================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               -------------------

                                    FORM 10-K
                               -------------------

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

For the fiscal year ended December 31, 1996        Commission File No.:  0-26954

                     CONSOLIDATED DELIVERY & LOGISTICS, INC.
             (Exact name of registrant as specified in its charter)

                   Delaware                                     22-3350958
        (State or other jurisdiction                        (I.R.S. Employer
       of incorporation or organization)                     Identification No.)

                                       Mack Centre IV, 61 South Paramus Road
                                             Paramus, New Jersey 07652
                                                  (201) 291-1900
     (Address, including Zip Code, and telephone number, including area code, of
principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:  None

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

                                      Common Stock, par value $.001 per share

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

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|

     The  aggregate  market value of voting stock held by  nonaffiliates  of the
registrant was $11,502,706 as of March 14, 1997.

     Indicate  the  number of  shares  outstanding  of each of the  registrant's
classes of common stock, as of the latest practicable date:
                                           Outstanding as of March 14, 1997
         Common Stock, $.001 par value                  6,795,790

     Documents  Incorporated by Reference:  The information required by Part III
(other  than  the  required   information   regarding   executive  officers)  is
incorporated  by reference from the  registrant's  definitive  proxy  statement,
which  will be filed  with the  Commission  not  later  than 120 days  following
December 31, 1996.


================================================================================


<PAGE>



                                   
                                     PART I


Item 1.  Business

         Consolidated Delivery & Logistics,  Inc. (the "Company") was founded in
June 1994 to create a national,  full service,  same-day ground and air delivery
and logistics company. In November 1995, the Company consummated the merger (the
"Mergers") of eleven  established  businesses  providing same-day ground and air
delivery  and  logistics  services  (collectively,   the  "Founding  Companies")
concurrently  with the closing of the  Company's  initial  public  offering (the
"Offering").  During  1996,  the Company has  acquired  certain  assets from and
assumed certain  liabilities of four Companies and agreed to provide  continuing
service to the  customers of another  Company  with  estimated  annual  revenues
aggregating  approximately  $15.6  million.  The Company  provides an  extensive
network of same-day  ground and air  delivery and  logistics  services to a wide
range of  commercial,  industrial  and retail  customers.  The Company's  ground
delivery  operations  currently  are  concentrated  on the  East  Coast,  with a
strategic presence in the Midwest and on the West Coast. The Company's logistics
services  are  provided on a national  basis and its air  delivery  services are
provided throughout the United States and to major cities around the world.

         The Company's  same-day delivery services are generally divided between
rush and scheduled delivery. Rush delivery service, provided via ground and air,
typically  consists  of  delivering  time-sensitive  packages,  such as critical
machine  parts or  emergency  medical  devices.  Scheduled  or  routed  delivery
services, provided on a recurring and often daily basis, include deliveries from
pharmaceutical  suppliers to  pharmacies,  manufacturers  to retailers,  and the
interbranch   distribution  of  financial  documents.  The  Company's  logistics
services include designing and managing systems created to maximize efficiencies
in transporting, warehousing, sorting and delivering customers' products.

         The Company believes that it can enhance revenues and  profitability by
systematically  integrating  the  operations of the  businesses  acquired by the
Company.  The  Company  expects  to realize  internal  growth  opportunities  by
offering  customers a single source for their  same-day  ground and air delivery
and logistics needs and by internalizing services currently being purchased from
other delivery  companies.  The Company intends to achieve  increased  operating
efficiencies  by  rationalizing  and  consolidating  operations  to increase the
density of its  delivery  routes and to improve  the  productivity  of  existing
personnel, equipment and facilities. While the Company has previously pursued an
aggressive   acquisition  strategy,  the  Company  has  recently  curtailed  its
acquisition  activities to focus on internal growth. In this regard, the Company
recently  announced  that it plans to implement  more  effective  financial  and
managerial  information  systems to facilitate the  improvement of the Company's
business. Also, in order to more effectively deploy the Company's resources, the
Company  sold  Distributions  Solutions,  Inc.,  a Founding  Company  ("DSI") in
January 1997, to DSI's founder and president.

Industry Overview

         The ground and air delivery  industry in the United  States is composed
largely of companies  providing  same-day,  next-day and two-day  services.  The
Company  primarily  services  the same-day  delivery  market.  In contrast,  the
next-day  and  two-day  delivery  markets  are  dominated  by  large  nationally
established  entities,  such as United Parcel  Service,  Inc.  ("UPS") and FedEx
Corp. ("FedEx").

         The Company  believes  that the  same-day  ground and air  delivery and
logistics  industry,  which is  currently  serviced  by a  fragmented  system of
approximately   10,000   companies,   is  undergoing   substantial   growth  and
consolidation.  The Company  estimates  that revenues  generated by the same-day
delivery  and  logistics  industry  were in excess of $15  billion in 1996.  The
Company believes that several factors,  including the following, are driving the
growth and resulting consolidation of the industry:

         Outsourcing.  Commercial and industrial  companies,  major consumers of
same-day  delivery and logistics  services,  have  continued to follow the trend
toward  controlling  their  own  costs by  outsourcing  delivery  and  logistics
requirements.  Companies that can offer  comprehensive,  customized delivery and
logistics  services  at  attractive  prices will be able to  capitalize  on this
trend.

         Vendor Consolidation. Businesses are increasingly seeking single-source
solutions for their same-day  delivery and logistics  needs in order to increase
efficiencies  and  improve  service.  As a result,  the  Company  believes  that
significant  opportunities  exist for delivery and logistics  companies  able to
provide a full range of services on a national or multi-regional basis.

         Heightened  Customer   Expectations.   Increased  customer  demand  for
customized  billing,   enhanced  tracking,   storage  and  inventory  management
capabilities  favor companies with greater resources to devote to providing such
services.

         New Market Opportunities. The significant growth in catalog and at-home
shopping and in-home medical care present  substantial growth  opportunities for
companies capable of economically providing more customized, reliable services.

