UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q/A

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
For the quarterly period ended June 30, 2003

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
For the transition period from _______________ to ____________________.

                         Commission file number 001-16105

                              STONEPATH GROUP, INC.
    ------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

             Delaware                               65-0867684
-----------------------------------   ---------------------------------------
   (State or Jurisdiction of            (I.R.S. Employer Identification No.)
 Incorporation or Organization)

                        1600 Market Street, Suite 1515
                             Philadelphia, PA 19103
    ------------------------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)
       Registrant's Telephone Number, Including Area Code: (215) 979-8370

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

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

There were 29,128,373 issued and outstanding shares of the registrant's common
stock, par value $.001 per share, at July 31, 2003.



                              STONEPATH GROUP, INC.

                                      INDEX



                                                                                    Page
                                                                                    ----
                                                                                  
Part I.  Financial Information

         Item 1.  Financial Statements
                  Condensed Consolidated Balance Sheets at June 30, 2003
                  (Unaudited-As restated) and December 31, 2002 (As restated).........1

                  Consolidated Statements of Operations (Unaudited-As restated)
                  Three and six months ended June 30, 2003 and 2002 ..................2

                  Consolidated Statements of Cash Flows (Unaudited-As restated)
                  Six months ended June 30, 2003 and 2002 ............................3

                  Notes to Unaudited Consolidated Financial Statements................4

         Item 2.  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations .....................15

         Item 3.  Quantitative and Qualitative Disclosures About Market Risk ........33

         Item 4.  Controls and Procedures............................................33

Part II. Other Information

         Item 1.  Legal Proceedings .................................................34

         Item 2.  Changes in Securities and Use of Proceeds .........................34

         Item 3.  Defaults Upon Senior Securities ...................................35

         Item 4.  Submission of Matters to a Vote of Security Holders ...............35

         Item 5.  Other Information .................................................36

         Item 6.  Exhibits and Reports on Form 8-K ..................................36

         SIGNATURES..................................................................38




                                Explanatory Note

This Form 10-Q/A is being filed to include the restatement of our unaudited
consolidated financial statements as of June 30, 2003 and for the three- and
six-month periods ended June 30, 2003 and 2002, and to revise certain
disclosures in connection with a review of our Form 10-K for the year ended
December 31, 2002 by the Staff of the Division of Corporation Finance of the
Securities and Exchange Commission. The restatement of our unaudited
consolidated financial statements relates to (i) allocating more value to the
customer relationship intangible assets for the Company's acquisitions and (ii)
revising the amortization method and life used for such assets. Further, the
Financial Outlook section previously included in Item 2 of our Form 10-Q has
been updated to give effect to the additional non-cash charges arising from the
resolution of outstanding discussions with the Securities and Exchange
Commission. Except as otherwise specifically noted, all information contained
herein is as of June 30, 2003 and does not reflect any events or changes in
information that may have occurred subsequent to that date.


PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements

                              STONEPATH GROUP, INC.
                      Condensed Consolidated Balance Sheets




                                                         June 30, 2003    December 31, 2002
                                                         -------------    -----------------
                                                          (UNAUDITED)
                                                            Restated          Restated
                                                          (See Note 2)      (See Note 2)
                                                                    
                     Assets
Current assets:
   Cash                                                  $     360,131    $       2,266,108
   Accounts receivable, net                                 26,111,674           21,799,983
   Other current assets                                      2,253,212            1,002,695
                                                         -------------    -----------------
               Total current assets                         28,725,017           25,068,786

Goodwill and acquired intangibles, net                      29,771,743           25,353,705
Furniture and equipment, net                                 6,754,063            3,233,677
Other assets                                                 1,418,302            1,509,347
                                                         -------------    -----------------
                                                         $  66,669,125    $      55,165,515
                                                         =============    =================

          Liabilities and Stockholders' Equity

Current liabilities:
   Line of credit - bank                                 $   5,618,000    $               -
   Accounts payable                                         11,754,894           12,873,703
   Accrued expenses                                          4,130,994            2,981,375
   Earn-out payable                                                  -            3,879,856
   Interim financing agreement, current portion                607,382                    -
                                                         -------------    -----------------
               Total current liabilities                    22,111,270           19,734,934

Interim financing agreement, net of current portion          1,353,570                    -
                                                         -------------    -----------------
               Total liabilities                            23,464,840           19,734,934
                                                         -------------    -----------------

Commitments and contingencies

Stockholders' equity:
   Preferred stock, $.001 par value, 10,000,000 shares
    authorized;
      Series D, convertible, issued and outstanding:
       360,745 shares (Liquidation preference: $21,644,700)        361                  361
   Common stock, $.001 par value, 100,000,000 shares
    authorized; issued and outstanding: 29,037,973 and
    23,453,414 shares at 2003 and 2002, respectively            29,038               23,453
   Additional paid-in capital                              203,833,429          196,235,064
   Accumulated deficit                                    (160,589,753)        (160,711,891)
   Deferred compensation                                       (68,790)            (116,406)
                                                         -------------    -----------------

               Total stockholders equity                    43,204,285           35,430,581
                                                         -------------    -----------------

                                                         $  66,669,125    $      55,165,515
                                                         =============    =================


     See accompanying notes to unaudited consolidated financial statements.

                                        1


                              STONEPATH GROUP, INC.
                      Consolidated Statements of Operations
                                   (UNAUDITED)



                                               Three months ended June 30,      Six months ended June 30,
                                              ------------------------------------------------------------
                                                  2003            2002            2003            2002
                                              ------------    ------------    ------------    ------------
                                                 Restated       Restated        Restated        Restated
                                               (See Note 2)   (See Note 2)    (See Note 2)    (See Note 2)
                                                                                  
Total revenue                                 $ 54,407,172    $ 32,689,603    $ 99,772,376    $ 45,755,163
Cost of transportation                          40,302,074      23,903,884      73,483,638      32,549,853
                                              ------------    ------------    ------------    ------------

Net revenue                                     14,105,098       8,785,719      26,288,738      13,205,310

Personnel costs                                  7,003,018       4,526,918      13,566,098       7,119,994
Other selling, general
   and administrative costs                      6,058,820       3,520,735      10,361,193       6,186,314
Depreciation and
   amortization                                    570,451         523,119       1,160,229         966,466
Litigation settlement                                    -               -         750,000               -
                                              ------------    ------------    ------------    ------------

Income (loss) from operations                      472,809         214,947         451,218      (1,067,464)

Other income, net                                   54,620          53,317          84,127         108,774
                                              ------------    ------------    ------------    ------------

Income (loss) from continuing
   operations before income taxes                  527,429         268,264         535,345        (958,690)
Income taxes                                        42,995               -          58,216               -
                                              ------------    ------------    ------------    ------------

Income (loss) from continuing operations           484,434         268,264         477,129        (958,690)
Loss from discontinued operations,
   net of tax                                     (354,991)              -        (354,991)              -
                                              ------------    ------------    ------------    ------------

Net income (loss)                                  129,443         268,264         122,138        (958,690)
Preferred stock dividends                                -        (892,116)              -      (1,779,888)
                                              ------------    ------------    ------------    ------------

Net income (loss) attributable
   to common stockholders                     $    129,443    $   (623,852)   $    122,138    $ (2,738,578)
                                              ============    ============    ============    ============

Basic earnings (loss) per common share -
   Continuing operations(1)                   $       0.02    $      (0.03)   $       0.02    $      (0.13)
   Discontinued operations                           (0.02)              -           (0.02)              -
                                              ------------    ------------    ------------    ------------

   Earnings (loss) per common share           $          -    $      (0.03)   $          -    $      (0.13)
                                              ============    ============    ============    ============

Diluted earnings (loss) per common share -
   Continuing operations(1)                   $       0.01    $      (0.03)   $       0.01    $      (0.13)
   Discontinued operations                           (0.01)              -           (0.01)              -
                                              ------------    ------------    ------------    ------------

   Earnings (loss) per common share           $          -    $      (0.03)   $          -    $      (0.13)
                                              ============    ============    ============    ============

Basic weighted average shares outstanding       28,410,129      21,227,481      26,597,540      21,066,192
                                              ============    ============    ============    ============

Diluted weighted average shares and
   share equivalents outstanding                38,082,567      21,227,481      35,305,458      21,066,192
                                              ============    ============    ============    ============


   (1)      Includes effect of preferred stock dividends in 2002.

     See accompanying notes to unaudited consolidated financial statements.

                                        2


                              STONEPATH GROUP, INC.
                      Consolidated Statements of Cash Flows
                                   (UNAUDITED)



                                                                                         Six months ended June 30,
                                                                                       ----------------------------
                                                                                           2003            2002
                                                                                       ------------    ------------
                                                                                         Restated        Restated
                                                                                       (See Note 2)    (See Note 2)
                                                                                                 
Cash flow from operating activities:
Net income (loss)                                                                      $    122,138    $   (958,690)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
        Depreciation and amortization                                                     1,160,229         966,466
        Stock-based compensation                                                             47,616          48,282
        Issuance of common stock in litigation settlement                                   350,000               -
        Discontinued operations - issuance of common stock to consultant                    128,000
        Loss on disposal of furniture and equipment                                               -           4,208
Changes in assets and liabilities, net of effect of acquisitions:
        Accounts receivable                                                              (4,311,691)     (1,715,635)
        Other assets                                                                     (1,069,842)        (59,375)
        Accounts payable and accrued expenses                                              (213,966)     (1,962,253)
                                                                                       ------------    ------------

                  Net cash used in operating activities                                  (3,787,516)     (3,676,997)
                                                                                       ------------    ------------

Cash flows from investing activities:
        Purchases of furniture and equipment                                             (3,905,048)       (326,525)
        Acquisitions of businesses, net of cash acquired                                 (3,770,000)     (9,805,403)
        Loans made                                                                         (320,909)       (350,000)
        Payment of earn-out                                                              (3,476,856)              -
        Discontinued operations - investing activities                                            -         115,000
                                                                                       ------------    ------------

                  Net cash used in investing activities                                 (11,472,813)    (10,366,928)
                                                                                       ------------    ------------

Cash flows from financing activities:
        Issuance of common stock in private placement, net of costs                       5,670,539               -
        Net proceeds from line of credit - bank                                           5,618,000               -
        Proceeds from financing of equipment                                              1,960,952               -
        Proceeds from issuance of common stock upon exercise of options and warrants        104,861         367,683
                                                                                       ------------    ------------

                  Net cash provided by financing activities                              13,354,352         367,683
                                                                                       ------------    ------------

                  Net decrease in cash and cash equivalents                              (1,905,977)    (13,676,242)

Cash and cash equivalents at beginning of year                                            2,266,108      15,227,830
                                                                                       ------------    ------------

Cash and cash equivalents at end of period                                             $    360,131    $  1,551,588
                                                                                       ============    ============

Supplemental disclosure of non-cash investing activities:
    Issuance of common stock in connection with acquisition of Regroup                 $  1,000,000    $          -
    Issuance of common stock in connection with payment of earnout                     $    443,300    $          -

     See accompanying notes to unaudited consolidated financial statements.

                                        3


                             Stonepath Group, Inc.
              Notes to Unaudited Consolidated Financial Statements
                                  June 30, 2003

(1)      Nature of Operations and Basis of Presentation

Stonepath Group, Inc. and subsidiaries (the "Company") is a non-asset based
third-party logistics services company providing supply chain solutions on a
global basis. The Company offers a full range of time-definite transportation
and distribution solutions through its Domestic Services platform, where the
Company manages and arranges the movement of raw materials, supplies, components
and finished goods for its customers. The Company offers a full range of
international logistics services including international air and ocean
transportation as well as customs house brokerage services through its
International Services platform. In addition to these core service offerings,
the Company also provides a broad range of value added supply chain management
services, including warehousing, order fulfillment and inventory management. The
Company services a customer base of manufacturers, distributors and national
retail chains.

The accompanying unaudited consolidated financial statements were prepared in
accordance with generally accepted accounting principles for interim financial
information. Certain information and footnote disclosures normally included in
financial statements have been condensed or omitted pursuant to the rules and
regulations of the U.S. Securities and Exchange Commission (the "SEC") relating
to interim financial statements. These statements reflect all adjustments,
consisting only of normal recurring accruals, necessary to present fairly the
Company's financial position, operations and cash flows for the periods
indicated. While the Company believes that the disclosures presented are
adequate to make the information not misleading, these unaudited consolidated
financial statements should be read in conjunction with the Company's Annual
Report on Form 10-K/A for the year ended December 31, 2002. Interim operating
results are not necessarily indicative of the results for a full year because
our operating results are subject to seasonal trends when measured on a
quarterly basis. Our first and second quarters are likely to be weaker as
compared with our other fiscal quarters, which we believe is consistent with the
operating results of other supply chain service providers.



