              —
              
              
              50,000Proceeds
                  from issuance of common stock net of
                issuance
                  costs
              
              
              1,018,506
              
              
              —
              
              
              5,202,525
              
              
              —
              
              
              —Proceeds
                  from credit facility net of credit fees
              
              
              1,969,936
              
              
              —
              
              
              —
              
              
              —
              
              
              —Payment
                  of credit facility fees
              
              
              (57,224
              )
              
              —
              
              
              —
              
              
              —
              
              
              —Long
                  term debt for acquisition (see Note 4)
              
              
              500,000
              
              
              —
              
              
              —
              
              
              —
              
              
              —Net
                  cash provided by financing activities
              
              
              3,431,218
              
              
              24,909
              
              
              5,227,434
              
              
              —
              
              
              50,000NET
                  INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
              
              
              (4,755,481
              )
              
              3,628
              
              
              5,246,964
              
              
              (31,243
              )
              
              23,580CASH
                  AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
              
              
              5,266,451
              
              
              19,487
              
              
              19,487
              
              
              50,730
              
              
              27,150CASH
                  AND CASH EQUIVALENTS AT END OF YEAR
              
              $
              510,970
              
              $
              23,115
              
              $
              5,266,451
              
              $
              19,487
              
              $
              50,730SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:Income
                  taxes paid
              
              $
              656,813
              
              $
              800
              
              $
              800
              
              $
              800
              
              $
              —Interest
                  paid
              
              $
              25,851
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —SUPPLEMENTAL
                  DISCLOSURE OF NON-CASH INVESTING ACTIVITIESAcquisition
                  of Airgroup (see Note 4):Fair
                  value of assets acquired
              
              $
              19,885,892
              
              $
              —
              
              $
              15,907
              
              $
              —
              
              $
              —Liabilities
                  assumed
              
              
              (9,797,019
              )
              
              —
              
              
              —
              
              
              —
              
              
              —Cash
                  paid
              
              
              10,088,873
              
              
              —
              
              
              15,907
              
              
              —
              
              
              —Less
                  cash acquired
              
              
              (2,730,285
              )
              
              —
              
              
              —
              
              
              —
              
              
              —Net
                  cash paid for Airgroup
              
              $
              7,358,588
              
              $
              —
              
              $
              15,907
              
              $
              —
              
              $
              —




F-6
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          to Table of Contents**




**RADIANT
      LOGISTICS, INC.**


**(f/k/a
      Golf Two, Inc.)**


**Consolidated
      Statements of Cash Flows**




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






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





Prior
      to
      the change of control transaction in October of 2005, a then officer of the
      Company provided office space to the Company on a month-to-month basis that
      was
      recorded as a contribution to capital. Total office expense for the years ended
      December 31, 2005, 2004, and 2003 amounted to $900, $1,200, and $1,500,
      respectively.





On
      November 5, 2003, the Company was loaned $50,000 by a stockholder in exchange
      for a promissory note. For the years ended December 31, 2005 and 2004 while
      the
      Company recorded interest expense of $1,200, and $2,000, respectively, related
      to this note.





On
      March
      1, 2005, the Company borrowed $24,909 from a stockholder in exchange for a
      non-interest bearing promissory note with principal due and payable in five
      years.





In
      October of 2005, and in conjunction with the change in control transaction,
      stockholders agreed to discharge $78,409 in notes and accumulated
      interest.





In
      December of 2005, 500,000 shares of common stock were issued to a financial
      advisor in exchange for financial advisory and investment banking services
      provided in connection with, among other things, our transition to a third-party
      logistics company at a price $0.44 per share.


F-7
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          to Table of Contents**




**RADIANT
      LOGISTICS, INC.**


**(f/k/a
      Golf Two, Inc.)**


**Notes
      to the Consolidated Financial
      Statements**






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




**The
      Company**





Radiant
      Logistics, Inc. (formerly known as “Golf Two, Inc”) (the “Company”) was formed
      under the laws of the state of Delaware on March 15, 2001 and from inception
      through the third quarter of 2005, the Company's principal business strategy
      focused on the development of retail golf stores. In October 2005, our
      management team consisting of Bohn H. Crain and Stephen M. Cohen completed
      a
      change of control transaction when they acquired a majority of the Company’s
      outstanding securities from the Company’s former officers and directors in
      privately negotiated transactions. In conjunction with the change of control
      transaction, we: (i) elected to discontinue the Company’s former business model;
      (ii) repositioned ourselves as a global transportation and supply chain
      management company; and (iii) changed our name to “Radiant Logistics, Inc.” to,
      among other things, better align our name with our new business
      focus.





Through
      the strategic acquisition of regional best-of-breed non-asset based
      transportation and logistics service providers, 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.





Our
      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. Also, 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.





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. As to our first factor,
      following our recent acquisition of Airgroup Corporation (“Airgroup”), we have
      identified a number of additional companies that may be suitable acquisition
      candidates and are in preliminary discussions with a select number of them.
      As
      to our second factor, 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, neither of which can be assured.





Our
      growth strategy relies upon a number of factors, including our ability to
      efficiently integrate the businesses of the companies we acquire, generate
      the
      anticipated economies of scale from the integration, and 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 our ability to acquire and profitably manage
      additional businesses and the intense competition in our industry for customers
      and for the acquisition of additional businesses.