Strategy

         The   Company's   objective   is  to  become  "The  Total   Package  in
Delivery"(TM)  by  developing  the product  strength and service  quality in the
ground and air divisions of the Company on the local,  regional,  national,  and
international  level so that the Company  becomes a viable and  reliable  "first
choice" for those companies that need a  transportation  and logistics  solution
within  critical time frames.  The Company  intends to achieve its objectives by
pursuing the followings strategies.

         Realize Internal Growth Opportunities. The Company intends to offer its
customer  base an  expanded  range  of  services  and  geographic  coverage.  In
addition,  the Company intends to internalize business  opportunities created by
its  acquisitions  by  redirecting  services  previously  purchased  from  other
delivery  companies.  The Company  also expects to gain  additional  business by
offering new and existing  customers  single source solutions for ground and air
delivery and logistics needs on a national and multi-regional basis.

         Improve  Operating  Efficiencies.  The Company continues to work toward
improving operating efficiencies by reducing costs and heightening  productivity
by  rationalizing  and  consolidating  operations to increase the density of its
delivery  routes and to improve the  productivity  of  personnel,  equipment and
facilities.  The Company's size and purchasing  power have enabled it to achieve
significant economies in areas such as insurance coverage and vehicle costs. The
Company expects that it will achieve further efficiencies through the continuing
consolidation of its operations.

Services

         The Company  provides a full range of same-day  ground and air delivery
and logistics  services.  In many cases,  the Company  combines  several service
capabilities to meet the needs of its customers.

Ground Delivery

         The Company's comprehensive same-day ground delivery services include:

         Rush. In providing rush or on-demand  services,  Company messengers and
couriers  respond to customer  requests  for  immediate  pick-up and delivery of
time-sensitive  packages,  such as emergency medical devices and supplies,  or a
critical  part  necessary  to  repair a  defective  machine,  as well as  urgent
documents and other materials. The Company generally offers one-, two- and four-
hour service,  seven days a week,  twenty-four  hours a day.  Typical  customers
include  commercial and industrial  companies,  hospitals and service  providers
such as  accountants,  lawyers,  advertising  and  travel  agencies  and  public
relations firms.


<PAGE>


         Scheduled  and  Routed.  The  Company's  scheduled  or routed  delivery
services  are  provided on a recurring  and often daily  basis.  These  services
typically consist of picking up or receiving large shipments of products,  which
the Company sorts, routes and delivers.  These shipments are generally delivered
in accordance with a customer's  demanding schedule calling for deliveries to be
made within an agreed upon time window.  These services include  deliveries from
pharmaceutical  suppliers to pharmacies,  from  manufacturers to retailers,  the
interbranch  distribution of checks,  payroll data and other documents,  and the
delivery  of  time-sensitive   materials  for  banks,  financial   institutions,
insurance companies and photo-finishing  laboratories.  In addition, the Company
provides  these  services  to large  retailers  seeking  low-cost  home-delivery
capabilities,   including  large  cosmetic  companies,  door-to-door  retailers,
catalog  marketers,  home  health  care  distributors  and  other  direct  sales
companies.

Air Services

         The Company provides  next-flight-out  (rush) and scheduled air courier
and  air   freight   services   to  its   customers,   both   domestically   and
internationally.   The  services   provided   include   arranging  for  (i)  the
transportation of a shipment from the customer's  location to the airport,  (ii)
air transportation and (iii) the delivery of the shipment to the destination. In
order  to  meet  the  needs  of  its  customers,  the  Company  has  established
relationships  with many major  airlines  and large air freight  companies  from
which the Company purchases cargo space on an as-needed basis.

Logistics

         The  Company  provides  a  wide  range  of  logistics  services  to its
customers including the following:

         Warehousing/Just-in-Time.  The Company has  facilities to warehouse and
deliver products on a just-in-time  delivery basis. At many of these facilities,
bulk  shipments are broken down for processing and local delivery by the Company
as part of its scheduled and routed delivery services. Typical customers include
computer  and  electronics  manufacturers,  automotive  parts  distributors  and
pharmaceutical wholesalers.

         Facilities  Management.  The  Company  provides  mail  room  management
services,  including the provision and supervision of mailroom  personnel,  mail
and package  sorting,  internal  delivery and outside local messenger  services.
Typical customers include commercial enterprises and professional firms.

         Fulfillment. The Company provides fulfillment services to manufacturers
and various  promotion  companies which includes  receiving orders directly from
the client's  customers,  shipping  those  orders with the  client's  product or
promotion  material,  and providing  detailed  shipping  information back to the
clients.  In addition,  the Company can assemble the  components of a promotion,
add mailing and other  information  provided by the client,  sort and mail out a
completed  promotion,   and  provide  the  client  with  detailed   distribution
information.

Operations

Ground Delivery

         The Company's  delivery  operations  are  currently  managed on a local
basis. Most locations have operations centers staffed by dispatchers, as well as
order  entry and other  operations  personnel.  The  Company's  ground  delivery
services are provided on a rush or  on-demand  basis or pursuant to  established
scheduled  and routing  arrangements.  Coordination  and  deployment of delivery
personnel is accomplished  either through  communications  systems linked to the
Company's  computers,  through  pagers or by  radio.  A  dispatcher  coordinates
shipments  for  delivery  within a specific  time  frame.  Shipments  are routed
according  to the type and  weight  of the  shipment,  the  geographic  distance
between the origin and  destination  and the time allotted for the delivery.  In
the case of scheduled and routed deliveries, routes are designed to minimize the
unit costs of the deliveries and to enhance route density.  Because the specific
products of the Company vary in terms of the type of air and ground services and
the geographic and time sensitive  nature of the services  provided,  no general
standard  presently  exists for the systems used to operate these services.  The
Company is evaluating new hardware and software  systems designed to enhance and
centralize the reporting and tracking of shipments  through the ground system as
well as to  simplify  the  process of  designing  delivery  routes.  The Company
believes  that  this  investment  in  technology  will  likely  reduce  costs by
streamlining  the  delivery  process and  reducing  back office  expenses  while
enhancing the Company's tracking capabilities.