(2) Restatement of Previously Reported Consolidated Financial Statements

The Company has been engaged in a dialogue with the staff of the Division of
Corporation Finance of the U.S. Securities and Exchange Commission (the "Staff")
as part of a review of one of the Company's filings. The results of the
discussions with the Staff have led the Company to restate its consolidated
financial statements for the quarters ended June 30, 2003 and March 31, 2003,
and for the years ended December 31, 2002 and 2001.

The restatement relates to (i) allocating more value to the customer
relationship intangible assets for the Company's acquisitions and (ii) revising
the amortization method and life used for such assets. The restatement did not
impact the amounts presented in the consolidated statements of cash flows for
net cash used in operating activities, net cash used in investing activities or
net cash provided by (used in) financing activities in any of the restated
periods, although it did impact certain non-cash components of cash flows from
operating activities.

The effects of this restatement on previously reported consolidated financial
statements as of June 30, 2003 and December 31, 2002 and for the three- and
six-month periods ended June 30, 2003 and 2002 are summarized below.



                                                       June 30, 2003                             December 31, 2002
                                              ---------------------------------        ------------------------------------
                                                     As                                      As
                                                Previously            As                Previously                 As
                                                 Reported          Restated              Reported               Restated
                                              -------------       -------------        --------------         -------------
                                                                                                      
Selected Balance Sheet Data:
    Goodwill and acquired intangibles, net    $  31,776,465       $  29,771,743        $   26,801,761         $  25,353,705
    Total assets                                 68,673,847          66,669,125            56,613,571            55,165,515
    Accumulated deficit                        (158,585,031)       (160,589,753)         (159,263,835)         (160,711,891)
    Total stockholders' equity                   45,209,007          43,204,285            36,878,637            35,430,581
    Total liabilities and
         stockholders' equity                    68,673,847          66,669,125            56,613,571            55,165,515


                                               Three months ended June 30, 2003         Three months ended June 30, 2002
                                              ---------------------------------        ------------------------------------
                                                     As                                      As
                                                Previously            As                Previously                 As
                                                 Reported          Restated              Reported               Restated
                                              -------------       -------------        --------------         -------------
Selected Statement of Operations Data:
     Depreciation and amortization            $     295,618       $     570,451        $      233,063         $     523,119
     Income from operations                         747,642             472,809               505,003               214,947
     Income from continuing
          operations before income taxes            802,262             527,429               558,320               268,264
     Income from continuing
          operations                                759,267             484,434               558,320               268,264
     Net income                                     404,276             129,443               558,320               268,264
     Net income (loss) attributable
          to common stockholders                    404,276             129,443              (333,796)             (623,852)

     Basic earnings (loss)
          per common share:
       Continuing operations                  $        0.02       $        0.02        $        (0.02)        $       (0.03)
       Earnings (loss) per
          common share                                 0.01                   -                 (0.02)                (0.03)

     Diluted earnings (loss)
          per common share:
       Continuing operations                  $        0.02       $        0.01        $        (0.02)        $       (0.03)
       Earnings (loss) per
          common share                                 0.01                   -                 (0.02)                (0.03)






                                                Six months ended June 30, 2003            Six months ended June 30, 2002
                                              ---------------------------------        ------------------------------------
                                                     As                                      As
                                                Previously            As                Previously                 As
                                                 Reported          Restated              Reported               Restated
                                              -------------       -------------        --------------         -------------
                                                                                                  
Selected Statement of Operations Data:
    Depreciation and amortization             $     603,563       $   1,160,229        $      113,743         $     966,466
    Income (loss) from operations                 1,007,884             451,218              (514,741)           (1,067,464)
    Income (loss) from continuing
          operations before income taxes          1,092,011             535,345              (405,967)             (958,690)
    Income (loss) from continuing
          operations                              1,033,795             477,129              (405,967)             (958,690)
    Net income (loss)                               678,804             122,138              (405,967)             (958,690)
    Net income (loss) attributable
          to common stockholders                    678,804             122,138            (2,185,855)           (2,738,578)

Basic earnings (loss) per common share:
      Continuing operations                   $        0.04       $        0.02        $        (0.10)        $       (0.13)
      Earnings (loss) per
          common share                                 0.03                  --                 (0.10)                (0.13)

Diluted earnings (loss)
          per common share:
      Continuing operations                   $        0.03       $        0.01        $        (0.10)        $       (0.13)
      Earnings (loss) per
          common share                                 0.02                  --                 (0.10)                (0.13)

Selected Statement of Cash Flows Data:
     Net income (loss)                        $     678,804       $      122,138       $     (405,967)        $    (958,690)
     Depreciation and amortization                  603,563            1,160,229              113,743               966,466


                                        4


                             Stonepath Group, Inc.
              Notes to Unaudited Consolidated Financial Statements
                                  June 30, 2003

(3)      Recent Acquisitions

On June 20, 2003, the Company acquired, through its indirect wholly owned
subsidiary, Stonepath Logistics Government Services, Inc. ("SLGS"), the business
of Regroup Express LLC, a Virginia limited liability company ("Regroup") for
$3,700,000 in cash and $1,000,000 of the Company's common stock paid at closing,
plus contingent consideration of up to an additional $12,500,000 payable over a
period of five years based on the future financial performance of SLGS following
the acquisition. The members of Regroup may also be entitled to an additional
earn-out payment to the extent its pre-tax earnings exceed $17,500,000 during
the earn-out period. The Company used funds from its credit facility with
LaSalle Business Credit, Inc. for the cash payment at the closing. The business
acquired from Regroup provides time-definite domestic and international
transportation services including air and ground freight forwarding, ocean
freight forwarding, major project logistics as well as local pick up and
delivery services. The customers of the acquired business include U.S.
government agencies and contractors, select companies in the retail industry and
other commercial businesses. The acquisition, which significantly enhances the
Company's presence in the Washington, D.C. market, was accounted for as a
purchase and accordingly, the results of operations and cash flows of the
business acquired from Regroup are included in the accompanying consolidated
financial statements prospectively from the date of acquisition. The total
purchase price, including acquisition expenses of $260,000, but excluding the
contingent consideration, was $4,960,000. The following table summarizes the
preliminary allocation of the purchase price based on estimated fair value of
the assets acquired at June 20, 2003 (in thousands):

              Furniture and equipment                          $      50
              Goodwill and other intangible assets                 4,910
                                                               ---------
                Total assets acquired                          $   4,960
                                                               ---------

The following unaudited pro forma information is presented as if the acquisition
of Regroup had occurred on January 1, 2002:




                                                         Three months ended June 30,      Six months ended June 30,
                                                         ---------------------------    -----------------------------
                                                            2003            2002            2003            2002
                                                          Restated        Restated        Restated        Restated
                                                         -----------    ------------    -------------    ------------
                                                                                               
Revenues                                                 $58,195,067    $ 35,475,933    $ 108,075,284    $ 51,266,834

Income (loss) from continuing operations                     725,950         463,337          945,567        (773,554)

Net income (loss)                                            370,959        (428,779)         590,576      (2,553,442)

Earnings (loss) per share:
     Basic                                               $      0.01    $      (0.02)   $        0.02    $      (0.12)

     Diluted                                             $      0.01    $      (0.02)   $        0.02    $      (0.12)


(4)      Stock-Based Compensation

In December 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure," which amended the disclosure
requirements of SFAS No. 123, "Accounting and Disclosure of Stock-Based
Compensation" to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. The Company
accounts for its employee stock option grants by

                                       5


                             Stonepath Group, Inc.
              Notes to Unaudited Consolidated Financial Statements
                                  June 30, 2003

applying the intrinsic value method in accordance with Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" and related
interpretations.

The table below illustrates the effect on net income (loss) attributable to
common stockholders and income (loss) per common share as if the fair value of
options granted had been recognized as compensation expense in accordance with
the provisions of SFAS No. 123.



                                                         Three months ended June 30,      Six months ended June 30,
                                                         ---------------------------    ------------------------------
                                                             2003           2002            2003             2002
                                                           Restated       Restated        Restated         Restated
                                                         -----------    ------------    -------------    -------------
                                                                                             
Net income (loss) attributable to common stockholders:
As reported                                              $   129,443    $   (623,852)   $     122,138    $  (2,738,578)
Add: stock-based employee compensation expense
   included in reported net income (loss)                     22,617             344           45,235           48,282
Deduct: total stock-based compensation expense
   determined under fair value method for all awards        (490,328)       (314,161)      (1,275,707)        (628,322)
                                                         -----------    ------------    -------------    -------------

Proforma net loss attributable to
   common stockholders                                   $  (338,268)   $   (937,669)   $  (1,108,334)   $  (3,318,618)
                                                         ===========    ============    =============    =============

Basic earnings (loss) per common share:
   As reported                                           $        --    $      (0.03)   $          --    $       (0.13)
   Pro forma                                                   (0.01)          (0.04)           (0.04)           (0.16)

Diluted earnings (loss) per common share:
   As reported                                           $        --    $      (0.03)   $          --    $       (0.13)
   Pro forma                                                   (0.01)          (0.04)           (0.04)           (0.16)


(5)      Revolving Credit Facility

To ensure adequate financial flexibility, in May 2002 we secured a $15,000,000
revolving credit facility (the "Facility") collateralized by the accounts
receivable and the other assets of the Company and its subsidiaries. The
Facility requires the Company and its subsidiaries to meet certain financial
objectives and maintain certain financial covenants. Advances under the Facility
may be used to finance future acquisitions, capital expenditures or for other
corporate purposes. We expect that the cash flow from operations of our
subsidiaries will be sufficient to support the corporate overhead of the Company
and some portion, if not all, of the contingent earn-out payments and other cash
requirements associated with our acquisitions. Therefore, we anticipate that our
primary use of the Facility will be to finance the cost of new acquisitions and
to pay any portion of existing earn-out arrangements that cash flow from
operations is otherwise unable to fund.

Interest expense for the three- and six-month periods ended June 30, 2003
amounted to $4,000. The Company did not incur any interest expense in the
comparable prior year periods.

At June 30, 2003, based on available collateral and outstanding letter of credit
commitments, there was $9,200,000 available for borrowing under our Facility
(see Note 11).

                                       6


                             Stonepath Group, Inc.
              Notes to Unaudited Consolidated Financial Statements
                                  June 30, 2003

(6)      Commitments and Contingencies

On May 6, 2003, we elected to settle litigation instituted on August 20, 2000 by
Austost Anstalt Schaan, Balmore Funds, S.A. and Amro International, S.A.
Although we believed that the plaintiffs' claims were without merit, we chose to
settle the matter in order to avoid future litigation costs and to mitigate the
diversion of management's attention from operations. The total settlement costs
of $750,000, payable $400,000 in cash and $350,000 in shares of the Company's
common stock, are included in the accompanying unaudited consolidated statement
of operations for the six months ended June 30, 2003.

On October 12, 2000, Emergent Capital Investment Management, LLC ("Emergent")
filed suit against the Company and two of its officers contending that it was
misled by statements made by the defendants in connection with the offering of
the Company's Series C Preferred Stock which closed in March 2000. Specifically,
Emergent alleges that it is entitled to rescind the transaction because it was
allegedly represented that the size of the offering would be $20,000,000 and the
Company actually raised $50,000,000. Emergent seeks a return of its $2,000,000
purchase price of Series C shares. In June of 2001, the Company moved for
summary judgment in this case.

After the summary judgment motion was filed, Emergent filed a second action
against the Company and two of its officers alleging different allegations of
fraud in connection with the Series C offering. In the new complaint, Emergent
alleges that oral statements and written promotional materials distributed by
the Company at a meeting in connection with the Series C offering were
materially inaccurate with respect to the Company's investment in Net Value,
Inc., a wholly owned subsidiary of the Company. Emergent also contends that the
defendants failed to disclose certain allegedly material transactions in which
an officer was involved prior to his affiliation with the Company. The Company
filed a motion to dismiss this new action for failure to state a claim upon
which relief can be granted.

On October 2, 2001, the Court entered an order granting summary judgment to the
defendants in the first case filed by Emergent and dismissing Emergent's second
complaint for failure to state a claim upon which relief can be granted. The
Court allowed Emergent 20 days to file a second amended complaint as to the
second action only. On October 21, 2001, Emergent did file a second amended
complaint in the second action. The second amended complaint does not raise any
new factual allegations regarding Emergent's participation in the offering.