We
      accomplished the first step in our strategy by completing the acquisition of
      Airgroup effective as of January 1, 2006; see Note 4. Airgroup is a Seattle,
      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.


F-8
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          to Table of Contents**




***Basis
                of Presentation***





The
      audited consolidated financial statements have been prepared by the Company,
      pursuant to the rules and regulations of the Securities and Exchange Commission
      ("SEC"). The information furnished herein reflects all adjustments (consisting
      of normal recurring accruals and adjustments), which are, in the opinion of
      management, necessary to fairly represent the operating results for the
      respective periods.





Effective
      June 30, 2006, the Company changed its fiscal year end from December 31 to
      June
      30. This change was made in
      order
      to make the Company’s fiscal year conform to the June 30 fiscal year of the
      Company’s platform acquisition, Airgroup Corporation. The
      resulting six-month period ended June 30, 2006 may be referred to herein as
      the
“Transition Period.” The six-month period ended June 30, 2005 is unaudited. As
      of January 1, 2006, the Company was no longer considered to be a development
      stage company due to the acquisition of Airgroup. Airgroup is a wholly owned
      subsidiary of the Company and its results are consolidated within the Company’s
      consolidated financial statements for the six months ended June 30, 2006. All
      material inter-company accounts have been eliminated in
      consolidation.





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





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





The
      preparation of consolidated 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 stock options, 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 statement 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)**
            **Property
                and 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


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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.





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 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. In
      the
      future, we will perform our 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, 2006 there are no indications of
      an
      impairment.





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




Acquired
      intangibles consist of customer related intangibles and non-compete agreements
      arising from our 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 approximately 5 year period.
      See
      Note 4.





The
      Company accounts for long-lived assets in accordance with the provisions of
      Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for
      the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
      Of.” This statement establishes financial accounting and reporting standards for
      the impairment or disposal of long-lived assets. The statement requires that
      long-lived assets be reviewed for impairment whenever events or changes in
      circumstances indicate that its carrying amount may be not be recoverable and
      is
      measured by a comparison of the carrying amount of an asset to undiscounted
      future net cash flows expected to be generated by the asset. If the carrying
      amount of an asset exceeds its estimated future undiscounted cash flows, an
      impairment charge is recognized for the amount by which the carrying amount
      of
      the asset exceeds the fair value of the asset. SFAS No. 144 requires companies
      to separately report discontinued operations and extends that reporting to
      a
      component of an entity that either has been disposed of (by sales, abandonment
      or in a distribution to owners) or is classified as held for sale. Assets to
      be
      disclosed are reported at the lower of the carrying amount or fair value less
      costs to sell. 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, 2006.





**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 2010. Annual commitments for years ending June
      30, 2007 through 2010, respectively, are **** $228,041,
      $87,122, $86,498, $78,008, and $31,800 thereafter.





**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 and the tax effects of net operating loss


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and
      capital loss carryforwards. 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.





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





The
      Company recognizes 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. The Company, at its sole
      discretion, set the prices charged to our customers, and is not required to
      obtain approval or consent from any other party in establishing our prices.
      The
      Company has multiple suppliers for the services the Company 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. 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. 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**





In
      December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
      No.
      123R, "Share Based Payment: An Amendment of FASB Statements No. 123 and 95"
      ("SFAS 123R"). This statement requires that the cost resulting from all
      share-based payment transactions be recognized in the Company’s consolidated
      financial statements. In addition, in March 2005 the Securities and Exchange
      Commission ("SEC") released 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. Generally, the approach in SFAS 123R is
      similar to the approach described in SFAS 123. However, 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.
      Pro
      forma disclosure of fair value recognition, as prescribed under SFAS 123, is
      no
      longer an alternative. The Company adopted statement SFAS 123R, the modified
      prospective application method, in October 2005 and does not believe the impact
      will be significant to the Company’s overall consolidated results of operations
      or financial position.





As
      a
      result of adopting Statement 123R in October 2005, for the six months ended
      June
      30, 2006 the effect of the expense was a reduction in income by $85,619, and
      an
      increase in net loss by $29,238 for the year ended December 31, 2005. Prior
      to
      October 2005 the company did not have a stock option plan therefore no expense
      was recorded.





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





The
      Company uses SFAS No. 128, "Earnings Per Share" for calculating the basic and
      diluted income (loss) per share. Basic income (loss) per share is computed
      by
      dividing net income (loss) 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 had been issued and if the additional
      common shares were dilutive. For six months ended June 30, 2006, the weighted
      average outstanding number of potentially dilutive common shares totaled
      34,584,836 shares of common stock, including options to purchase 2,425,000
      shares of common stock at June 30, 2006, which on a weighted average basis
      is
      1,399,171 shares based on the application of the treasury stock method. The
      following table reconciles the numerator and denominator of the basic and
      diluted per share computations for earnings per share for the six months ended
      June 30, 2006.