Air Services

         The  Company's  air  courier  and air  freight  service  begins  with a
customer placing an order which is then dispatched for pickup by a local driver.
A tracking  number is assigned to the shipment  and entered  into the  Company's
computer  system.  The computer  system then  selects the optimal  route for the
shipment based on delivery,  destination and timing  considerations,  tracks the
shipment  as it  flows  through  the  delivery  stream  until  it is  ultimately
delivered to the recipient and prepares the appropriate  billing charges. At the
final destination, a "proof of delivery" is obtained to conclude and confirm the
delivery.  At any  point in the  process,  the  Company  is able to  inform  the
customer  as to the exact  location  of its  shipment  within  the  distribution
network.

Logistics

         The Company's  logistics  services are coordinated by trained logistics
specialists  who have  substantial  experience  in designing,  implementing  and
managing  integrated  networks  for the  transportation,  warehousing,  sorting,
routing and distribution of the customer's  products and promotional  materials.
The Company  analyzes  the  customer's  distribution  requirements;  identifies,
engages,  coordinates and supervises the delivery  services to be used to effect
the  distribution;  and  generates  customized  reports  to manage and track the
distribution.

Sales and Marketing

         The Company  believes that its  customers  for same-day  ground and air
delivery and logistics  services are most effectively  reached by a direct sales
force and,  accordingly,  the Company  does not  currently  engage in mass media
advertising.  The Company markets directly to individual  customers by designing
and offering customized service packages after determining a customer's specific
delivery,  distribution  and  logistics  requirements.  The  Company  intends to
implement a  coordinated  "major  account"  strategy by building on  established
relationships  with  regional and national  customers.  The Company also employs
certain direct response marketing techniques.

         Many of the  services  provided  by the  Company,  such  as  facilities
management,  logistics,  distribution services and scheduled and routed services
are determined on the basis of competitive bids.  However,  the Company believes
that quality and service capability are also important  competitive  factors. In
certain  instances,  the  Company has  obtained  business by offering a superior
level  of  service,  even  though  it was not the low  bidder  for a  particular
contract.  The  Company  derives a  substantial  portion  of its  revenues  from
customers with whom it has entered into  contracts.  Virtually all scheduled and
routed services, dedicated vehicle services,  facilities management services and
logistics  services are provided pursuant to contracts.  Many of these contracts
are terminable by the customer on relatively short notice without penalty.

Competition

         The market for the  Company's  same-day  ground  and air  delivery  and
logistics  services  is  highly  competitive.  The  Company  believes  that  the
principal   competitive  factors  in  the  markets  in  which  it  competes  are
reliability,  quality and breadth of service and price.  The Company competes on
all such factors. The Company's principal competitors in the same-day ground and
air  delivery  industry  are other  ground and air  delivery  companies  and the
commercial and industrial  businesses already using the Company's services.  The
Company's  principal  competitors in the logistics  market are national  freight
carrier companies  (including FedEx and UPS) and other logistics  providers.  In
addition,  UPS and FedEx have  recently  begun to provide  same-day air delivery
services.

     Most of the Company's  competitors in the same-day  ground and air delivery
market are privately  held  companies  that operate in only one location or in a
limited service area. However,  there is a growing trend toward consolidation in
the industry.  The Company's primary  competitor in the same-day ground delivery
business is Corporate Express,  Inc.  ("Corporate  Express") which,  during 1996
acquired two of the Company's major competitors, U.S. Delivery Systems, Inc. and
United Transnet, Inc.

         In addition to the same-day ground and air delivery  services  provided
by the Company, customers also utilize next-day and second-day air services. The
market for  next-day  and  second-day  air  services is  primarily  dominated by
nationwide  network  providers,  such as FedEx and UPS,  which have built large,
capital-intensive distribution channels that allow them to process a high volume
of materials.  In order to effectively  operate their networks,  these companies
typically have fixed deadlines for next-day or second-day delivery services.  In
contrast,  the Company specializes in on-demand,  next-flight-out  deliveries or
services which, by their nature, are not governed by rigid time schedules.  If a
customer  is unable  to meet a  network  provider's  established  deadline,  the
Company  can pick up the  shipment,  put it on the  next  available  flight  and
deliver it, in some  cases,  before the network  provider's  scheduled  delivery
time. The Company's services are available twenty-four hours a day, seven days a
week.

         The Company  obtains space on scheduled  airline flights to provide its
same-day air services  and  accordingly  does not have to acquire or maintain an
expensive  fleet of  airplanes.  As a result,  the  Company  can  provide a more
flexible,  specialized  service to its customers on demand without incurring the
high fixed overhead that the larger network providers must incur.

Acquisitions and Divestitures

         In November 1995 the Company  acquired the eleven  Founding  Companies.
The aggregate  consideration  paid by the Company for the Founding Companies was
approximately  $29.6 million in cash and 2,935,702  shares of Common Stock,  par
value  $.001  per  share  (the  "Common  Stock"),  for  an  aggregate  value  of
approximately $67.8 million.

         In addition to the  acquisition  of the  Founding  Companies  described
above,  during 1995, the Company acquired certain  additional  assets (comprised
primarily of customer  lists and other assets) from other entities to supplement
and enhance  the assets and  expertise  of the  Founding  Companies.  The assets
acquired in those transactions were not material to the Company.

         The  Company   acquired   certain  assets  from  and  assumed   certain
liabilities  of four Companies and agreed to provide  continuing  service to the
customers of another Company during 1996:
<TABLE>
<S>     <C>                                            <C>                          <C>

                                                                                     Approximate Annual Revenues
                             Name                         Date of Transaction
            International Courier Services, Inc.              May 1996                       $2.7 million
            Celadon Express, Inc.                             June 1996                      $2.8 million
            Interim Personnel, Inc.                           June 1996                      $3.8 million
            HurryWagon, Inc.                                  September 1996                 $3.1 million
            W. I. Services, Inc.                              November 1996                  $3.2 million
</TABLE>


         The aggregate purchase price paid by the Company was approximately $3.3
million, consisting of a combination of cash and shares of Common Stock. Each of
the transactions has been accounted for as a purchase.  See Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations.

         The Company has been consolidating the operations it acquired by, among
other  things,  combining  dispatching,  integrating  routes where  feasible and
eliminating  redundant  facilities.  In addition,  the Company appointed General
Managers for each of its  Manhattan,  Northeast and Southeast  Regions to better
coordinate the operations of the various companies and to manage the integration
process.