The Company filed a motion to dismiss Emergent's second amended complaint. On
April 15, 2002, the United States District Court for the Southern District of
New York entered an order granting the motion to dismiss Emergent's second
amended complaint against the Company and its former officers. The Court refused
to grant Emergent an additional opportunity to re-plead its claims against the
defendants and a final order dismissing the matter has been entered. Emergent
thereafter filed a notice of appeal to

                                       7


                             Stonepath Group, Inc.
              Notes to Unaudited Consolidated Financial Statements
                                  June 30, 2003

the United States Court of Appeals for the Second Circuit, which is currently
pending. The Company intends to vigorously defend this action. The Company has
not established any accrual for this action since (i) it believes that there are
substantial defenses to the plaintiff's claims, and (ii) the amount of loss, if
any, cannot be reasonably estimated. Notwithstanding the Company's belief, there
can be no assurances that the Company will not incur material expenses in the
defense and resolution of this matter.

One of the Company's customers which is the subject of a Chapter 11 proceeding
under the Bankruptcy Code paid to the Company approximately $1,300,000 of
pre-petition indebtedness for shipping and delivery charges pursuant to an order
of a United States Bankruptcy Court authorizing the payment of such charges. One
of the creditors in the Chapter 11 proceeding appealed other orders of the
Bankruptcy Court authorizing the payment of pre-petition indebtedness to other
creditors for other charges, and those orders have been reversed by a United
States District Court. The Company's customer has appealed the District Court's
reversal and that appeal is pending. While no action has been taken in the
Bankruptcy Court to challenge the payments made to the Company, if such action
were taken in the future and that action were successful, the Company could be
required to return all or a substantial portion of the payments made by the
customer.

The Company may become involved in various other claims and legal actions
arising in the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse effect on
the Company's consolidated financial position, results of operations or
liquidity. As of June 30, 2003, the Company has not established any accruals for
any pending legal proceedings.

The Company entered into a master lease agreement with LaSalle National Leasing
Corporation effective June 6, 2003 to provide up to $2,750,000 in financing for
the deployment of the Tech-Logis(TM) operating system and the unrelated
installation of sorting equipment to automate the operations of one of the
Company's strategic logistics centers. As part of this arrangement, the Company
entered into an interim financing agreement which enabled the Company to finance
its purchase of the assets discussed above while the costs of the lease
arrangement were being accumulated. As of June 30, 2003, there was $1,961,000
outstanding under the interim financing agreement.

On July 28, 2003, as contemplated in the master lease and related interim
financing agreements with LaSalle National Leasing Corporation effective June 6,
2003, the Company sold and leased back the technology and sorting equipment,
which effectively retired the related interim financing arrangements, and
commenced the base term of a three-year capital lease for the technology
equipment totaling $2,000,000 and commenced the base term of a three-year
operating lease for the sorting equipment. Payments under both the capital and
operating leases will be approximately $62,000 and $22,000 per month,
respectively.

                                       8


                             Stonepath Group, Inc.
              Notes to Unaudited Consolidated Financial Statements
                                  June 30, 2003

(7)      Stockholders' Equity

Common Stock

On March 6, 2003, the Company completed a private placement of 4,470,000 shares
of its common stock. The transaction consisted of the sale of 4,270,000 shares
at $1.35 per share and 200,000 shares at $1.54 per share. In connection with
this transaction, the Company realized gross proceeds of $6,072,500, paid a
brokerage fee consisting of cash commissions of $364,350, issued placement agent
warrants to purchase 297,000 shares of common stock at an exercise price of
$1.49 per share, and incurred other cash expenses of $37,611. In addition, the
Company had previously paid the placement agent $25,000 in cash and had issued
it warrants to purchase 150,000 shares of common stock at an exercise price of
$1.23 per share.

In connection with the private placement, the Company agreed to register the
shares underlying the warrants, as well as the shares that were actually issued.
Until the matter under discussion with the SEC is resolved, the registration
statement that was filed will not be declared effective. Under the terms of the
private placement agreement, the Company must pay a penalty of $150,000 to the
investors as of July 3, 2003 and at the end of each 30-day period thereafter,
until it files an effective registration statement. The Company has not
reflected the $150,000 penalty in the accompanying consolidated financial
statements.

Series C Preferred Stock

In March 2000, the Company completed a private placement transaction in which it
issued 4,166,667 shares of its Series C Preferred Stock and warrants to purchase
416,667 shares of its common stock for aggregate gross proceeds of $50,000,000.

The terms of the Series C Preferred Stock initially required the Company to use
the proceeds from this offering solely for investments in early stage Internet
companies. In February 2001, the Company received consents from the holders of
more than two-thirds of its issued and outstanding shares of Series C Preferred
Stock to modify this restriction to permit it to use the proceeds to make any
investments in the ordinary course of business, as from time-to-time determined
by the Board of Directors, or for any other business purpose approved by the
Board of Directors.

In exchange for these consents, the Company agreed to a private exchange
transaction (the "Exchange Transaction") in which it would issue to the holders
of the Series C Preferred Stock as of July 18, 2002 (the "conversion date"),
additional warrants to purchase up to a maximum of 2,692,194 shares of its
common stock at an exercise price of $1.00 per share, and reduce the per share
exercise price from $26.58 to $1.00 for 307,806 existing warrants owned by the
holders of the Series C Preferred Stock. As a condition to receiving the
additional warrants and having their existing warrants re-priced, the holders of
the Series C Preferred Stock agreed to convert their shares of preferred stock
into shares of the Company's common stock on the conversion date.

At the request of the largest holder of Series C Preferred Stock (because of
legal limitations in its governing instruments which prevent it from holding
investments in common stock), the Company expanded the Exchange Transaction to
include an additional alternative. Holders of the Series C Preferred Stock as of
the conversion date

                                       9


                             Stonepath Group, Inc.
              Notes to Unaudited Consolidated Financial Statements
                                  June 30, 2003

were provided with the alternative of exchanging the common
stock issuable upon conversion of the Series C Preferred Stock, the additional
warrants and re-priced warrants, for shares of a newly designated Series D
Convertible Preferred Stock.

As a result of the exercise of these rights by the holders of the Series C
Preferred Stock, as of July 19, 2002, all of the Company's shares of Series C
Preferred Stock, representing approximately $44,600,000 in liquidation
preferences, together with warrants to purchase 149,457 shares of the Company's
common stock, were surrendered and retired in exchange for a combination of
securities consisting of:

          -    1,911,071 shares of the Company's common stock;

          -    1,543,413 warrants to purchase the Company's common stock at an
               exercise price of $1.00; and

          -    360,745 shares of the Company's Series D Convertible Preferred
               Stock.

The Series C Preferred Stock, which was converted into Series D Convertible
Preferred Stock, had a carrying value of approximately $21,645,000. The Company
obtained an independent appraisal which valued the Series D Convertible
Preferred Stock at approximately $4,672,000. The excess of the carrying value of
the Series C Preferred Stock over the fair value of the Series D Convertible
Preferred Stock was added to net income for purposes of computing net income
attributable to common stockholders for the year ended December 31, 2002. The
Exchange Transaction had no effect on the cash flows of the Company.

The holders of the Series C Preferred Stock earned 148,324 additional shares of
Series C Preferred Stock from payment of preferred stock dividends during the
six months ended June 30, 2002. No further preferred stock dividends were
payable on the Series C Preferred Stock after July 18, 2002.

Series D Convertible Preferred Stock

The Series D Convertible Preferred Stock is convertible into 3,607,450 shares of
the Company's common stock. In the event of any liquidation, dissolution or
winding-up of the Company prior to December 31, 2003 (which also includes
certain mergers, consolidations and asset sale transactions), holders of the
Series D Convertible Preferred Stock are entitled to a liquidation preference
equal to $60.00 per share, paid prior to and in preference to any payment made
or set aside for holders of the Company's common stock, but subordinate and
subject in preference to the prior payment in full of all amounts to which
holders of other classes of the Company's preferred stock may be entitled to
receive as a result of such liquidation, dissolution or winding-up. Subsequent
to December 31, 2003, the holders of the Series D Convertible Preferred Stock
are entitled to participate in all liquidation distributions made to the holders
of the Company's common stock on an as-if converted basis. The Series D
Convertible

                                       10


                             Stonepath Group, Inc.
              Notes to Unaudited Consolidated Financial Statements
                                  June 30, 2003

Preferred Stock carries no dividend, and, except under limited circumstances,
has no voting rights except as required by law. In addition, the Series D
Convertible Preferred Stock will convert into 3,607,450 shares of the Company's
common stock no later than December 31, 2004.

Stock Options and Warrants

On February 24, 2003, the Company issued to its Chief Financial Officer and one
other employee options to purchase 210,000 shares of its common stock at an
exercise price of $1.53 per share, which equaled the quoted market price on the
date of grant.

On March 10, 2003, the Company issued to its Chairman and Chief Executive
Officer options to purchase 300,000 shares of its common stock at an exercise
price of $1.68 per share, which equaled the quoted market price on the date of
grant. On that same day, the Company issued to its Chairman and Chief Executive
Officer options to purchase 400,000 shares of its common stock at an exercise
price of $2.00 per share, which represented a 19% premium over the quoted market
price of $1.68 on the date of grant.

On March 25, 2003, the Company issued to certain officers and employees options
to purchase 81,600 shares of its common stock at an exercise price of $1.81 per
share, which equaled the quoted market price on the date of grant.

On June 2, 3003, the Company issued to a director and the chief operating
officer of its domestic operations options to purchase 350,000 shares of its
common stock at an exercise price of $2.04 per share, which equaled the quoted
market price on the date of grant.

During the six months ended June 30, 2003, options on 273,200 shares expired.
The weighted average exercise price for those options was $9.27 per share.

During the six months ended June 30, 2003, the Company issued warrants to
purchase 297,000 shares of its common stock at an exercise price of $1.49 per
share. The Company issued these warrants to a private placement agent in
connection with the private placement of the Company's common stock described
above.

During the six months ended June 30, 2003, warrants issued to nonemployees for
the purchase of 241,296 shares of the Company's common stock were exercised. The
Company canceled warrants to purchase 136,399 shares of its common stock in
connection with a cashless exercise by the holder.

(8)      Earnings (Loss) per Share

Basic earnings (loss) per common share and diluted earnings (loss) per common
share are presented in accordance with SFAS No. 128, "Earnings per Share." Basic
earnings (loss) per common share has been computed using the weighted-average
number of shares of common stock outstanding during the period. Diluted earnings
(loss) per common share

                                       11


                             Stonepath Group, Inc.
              Notes to Unaudited Consolidated Financial Statements
                                  June 30, 2003

incorporates the incremental shares issuable upon the assumed exercise of stock
options and warrants and upon the assumed conversion of the Company's preferred
stock, if dilutive. Certain stock options, stock warrants, and convertible
securities were excluded from the calculation of diluted earnings(loss) per
share because their effect was antidilutive. The total numbers of such shares
excluded from the diluted earnings (loss) per common share calculations are
288,600 and 12,848,242 for the three months ended June 30, 2003 and 2002,
respectively, and 766,777 and 12,915,954 for the six months ended June 30, 2003
and 2002, respectively.