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Six
                months ended
            
            Year
                ended
            
            Year
                endedJune
                30, 2006
            
            December
                31,2005
            
            December
                31, 2004Weighted
                average basic shares outstanding
            
            
            33,185,665
            
            
            26,490,427
            
            
            25,964,176Options
            
            
            1,399,171
            
            
            —
            
            
            —Weighted
                average dilutive shares outstanding
            
            
            34,584,836
            
            
            26,490,427
            
            
            25,964,176





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




The
      carrying value of the Company's accounts receivable, accounts payable, other
      accrued liabilities, and line of credit approximate their estimated fair values
      due to the relatively short maturities of those instruments.




**n)**
            **Comprehensive
                Loss**




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





**NOTE
      3 - RECENT ACCOUNTING PRONOUNCEMENTS**





In
      December 2004, the FASB issued SFAS No.152, "Accounting for Real Estate
      Time-Sharing Transactions--an amendment of FASB Statements No. 66 and 67" ("SFAS
      152) The amendments made by Statement 152 This Statement amends FASB Statement
      No. 66, Accounting for Sales of Real Estate, to reference the financial
      accounting and reporting guidance for real estate time-sharing transactions
      that
      is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real
      Estate Time-Sharing Transactions. This Statement also amends FASB Statement
      No.
      67, Accounting for Costs and Initial Rental Operations of Real Estate Projects,
      to state that the guidance for (a) incidental operations and (b) costs incurred
      to sell real estate projects does not apply to real estate time-sharing
      transactions. The accounting for those operations and costs is subject to the
      guidance in SOP 04-2. This Statement is effective for financial statements
      for
      fiscal years beginning after June 15, 2005. We have evaluated the impact of
      the
      adoption of SFAS 152, and do not believe the impact will be significant to
      our
      overall consolidated results of operations or financial position.





In
      December 2004, the FASB issued SFAS No.123 (revised 2004), "Share-Based
      Payment". Statement 123(R) will provide investors and other users of financial
      statements with more complete and neutral financial information by requiring
      that the compensation cost relating to share-based payment transactions be
      recognized in financial statements. That cost will be measured based on the
      fair
      value of the equity or liability instruments issued. Statement 123(R) covers
      a
      wide range of share-based compensation arrangements including share options,
      restricted share plans, performance-based awards, share appreciation rights,
      and
      employee share purchase plans. Statement 123(R) replaces FASB Statement No.
      123,
      Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25,
      Accounting for Stock Issued to Employees. Statement 123, as originally issued
      in
      1995, established as preferable a fair-value-based method of accounting for
      share-based payment transactions with employees. However, that Statement
      permitted entities the option of continuing to apply the guidance in Opinion
      25,
      as long as the footnotes to financial statements disclosed what net income
      would
      have been had the preferable fair-value-based method been used. Non-public
      entities will be required to apply Statement 123(R) as of the first annual
      reporting period that begins after December 15, 2005. We adopted SFAS 123 (R)
      which resulted in an incremental $29,238 of compensation expense included in
      our
      results for the year ended December 31, 2005.





In
      March
      2005, the staff of the SEC issued Staff Accounting Bulletin No. 107 ("SAB 107").
      The interpretations in SAB 107 express views of the staff regarding the
      interaction between SFAS 123(R) and certain SEC rules and regulations and
      provide the staff's views regarding the valuation of share-based payment
      arrangements for public companies. In particular SAB 107 provides guidance
      related to share-based payment transactions with nonemployees, the transition
      from public entity status, valuation methods (including assumptions such as
      expected volatility and expected term), the accounting for certain redeemable
      financial instruments issued under share-based payment arrangements, the
      classification of compensation expense, non-GAAP financial measures, first-time
      adoption of SFAS 123(R) in an interim period, capitalization of compensation
      cost related to share-based payment arrangements, the accounting for income
      tax
      effects of share-based payment arrangements upon adoption of SFAS 123(R) and
      the
      modification of employee share options prior to adoption of SFAS 123(R). Management
      is currently evaluating the impact SAB 107 will have on our consolidated
      financial statements.


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In
      March
      2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional
      Asset Retirement Obligations” (“FIN 47”). FIN 47 provides guidance relating to
      the identification of and financial reporting for legal obligations to perform
      an asset retirement activity. The Interpretation requires recognition of a
      liability for the fair value of a conditional asset retirement obligation when
      incurred if the liability’s fair value can be reasonably estimated. FIN 47 also
      defines when an entity would have sufficient information to reasonably estimate
      the fair value of an asset retirement obligation. The provision is effective
      no
      later than the end of fiscal years ending after December 15, 2005. We have
      adopted FIN 47 beginning the first quarter of fiscal year 2006 and do not
      believe the adoption will have a material impact on our financial position
      or
      results of operations or cash flows.





In
      May
      2005, the FASB issued SFAS No.154, “ *Accounting
      Changes and Error Corrections* ”
(“SFAS
      154”) which replaces Accounting Principles Board Opinions No. 20 “ *Accounting
      Changes* ”
and
      SFAS No. 3, “ *Reporting
      Accounting Changes in Interim Financial Statements - An Amendment of APB Opinion
      No. 28* .” SFAS
      154 provides guidance on the accounting for and reporting of accounting changes
      and error corrections. It establishes retrospective application, for the latest
      practicable date, as the required method for reporting a change in accounting
      principle and the reporting of a correction of an error. SFAS 154 is effective
      for accounting changes and corrections of errors made in fiscal years beginning
      after December 15, 2005. The Company adopted SFAS 154 in the first quarter
      of
      fiscal 2006.