<PAGE>


         In January  1997,  the Company sold DSI, a Founding  Company,  to David
Mathia,  DSI's  founder  and  president  in exchange  for 137,239  shares of the
Company's common stock. In connection with the sale, the Company recorded a gain
of  approximately  $830,000  before the effect of Federal and state income taxes
during the first quarter of 1997.

         As  a  result  of  a  change  in  strategic   focus,  the  Company  has
substantially curtailed its acquisition strategy.  However, the Company may make
additional  acquisitions as part of the implementation of its new business plan.
The Company's ability to make additional acquisitions is limited under the terms
of its Credit Agreement - See Risk Factors, Non-Compliance Under Bank Covenants.

Regulation

         The  Company's  delivery  operations  are subject to various  state and
local  regulations  and, in many  instances,  require  permits and licenses from
state  authorities.  To a limited degree,  state and local  authorities have the
power to regulate the  delivery of certain  types of  shipments  and  operations
within  certain  geographic  areas.  Interstate  and  intrastate  motor  carrier
operations are also subject to safety requirements prescribed  respectively,  by
the  United  States  Department  of  Transportation  (the  "DOT")  and by  State
Departments  of  Transportation.  Failure  of the  Company  to  comply  with the
applicable  regulations could result in substantial fines or possible revocation
of one or more of the Company's operating permits.

Safety

         The  Company  seeks to ensure  that all  employee  drivers  meet safety
standards  established by the Company and its insurance  carriers as well as the
DOT. In addition,  where required by the DOT or state or local authorities,  the
Company  requires  independent  owner/operators  utilized by the Company to meet
required safety  standards.  The Company reviews  prospective  drivers to ensure
that they meet all applicable requirements.

Intellectual Property

         An  application to register the service mark  "Consolidated  Delivery &
Logistics,  Inc. - The Total  Package in Delivery"  is currently  pending in the
U.S.  Patent  and  Trademark  Office.  No  assurance  can be given that any such
registration  will be  granted or that if  granted,  such  registration  will be
effective  to  prevent  others  from (i) using  this or a similar  service  mark
concurrently  or (ii)  preventing  the Company  from using the  service  mark in
certain  locations.  The Company is not aware of any other entity using the name
"Consolidated Delivery & Logistics, Inc." or the service mark "The Total Package
in Delivery."

Employees and Independent Contractors

         At December 31, 1996, the Company employed  approximately 3,000 people,
1,500 of whom were employed as drivers,  600 as  messengers,  400 in operations,
300 in clerical and administrative positions, 50 in sales and 150 in management.
The Company is not a party to any collective  bargaining agreements although the
Company is subject to union  organizing  activity from time to time. See Item 3.
Legal  Proceedings.  The  Company has not  experienced  any work  stoppages  and
believes that its relationship with its employees is good.

         The Company  also had  contracts  with  approximately  900  independent
contractors  as of  December  31,  1996.  From time to time,  federal  and state
authorities  have  sought  to  assert  that   independent   contractors  in  the
transportation industry, including those utilized by the Company, are employees,
rather than independent  contractors.  The Company believes that the independent
contractors   utilized  by  the  Company  are  not  employees   under   existing
interpretations  of federal and state laws.  However,  there can be no assurance
that federal and state  authorities  will not challenge this  position,  or that
other laws or regulations,  including tax laws, or interpretations thereof, will
not change. If, as a result of any of the foregoing,  the Company is required to
pay for and administer added benefits to independent contractors,  the Company's
operating costs would increase. See "Risk Factors - Independent  Contractors and
Employee Owner/Operators."

Risk Factors

         Prospective  investors  should  consider  carefully the following  risk
factors as well as the other information contained in this Annual Report on Form
10-K.

Limited Combined Operating History

         The Company was founded in June 1994 and conducted no operations  prior
to  consummating  the Mergers.  The businesses  acquired by the Company have all
operated as separate  independent  entities  prior to their  acquisition  by the
Company.  There can be no  assurance  that the Company will be able to integrate
these businesses in an economic manner or that the recently assembled management
group will be able to oversee the combined  entity and  implement  the Company's
operating or growth  strategies.  Failure to properly integrate these businesses
and to  implement  the  Company's  operating  and growth  strategy  could have a
material  adverse  impact  on the  Company's  operating  results.  See  Item  1.
Business.

Non-Compliance Under Bank Covenants

     The  Company  and  certain  of its  subsidiaries  are  parties  to a Credit
Agreement,  dated as of May 31, 1996 (the "Credit Agreement"),  with Summit Bank
and Mellon Bank,  N.A. as co-agents for the banks party  thereto  (collectively,
the  "Banks")  pursuant  to which the Banks have  provided  the  Company  with a
working capital facility (the "Facility").  At December 31, 1996, as a result of
losses  during 1996,  the Company was in  violation of certain of the  financial
covenants contained in the Credit Agreement,  including  leverage,  interest and
fixed  charge  coverage  ratios.  In April  1997,  the  Company  entered  into a
Forbearance and Amendment Agreement with the Banks (the "Forbearance Agreement")
pursuant  to which the Banks  waived any default  arising  out of the  Company's
failure to comply with the covenants referenced above and agreed not to exercise
any remedies under the Credit  Agreement in respect thereof until April 1, 1998.
Pursuant  to the  terms of the  Forbearance  Agreement,  amounts  available  for
borrowing  under the Facility were reduced to  approximately  $8.8 million until
June 15,  1997  and,  thereafter,  to the  lesser of $8.8  million  or an amount
determined  on a formula  basis  taking  into  account  the  Company's  eligible
accounts  receivable and any pre-tax  losses  incurred after March 31, 1997. The
interest rates borne by borrowings under the Facility were increased on variable
rate loans to prime plus 2.5% and may increase to prime plus 3.5% if the Company
does not comply with certain provisions in the Forbearance Agreement (fixed rate
loans expiring in June 1997 will bear interest at LIBOR plus 4.5%), the types of
borrowings available to the Company were reduced and the commitment fees payable
to the Banks were increased. In addition,  under the Forbearance Agreement,  the
Company must maintain a consolidated net worth of at least $6.8 million, may not
make any  acquisitions  and is  required  to  establish  certain  separate  cash
collection accounts.  All amounts outstanding under the Facility will become due
and payable on April 1, 1998.  The Company is  currently  seeking to replace the
Facility.  However,  there can be no assurance  that the Company will be able to
obtain  replacement  financing  or  that  such  replacement  financing  will  be
available on terms  acceptable to the Company.  In the event that the Company is
unable to comply  with the terms of the  Forbearance  Agreement,  the Banks will
have the right,  under the  Credit  Agreement,  to  exercise  certain  remedies,
including accelerating the repayment of any loans outstanding thereunder.  There
can be no  assurance  that the Banks will  continue to forbear  from  exercising
their  remedies in those  circumstances.  If the Banks  demand  repayment of the
loans outstanding under the Facility and no replacement  financing is available,
the Company might be required to significantly curtail its operations.  See Item
7.  Management's  Discussion and Analysis of Financial  Condition and Results of
Operations.