(9)      Segment Information

SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information," established standards for reporting information about operating
segments in financial statements. Operating segments are defined as components
of an enterprise engaging in business activities about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker or group in deciding how to allocate resources and in assessing
performance. The Company determined that it had one operating segment in the
first quarter of 2002, Domestic Services, which provides a full range of
logistics and transportation services throughout North America. In the second
quarter of 2002, with the acquisition of SLIS, the Company established its
International Services platform, which provides international air and ocean
logistics services. The Company identifies operating segments based on the
principal service provided by the business unit. Each segment has a separate
management structure. The accounting policies of the reportable segments are the
same as described in the Company's Annual Report on Form 10-K/A for the year
ended December 31, 2002. Segment information, in which corporate expenses (other
than the legal settlement) have been fully allocated to the operating segments,
is as follows (in thousands):



                                            Three months ended June 30, 2003
                                  ----------------------------------------------------
                                   Restated       Restated
                                   Domestic    International                 Restated
                                   Services      Services      Corporate       Total
                                  ----------   -------------   ----------   ----------
                                                                
Revenue from external customers   $   24,061   $      30,346   $        -   $   54,407
Intersegment revenue                       6              29            -           35
Income (loss) from operations           (166)            639            -          473





                                            Three months ended June 30, 2002
                                  ----------------------------------------------------
                                   Restated       Restated
                                   Domestic    International                 Restated
                                   Services      Services      Corporate       Total
                                  ----------   -------------   ----------   ----------
                                                                
Revenue from external customers   $   16,345   $      16,345   $        -   $   32,690
Intersegment revenue                       -               -            -            -
Income (loss) from operations            (98)            313            -          215


                                       12


                             Stonepath Group, Inc.
              Notes to Unaudited Consolidated Financial Statements
                                  June 30, 2003



                                              Six months ended June 30, 2003
                                  ----------------------------------------------------
                                   Restated       Restated
                                   Domestic    International                 Restated
                                   Services      Services      Corporate       Total
                                  ----------   -------------   ----------   ----------
                                                                 
Revenue from external customers   $   47,835   $      51,937   $        -    $   99,772
Intersegment revenue                      40              57            -            97
Income (loss) from operations             95           1,106         (750)          451

Segment assets                        47,238          15,778        3,653        66,669
Segment goodwill and
     intangibles, net                 24,309           5,463            -        29,772




                                              Six months ended June 30, 2002
                                  ----------------------------------------------------
                                   Restated       Restated
                                   Domestic    International                 Restated
                                   Services      Services      Corporate       Total
                                  ----------   -------------   ----------   ----------
                                                                
Revenue from external customers   $   29,317   $      16,438   $        -   $   45,755
Intersegment revenue                       -               -            -            -
Income (loss) from operations         (1,110)             43            -       (1,067)

Segment assets                        33,307          10,028        1,300       44,635
Segment goodwill and
      intangibles, net                17,303           4,513            -       21,816


The revenue in the table below is allocated to geographic areas based upon the
location of the customer (in thousands).

                         Three months ended June 30,   Six months ended June 30,
                         --------------------------    -------------------------
                             2003          2002            2003          2002
                         ------------   -----------    -----------   -----------
      Total revenue:

         United States   $     53,853   $    32,690    $    98,769   $    45,755
         Hong Kong                554             -          1,003             -
                         ------------   -----------    -----------   -----------
            Total        $     54,407   $    32,690    $    99,772   $    45,755
                         ============   ===========    ===========   ===========

(10)     Discontinued Operations

In the second quarter of 2003, the subtenant in a property previously used in
the Company's former internet business vacated the property and attempted to
terminate the sublease agreement. Shortly thereafter, the subtenant filed for
bankruptcy. Due to an inability to find a replacement subtenant, the Company has
accrued the remaining lease liability amounting to approximately $227,000, net
of taxes, and such amount has been reflected as part of discontinued operations
in the accompanying consolidated statements of operations for the three and six
month periods ended June 30, 2003.

In the second quarter of 2003, a consultant to the Company's former internet
business demanded payment for services provided in 2000. Based on negotiations
with the consultant, the Company agreed to issue 50,000 shares of its common
stock in satisfaction of the claim, which amounted to approximately $128,000,
net of taxes. Such

                                       13


                             Stonepath Group, Inc.
              Notes to Unaudited Consolidated Financial Statements
                                  June 30, 2003

amount has been reflected as part of discontinued operations in the accompanying
consolidated statements of operations for the three and six month periods ended
June 30, 2003.

(11)     Subsequent Events

On July 16, 2003, the Company acquired the business of Customs Services
International, Inc. ("CSI"), a Miami-based, privately held international freight
forwarder and customs broker for $1,400,000 in cash, which was provided from
funds available under the Facility, and up to an additional $2,400,000 payable
over a five year earn-out period based upon the future financial performance of
CSI. The acquisition will be accounted for as a purchase and accordingly, the
results of operations and cash flows of CSI will be reflected in the Company's
consolidated financial statements for periods subsequent to the date of the
transaction. The acquisition, which enhances the Company's presence in Miami and
provides a platform throughout Central America, South America and the Caribbean,
is not reflected in the accompanying consolidated financial statements.

On August 8, 2003, the Company acquired a 70% interest in the Singapore and
Cambodia based operations of the G-Link Group ("G-Link"), a regional logistics
business headquartered in Singapore with offices throughout Southeast Asia. As
consideration for the purchase, the Company paid $3,700,000 at closing through a
combination of $2,800,000 in cash, which was provided from funds available under
the Facility, and $900,000 of Company common stock and agreed to issue to G-Link
a thirty percent interest in the subsidiaries which acquired the operations. As
additional purchase price, on a post-closing basis, the Company has agreed to
pay G-Link for excess working capital estimated at $1,600,000 through the
issuance of Company common stock. G-Link will also be entitled to an earn-out
arrangement over a period of four years of up to $2,500,000 contingent upon the
future financial performance of the business. The acquisition will be accounted
for as a purchase and accordingly, the results of operations and cash flows of
G-Link will be reflected in the Company's consolidated financial statements for
periods subsequent to the date of the transaction. The G-Link acquisition
facilitates the Company's expansion into a rapidly growing region where most of
the Company's customers have significant supplier relationships. The acquisition
is not reflected in the accompanying consolidated financial statements.

                                       14


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

As noted above, our unaudited consolidated financial statements as of June 30,
2003 and for the three- and six-month periods ended June 30, 2003 and 2002 have
been restated in connection with a review of our Form 10-K for the year ended
December 31, 2002 by the Staff of the Division of Corporate Finance of the
Securities and Exchange Commission. The restatement of our unaudited
consolidated financial statements relates to (i) allocationg more value to the
customer relationship intangible assets for the Company's acquisitions and (ii)
revising the amortization method and life used for such assets. Further, the
Financial Outlook section previously included in Item 2 of our Form 10-Q has
been updated to give effect to the additional non-cash charges arising from the
resolution of outstanding discussions with the Securities and Exchange
Commission. Except as otherwise specifically noted, all information contained
herein is as of June 30, 2003 and does not reflect any events or changes in
information that may have occurred subsequent to that date.

Cautionary Statement For Forward-Looking Statements

This Quarterly Report on Form 10-Q/A 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
results, levels of activity, events, trends or plans. We have based these
forward-looking statements on our current expectations and projections about
such future results, levels of activity, events, trends or plans. These
forward-looking statements are not guarantees and are subject to known and
unknown risks, uncertainties and assumptions about us that may cause our actual
results, levels of activity, events, trends or plans to be materially different
from any future results, levels of activity, events, trends or plans expressed
or implied by such forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as "may", "will", "should",
"could", "would", "expect", "plan", "anticipate", "believe", "estimate",
"continue", or the negative of such terms or other similar expressions. While it
is impossible to identify all of the factors that may cause our actual results,
levels of activity, 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 sustain an annual growth rate in
revenue consistent with recent results, (ii) our ability to maintain current
operating margins, (iii) our ability to identify, acquire, integrate and manage
additional businesses in a manner which does not dilute our earnings per share,
(iv) our ability to obtain the additional capital necessary to make additional
cash acquisitions, (v) the uncertainty of future trading prices of our common
stock and the impact such trading prices may have upon our ability to utilize
common stock to facilitate our acquisition strategy, (vi) the uncertain effect
on the future trading price of our common stock associated with the dilution
upon the conversion of outstanding convertible securities or exercise of
outstanding options and warrants, (vii) our dependence on certain large
customers, (viii) our dependence upon certain key personnel, (ix) an unexpected
adverse result in any legal proceeding, (x) the scarcity and competition for the
operating companies we need to acquire to implement our business strategy, (xi)
competition in the freight forwarding, logistics and supply chain management
industry, (xii) the impact of current and future laws affecting the Company's
operations, (xiii) adverse changes in general economic conditions as well as
economic conditions affecting the specific industries and customers we serve,
(xiv) regional disruptions in transportation, (xv) the resolution of the
Company's discussions with the SEC over the manner in which the Company has
allocated the consideration paid in its acquisitions to the identifiable assets
of the businesses acquired (which may result in the restatement of earnings to
reflect additional non-cash charges), and (xvi) other factors which are or may
be identified from time to time in our Securities and Exchange Commission
filings and other public announcements, including our Annual Report on Form
10-K/A for the year ended December 31, 2002. There can be no assurance that
these and other factors will not affect the accuracy of such forward-looking
statements. Readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date made. 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.

Overview

         We are a non-asset based third-party logistics services company
providing supply chain solutions on a global basis. We offer a full range of
time-definite transportation and distribution

                                       15


solutions through our Domestic Services platform, where we manage and arrange
the movement of raw materials, supplies, components and finished goods for our
customers. We offer a full range of international logistics services, including
international air and ocean transportation as well as customs house brokerage
services, through our International Services platform. In addition to these core
service offerings, we also provide a broad range of value added supply chain
management services, including warehousing, order fulfillment and inventory
management solutions. We service a customer base of manufacturers, distributors,
national retail chains and government agencies through a network of offices in
21 major metropolitan areas in North America, plus four international locations,
using an extensive network of over 200 independent carriers and over 150 service
partners strategically located around the world.

         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. The volume of
our flow of freight enables us to negotiate attractive pricing with our
transportation providers.

         Our strategic objective is to build a leading global logistics services
organization that integrates established operating businesses and innovative
technologies. We plan to achieve this objective by broadening our network
through a combination of synergistic acquisitions and the organic expansion of
our existing base of operations. We are currently pursuing an aggressive
acquisition strategy to enhance our position in our current markets and to
acquire operations in new markets. The focus of this strategy is on acquiring
businesses that have demonstrated historic levels of profitability, have a
proven record of delivering high quality services, have a customer base of large
and mid-sized companies and which otherwise may benefit from our long term
growth strategy and status as a public company.

         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, we believe
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. As a non-asset based provider of third party
logistics services, we can focus on optimizing the transportation solution for
our customers, rather than on our own asset utilization. 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.

         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. 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 so as 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, our current reliance on a small number of key customers, the risks
inherent in international operations, and the intense competition in our
industry for customers and for the acquisition of additional businesses. The

                                       16


business risks associated with these factors are identified or referred to above
under our "Cautionary Statement for Forward-Looking Statements."

         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.

         We also provide a range of other services including customs brokerage,
warehousing and other services, which include customized distribution,
fulfillment, and other value added supply chain services.

         Total 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. We believe that net revenue is also an important measure of
economic performance. Net revenue includes transportation revenue and our
fee-based activities, after giving effect to the cost of transportation. In
addition, management believes measuring its operating costs as a function of net
revenue provides a useful metric, as our ability to control costs as a function
of net revenue directly impacts operating earnings. With respect to our services
other than freight transportation, net revenue is identical to total revenue.

         Our operating results will be affected as acquisitions occur. Since all
acquisitions are made using the purchase method of accounting for business
combinations, our financial statements will only include the results of
operations and cash flows of acquired companies for periods subsequent to the
date of acquisition. Accordingly, our results of operations only reflect the
operations of: Air Plus for periods subsequent to October 5, 2001; SLIS for
periods subsequent to April 4, 2002; United American for periods subsequent to
May 30, 2002; SLGS for periods subsequent to October 1, 2002; the acquired
business operations of Regroup for periods subsequent to June 20, 2003; the
acquired business operations of CSI for periods subsequent to July 18, 2003; and
the Singapore and Cambodia based operations of G-Link for periods subsequent to
August 8, 2003.

         Our operating results are also subject to seasonal trends when measured
on a quarterly basis. Our first and second quarters are likely to be weaker as
compared with our other fiscal quarters, which we believe is consistent with the
operating results of other supply chain service providers. This trend is
dependent 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
may be offset to an extent by opposite trends in

                                       17


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.

         A significant portion of our revenues is derived from our international
operations, and the growth of those operations is an important part of our
business strategy. Our current international operations are focused on the
shipment of goods into and out of the United States and are dependent on the
volume of international trade with the United States. Our strategic plan
contemplates the growth of those operations, as well as the expansion into the
transportation of goods wholly outside of the United States. The following
factors could adversely affect our current international operations, as well as
the growth of those operations:

         -        the political and economic systems in certain international
                  markets are less stable than in the United States;
         -        wars, civil unrest, acts of terrorism and other conflicts
                  exist in certain international markets;
         -        export restrictions, tariffs, licenses and other trade
                  barriers can adversely affect the international trade serviced
                  by our international operations;
         -        managing distant operations with different local market
                  conditions and practices is more difficult than managing
                  domestic operations;
         -        differing technology standards in other countries present
                  difficulties and expense in integrating our services across
                  international markets;
         -        complex foreign laws and treaties can adversely affect our
                  ability to compete; and
         -        our ability to repatriate funds may be limited by foreign
                  exchange controls.