In
      June
      2005, the Emerging Issues Task Force (EITF) reached a consensus on Issue 05-6,
      “Determining *the
      Amortization Period for Leasehold Improvements* ”,
      which
      requires that leasehold improvements acquired in a business combination or
      purchased subsequent to the inception of a lease be amortized over the lesser
      of
      the useful life of the assets or a term that includes renewals that are
      reasonably assured at the date of the business combination or purchase. EITF
      05-6 is effective for periods beginning after July 1, 2005. The Company does
      not
      expect the provisions of this consensus to have any impact on its consolidated
      financial position, results of operations or cash flows.





In
      February 2006, the FASB has issued FASB Statement No. 155, Accounting for
      Certain Hybrid Instruments. This standard amends the guidance in FASB Statements
      No. 133, Accounting for Derivative Instruments and Hedging Activities, and
      No.
      140, Accounting for Transfers and Servicing of Financial Assets and
      Extinguishments of Liabilities. Statement 155 allows financial instruments
      that
      have embedded derivatives to be accounted for as a whole (eliminating the need
      to bifurcate the derivative from its host) if the holder elects to account
      for
      the whole instrument on a fair value basis. Statement 155 is effective for
      all
      financial instruments acquired or issued after the beginning of an entity’s
      first fiscal year that begins after September 15, 2006. The Company does not
      expect the adoption of SFAS 155 to have any impact on its consolidated financial
      position, results of operations or cash flows.





In
      February 2006, the FASB decided to move forward with the issuance of a final
      FSP
      FAS 123R-4 *“Classification
      of Options and Similar Instruments Issued as Employee Compensation That Allow
      for Cash Settlement upon the Occurrence of a Contingent Event”* . The
      guidance in FSP FAS 123R-4 amends paragraphs 32 and A229 of FASB Statement
      No.
      123R to incorporate the concept articulated in footnote 16 of FAS 123R. That
      is,
      a cash settlement feature that can be exercised only upon the occurrence of
      a
      contingent event that is outside the employee’s control does not meet the
      condition in paragraphs 32 and A229 until it becomes probable that the event
      will occur. Originally under FAS 123R, a provision in a share-based payment
      plan
      that required an entity to settle outstanding options in cash upon the
      occurrence of any contingent event required classification and accounting for
      the share based payment as a liability. This caused an issue under certain
      awards that require or permit, at the holder’s election, cash settlement of the
      option or similar instrument upon (a) a change in control or other liquidity
      event of the entity or (b) death or disability of the holder. With this new
      FSP,
      these types of cash settlement features will not require liability accounting
      so
      long as the feature can be exercised only upon the occurrence of a contingent
      event that is outside the employee’s control (such as an initial public
      offering) until it becomes probable that event will occur. The guidance in
      this
      FSP shall be applied upon initial adoption of Statement 123(R). An entity that
      adopted Statement 123(R) prior to the issuance of the FSP shall apply the
      guidance in the FSP in the first reporting period beginning after February
      2006.
      Early application of FSP FAS 123R-4 is permitted in periods for which financial
      statements have not yet been issued. The Company does not expect this will
      have
      any impact upon its consolidated financial position, results of operations,
      or
      cash flows.





In
      March 2006, the FASB issued SFAS No. 156 “Accounting for Servicing of
      Financial Assets an amendment of FASB Statement No. 140”. FASB Statement
      No. 140, “Accounting for Transfers and servicing of Financial Assets and
      Extinguishments of Liabilities” establishing among other things, the accounting
      for all separately recognized servicing assets and servicing liabilities. This
      Statement amends Statement 140 to require that all separately recognized
      servicing assets and servicing liabilities be initially measured at fair value,
      if practicable. This Statement permits, but does not require, the subsequent
      measurement of separately recognized servicing assets and servicing liabilities
      at fair value. SFAS No. 156 is effective as of the beginning of the
      fiscal year that begins after September 15, 2006. The Company is currently
      evaluating the impact this new Standard, but believes that it will
      not


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have
      a
      material impact on the Company’s financial position, results of operations, or
      cash flows. The Company will adopt SFAS 156 on January 1,
      2007.





In July
      2006, the Financial Accounting Standards Board ("FASB") issued FASB
      Interpretation ("FIN") No. 48, *Accounting
      for Uncertainty in Income Taxes* ,
      with
      respect to FASB Statement No. 109, *Accounting
      for Income Taxes* ,
      regarding accounting for and disclosure of uncertain tax positions. FIN No.
      48 is intended to reduce the diversity in practice associated with the
      recognition and measurement related to accounting for uncertainty in income
      taxes. This interpretation is effective for fiscal years beginning after
      December 15, 2006. We are currently evaluating the impact this interpretation
      will have on our consolidated financial statements.





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. We are currently evaluating the
      impact this interpretation will have on our consolidated financial
      statements.





**NOTE
      4 - ACQUISITION OF AIRGROUP**





In
      January of 2006, the Company acquired 100 percent of the outstanding stock
      of
      Airgroup Corporation (“Airgroup”). Airgroup is a Seattle, 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) an additional base payment of $0.6 million payable in
      cash
      on the one-year anniversary of the closing, provided at least 90% of Airgroup’s
      locations remain operational through the first anniversary of the closing (the
      “Additional Base Payment”); (iii) a subsequent cash payment of $0.5 million in
      cash on the two-year anniversary of the closing; (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.