Competition

         The markets for the  Company's  same-day  ground and air  delivery  and
logistics services are highly  competitive.  Price competition is often intense,
particularly in the market for basic delivery  services where entry barriers are
low. Major participants in the next-day and second-day air delivery market, such
as UPS and FedEx,  provide logistics services and have recently begun to provide
same-day air delivery services. The Company's primary competitor in the same-day
ground delivery business is Corporate Express. Furthermore, other companies with
significantly  greater  capital and other resources than the Company that do not
currently  operate  same-day  ground and air  delivery  and  logistics  services
businesses  may  enter  the  industry  in the  future.  See Item 1.  Business  -
Competition.

Independent Contractors and Employee Owner/Operators

         From time to time,  federal and state authorities have sought to assert
that independent  contractors in the  transportation  industry,  including those
utilized by the Company, are employees, rather than independent contractors. The
Company  believes that the independent  contractors  utilized by the Company are
not employees under existing interpretations of federal and state laws. However,
there can be no assurance that federal and state  authorities will not challenge
this  position,  or that  other  laws or  regulations,  including  tax laws,  or
interpretations  thereof,  will  not  change.  If,  as a  result  of  any of the
foregoing,  the Company is required to pay for and administer  added benefits to
independent contractors,  the Company's operating costs would increase. See Item
1. Business - Employees and Independent Contractors.

         In addition,  certain of the Company's  employees own and operate their
own vehicles in the course of their  employment.  In certain cases,  the Company
pays  those  employees  for all or a  portion  of the costs of  operating  those
vehicles.  The  Company  believes  that  these  arrangements  do  not  represent
additional  compensation to those employees.  However, there can be no assurance
that federal and state taxing  authorities will not seek to recharacterize  some
or all of such  payments as  additional  compensation.  If such  amounts were so
recharacterized,  the Company  would have to pay  additional  employment-related
taxes on such amounts.

Claims Exposure

         The Company utilizes the services of approximately  1,500 drivers,  and
from time to time such drivers are involved in accidents.  The Company currently
carries  liability  insurance  of at least $25  million  for each such  accident
(subject to applicable deductibles), and requires its independent contractors to
maintain  liability  insurance of at least the minimum amounts required by state
and federal  law.  However,  there can be no assurance  that claims  against the
Company  will not exceed the amount of  coverage.  In  addition,  the  Company's
increased  visibility  and  financial  strength  as a public  company may create
additional  claims  exposure.  If the  Company  were to  experience  a  material
increase in the frequency or severity of accidents, liability claims or workers'
compensation  claims,  or  unfavorable  resolutions  of  claims,  the  Company's
operating  results  could  be  materially  affected.  In  addition,  significant
increases in insurance costs would reduce the Company's profitability.

Shares Eligible for Future Sale

         The market price of the Common Stock could be adversely affected by the
sale of substantial  amounts of Common Stock in the public  market.  As of March
14,  1997,  6,795,790  shares of  Common  Stock  were  issued  and  outstanding,
3,250,312 of which were registered for resale by the holders thereof, other than
certain affiliates of the Company.  The remaining shares may only be sold except
in  transactions  registered  under the  Securities Act of 1933, as amended (the
"Securities Act"), or pursuant to an exemption from registration,  including the
exemption contained in Rule 144 under the Securities Act.

         In September 1995, the Company issued $2 million in aggregate principal
amount  of its 8%  Subordinated  Convertible  Debentures  due  August  2000 (the
"Debentures")  to certain  individuals.  The  Debentures  are  convertible  into
180,995 shares of Common Stock.  None of these shares will have been acquired in
transactions registered under the Securities Act, and, accordingly,  such shares
may not be transferred  except in transactions  registered  under the Securities
Act or pursuant to an exemption from registration.  Pursuant to the terms of the
Debentures,  the Company has agreed to register  the shares of Common Stock into
which the Debentures are convertible.

         As of March 14,  1997,  the  Company  had  outstanding  under its stock
option plans options to purchase an aggregate of 654,876 shares of Common Stock,
234,883 of which were  exercisable  as of that date.  The shares of Common Stock
issuable  upon the  exercise  of such  options  have been  registered  under the
Securities  Act and,  as a result,  will be  eligible  for  resale in the public
market, unless held by affiliates of the Company.


<PAGE>


Reliance on Key Personnel

         The Company's  operations are dependent on the continued efforts of its
executive officers and senior management.  Furthermore,  the Company will likely
be dependent on the senior  management of companies  that may be acquired in the
future.  If any of these people elect not to continue in their present roles, or
if the  Company is unable to attract and retain  other  skilled  employees,  the
Company's  business  could be adversely  affected.  See Item 10.  Directors  and
Executive Officers of the Registrant and Item 1. Business - Strategy.

Permits and Licensing

         The Company's  delivery  operations are subject to various state, local
and federal  regulations  that in many instances  require  permits and licenses.
Failure by the Company to maintain  required  permits or licenses,  or to comply
with  applicable  regulations,  could  result in  substantial  fines or possible
revocation of the Company's authority to conduct certain of its operations.