Critical Accounting Policies

Our accounting policies, which we believe are in compliance with accounting
principles generally accepted in the United States, require us to apply
methodologies, estimates and judgments that have a significant impact on the
results we report in our financial statements. In our Annual Report on Form
10-K/A for the year ended December 31, 2002 we have discussed those policies
that we believe are critical and require the use of complex judgment in their
application. Since the date of that Form 10-K/A, there have been no material
changes to our critical accounting policies or the methodologies or assumptions
applied under them.

                                       18


Results of Operations

         Quarter ended June 30, 2003 compared to quarter ended June 30, 2002

         The following table compares our historical total revenue, net
transportation revenue and other revenue (in thousands):

                                                     Quarter ended June 30,
                                               --------------------------------
                                                                        Percent
                                                 2003        2002       Change
                                               --------    --------    --------
      Total revenue                            $ 54,407    $ 32,690        66.4%
                                               ========    ========
      Transportation revenue                   $ 50,655    $ 30,177        67.9
      Cost of transportation                     40,302      23,904        68.6
                                               --------    --------
      Net transportation revenue
                                               $ 10,353    $  6,273        65.0
                  Net transportation margins       20.4%       20.8%

      Customs brokerage                           2,178       1,748        24.6
      Warehousing and other
           value added services                   1,574         765       105.8
                                               --------    --------
                           Total net revenue   $ 14,105    $  8,786        60.5
                                               ========    ========

         Total revenue was $54.4 million in the second quarter of 2003, an
increase of $21.7 million or 66.4% over total revenue of $32.7 million in the
second quarter of 2002.. For the second quarter of 2003, $11.9 million, or 54.8%
of the increase in revenues was attributed principally to organic growth in the
Domestic platform while $9.8 million or 45.2% of the increase was attributable
to organic growth in the International platform.

         Net transportation revenue was $10.4 million in the second quarter of
2003, an increase of $4.1 million or 65.0% over net transportation revenue of
$6.3 million in the second quarter of 2002. For the second quarter of 2003, $3.0
million, or 73.2% of the increase in net transportation revenue was

                                       19


attributed principally to organic growth in the Domestic platform while $1.1
million or 26.8% of the increase was attributed to organic growth in the
International platform. Net transportation margins remained relatively flat
quarter on quarter.

         Net revenue was $14.1 million in the second quarter of 2003, an
increase of $5.3 million or 60.5% over net revenue of $8.8 million in the second
quarter of 2002. For the second quarter of 2003, $3.8 million or 71.7% of the
increase in net revenue was attributed principally to organic growth in the
Domestic platform, while $1.5 million or 28.3% of the increase was attributed to
organic growth in the International platform.

      The following table compares certain historical consolidated statement of
operations data as a percentage of our net revenue (in thousands):



                                                                              Quarter ended June 30,
                                                        -------------------------------------------------------------------
                                                              Restated               Restated
                                                                2003                   2002                   Change
                                                       --------------------   --------------------    --------------------
                                                         Amount      Percent    Amount      Percent     Amount     Percent
                                                        --------    --------   --------    --------    --------    --------
                                                                                                     
Net revenue                                             $ 14,105       100.0   $  8,786       100.0    $  5,319        60.5
                                                        --------    --------   --------    --------    --------
Personnel costs                                            7,003        49.7      4,527        51.5       2,476        54.7
Other selling, general and administrative                  6,059        43.0      3,521        40.1       2,538        72.1
Depreciation and amortization                                570         4.0        523         6.0          47         9.0
                                                        --------    --------   --------    --------    --------
Total operating costs                                     13,632        96.7      8,571        97.6       5,061        59.0
                                                        --------    --------   --------    --------    --------
Income from operations                                       473         3.3        215         2.4         258       120.0
Other income, net                                             54         0.4         53         0.6           1         1.9
                                                        --------    --------   --------    --------    --------
Income from continuing operations before income taxes        527         3.7        268         3.0         259        96.6
Income taxes                                                 (43)       (0.3)        --          --         (43)       NM
                                                        --------    --------   --------    --------    --------
Net income from continuing operations                        484         3.4        268         3.0         216        80.6
Loss from discontinued operations                           (355)       (2.5)        --          --        (355)       NM
                                                        --------    --------   --------    --------    --------    --------
Net income (loss)                                            129         0.9        268         3.0        (139)      (51.9)
Preferred stock dividends                                     --          --       (892)      (10.1)        892        NM
                                                        --------    --------   --------    --------    --------
Net income (loss) attributable to common stockholders   $    129         0.9   $   (624)       (7.1)   $    753       120.7
                                                        ========    ========   ========    ========    ========


         Personnel costs were $7.0 million for the second quarter of 2003, an
increase of $2.5 million or 54.7% over $4.5 million for the second quarter of
2002. Of the increase, $1.5 million or 60.0% was attributed to growth in the
Domestic platform, which added 119 employees over the comparable prior period.
$0.8 million or 32.0% of the increase was attributed to the International
platform which added 36 employees over the comparable prior period. Personnel
costs as a percentage of net revenue decreased to 49.6% in the second quarter of
2003 from 51.5% in the second quarter of 2002.

         Other selling, general and administrative costs were $6.1 million for
the second quarter of 2003, an increase of $2.5 million or 72.1% over $3.5
million for the second quarter of 2002. For the second quarter of 2003,
$1.6 million or 63.0% of the increase in other selling, general and
administrative costs was attributed to growth in the Domestic platform while
$0.2 million or 8.5% of

                                       20


the increase was attributed to the International platform. As a percentage of
net revenue, other selling, general and administrative costs increased to 43.0%
in the second quarter of 2003 from 40.1% in the first quarter of 2002.

         Depreciation and amortization costs were $0.6 million for the second
quarter of 2003, an increase of 9.0% over $0.5 million for the second quarter
of 2002 driven principally by the increase in amortizable intangible assets
resulting from our acquisition strategy. As discussed in Note 2 to the unaudited
consolidated financial statements, amortization expense associated with the
customer relationship intangible asset has been revised upward based on the
outcome of our discussions with the SEC.

         Income from operations was $0.5 million in the second quarter of 2003,
as compared to $0.2 million for the second quarter of 2002. Income from
operations as a percentage of net revenue increased to 3.3% for the second
quarter of 2003 from 2.4% for the same period in 2002.

         Other income, net increased modestly in 2003 compared to 2002. With
quarter over quarter cash balances being reduced as a result of our acquisition
program, interest income remained an insignificant component to the Company's
overall financial performance for the second quarter of 2003 and 2002.

         As a result of historical losses related to investments in early-stage
technology businesses, the Company has accumulated federal net operating loss
carryforwards ("NOLs"). Although a portion of this loss may be subject to
certain limitations, the Company expects it will be able to use approximately
$21.7 million of the loss to offset current and future federal taxable income.
As a result, the Company is currently only subject to certain state and local
taxes which are immaterial to the Company's quarterly financial results.

         Income from continuing operations was $0.5 million in the second
quarter of 2003, an improvement of $0.2 million over income of $0.3 million in
the second quarter of 2002.

         Loss from discontinued operations in the second quarter of 2003
represents the settlement of certain consulting costs related to the Company's
former internet operations and an accrual for the remaining lease payments on a
property which had been sublet to a company that recently vacated the property
and filed for bankruptcy. See Note 10 to the unaudited consolidated financial
statements.

         The Company had no preferred stock dividends in the second quarter of
2003 as compared to $0.9 million for the second quarter of 2002 as a result of
the restructuring of our Series C Preferred Stock effective July 18, 2002. See
Note 7 to the unaudited consolidated financial statements.

         Net income attributable to common stockholders was $0.1 million in the
second quarter of 2003, an improvement of $0.8 million over a net loss
attributable to common stockholders of $0.6 million in the second quarter of
2002, primarily due to the effect of the $0.9 million preferred stock dividend.
Basic and diluted earnings per common share were $0.00 for the second quarter of
2003 compared to a loss of $0.03 per basic and diluted common share for the
second quarter of 2002.

                                       21


         Six months ended June 30, 2003 compared to six months ended June 30,
2002

         The following table compares our historical total revenue, net
transportation revenue and other revenue (in thousands):



                                                         Six months ended June 30,
                                                  --------------------------------------
                                                                               Percent
                                                     2003          2002         Change
                                                  ----------    ----------    ----------
                                                                          
         Total revenue                            $   99,772    $   45,755         118.1%
                                                  ==========    ==========
         Transportation revenue                   $   93,229    $   42,759         118.0
         Cost of transportation                       73,484        32,550         125.8
                                                  ----------    ----------
         Net transportation revenue               $   19,745    $   10,209          93.4
                     Net transportation margins         21.2%         23.8%

         Customs brokerage                             4,042         1,748         131.2
         Warehousing and other
              value added services                     2,502         1,248         100.5
                                                  ----------    ----------
                              Total net revenue   $   26,289    $   13,205          99.1
                                                  ==========    ==========


         Total revenue was $99.8 million in the first six months of 2003, an
increase of $54.0 million or 118.1% over total revenue of $45.8 million in the
first six months of 2002. For the first six months of 2003, $22.6 million, or
41.9%, of the increase in revenues was attributed to growth in the Domestic
platform with an incremental five months of operations of United American
accounting for $9.9 million of the growth; $31.4 million, or 58.1% of the
increase was attributed to growth in the International platform with an
incremental three months of operations of SLIS accounting for $19.3 million of
the growth.

         Net transportation revenue was $19.7 million in the first six months of
2003, an increase of $9.5 million or 93.4% over net transportation revenue of
$10.2 million in the first six months of 2002. For the first six months of 2003,
$6.5 million, or 68.4% of the increase in net transportation revenues was
attributed to growth in the Domestic platform while $3.0 million, or 31.6% of
the increase was attributed to growth in the International platform. Net
transportation margins decreased to 21.2% for the first six months of 2003 from
23.8% for the first six months of 2002. This decrease in historical
transportation margins is primarily the result of the additional relative
contribution of our International Services platform which traditionally
generates lower transportation margins.

         Net revenue was $26.3 million in the first six months of 2003, an
increase of $13.1 million or 99.1% over net revenue of $13.2 million in the
first six months of 2002. For the first six months of 2003, $7.5 million, or
57.3% of the increase in net revenues was attributed to growth in the Domestic
platform while $5.6 million, or 42.7% of the increase was attributed to growth
in the International platform.

                                       22


      The following table compares certain consolidated statement of operations
data as a percentage of our net revenue (in thousands):



                                                                                   Six months ended June 30,
                                                               -------------------------------------------------------------------
                                                                     Restated               Restated
                                                                       2003                   2002                    Change
                                                               --------------------   --------------------    --------------------
                                                                Amount      Percent    Amount      Percent    Amount      Percent
                                                               --------    --------   --------    --------    --------    --------
                                                                                                           
Net revenue                                                    $ 26,289       100.0   $ 13,205       100.0    $ 13,084        99.1
                                                               --------    --------   --------    --------    --------
Personnel costs                                                  13,566        51.6      7,120        53.9       6,446        90.5
Other selling, general and administrative                        10,361        39.4      6,186        46.9       4,175        67.5
Depreciation and amortization                                     1,161         4.4        966         7.3         195        20.1
Litigation settlement                                               750         2.9         --          --         750          NM
                                                               --------    --------   --------    --------    --------
Total operating costs                                            25,838        98.3     14,272       108.1      11,566        81.0
                                                               --------    --------   --------    --------    --------
Income (loss) from operations                                       451         1.7     (1,067)       (8.1)      1,518       142.3
Other income, net                                                    84         0.3        108         0.8         (24)      (22.0)
                                                               --------    --------   --------    --------    --------
Income (loss) from continuing operations before income taxes        535         2.0       (959)       (7.3)      1,494       155.8
Income taxes                                                        (58)       (0.2)        --          --         (58)         NM
                                                               --------    --------   --------    --------    --------
Net income (loss) from continuing operations                        477         1.8       (959)       (7.3)      1,436       149.7
Loss from discontinued operations                                  (355)       (1.3)        --          --        (355)         NM
                                                               --------    --------   --------    --------    --------
Net income (loss)                                                   122         0.5       (959)       (7.3)      1,081       112.7
Preferred stock dividends                                            --          --     (1,780)      (13.5)      1,780       100.0
                                                               --------    --------   --------    --------    --------
Net income (loss) attributable to common stockholders          $    122         0.5   $ (2,739)      (20.8)   $  2,861       104.5
                                                               ========    ========   ========    ========    ========


         Personnel costs were $13.6 million for the first six months of 2003, an
increase of $6.4 million or 90.5% over $7.1 million for the first six months of
2002. Of the increase, $3.2 million, or 50.0% was attributed to the Domestic
platform, driven primarily by the acquisition of United American in the second
quarter of 2002. However, employees from the United American transaction were
only employed for one month during the first six months of 2002. The
International platform accounted for $3.0 million, or 46.9% of the increase, due
to the acquisition of SLIS in the second quarter of 2002. The employees from the
SLIS acquisition were employed for only three months during the first six months
of 2002. Notwithstanding the nominal dollar growth in personnel costs, as a
percentage of net revenue, personnel costs decreased to 51.6% in the first six
months of 2003 from 53.9% in the first six months of 2002.