The
      acquisition, which provided the platform operation for the Company’s
      consolidation strategy, was accounted for as a purchase and accordingly, the
      results of operations and cash flows of Airgroup have been included in the
      Company’s consolidated financial statements prospectively from the date of
      acquisition.  At June 30, 2006 the total purchase price, including
      acquisition expenses of $104,779, but excluding the contingent consideration,
      was $10,104,779. If the parameters of the contingencies are met, in essence
      achieving certain income levels (see Note 9), they would be recorded as an
      adjustment to goodwill. The following table summarizes the allocation of the
      purchase price based on the estimated fair value of the assets acquired and
      liabilities assumed at January 1, 2006:




Current
                assets
            
            $
            11,777,922Furniture
                and equipment
            
            
            231,726Other
                assets
            
            
            438,089Intangibles
            
            
            2,742,000Goodwill
            
            
            4,712,061Total
                acquired assets
            
            
            19,901,798Current
                liabilities assumed
            
            
            8,864,739Long
                term deferred tax liability
            
            
            932,280Total
                acquired liabilities
            
            
            9,797,019Net
                assets acquired
            
            $
            10,104,779




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The
      above
      allocation is still preliminary and the Company expects to finalize it prior
      to
      the January 2007 anniversary of the acquisition of Airgroup. For the six months
      ended June 30, 2006, the Company recorded an expense of $340,400 from
      amortization of intangibles and an income tax benefit of $115,736 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 $403,806 in 2007, $361,257 in 2008, $394,079 in 2009, in
      $318,862 in 2010, and $107,052 in 2011.




The
      following information is based on actual and audited results for the six months
      ended June 30, 2006 while June 30, 2005 is based on historical and unaudited
      information as if the acquisition of Airgroup had occurred as of the beginning
      of the reporting period (in thousands, except earnings per share):





Six
                Monthsended
              June
                30,2006
            
            
            2005Total
                revenue
            
            $
            26,469
            
            $
            27,603Income
                (loss) from continuing operations
            
            
            46
            
            
            (36
            )Net
                income (loss)
            
            
            71
            
            
            (11
            )Earnings
                per share:Basic
            
            $
            —
            
            $
            —




**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 six months ended June 30, 2006
      and the year ended December 31, 2005. Prior the Company’s acquisition of
      Airgroup, there were no intangible assets for prior years as this is the
      Company’s first acquisition.




Six
                months ended
              June
                30, 2006
            
            Year
                ended
              December
                31, 2005Gross
              carrying
              amount
            
            Accumulated
                Amortization
            
            Gross
              carrying
              amount
            
            Accumulated
              AmortizationAmortizable
                intangible assets:Customer
                related
            
            $
            2,652,000
            
            $
            331,400
            
            $
            —
            
            $
            —Covenants
                not to compete
            
            
            90,000
            
            
            9,000
            
            
            —
            
            
            —Total
            
            $
            2,742,000
            
            $
            340,400
            
            $
            —
            
            $
            —Aggregate
                amortization expense for the year ended June 30:2007
            
            
            
            
            $
            611,8272008
            
            
            
            
            
            547,3592009
            
            
            
            
            
            597,0902010
            
            
            
            
            
            483,1242011
            
            
            
            
            
            162,200$
            2,401,600





**NOTE
      6 - PROPERTY AND EQUIPMENT**





The
      Company, prior to acquiring Airgroup, has never carried any fixed assets since
      its inception. Property and equipment consists of the following:




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June
                30,
            
            
            December
                31,2006
            
            
            2005Vehicles
            
            $
            3,500
            
            $
            —Communication
                equipment
            
            
            1,353
            
            
            —Office
                equipment
            
            
            6,023
            
            
            —Furniture
                and fixtures
            
            
            10,212
            
            
            —Computer
                equipment
            
            
            96,653
            
            
            —Computer
                software
            
            
            198,438
            
            
            —Leasehold
                improvements
            
            
            10,699
            
            
            —326,878
            
            
            —Less:
                Accumulated depreciation and amortization
            
            
            (68,759
            )
            
            —Property
                and equipment - net
            
            $
            258,119
            
            $
            —




Depreciation
      and amortization expense for the six months ended June 30, 2006 was $68,759
      and
      zero for year ended December 31, 2005.





**NOTE
      7 - LONG TERM DEBT**





To
      complete the Airgroup acquisition and ensure adequate financial flexibility,
      the
      Company secured a $10,000,000 revolving credit facility (the "Facility") in
      January 2006. The Facility is collateralized by our 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 prime minus 1.00% or LIBOR plus 1.55% and can be adjusted up or down during
      the term of the Facility based on our performance relative to certain financial
      covenants. At June 30, 2006, the Company’s facility interest rate was 7.25%. The
      facility provides for advances of up to 75% of our eligible accounts
      receivable.