No Future Dividends

         The Company does not anticipate  paying any cash dividends on shares of
the  Common  Stock in the  foreseeable  future  and  intends  to  retain  future
earnings, if any, for use in its business. In addition, the Company's ability to
pay cash  dividends  on the Common  Stock is limited by the terms of its working
capital facility.  See Item 5. Market for Registrant's  Common Stock and Related
Stockholder Matters - Dividends and Item 7. Management's Discussion and Analysis
of  Financial  Condition  and  Results of  Operations  -  Liquidity  and Capital
Resources.

Effect of Certain Charter Provisions

         The Board of Directors  of the Company is empowered to issue  preferred
stock without stockholder action. The existence of this "blank-check"  preferred
stock could render more  difficult or discourage an attempt to obtain control of
the Company by means of a tender offer,  merger,  proxy contest or otherwise and
may  adversely  affect the  prevailing  market  price of the Common  Stock.  The
Company  currently has no plans to issue shares of preferred stock. In addition,
Section 203 of the Delaware  General  Corporation Law prohibits  certain persons
from engaging in business combinations with the Company.



<PAGE>


Item 2.  Properties -

         As of December 31, 1996, the Company operated from 58 leased facilities
(excluding 9 authorized sales agent locations). These facilities are principally
used for  operations,  general and  administrative  functions and  training.  In
addition, several facilities also contain storage and warehouse space. The table
below summarizes the location of the Company's current facilities (excluding the
sales agent locations).
<TABLE>
<S>                                                         <C>

State                                                     Number of Facilities
-----                                                     --------------------
New York.....................................................................   20
Florida......................................................................   7
New Jersey...................................................................   7
California...................................................................   3
Georgia......................................................................   2
Illinois.....................................................................   2
Louisiana....................................................................   2
Missouri.....................................................................   2
Ohio.........................................................................   2
Alabama......................................................................   1
Connecticut..................................................................   1
Indiana......................................................................   1
Maine........................................................................   1
Maryland.....................................................................   1
Massachusetts................................................................   1
Michigan.....................................................................   1
North Carolina...............................................................   1
Tennessee....................................................................   1
Virginia.....................................................................   1
Washington...................................................................   1
</TABLE>


         The  Company's  corporate  headquarters  are  located in  Paramus,  New
Jersey.  The Company believes that its properties are generally well maintained,
in good condition and adequate for its present needs.  Furthermore,  the Company
believes that suitable  additional or  replacement  space will be available when
required.  In February  1997,  the Company  entered into a lease  agreement  for
approximately 120,000 square feet in Clifton, New Jersey to consolidate three of
the above  facilities  into one in order to combine  operations,  reduce overall
rent expense, and better serve its logistics customers.

         As of December 31, 1996, the Company owned or leased  approximately 440
cars and 225 trucks of various  types,  which are primarily  operated by drivers
employed by the Company. In addition,  certain of the Company's employee drivers
own or lease their own vehicles. The Company also hires independent  contractors
who typically  provide their own vehicles and are required to carry at least the
minimum amount of insurance required by state law.

         On January 31,  1997,  a subsidiary  of the Company  contracted  with a
vehicle leasing company to lease 175 delivery vehicles. The net present value of
the three-year  agreement,  which is being accounted for as a capitalized lease,
is  estimated at $2.3  million.  Receipt of the vehicles is expected to begin in
March 1997 and conclude by May 1997.

         The  Company's  aggregate  rental  expense for the year ended  December
31, 1996 was  approximately  $4.4 million.  See Note 11 to the Company's
Consolidated Financial Statements.



<PAGE>


Item 3.  Legal Proceedings

         Olympic Courier Systems, Inc. ("Olympic"),  a subsidiary of the Company
and a successor to Orbit/Lightspeed  Courier Systems, Inc. and related companies
("Orbit"), is the respondent in an administrative proceeding before the National
Labor Relations Board ("NLRB") arising out of a representation  election held in
November  1994  in  which  Orbit's  messengers  voted  against  the  Local  840,
International  Brotherhood  of Teamsters  ("Union")  becoming  their  collective
bargaining   representative.   The  administrative   proceeding  is  based  upon
objections the Union filed in November,  1994 following the election, as well as
unfair labor practice charges first filed by the Union in September,  1994, with
respect to which General  Counsel for the NLRB went to complaint on February 16,
1995 and May 31, 1995. The Union and General  Counsel seek an order  directing a
second election.  On May 20, 1996, the Administrative Law Judge recommended that
the  election  held on  November  18,  1994 be rerun  and found  that  Orbit had
committed certain violations alleged by the Union. On July 30, 1996, Orbit filed
exceptions to the decision of the  Administrative  Law Judge.  In the event that
Orbit is not  successful  in its  appeal,  the Company may be required to hold a
rerun election if it is determined that an appropriate bargaining unit exists.

         In March  1996,  a purported  class  action  lawsuit was filed  against
Olympic,  Robert Wyatt, Rick Katz, Jeremy Weinstein and certain related entities
(collectively the "Orbit/Lightspeed  parties") in the Supreme Court of the State
of New York,  County of Kings,  on behalf of former and  current  messengers  of
Olympic,  alleging that the Orbit Lightspeed parties unlawfully withheld certain
amounts  otherwise  payable to the  messengers.  A similar action had previously
been filed  against the  Orbit/Lightspeed  parties in October 1995 but was later
voluntarily  discontinued by the plaintiffs.  A motion to deny  certification of
the class is currently pending in State Court. On November 20, 1996,  plaintiffs
filed an action in the United States District Court for the Eastern  District of
New York  alleging  the same causes of action  contained in the first and second
actions  mentioned above which are pending in State Court.  Olympic has moved to
dismiss the lawsuit in the United States District Court of the Eastern  District
of New York. Both suits claim  violations of contract  minimum wage and overtime
statutes and civil provisions of the Federal RICO statute, an unspecified amount
of compensatory and punitive damages from the Orbit/Lightspeed  parties, as well
as attorneys' fees and other expenses. The Company believes that the plaintiffs'
claims are without merit and is defending both actions  vigorously.  The Company
does not believe  that this action  will have a material  adverse  effect on the
consolidated financial position or results of operations of the Company.