         Other selling, general and administrative costs were $10.4 million for
the first six months of 2003, an increase of $4.2 million or 67.5% over $6.2
million for the first six months of 2002. For the first six months of 2003, $2.2
million, or 53.4% of the increase in other selling, general and administrative
costs was attributed to growth in the Domestic platform and $1.0 million, or
24.8% of the increase was attributed to the International platform. As a
percentage of net revenue, other selling, general and administrative costs
decreased to 39.4% in the first six months of 2003 from 46.9% in the first six
months of 2002.

                                       23


         Depreciation and amortization costs were $1.2 million for the first six
months of 2003, an increase of 20.1% over $1.0 million for the first six months
of 2002 driven principally by the increase in amortizable intangible assets
resulting from our acquisition strategy. As discussed in Note 2 to the unaudited
consolidated financial statements, amortization expense associated with the
customer relationship intangible asset has been revised upward based on the
outcome of our discussions with the SEC.

         The litigation settlement in 2003 amounted to $750,000 and represents
payment to settle litigation commenced against the Company in August 2000. The
Company settled the claim for a payment consisting of $400,000 in cash and
$350,000 in Company common stock.

         Income from operations was $0.5 million in the first six months of
2003, as compared to a loss of $1.1 million for the first six months of 2002.
Income from operations as a percentage of net revenue increased to 1.7% for the
first six months of 2003 from (8.1)% for the same period in 2002.

         Other income, net decreased modestly in 2003 compared to 2002. With six
month over six month cash balances being reduced as a result of our acquisition
program, interest income remained an insignificant component to the Company's
overall financial performance for the first six months of 2003 and 2002.

         As a result of historical losses related to investments in early-stage
technology businesses, the Company has accumulated federal NOLs. Although a
portion of this loss may be subject to certain limitations, the Company expects
it will be able to use approximately $21.7 million of the loss to offset current
and future federal taxable income. As a result, the Company is currently only
subject to certain state and local taxes which are immaterial to the Company's
quarterly financial results.

         Income from continuing operations was $0.5 million in the first six
months of 2003, an improvement of $1.4 million over a loss of $1.0 million in
the first six months of 2002.

         The Company had no preferred stock dividends in the first six months of
2003 as compared to $1.8 million for the first six months of 2002 as a result of
the restructuring of our Series C Preferred Stock effective July 18, 2002. See
Note 7 to the unaudited consolidated financial statements.

         Net income attributable to common stockholders was $0.1 million in the
first six months of 2003, an improvement of $2.9 million over a net loss
attributable to common stockholders of $2.7 million in the first six months of
2002 due primarily to the effect of the $1.8 million preferred stock dividend.
Basic and diluted earnings per common share were $0.00 for the first six months
of 2003, compared to a loss of $0.13 per basic and diluted common share for the
first six months of 2002.

Financial Outlook

         We will continue to invest in the business over the balance of the year
focusing on the integration of the companies we have acquired, developing our
global network, continuing the roll-out of our Tech-Logis(TM) operating platform
and working with our expanded sales force to drive organic growth. In addition
to these core initiatives, our 2003 results are also being adversely affected by
a number of factors which will affect our full year performance. These factors
include: the possibility, based upon year-to-date performance, that certain of
the operating companies within our domestic unit

                                       24


will not achieve their targeted earnings; over $1.0 million of non-recurring
expense associated with the settlement of matters that arose during our prior
business model; a delay in the completion of three strategic acquisitions which
delayed the operational benefits and revenue base otherwise expected with those
transactions; delays in our domestic integration program which have caused us to
experience additional costs and postponed expected operational synergies; and an
estimated $0.5 million of costs associated with our on-going discussions with
the SEC. For 2003, the Company is maintaining its $8.5 million guidance for
earnings before interest, taxes and depreciation ("EBITDA") although net
earnings is being reduced to the range of $6.3 million, based on an expected
$210 million in revenue. This guidance includes the benefit of the recent
acquisitions, on-going costs of integration, non-recurring costs experienced
through June and an estimated $0.5 million of costs which we expect to incur in
connection with the on-going discussions with the SEC.

         We have also concluded our conversations with the SEC with respect to
our allocation of purchase price for certain of our acquired companies,
resulting in (i) $4.9 million being reclassified from goodwill to the customer
relationship amortizable asset, (ii) a reduction in the estimated useful life
over which the asset is amortized from 15 years to 10 years, and (iii) use of an
accelerated amortization method. Based on this conclusion, we will report an
additional $1.3 million in non-cash charges for 2003, providing adjusted net
earnings estimated at $5.0 million with no impact on EBITDA.

         Because of the potential discrepancy between our GAAP-based financials
and the economic reality of our business resulting from the possible increased
amortization related to customer relationships, we believe EBITDA is a useful
non-GAAP measure.

         A reconciliation of EBITDA to the most directly comparable GAAP measure
in accordance with SEC Regulation S-K follows:



                                                            (In millions)
                                                      Unadjusted     Adjusted*
                                                       Earnings       Earnings
                                                       Guidance       Guidance
                                                     ------------   ------------
                                                              
     Net income                                      $        6.3   $        5.0
     Income taxes                                              .3             .3
                                                     ------------   ------------

     Income from operations before income taxes               6.6            5.3
     Interest expense/(income)                                 .2             .2
                                                     ------------   ------------

     Income from operations                                   6.8            5.5
     Depreciation and amortization                            1.7            3.0
                                                     ------------   ------------
     Earnings before interest, taxes, depreciation
       and amortization (EBITDA)                     $        8.5   $        8.5
                                                     ============   ============


         *Gives effect for an estimated $1.3 million in non-cash charges
associated with the Company's discussions with the SEC with respect to valuing
the customer relationship intangible assets.

         In addition, we may record a non-cash tax benefit in 2003 in
recognition of the value associated with our net deferred tax assets, which is
not reflected in our $5.0 million in adjusted net earnings guidance. Given the
possibility of recognizing this non-cash benefit some time in the future,

                                       25


and under the assumption that over time we will make use of the NOLs available
to us and become a "full taxpayer", and the non-cash charges associated with the
customer relationship intangible asset, a key measurement of our ongoing
financial performance will be the period-on-period change in EBITDA.

         Our revenue and net income estimates have been developed based on a
number of principal assumptions including, among others: (i) that revenue and
net income will continue to grow at an annual rate that is consistent with
recent results; (ii) that operating margins will not decline from current
levels; (iii) that no material economic or customer disruptions will occur; (iv)
that the methodologies adopted and amounts allocated by the Company for
amortizable intangibles associated with acquisitions completed in 2003 remain
consistent with positions presently under discussion between the Company and the
SEC; and (v) that the risks otherwise identified in our Annual Report on Form
10-K/A for the year ended December 31, 2002 under "Risks Particular to our
Business" will not have an adverse effect on our operations. In prior forward-
looking guidance, we had assumed that each of our operating companies, on a
stand-alone basis, would deliver the level of pre-tax operating income necessary
to fully achieve the earn-out payments under each of their acquisition
agreements. Our present guidance no longer relies upon that assumption based
upon year to date performance of certain of our operating units, and since some
of our most recent acquisitions establish earn-out levels based upon forecasted,
rather than current levels of earnings.

         Assuming we can continue to execute on our business plan and
acquisition model without any material disruptions, and identify and close
transactions similar to transactions accomplished to date, it is our goal to
generate $500.0 million in annualized revenue by the end of 2006.

         Notwithstanding our expectations regarding our ability to deliver these
results, we can never be certain that future revenue or earnings will be
achieved at any particular level. Estimates of future financial performance are
forward-looking statements and are subject to uncertainty created by the risk
elements otherwise identified in our Annual Report on Form 10-K/A for the year
ended December 31, 2002 under "Risks Particular to our Business." Furthermore,
even though we believe our current operations will achieve a certain level of
earnings on an annual basis, our results are subject to seasonal trends. For
2002 and 2001, on a pro forma basis, approximately 21% of our annual total
revenue and a small percentage of our annual income were generated in the first
quarter. Thereafter, volume and income typically accelerate for the remainder of
the year, with the third and fourth quarters showing the greatest improvement.

Liquidity and Capital Resources

         Prior to the adoption of our current business model, our operations
consisted of developing early-stage technology businesses. These operations did
not generate sufficient operating funds to meet our cash needs, and, as a
result, we funded our historic operations with the proceeds from a number of
private placements of debt and equity securities. With the advent of our new
business model, we expect to be able to fund our operations with the cash flow
generated by the subsidiaries we acquire. We are also in an acquisitive mode and
expect to deploy material amounts of capital as we execute our business plan.
Therefore, it is likely that we will need to raise additional capital in the
future. There can be no assurance that we will be able to raise additional
capital on terms acceptable to us, if at all.

                                       26


         Cash and cash equivalents totaled $0.4 million and $2.3 million as of
June 30, 2003 and December 31, 2002, respectively. Working capital totaled $6.6
million and $5.3 million at June 30, 2003 and December 31, 2002, respectively.

         Cash used in operating activities was $3.8 million for the first six
months of 2003 compared to $3.7 million used in the first six months of 2002.

         Net cash used in investing activities during the first quarter of 2003
was $11.5 million compared to $10.4 million in the first quarter of 2002.
Investing activities in 2003 were driven principally by $3.7 million related to
our acquisition of Regroup, approximately $3.5 million in earn-out payments made
in relation to 2002 performance targets in connection with prior acquisitions
and $3.9 million for the purchase of furniture and equipment primarily related
to the roll-out of Tech-Logis(TM), the Company's new web-based technology
platform.

         Cash from financing activities in the first six months of 2003 included
a private placement of 4,470,000 shares of our common stock in exchange for
gross proceeds of approximately $6.1 million. This placement yielded net
proceeds of $5.7 million for the Company, after the payment of placement agent
fees and other out-of-pocket costs. Until the Company resolves the issues
surrounding the valuation of its acquired customer relationship intangible
assets, it is not able to file an effective registration statement with respect
to these shares. Under the private placement agreement, the Company became
subject to a penalty provision that requires the Company, beginning July 3, 2003
and again at the end of each 30-day period thereafter, to pay $150,000 to the
shareholders who participated in the private placement.

         The Company utilized $5.6 million under the Company's credit line,
principally in connection with payment of earnouts and the acquisition of
Regroup, and it received approximately $2.0 million related to the financing of
certain equipment under a capital lease arrangement.

         On July 18, 2002 we completed a private exchange transaction that
eliminated approximately $44.6 million in liquidation value of our Series C
Preferred Stock. The terms of the Series C Preferred Stock would have
significantly constrained our future growth opportunities. In return for
eliminating the Series C Preferred Stock, we issued 1,911,071 shares of common
stock, warrants to purchase 1,543,413 shares of common stock at an exercise
price of $1.00 per share for a term of three (3) years, and a new class of
Series D Convertible Preferred Stock that will convert into 3,607,450 shares of
our common stock no later than December 31, 2004. The terms of the Series D
Convertible Preferred Stock were structured to make it much like a common equity
equivalent in that (1) it receives no dividend; (2) it is subordinated to new
rounds of equity; and (3) it holds a limited liquidation preference (expiring at
the end of 2003). In addition, the holders of the Series D Convertible Preferred
Stock were restricted from selling the common stock received upon conversion of
the Series D Convertible Preferred Stock until July 19, 2003 (or earlier if the
stock traded at or above $4.50) and then are permitted limited resale based on
trading volume through July 19, 2004.

         We may also receive proceeds in the future from the exercise of
existing options and warrants. As of June 30, 2003, approximately 16,548,000
options and warrants were outstanding. Of these outstanding securities, there
are approximately 73,000 that have an exercise price of $5.00 per share or
higher. If we exclude those options and warrants from our diluted share count,
our outstanding diluted shares, as adjusted, would be approximately
45,512,000 shares. Excluding options and warrants with

                                       27


an exercise price of $5.00 or higher, the proceeds received by the Company, if
all of the remaining options and warrants were exercised, would be approximately
$15.2 million.