As
      of
      August 31, 2006, the Company had approximately $250,000 outstanding under the
      Facility and we had eligible accounts receivable sufficient to support
      approximately $3.6 million in borrowings. The terms of our Facility are subject
      to certain financial and operational covenants which may limit the amount
      otherwise available under the Facility. The first covenant limits our 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 70.0%).
      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 us 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 our historical business and acquisition model, (iv)
      after giving effect for the funding of the acquisition, we must have undrawn
      availability of at least $2.0 million under the Facility, (v) the lender must
      be
      reasonably satisfied with projected financial statements 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 would have to 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 we may need to achieve our strategic objectives.
      At
      June 30, 2006, the Company was in compliance with all of its
      covenants.





As
      of
      June 30, 2006, we had $941,560 in advances under the Facility along with
      $1,028,376 in outstanding checks which had not yet been presented to the bank
      for payment. The outstanding checks have been reclassed from our cash accounts,
      as they will be advanced from, or against, our facility when presented for
      payment to the bank. These amounts, in addition to $500,000 payable to the
      former shareholders of Airgroup, total long term debt of
      $2,469,936.





At
      June
      30, 2006, based on available collateral and $205,000 in outstanding letter
      of
      credit commitments, there was $3,189,615 available for borrowing under the
      Facility.


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**NOTE
      8 - 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.




Six
                monthsended
            
            Year
                endedJune
                  30,
            
            December
                31,2006
            
            2005
            
            2004Deferred
                tax assets:Allowance
                for doubtful accounts
            
            $
            72,708
            
            $
            —
            
            $
            —Accruals
            
            
            532,585
            
            
            —
            
            
            —Net
                operating loss carryforwards
            
            
            162,088
            
            
            50,672
            
            
            8,600Valuation
                allowance for loss carryforwards
            
            
            (116,372
            )
            
            (50,672
            )
            
            (8,600
            )Accrued
                  other income
            
            
            33,631
            
            
            —
            
            
            —Total
                deferred tax assets
            
            $
            684,640
            
            $
            —
            
            $
            —Deferred
                tax liabilities:Accruals
            
            
            368,340
            
            
            —
            
            
            —Stock
                options
            
            
            38,883
            
            
            —
            
            
            —Net
                deferred tax asset - current
            
            $
            407,223
            
            $
            —
            
            $
            —Long
                term deferred tax liability - intangibles - Note 4
            
            $
            816,544
            
            $
            —
            
            $
            —





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 4.





The
      Company accumulated a net federal operating loss carryforward of $342,272 from
      inception though its transition into the logistics business as of January 2006
      which expires in 2025. Utilization of the net operating loss and tax credit
      carryforwards is subject to significant limitations imposed by the change in
      control under I.R.C. 382, limiting its annual utilization to the value of the
      Company at the date of change in control times the federal discount rate. A
      significant portion of the NOL may expire before it can be utilized. The
      Company is maintaining a valuation allowance of $116,372 to off-set the deferred
      tax asset associated with these net operating losses until when, in the opinion
      of management, utilization is reasonably assured.





From
      inception through the year ended December 31, 2005, the Company experienced
      net
      losses and as a results did not incur any income tax expense or deferred taxes.
      Income tax expense attributable to operations is as follows.




Six
                Monthsended
            
            Year
                endedJune
                30,
            
            December
                31,2006
            
            2005
            
            2004Current:Federal
            
            $
            109,216
            
            $
            —
            
            $
            —State
            
            
            —
            
            
            —
            
            
            —Deferred:Federal
            
            
            (148,311
            )
            
            —
            
            
            —State
            
            
            —
            
            
            —
            
            
            —Net
                income tax expense (benefit)
            
            $
            (39,095
            )
            $
            —
            
            $
            —





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


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Six
                Monthsended
            
            
            Year
                endedJune
                30,
            
            
            December
                31,2006
            
            
            2005
            
            
            2004Tax
                at statutory rate
            
            $
            10,741
            
            $
            —
            
            
            —Net
                operating loss carryforward net of valuation allowance
            
            
            (45,716
            )
            
            —
            
            
            —Other
            
            
            (4,120
            )
            
            —
            
            
            —Net
                income tax expense (benefit)
            
            $
            (39,095
            )
            $
            —
            
            $
            —




**NOTE
      9 - CONTINGENCIES**





The
      Company’s acquisition agreement of Airgroup contain 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, we acquired 100 percent of the outstanding stock of Airgroup.
      The transaction was valued at up to $14.0 million and consisted of: (i) $9.5
      million payable in cash at closing; (ii) an additional base payment of $0.6
      million payable in cash on the one-year anniversary of the closing, provided
      at
      least 31 of Airgroup’s locations remain operational through the first
      anniversary of the closing (the “Additional Base Payment”); (iii) a subsequent
      cash payment of $0.5 million in cash on the two-year anniversary of the closing;
      (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.