         In February 1996,  Liberty Mutual Insurance Company ("Liberty  Mutual")
filed an action  against  Securities  Courier  Corporation,  a subsidiary of the
Company,  Mr.  Vincent  Brana and  certain  other  parties in the United  States
District  Court for the  Southern  District  of New York  alleging,  among other
things, that Securities Courier had fraudulently  obtained automobile  liability
insurance  from Liberty Mutual in the late 1980s and early 1990s at below market
rates. This suit, which claims common law fraud,  fraudulent inducement,  unjust
enrichment and  violations of the civil  provisions of the Federal RICO statute,
among other things,  seeks an unspecified  amount of  compensatory  and punitive
damages from the  defendants,  as well as  attorneys'  fees and other  expenses.
Discovery is currently pending in the matter. Under the terms of its acquisition
of Securities Courier, the Company is entitled to indemnification from Mr. Brana
for any class of damages in excess of  $100,000.  Accordingly,  the Company does
not  believe  that  this  action  will  have a  material  adverse  effect on the
consolidated financial position or results of operations of the Company.


<PAGE>


         On March 19,  1997,  a  purported  class  action  complaint,  captioned
Gapszewicz v.  Consolidated  Delivery & Logistics,  Inc., et al. (97 Civ. 1939),
was filed in the United States  District Court for the Southern  District of New
York against the Company,  certain of the Company's present and former executive
officers,  and the  co-managing  underwriters  of the Company's  initial  public
offering (the  "Offering").  The gravamen of the complaint is that the Company's
registration statement for the Offering contained misstatements and omissions of
material fact in violation of the federal securities laws and that the Company's
financial  statements  included  in the  registration  statement  were false and
misleading and did not fairly  reflect the Company's  true financial  condition.
The complaint seeks the certification of a class consisting of purchasers of the
Company's  Common  Stock from  November  21, 1995  through  February  27,  1997,
rescission  of the  Offering,  attorneys'  fees and other  damages.  The Company
believes that the  allegations  contained in the complaint are without merit and
intends to defend the action vigorously.

         On April 14, 1997, the Company  received  notice that a purported class
action  complaint  was filed  against  the  Company,  certain  of the  Company's
directors,  and the  co-managing  underwriters  of the Company's  initial public
offering.  The complaint  was filed by the  plaintiff  Morris Rubin on behalf of
buyers of  Consolidated  Delivery &  Logistics,  Inc.'s  stock during the period
November  20, 1995 through  February 27, 1997.  As of April 15, 1997 the Company
had not yet been served with the complaint and therefore  cannot comment further
on the allegations contained therein.

         The Company is, from time to time, a party to litigation arising in the
normal course of its business, most of which involves claims for personal injury
and property  damage  incurred in  connection  with its same-day  ground and air
delivery operations.  Management believes that none of these actions,  including
the  actions  described  above,  will  have a  material  adverse  effect  on the
consolidated financial position or results of operations of the Company.

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

         Not applicable.


<PAGE>


                                                      PART II


Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters -

         The  Company's  Common  Stock is included  for  quotation on the Nasdaq
National Market under the symbol "CDLI." The following table sets forth the high
and low sales  prices for the Common Stock from  November 20, 1995,  the date of
the Offering, through March 14, 1997.
<TABLE>
<S>                                                                                  <C>                <C>

                                           1995                                         Low              High
           Fourth Quarter (from November 20, 1995)                                    $10.00            $13.50


                                           1996                                         Low               High
           First Quarter                                                               $5.75            $12.25
           Second Quarter                                                              $4.75             $9.25
           Third Quarter                                                               $4.25             $6.63
           Fourth Quarter                                                              $4.00             $5.88
</TABLE>



         On March 14, 1997, the last reported sale price of the Common Stock was
$2.38 per share. As of March 14, 1997, there were approximately 104 shareholders
of record of Common Stock and, based on security position listings,  the Company
believes there were approximately 1,652 beneficial holders of the Common Stock.

         On September  30, 1996 the Company  issued  25,000 shares of restricted
stock in connection  with the  acquisition  of certain assets subject to certain
liabilities of Hurry Wagon, Inc.

         On November  1, 1996 the Company  issued  90,909  shares of  restricted
stock in connection  with the  acquisition  of certain assets subject to certain
liabilities of W.I. Services, Inc.

Dividends

         The Company has not declared or paid any dividends on its Common Stock.
The Company  currently intends to retain earnings to support its growth strategy
and does not anticipate paying dividends in the foreseeable  future.  Payment of
future  dividends,  if any, will be at the discretion of the Company's  Board of
Directors  after taking into account  various  factors,  including the Company's
financial condition,  results of operations,  current and anticipated cash needs
and plans for  expansion.  The  Company's  ability to pay cash  dividends on the
Common Stock is also limited by the terms of its Credit  Agreement.  See Item 1.
Business  -  Risk  Factors  - No  Future  Dividends  and  Item  7.  Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of  Operations
Liquidity and Capital Resources.




<PAGE>


Item 6.  Selected Financial Data

                                              SELECTED FINANCIAL DATA
                                     (In thousands, except per share amounts)

     Separate,  wholly-owned  subsidiaries of Consolidated Delivery & Logistics,
Inc. (the  "Company")  merged (the  "Mergers")  with the following 11 companies:
American Courier Express, Inc. ("American"); Bestway Distribution Services, Inc.
and Crown Courier Systems, Inc. ("Bestway/Crown"); Click Messenger Service, Inc.
and related  companies  ("Click");  Court  Courier  Systems,  Inc. and a related
company  ("Court");   Distribution   Solutions   International,   Inc.  ("DSI");
Clayton/National  Courier  Systems,  Inc.  and a related  company  ("National");
Olympic   Courier   Systems,   Inc.   and   a   related   company   ("Olympic");
Orbit/Lightspeed     Courier    Systems,     Inc.    and    related    companies
("Orbit/Lightspeed");  Securities Courier  Corporation  ("Securities  Courier");
Silver Star Express, Inc. and related companies ("Silver Star"); and SureWay Air
Traffic  Corporation  and  a  related  company  ("SureWay")   (collectively  the
"Founding  Companies") in exchange for shares of the Company's  common stock and
cash.

