ITEM 1. DESCRIPTION OF BUSINESS



Rand Logistics Inc. (formerly Rand Acquisition Corporation) was formed on
June 2, 2004 as a blank check company to effect a merger, capital stock
exchange, asset acquisition or other similar business combination with an
operating business. On November 2, 2004, we closed our initial public offering
of 4,000,000 units with each unit consisting of one share of our common stock
and two warrants, each to purchase one share of our common stock at an exercise
price of $5.00 per share. The units were sold at an offering price of $6.00 per
unit, generating gross proceeds of $24,000,000. On November 3, 2004, we sold an
additional 600,000 units pursuant to the underwriters' over-allotment option
raising additional gross proceeds of $3,600,000. After deducting the
underwriting discounts and commissions and the offering expenses, the total net
proceeds to us from the offering were approximately $24,605,000.


On March 3, 2006, we acquired all of the outstanding shares of capital
stock of Lower Lakes Towing Ltd., a Canadian corporation which, with its
subsidiary Lower Lakes Transportation Company, provides bulk freight shipping
services throughout the Great Lakes region. As part of the acquisition of Lower
Lakes, we also acquired Lower Lakes affiliate, Grand River Navigation Company,
Inc. Prior to the acquisition, we did not conduct, or have any investment in,
any operating business. In this discussion of Rand's business, unless the
context otherwise requires, references to Rand include Rand and its direct and
indirect subsidiaries, and references to Lower Lakes' business or the business
of Lower Lakes mean the combined businesses of Lower Lakes, Lower Lakes
Transportation and Grand River.


Rand's shipping business is operated in Canada by Lower Lakes and in the
United States by Lower Lakes Transportation. Lower Lakes was organized in March
1994 under the laws of Canada to provide marine transportation services to dry
bulk goods suppliers and purchasers operating in ports in the Great Lakes that
were restricted in their ability to receive larger vessels. Lower Lakes has
grown from its origin as a small tug and barge operator to a full service
shipping company with a fleet of eight cargo-carrying vessels. From its
exclusively Canadian beginnings, Lower Lakes has also grown to offer domestic
services to both Canadian and U.S. customers as well as cross-border routes.
Lower Lakes services the construction, electric utility and integrated steel
industries through the transportation of limestone, coal, iron ore, salt, grain
and other dry bulk commodities.


We believe that Lower Lakes is the only company providing significant
domestic port-to-port services to both Canada and the United States in the Great
Lakes region. Lower Lakes maintains this operating flexibility by operating both
U.S. and Canadian flagged vessels in compliance with the Shipping Act, 1916, and
the Merchant Marine Act, 1920, commonly referred to as the Jones Act, in the
U.S. and the Coasting Trade Act (Canada) in Canada.


Lower Lakes' fleet consists of four self-unloading bulk carriers in Canada
and three self-unloading bulk carriers as well as a tug and a self-unloading
barge in the U.S. Lower Lakes owns three of the four Canadian vessels and its
wholly-owned subsidiary, Port Dover Steamship Company Inc., owns the fourth and
charters it to Lower Lakes. Lower Lakes Transportation time charters the five
vessels in the U.S. from Grand River, which owns three of the U.S. flagged
vessels and charters the fourth and the barge from a third party under long term
charter arrangements.


Lower Lakes is a leader in the provision of River Class bulk freight
shipping services throughout the Great Lakes, operating more than one-third of
all River Class vessels servicing the Great Lakes and the majority of
boom-forward equipped vessels in this category. Boom forward self-unloading
vessels - those with their booms located in front of the cargo holds - offer
greater accessibility for delivery of cargo to locations where only forward
access is possible. Seven of the vessels used in Lower Lakes' operations are
boom forward self-unloaders and one vessel is a boom aft self-unloader. River
Class vessels - which represent the smaller end of Great Lakes vessels with
maximum dimensions of approximately 650 feet in length and 72 feet in beam and
carrying capacities of 15,000 to 20,000 tons - are ideal for customers seeking
to move significant quantities of dry bulk product to ports which restrict


non-River Class vessels due to size and capacity constraints. Of the 37 Canadian
self-unloading vessels currently in operation, seven are River Class, each of
which is boom forward. Lower Lakes operates three of these vessels. The U.S.
Great Lakes fleet includes 12 River Class vessels, four boom forward, eight boom
aft. Lower Lakes Transportation operates four of the boom forward vessels, one
of which is the barge.



Customers



Lower Lakes services approximately 50 customers in a diverse array of end
markets by shipping dry bulk commodities such as construction aggregates, coal,
grain, iron ore and salt. Lower Lakes' top ten customers accounted for
approximately 71% of its revenue in fiscal 2005. Lower Lakes is the sole-source
shipping provider to several of its customers. Many of Lower Lakes' customers
are under long-term contracts with Lower Lakes, which typically average three to
five years in duration and provide for minimum and maximum tonnage, annual price
escalation features, and fuel surcharges.



Competition



Lower Lakes faces competition from other marine and land-based
transporters of dry bulk commodities in and around the Great Lakes area. In the
River Class market segment, Lower Lakes generally faces two primary competitors:


Seaway Marine Transport and United Shipping Alliance. Seaway Marine Transport is
a Canadian traffic and marketing partnership, which owns 22 self-unloading
vessels, 4 of which are River Class boom forward vessels. United Shipping
Alliance operates in the U.S. and maintains a fleet of 22 vessels, 7 of which
are River Class. We believe that industry participants compete on the basis of
customer relationships, price, and service, and that the ability to meet a
customer's schedule and offer shipping flexibility is a key competitive factor.
Moreover, we believes that customers are generally willing to continue to use
the same carrier assuming such carrier provides satisfactory service with
competitive pricing.



Employees



As of December 31, 2005, Lower Lakes had approximately 230 full-time
employees, 18 of whom were management and 212 were operational. Approximately
42% of Lower Lakes' employees (all U.S. based Grand River Navigation crew) are
unionized with the International Organization of Masters, Mates and Pilots,
AFL-CIO. Lower Lakes has never experienced a work stoppage as a result of labor
issues, and we believe that our employee relations are good. Laurence S. Levy,
our chairman of the board and chief executive officer, is Rand's only executive
officer, and Rand does not at present have any other employees.



Additional Information



Additional information relating to Rand's and Lower Lakes' business is
included in Exhibit 99.1 to this Form 10-KSB, which is incorporated herein by
reference.