The
      following table summarizes our contingent base earn-out payments for the fiscal
      years indicated based on results of the prior year (in thousands) (1) :




**Fiscal
                Year Ended June 30,****2007**
            
            **2008**
            
            **2009**
            
            **2010**
            
            **2011**
            
            **Total**Earn-out
                payments:Cash
            
            $
            600
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            600Equity
            
            
            —
            
            
            633
            
            
            633
            
            
            634
            
            
            —
            
            
            1,900Total
                earn-out Payments
            
            $
            600
            
            $
            633
            
            $
            633
            
            $
            634
            
            $
            —
            
            $
            2,500Prior
                year earnings targets (income from continuing operations)(3)Total
                earnings targets
            
            $
            —
            
            $
            2,500
            
            $
            2,500
            
            $
            2,500
            
            $
            —
            
            $
            7,500Earn-outs
                as a percentage of prior year earnings targets:Total
            
            
            —
            
            
            25.3
            %
            
            25.3
            %
            
            25.3
            %
            
            —
            
            
            33.3
            %





(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)
            Payable
                in cash on the one-year anniversary of the closing, as long as at
                least 31
                of Airgroup’s agent operations remain operational through the first
                anniversary of the closing.(3)
            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.




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**NOTE
      10 - 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, 2006, none of the shares were issued or
      outstanding.





**Common
      Stock**





In
      March
      2001, the Company issued 19,775,000 shares of its common stock in exchange
      for
      services to incorporate the Company. In February 2002, the Board of Directors
      declared that the Company had not received consideration for the issuance of
      11,637,500 of the previously issued shares and canceled those shares leaving
      8,137,500 shares outstanding totaling $2,325. The forgoing shares (before the
      3.5:1 stock split) were valued at the par value of the Company's common stock,
      which represented the fair market value of such shares on the date of issuance.
      The Company has not recognized the issuance of the cancelled shares in the
      consolidated financial statements.





In
      September 2005, the Company’s Board of Directors approved a 3.5 for 1 split of
      its issued and outstanding common stock which was effectuated through a dividend
      of 2.5 shares for each share of common stock outstanding as of the record date.
      The dividend was payable on October 21, 2005 to shareholders of record on
      October 20, 2005. The stock split has been reflected in the Company’s
      consolidated financial statements for all periods presented. The common stock
      will continue to have a par value of $0.001 per share. Fractional shares were
      rounded upward.





In
      October 2005, the Company completed a private placement and issued 2,272,728
      shares of its common stock at a purchase price of $0.44 per share for aggregate
      gross proceeds of $1,000,000. This placement yielded net proceeds of $986,222
      for the Company, after the payment of out-of-pocket costs associated with the
      placement.





In
      December, 2005, the Company completed a private placement and issued 10,098,943
      shares of its common stock at a purchase price of $0.44 per share for aggregate
      gross proceeds of $4,400,000. This placement yielded net proceeds of $4,216,303
      for the Company, after the payment of placement agent fees and other
      out-of-pocket costs associated with the placement.





In
      December, 2005, a total of 7,700,001 shares of common stock were surrendered
      to
      the Company for cancellation, including 5,712,500 shares surrendered by Bohn
      H.
      Crain our Chief Executive Officer and Chairman of the Board of Directors and
      1,904,166 shares surrendered by Stephen M. Cohen, our Secretary General Counsel
      and a Director and other non-related investors surrendered 83,335 shares.





In
      December, 2005, the Company issued 500,000 shares of its common stock at a
      price
      of $0.44 per share in exchange for financial advisory and investment banking
      services provided in connection with, among other things, our transition to
      a
      third-party logistics.





In
      January 2006, we issued 1,009,093 shares of our common stock to certain Airgroup
      shareholders and employees who are accredited investors for gross proceeds
      of
      $444,000. In February 2006, we issued 1,466,697 shares of our common stock
      to a
      limited number of accredited investors for gross cash proceeds of $645,000.
      Each
      of these private placements was completed at a purchase price of $0.44 per
      share. Net of issuance costs, net proceeds were $441,637 and $640,022
      respectively.


F-19
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**NOTE
      11 - 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. 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.





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 an exercise
      prices of $.44 per share and are exercisable in whole or in part at stated
      times
      from the date of grant up to ten years from the date of grant. At June 30,
      2006,
      425,000 stock options granted to employees were exercisable under the 2005
      Plan
      with 2,000,000 options granted at the end of December 31, 2005 with a weighted
      average of $.625 a share. There were no options granted prior to October 2005
      as
      no option plan existed prior to October 2005. The Company adopted SFAS 123
      (R)
      at the time of implementing its 2005 Plan and recorded a compensation expense
      of
      $85,619 for the six months ended June 30, 2006, and $29,238 for the year ended
      December 31, 2005 which resulted in a tax benefit of $29,110 and $9,941,
      respectively.





The
      following table reflects activity under the plan for six months ended June
      30,
      2006 and years ended December 31, 2005 and December 31, 2004. There were no
      shares vested as a result of the recent inception of the stock options
      plan:




Six
                months ended
              June
                30, 2006
            
            Year
                ended
              December
                31, 2005
            
            Year
                ended
              December
                31, 2004Granted
              Shares
            
            Weighted
                Average Exercise Price
            
            Granted
                Shares
            
            Weighted
                Average Exercise Price
            
            Granted
                Shares
            
            Weighted
                Average Exercise PriceOutstanding
                at beginning of year
            
            
            2,000,000
            
            $
            .625
            
            
            —
            
            $
            —
            
            
            —
            
            $
            —Granted
            
            
            425,000
            
            $
            .440
            
            
            2,000,000
            
            
            .625
            
            
            —
            
            
            —Exercised
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Forfeited
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Cancelled
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Outstanding
                at end of year
            
            
            2,425,000
            
            $
            0.593
            
            
            2,000,000
            
            $
            .625
            
            
            —
            
            $
            —Exercisable
                at end of year
            
            
            —
            
            $
            —
            
            
            —
            
            $
            —
            
            
            —
            
            $
            —




F-20
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Since
      the
      Company is in its first year of issuing stock options under the 2005 Stock
      Incentive Plan, no options were exercised during the six months ended June
      30,
      2006, year ended December 31, 2005 or prior years.