         We believe that our current working capital and anticipated cash flow
from operations are adequate to fund existing operations. In view of the
outstanding balance under our credit facility, our ability to finance further
acquisitions is limited until we raise additional capital. We may finance
acquisitions, however, 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.

         To ensure that we have adequate near-term liquidity, we maintain a
revolving credit facility of $15.0 million (the "Facility") with LaSalle
Business Credit, Inc. that is collateralized by accounts receivable and other
assets of the Company and its subsidiaries. The Facility requires the Company
and its subsidiaries to comply with certain financial covenants that may limit
or otherwise govern the Company's ability to make acquisitions. Advances under
the Facility are available to fund future acquisitions, capital expenditures or
for other corporate purposes. At June 30, 2003, advances plus checks then
outstanding stood at $5.6 million. This amount was subsequently increased to
approximately $11.3 million as of August 14, 2003, to finance the acquisitions
of the Singapore offices of G Link Express Pte. Ltd. and the Cambodia offices of
G Link Express (Cambodia) Pte. Ltd. (collectively "G-Link") and Customs Services
International, Inc. ("CSI"). Thus, we have limited availability under the
Facility until we are able to reduce the level of our outstanding advances and
are otherwise limited in our ability to make future acquisitions. We expect that
the cash flow from our existing operations and any other subsidiaries acquired
during the year will be sufficient to support our corporate overhead and some
portion, if not all, of the contingent earn-out payments or other cash
requirements associated with our acquisitions. Therefore, we anticipate that our
primary uses of capital in the near term will be to finance the cost of new
acquisitions and to pay any portion of existing earn-out arrangements that cash
flow from operations is otherwise unable to fund.

         The acquisition of Air Plus was completed subject to an earn-out
arrangement of $17.0 million. We agreed to pay the former Air Plus shareholders
installments of $3.0 million in 2003, $5.0 million in 2004, $5.0 million in 2005
and $4.0 million in 2006, with each installment payable in full if Air Plus
achieves pre-tax income of $6.0 million in each of the years preceding the year
of payment. In the event there is a shortfall in pre-tax income, 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
pre-tax income in any other pay-out year exceeds the $6.0 million level. Based
upon 2002 performance, former Air Plus shareholders were entitled to receive
$3.0 million, and will have excess earnings of $0.3 million as a carryforward
against future earnings targets. Former Air Plus shareholders elected to receive
$2.6 million in cash with the balance paid in shares of the Company's common
stock in April 2003.

         On April 4, 2002, we acquired SLIS, a Seattle-based privately-held
company that provides a full range of international air and ocean logistics
services. The transaction was valued at up to $12.0 million, consisting of cash
of $5.0 million paid at the closing and up to an additional $7.0 million payable
over a five year earn-out period based upon the future financial performance of
SLIS. We agreed to pay the former SLIS shareholders a total of $5.0 million in
base earn-out payments in installments of $0.7 million in 2003, $1.0 million in
2004 through 2007 and $0.3 million in 2008, with each installment payable in
full if SLIS achieves pre-tax income of $2.0 million in each of the years
preceding the year of payment (or the pro rata portion thereof in 2002 and
2007). In the event there is

                                       28


a shortfall in pre-tax income, the earn-out payment will be reduced on a pro
rata basis. Shortfalls may be carried over or carried back to the extent that
pre-tax income in any other pay-out year exceeds the $2.0 million level. The
Company has also provided the former SLIS shareholders with an additional
incentive to generate earnings in excess of the base $2.0 million annual
earnings target ("SLIS' tier-two earn-out"). Under SLIS' tier-two earn-out,
former SLIS shareholders are also entitled to receive 40% of the cumulative
pre-tax earnings in excess of $10.0 million generated during the five-year
earn-out period subject to a maximum additional earn-out opportunity of $2.0
million. SLIS would need to generate cumulative earnings of $15.0 million over
the five-year earn-out period in order for the former SLIS shareholders to
receive the full $7.0 million in contingent earn-out payments. Based upon 2002
performance, former SLIS shareholders received $0.7 million on April 1, 2003,
and will have excess earnings of $2.3 million as a carryforward against future
earnings targets.

         On May 30, 2002 we acquired United American, a Detroit-based
privately-held provider of expedited transportation services. The United
American transaction provided us with a new time-definite service offering
focused on the automotive industry. The transaction is valued at up to $16.1
million, consisting of cash of $5.1 million paid at closing and a four-year
earn-out arrangement based upon the future financial performance of United
American. We agreed to pay the former United American shareholder a total of
$5.0 million in base earn-out payments in installments of $1.25 million in 2003
through 2006, with each installment payable in full if United American achieves
pre-tax income of $2.2 million in each of the years preceding the year of
payment. In the event there is a shortfall in pre-tax income, 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
pre-tax income in any other pay-out year exceeds the $2.2 million level. The
Company has also provided the former United American shareholder with an
additional incentive to generate earnings in excess of the base $2.2 million
annual earnings target ("United American's tier-two earn-out"). Under United
American's tier-two earn-out, the former United American shareholder is also
entitled to receive 50% of the cumulative pre-tax earnings generated by a
certain pre-acquisition customer in excess of $8.8 million during the four year
earn-out period subject to a maximum additional earn-out opportunity of $6.0
million. United American would need to generate cumulative earnings of $20.8
million over the four-year earn-out period in order for the former United
American shareholder to receive the full $11.0 million in contingent earn-out
payments. Based upon 2002 performance, the former United American shareholder
was entitled to receive $0.2 million, which he received in the first quarter of
2003, and has an earnings shortfall of $1.0 million. In future years, earnings
in excess of the $2.2 million earnings target would first be applied against the
$1.0 million shortfall.

         On October 1, 2002 we acquired SLGS, a Northern Virginia-based
privately-held provider of expedited domestic and international transportation
services. The SLGS transaction capitalized on SLGS' existing base of government
contract work in the Washington metropolitan area and served as a supplement to
an existing Company-operated facility in that area. The transaction was valued
at up to $1.1 million, consisting of cash of $0.5 million paid at closing, and a
three-year earn-out arrangement. The Company agreed to pay the former SLGS
shareholder $0.2 million for each year in the three-year earn-out period ending
December 31, 2005, based upon the annual net revenue targets of $1.6 million. In
the event there is a shortfall in net revenue, the earn-out payment will be
reduced proportionally to the extent of the shortfall, provided no earn-out
payment shall be made if net revenue for the year falls below $1.0 million.
Shortfalls may be carried over or carried back to the extent that net revenue in
any other pay-out year exceeds the $1.6 million level.

                                       29


         On June 20, 2003, through our indirect wholly owned subsidiary, SLGS,
we acquired the business of Regroup Express LLC, a Virginia limited liability
company ("Regroup"). The Regroup transaction enhanced our presence in the
Washington, D.C. market and provided a platform to focus on the logistics needs
of U.S. government agencies and contractors. The transaction was valued at up to
$27.2 million, consisting of cash of $3.7 million and $1.0 million of Company
stock paid at closing, and a five year earn-out arrangement. The Company agreed
to pay the members of Regroup a total of $10.0 million in base earn-out payments
payable in equal installments of $2.5 million in 2005 through 2008, if Regroup
achieves pre-tax income of $3.5 million in each of the years preceding the year
of payment. In the event there is a shortfall in pre-tax income, the earn-out
payment will be reduced on a pro rata basis. Shortfalls may be carried over or
carried back to the extent that pre-tax income in any other pay-out year exceeds
the $3.5 million level. The Company has also provided the former members of
Regroup with an opportunity to earn an additional payment of $2.5 million if
Regroup earns $3.5 million in pre-tax income during the 12 month period
commencing July 1, 2003. In addition, the Company has also provided the former
members of Regroup with an additional incentive to generate earnings in excess
of the base $3.5 million annual earnings target ("Regroup's tier-two earn-out").
Under Regroup's tier-two earn-out, the former members of Regroup are also
entitled to receive 50% of the cumulative pre-tax earnings in excess of $17.5
million generated during the five-year earn-out period subject to a maximum
additional earn-out opportunity of $10.0 million. Regroup would need to generate
cumulative earnings of $37.5 million over the five-year earn-out period in order
for the former members to receive the full $22.5 million in contingent earn-out
payments.


         On July 16, 2003, through our indirect wholly owned subsidiary, SLIS,
we acquired the business of CSI, a Miami-based, privately held international
freight forwarder and leading customs broker. The acquisition significantly
enhanced our presence in Miami and provided a powerful platform to service
Central America, South America, and the Caribbean. The transaction was valued at
up to $3.8 million, consisting of cash of $1.4 million paid at the closing and
up to an additional $2.4 million payable over a five year earn-out period based
upon the future financial performance of CSI. We agreed to pay the former CSI
shareholders a total of $2.4 million in base earn-out payments in installments
of $0.2 million in 2004, $0.5 million in 2005 through 2007 and $0.7 million in
2008, with each installment payable in full if CSI achieves pre-tax income of
$0.8 million in each of the years preceding the year of payment (or the pro rata
portion thereof in 2004 and 2008). In the event there is a shortfall in pre-tax
income, the earn-out payment will be reduced on a pro rata basis. Shortfalls may
be carried over or carried back to the extent that pre-tax income in any other
pay-out year exceeds the $0.8 million level.

         On August 8, 2003, through two indirect international subsidiaries, we
acquired a seventy (70%) percent interest in the assets and operations of G-Link
which provide a full range of international logistics services, including
international air and ocean transportation to a worldwide customer base of
manufacturers and distributors. The G-Link transaction substantially increased
our presence in Southeast Asia and expanded our network of owned offices through
which to deliver global supply chain solutions. The transaction was valued at up
to $6.2 million, consisting of cash of $2.8 million, $0.9 million of the
Company's common stock paid at the closing, a thirty (30%) interest in the
subsidiaries which acquired the assets and an additional $2.5 million payable
over a four year earn-out period based upon the future financial performance of
G-Link. We agreed to pay the selling companies a total of $2.5 million in base
earn-out payments in

                                       30


installments of $0.3 million in 2004, $0.6 million in 2005 through 2006 and $1.0
million in 2007, with each installment payable in full if G-Link achieves
pre-tax income of $1.8 million in each of the years preceding the year of
payment (or the pro rata portion thereof in 2003 and 2007). In the event there
is a shortfall in pre-tax income, the earn-out payment will be reduced on a pro
rata basis. Shortfalls may be carried over or carried back to the extent that
pre-tax income in any other pay-out year exceeds the $1.8 million level. As
additional purchase price, the Company has also agreed to pay G-Link for excess
working capital estimated at $1.6 million through the issuance of Company common
stock, on a post-closing basis.

         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 significant portion of the required payments will be generated by
the acquired subsidiaries, we may have to secure additional sources of capital
to fund some portion of the earn-out payments as they become due. This presents
us with certain business risks relative to the availability and pricing of
future fund raising, as well as the potential dilution to our stockholders if
the fund raising involves the sale of equity.

         The following table summarizes our contingent base earn-out payments,
assuming full payout (in thousands)(1)(2):



                                         2004       2005       2006       2007       2008       Total
                                       --------   --------   --------   --------   --------   --------
                                                                            
Earn-out payments:
   Domestic                            $  9,040   $  9,050   $  8,050   $  2,500   $  2,500   $ 31,140
   International                          1,466      2,097      2,097      2,469        259      8,388
                                       --------   --------   --------   --------   --------   --------
Total earn-out payments                $ 10,506   $ 11,147   $ 10,147   $  4,969   $  2,759   $ 39,528
                                       ========   ========   ========   ========   ========   ========

Prior year pre-tax earnings targets(3):

   Domestic                            $  8,806   $ 12,306   $ 12,306   $  3,500   $  3,500   $ 40,418
   International                          3,069      4,564      4,564      5,259        510     17,966
                                       --------   --------   --------   --------   --------   --------
   Total pre-tax earnings targets      $ 11,875   $ 16,870   $ 16,870   $  8,759   $  4,010   $ 58,384
                                       ========   ========   ========   ========   ========   ========

Earn-outs as a percentage of prior year pre-tax earnings targets:

Domestic                                  102.7%      73.5%      65.4%      71.4%      71.4%      77.0%
International                              47.8%      45.9%      45.9%      46.9%      50.8%      46.7%
Combined                                   88.5%      66.1%      60.1%      56.7%      68.8%      67.7%


----------
(1)      Excludes the impact of prior year's pre-tax earnings carryforwards
         (excess or shortfalls versus earnings targets).
(2)      During the 2003-2007 earn-out period, there is an additional contingent
         obligation related to tier-two earn-outs that could be as much as $18.0
         million if the applicable acquired companies generate an incremental
         $37.0 million in pre-tax earnings.
(3)      Aggregate pre-tax earnings targets as presented here identify the
         uniquely defined earnings targets of each acquisition and should not be
         interpreted to be the consolidated pre-tax earnings of the Company
         which would give effect for, among other things, amortization or
         impairment of intangibles created in connection with each acquisition
         or various other expenses which may not be charged to the operating
         groups for purposes of calculating earn-outs.

         On May 6, 2003, we settled litigation instituted on August 20, 2000 by
Austost Anstalt Schaan, Balmore Funds, S.A. and Amro International, S.A.
Although we believed that the Plaintiffs' claims were without merit, we chose to
settle the matter at that time in order to remove any cloud of uncertainty
created by nominal claims in excess of $20 million, to avoid future litigation
costs and to mitigate the diversion of management attention from operations.

                                       31


         Notwithstanding the settlement, the Company remains subject to one
remaining material legal proceeding that arose prior to our transition to a
logistics business. That proceeding has been identified in our Annual Report on
Form 10-K/A for the year ended December 31, 2002. Although we believe that the
claims asserted in this proceeding are without merit, and we intend to
vigorously defend this matter, there is the possibility that the Company could
incur material expenses in the defense and resolution of this matter.
Furthermore, since the Company has not established any reserves in connection
with such claims, any such liability, if any, would be recorded as an expense in
the period incurred or estimated. This amount, even if not material to the
Company's overall financial condition, could adversely affect the Company's
results of operations in the period recorded.

         One of the Company's customers which is the subject of a Chapter 11
proceeding under the Bankruptcy Code paid to the Company approximately $1.3
million of pre-petition indebtedness for shipping and delivery charges pursuant
to an order of a United States Bankruptcy Court authorizing the payment of such
charges. One of the creditors in the Chapter 11 proceeding appealed other orders
of the Bankruptcy Court authorizing the payment of pre-petition indebtedness to
other creditors for other charges and those orders have been reversed by a
United States District Court. The Company's customer has appealed the District
Court's reversal and that appeal is pending. While no action has been taken in
the Bankruptcy Court to challenge the payment made to the Company, if such
action were taken in the future and that action were successful, the Company
could be required to return all or a substantial portion of the payments made by
the customer.

New Accounting Pronouncements

          In December 2002, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 148, "Accounting
for Stock-Based Compensation - Transition and Disclosure," which (i) amends SFAS
No. 123, "Accounting for Stock-Based Compensation," to provide alternative
methods of transition for an entity that voluntarily changes the fair value
based method of accounting for stock-based employee compensation, (ii) amends
the disclosure provisions of SFAS No. 123 to require prominent disclosure about
the effects on reported net income of an entity's accounting policy decisions
with respect to stock-based employee compensation and (iii) amends Accounting
Principles Board Opinion No. 28, "Interim Financial Reporting," to require
disclosure about those effects in interim financial information. Items (ii) and
(iii) in the new requirements of SFAS No. 148 are effective for financial
statements for fiscal years ending after December 15, 2002. The Company has
adopted the disclosure requirements described in items (ii) and (iii).

         In January 2003, the FASB issued Interpretation No. 46, "Consolidation
of Variable Interest Entities," which provides new guidance with respect to the
consolidation of all unconsolidated entities, including special purpose
entities. The adoption of Interpretation No. 46 in 2003 is not expected to
impact the Company's consolidated financial statements as the Company does not
have investments in any unconsolidated variable interest entities.

         In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." SFAS
No. 150 establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires an issuer to classify a financial instrument that is within its scope
as a liability. Many of these instruments were previously classified as equity.
SFAS No. 150 affects the issuer's

                                       32


accounting for three types of freestanding financial instruments: 1) mandatorily
redeemable shares, which the issuing company is obligated to buy back in
exchange for cash or other assets; 2) instruments that do or may require the
issuer to buy back some of its shares in exchange for cash or other assets,
including put options and forward purchase contracts; and 3) obligations that
can be settled with shares, the monetary value of which is fixed, tied solely or
predominantly to a variable such as a market index, or varies inversely with the
value of the issuer's shares. SFAS No. 150 does not apply to features embedded
in a financial instrument that is not a derivative in its entirety. The adoption
of SFAS No. 150 is not expected to have a material effect on the Company's
consolidated financial position, results of operations or cash flows.

Item 3.       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 investment portfolio and its line of credit.
The Company does not have any derivative financial instruments in its investment
portfolio. 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 June 30, 2003, the change in interest
expense would have had an immaterial impact on the Company's results of
operations. The Company does not expect any material loss with respect to its
investment portfolio.

Item 4.       Controls and Procedures

         As required by Rule 13a-15 under the Securities Exchange Act of 1934,
as of the end of the period covered by this report, the Company carried out an
evaluation of the effectiveness of the Company's disclosure controls and
procedures. This evaluation was carried out under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer and Chief Financial Officer. Based upon that evaluation, the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective. There have been no
significant changes in the Company's internal controls or in other factors,
which could significantly affect internal controls subsequent to the date the
Company carried out its evaluation.

         Disclosure controls and procedures are designed to ensure that
information required to be disclosed in Company reports filed or submitted under
the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in
Company reports filed under the Exchange Act is accumulated and communicated to
management, including the Company's Chief Executive Officer and Chief Financial
Officer as appropriate, to allow timely decisions regarding required disclosure.

                                       33


PART II. OTHER INFORMATION

Item 1. Legal Proceedings

         Other than as described in the Company's Annual Report on Form 10-K/A
for the year ended December 31, 2002, there have been no material developments
in any of the reported legal proceedings, except as described below.

         With respect to the litigation instituted on August 20, 2000 by Austost
Anstalt Schaan, Balmore Funds, S.A. and Amro International, S.A., the parties
entered into a Settlement Agreement with the Company on May 6, 2003, pursuant to
which the controversy has been settled, the litigation withdrawn and mutual
releases executed.

         The Company is involved in various other claims and legal actions
arising in the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse effect on
the Company's overall consolidated financial position, results of operations or
liquidity.

Item 2. Changes in Securities and Use of Proceeds

         On April 2, 2003, we issued an aggregate of 254,825 shares of our
common stock to the six (6) former shareholders of Air Plus, each of whom was an
accredited investor, in lieu of approximately $403,000 of the earn-out
obligation that was due to them for 2002. The balance of the earn-out obligation
was paid in cash. The shares were valued, for the purpose of this distribution,
at $1.58 per share, and were issued in a private placement transaction exempt
from the registration requirements of the Securities Act of 1933, pursuant to
Section 4(2) and Rule 506 thereunder, as an issuer transaction not involving a
public offering.

         On May 8, 2003, we issued an aggregate of 175,791 shares of our common
stock to the representative of Austost Anstalt Schaan, Balmore Funds, S.A., and
Amro International, S.A., each an accredited investor, in settlement of
outstanding litigation involving the Company. The shares were valued, for the
purpose of this settlement, at $350,000 ($1.99 per share), and were issued in a
private placement transaction exempt from the registration requirements of the
Securities Act of 1933, pursuant to Section 4(2) and Rule 506 thereunder, as an
issuer transaction not involving a public offering.

         On June 20, 2003, we issued 367,647 shares of our common stock to
Regroup Express, LLC in partial consideration for the acquisition of the assets
and operations of Regroup Express, LLC. The shares were valued, for the purpose
of the acquisition, at $1 million ($2.82 per share), and were issued in a
private placement transaction exempt from the registration requirements of the
Securities Act of 1933, pursuant to Section 4(2) and Rule 506 thereunder, as an
issuer transaction not involving a public offering.

         On June 25, 2003, we issued an aggregate of 75,000 shares of our common
stock to Investec Inc. and one of its former principals, in settlement of the
Company's monetary obligations under an

                                       34


investment banking arrangement entered into with a predecessor of Investec Inc.
during 2001. The shares were valued, for the purpose of settlement, at $150,000
($2.00 per share), and were issued in a private placement transaction exempt
from the registration requirements of the Securities Act of 1933, pursuant to
Section 4(2) and Rule 506 thereunder, as an issuer transaction not involving a
public offering.

Item 3. Defaults Upon Senior Securities

         None.

Item 4. Submission of Matters to a Vote of Security Holders

         We held our Annual Meeting of Stockholders on May 31, 2003. At the
Annual Meeting, our stockholders voted on the following proposals identified in
our Proxy Statement dated April 14, 2003:

         (1)      Vote for the Election of Directors:

         The following directors were elected to serve as members of our Board
of Directors:


                                              For       Withheld
                                          ----------    --------
         Dennis Pelino                    18,962,173     143,987
         J. Douglass Coates               18,979,405     128,155
         John Springer                    18,980,473     125,687
         David R. Jones                   18,980,338     125,822
         Aloysius T. Lawn, III            18,977,255     128,905
         Robert McCord                    18,979,405     126,755

         (2)      Proposal to approve the adoption of the Stonepath Group, Inc.
2003 Employee Stock Purchase Plan:

                  For         Against     Uninstructed     Abstain
                  ---         -------     ------------     -------

               6,136,068     1,091,176     11,852,490       26,426

         (3)      Proposal to approve amendments to the Stonepath Group, Inc.
Amended and Restated 2000 Stock Incentive Plan to increase the number of shares
of the Company's Common Stock which may be issued thereunder:

                  For         Against     Uninstructed     Abstain
                  ---         -------     ------------     -------

               5,512,798     1,623,146     11,942,490       27,726

                                       35


         (4)      Proposal to ratify appointment of KPMG LLP as independent
auditors for the Company:

                       For          Against     Abstain
                       ---          -------     -------

                    18,623,300      464,279      18,581

Item 5. Other Information

         None.

Item 6. Exhibits and Reports on Form 8-K

(a)      The following exhibits are included herein:

         2.6      Asset Purchase Agreement by and among Stonepath Logistics
                  Government Services, Inc. (f/k/a "Transport Specialists,
                  Inc."), Regroup Express L.L.C. and Jed J. Shapiro and Charles
                  R. Cain, the sole members of Regroup Express L.L.C., dated
                  June 4, 2003 (1)

         2.7      Asset Purchase Agreement by and among Stonepath Holdings (Hong
                  Kong) Limited, G Link Express Logistics (Singapore) Pte. Ltd.,
                  G Link Express Pte. Ltd. and the shareholders of G Link
                  Express Pte. Ltd., dated August 8, 2003 (2)

         2.8      Asset Purchase Agreement by and among Stonepath Holdings (Hong
                  Kong) Limited, G Link Express (Cambodia) Pte. Ltd. and the
                  shareholders of G Link Express (Cambodia) Pte. Ltd., dated
                  August 8, 2003 (2)

         4.6      Stonepath Group, Inc. Amended and Restated 2000 Stock
                  Incentive Plan (3)

         4.24     Stonepath Group, Inc. 2003 Employee Stock Purchase Plan (3)

         31.1     Certification of Chief Executive Officer Pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002

         31.2     Certification of Chief Financial Officer Pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002

         32.1     Certification of Chief Executive 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.)

                                       36


         32.2     Certification of 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.)

----------
(1)  Incorporated by reference to Registrant's Current Report on Form 8-K dated
     June 20, 2003.

(2)  Incorporated by reference to Registrant's Current Report on Form 8-K dated
     August 8, 2003.

(3)  Incorporated by reference to Registrant's Definitive Proxy Statement on
     Schedule 14A filed on April 15, 2003.

(b)      Reports on Form 8-K

                  On May 7, 2003, the Company furnished under Item 7- "Financial
                  Statements, Pro Forma Financial Information and Exhibits" and
                  Item 9 - "Regulation FD Disclosure" of Form 8-K a copy of its
                  earnings press release that was issued on May 7, 2003. This
                  release, which is required under Item 12, "Results of
                  Operations and Financial Condition", was included under Item 9
                  pursuant to interim guidance provided by the SEC.

                                       37


                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Quarterly Report on Form 10-Q/A to be signed
on its behalf by the undersigned thereunto duly authorized.

                                    STONEPATH GROUP, INC.


Date:  August 25, 2003              /s/Dennis L. Pelino
                                    -------------------------------------
                                    Dennis L. Pelino
                                    Chief Executive Officer and
                                    Chairman of the Board of Directors


Date:  August 25, 2003              /s/Bohn H. Crain
                                    -------------------------------------
                                    Bohn H. Crain
                                    Chief Financial Officer and Treasurer


Date:  August 25, 2003              /s/Thomas L. Scully
                                    -------------------------------------
                                    Thomas L. Scully
                                    Vice President and Controller and
                                    Principal Accounting Officer

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