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:




Six
                months ended
            
            Year
                endedJune
                30, 2006
            
            December
                31, 2005Risk-Free
                Interest Rates
            
            
            3.73
            %
            
            3.73
            %Expected
                Lives
            
            
            5
                yrs
            
            
            5
                yrsExpected
                Volatility
            
            
            116.9
            %
            
            117.8
            %Expected
                Dividend Yields
            
            
            0.00
            %
            
            0.00
            %Forfeiture
                Rate
            
            
            0.00
            %
            
            0.00
            %





No
      stock
      options were granted prior to October 2005 as the stock incentive plan did
      not
      exist, so the Black-Scholes information has not been presented.





The
      following table summarizes information about stock options outstanding at June
      30, 2006:




Exercise
              Prices
            
            
            Number
                Outstanding
              at
                June 30, 2006
            
            
            Weighted
                Average Remaining Contractual Life-Years
            
            
            Weighted
                Average
              Exercise
                Price
            
            
            Aggregate
              Intrinsic
                Value
              at
                June 30, 2006$0.44
                - $0.49
            
            
            425,000
            
            
            9.66
            
            $
            0.440
            
            $
            187,000$0.50
                - $0.75
            
            
            2,000,000
            
            
            9.33
            
            $
            0.625
            
            $
            1,250,000$0.44
                - $0.75
            
            
            2,425,000
            
            
            9.39
            
            $
            0.593
            
            $
            1,437,000







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




2006
                Quarter ended
            
            2005
                Quarter endedMarch
                31
            
            June
                30
            
            March
                31
            
            June
                30Revenue
            
            $
            11,842,717
            
            $
            14,626,332
            
            $
            —
            
            $
            —Cost
                of transportation
            
            
            7,479,707
            
            
            9,486,259
            
            
            —
            
            
            —Net
                revenues
            
            
            4,6363,010
            
            
            5,140,073
            
            
            —
            
            
            —




Total operating expenses
            
            
            4,489,907
            
            
            4,967,761
            
            
            13,830
            
            
            8,051Income
                (loss) from operations
            
            
            (126,897
            )
            
            172,312
            
            
            (13,830
            )
            
            (8,051
            )Total
                other income (expense)
            
            
            (1,858
            )
            
            (11,966
            )
            
            (500
            )
            
            (500
            )Income
                (loss) before income tax expense (benefit)
            
            
            (128,755
            )
            
            160,346
            
            
            (14,330
            )
            
            (8,551
            )Income
                tax (benefit)
            
            
            (101,645
            )
            
            (62,550
            )
            
            —
            
            
            —Net
                income (loss)
            
            $
            (27,110
            )
            $
            97,796
            
            $
            (14,330
            )
            $
            (8,551
            )Net
                income (loss) per common share - basic and diluted
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —




F-21
 **Back
          to Table of Contents**




**NOTE
      13 - VALUATION ALLOWANCE AND QUALIFYING ACCOUNTS**




Balance
                at
              beginning
                of year
            
            Charged
                to
              expense
            
            Deductions
            
            Balance
                at
              end
                of yearAllowance
                for Doubtful Accounts:Year
                ended December 31, 2004
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —Year
                ended December 31, 2004
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —Six
                months ended June 30, 2006
            
            $
            218,000
            
            $
            15,170
            
            $
            —
            
            $
            202,830





**NOTE
      12 - SUBSEQUENT EVENTS**





In
      August
      2006, the Company issued 100,000 of stock options to its Vice President, Chief
      Accounting Officer and Controller at an exercise price of $0.74 per share under
      the 2005 Stock Options Plan with a fair value of approximately $60,013 based
      on
      the Black Scholes option pricing model using the following weighted average
      assumptions.





Risk-Free
                Interest Rates
            
            
            3.73
            %Expected
                Lives
            
            
            5
                yrsExpected
                Volatility
            
            
            112.7
            %Expected
                Dividend Yields
            
            
            0.00
            %Forfeiture
                Rate
            
            
            0.00
            %





In
      September 2006, the Company issued 45,000 of stock options to various employees
      at an exercise price of $1.01 per share under the 2005 Stock Options Plan with
      a
      fair value of approximately $36,395, based on the Black Scholes options pricing
      model using the following weighted average assumptions.





Risk-Free
                Interest Rates
            
            
            3.73
            %Expected
                Lives
            
            
            5
                yrsExpected
                Volatility
            
            
            110.0
            %Expected
                Dividend Yields
            
            
            0.00
            %Forfeiture
                Rate
            
            
            0.00
            %





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




In
      October 2006, the Company has approved, and
      awaiting final board approval, the issuance of 100,000 shares of common stock
      as
      bonus compensation to its senior managers. The fair value of the shares will
      be
      determined at the time of their issuance.


F-22