         The  statement  of  operations  data  shown  below for the years  ended
December 31, 1992,  1993, 1994 and for the nine month period ended September 30,
1995 and the balance sheet data as of December 31, 1992,  1993 and 1994 are that
of the Combined Founding  Companies prior to the Mergers (the "Combined Founding
Companies") on a historical basis.  During the periods  presented,  the Combined
Founding Companies were not under common control or management and some were not
taxable  entities.  Therefore  the data  presented  may not be  comparable to or
indicative  of  post-Merger  results to be  achieved  by the  Company  after the
Mergers.

         The selected  financial  data with respect to  Consolidated  Delivery &
Logistics,  Inc.'s  consolidated  statement  of  operations  for the years ended
December  31,  1995 and  1996  and  with  respect  to  Consolidated  Delivery  &
Logistics,  Inc.'s  consolidated  balance sheet as of December 31, 1995 and 1996
have been derived from Consolidated  Delivery & Logistics,  Inc.'s  consolidated
financial  statements that appear elsewhere herein.  The financial data provided
below should be read in conjunction with these accompanying financial statements
and notes thereto as well as "Item 7.  Management's  Discussion  and Analysis of
Financial Condition and Results of Operations."


<PAGE>





                                   SELECTED FINANCIAL DATA (Continued)
                                 (In thousands, except per share amounts)

Statement of Operations Data:
                                   Combined Founding Companies (4)
                          ---------------------------------------------------
<TABLE>
<S>                        <C>         <C>         <C>          <C>          <C>            <C>            <C>

                                                                             Consolidated                 Consolidated
                                                                              Delivery &                   Delivery &
                                                                              Logistics,                   Logistics,
                                                                               Inc. and                     Inc. and
                                                                             Subsidiaries   For the Pro   Subsidiaries
                                                              For The Nine   For The Year   Forma Period     For The
                           For The Years Ended December 31,   Months Ended       Ended         Ended       Year Ended
                          -----------------------------------
                                                              September 30,   December 31,  December 31,  December 31,
                             1992        1993        1994         1995           1995 (3)      1995 (1)        1996
                          ----------- ----------- ----------- --------------   ------------- -------------  ------------

Revenues                   $111,972    $121,752    $137,544     $111,406         $39,036      $150,442       $171,049

Gross profit                 34,944      37,715      42,194       33,859          11,597        45,456         50,281

Operating income (loss)         645       1,300       1,856        4,082             296         4,377         (1,183)

Net income (loss)              $362        $722        $721       $2,182           ($195)       $1,987          ($683)

Net loss per share
                                                                               ($.10)                       ($.10)
                                                                               =============                ============

Pro forma net income
per share (2)                                                                                        $.29
                                                                                             =============
</TABLE>



Balance Sheet Data:
<TABLE>
<S>                            <C>                 <C>            <C>                  <C>                <C>   

                                                                                         Consolidated Delivery &
                                          Combined Founding Companies                      Logistics, Inc. and
                                                                                              Subsidiaries
                                                 December 31,                                 December 31,
                              ----------------------------------------------------   --------------------------------
                                    1992              1993             1994               1995              1996
                              ------------------ ---------------  ----------------   ----------------  ---------------

Working capital                   $1,290             $3,211           $3,548              $7,542            $5,472
Equipment and leasehold
   improvements, net               3,255              3,651            3,102               3,925             4,316
Total assets                      21,453             23,045           23,869              32,270            35,690
Long-term debt, net of
current  maturities                3,226              3,680            1,164               3,027             3,415
Stockholders' equity               4,149              5,212            5,568               8,311             8,730
</TABLE>


(1)  Reflects the results of operations of the Combined  Founding  Companies for
     the  period  from  January  1 to  September  30,  1995 and the  results  of
     operations of Consolidated Delivery & Logistics,  Inc. and Subsidiaries for
     the year ended December 31, 1995.

(2)  The computation of pro forma earnings per share for the year ended December
     31, 1995 is based upon 6,810,564 shares of Common Stock outstanding,  which
     includes (i) 493,869  shares  issued prior to the Mergers,  (ii)  2,935,700
     shares issued to the  stockholders of the Founding  Companies in connection
     with the Mergers, (iii) 3,200,000 shares sold in the Offering, and (iv) the
     dilution  attributable to the debentures which are convertible into 180,995
     shares of Common Stock. The conversion of the stock options  outstanding at
     December 31, 1995 are not included in the  computation  as the effect would
     be antidilutive.

(3)  The Company  selected  October 1, 1995 as the effective date of the Merger.
     The assets and liabilities of the Founding  Companies at September 30, 1995
     were  recorded  by CD&L at  their  historical  amounts.  The  statement  of
     operations  includes the results of  operations  of the Founding  Companies
     from October 1, 1995 through  December 31, 1995.  The results of operations
     for  Consolidated  Delivery & Logistics,  Inc. prior to the Mergers are not
     significant.

(4) Pro Forma income tax  provisions  have been  provided  for certain  Founding
Companies.


<PAGE>


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
           of Operations

Overview

         The following  discussion of the Company's results of operations and of
its  liquidity  and capital  resources  should be read in  conjunction  with the
Consolidated  Financial  Statements of the Company and the related notes thereto
appearing elsewhere in this Report.  Prior to the Mergers,  each of the Founding
Companies  operated  as a separate  independent  entity.  The  Company  selected
October  1,  1995 as the  effective  date of the  Mergers.  For the  year  ended
December 31, 1995 the pro forma  combined  historical  statement  of  operations
presented  in Item 6 - Selected  Financial  Data  includes  the  accounts of the
Founding  Companies as if the Founding  Companies had always been members of the
same operating  group without giving effect to the Mergers or the Offering.  The
Company  conducted  no  business  prior to the  Mergers.  As a result,  combined
results  may not be  comparable  to or  indicative  of future  performance  (see
below).

         During the year ended December 31, 1996, the Company  acquired  certain
assets from and assumed  certain  liabilities  of four  Companies  and agreed to
provide  continuing  service to the customers of another Company in transactions
accounted  for  as  purchases.  The  total  consideration  to be  paid  for  the
businesses is contingent on future  activity and is estimated to be $3.3 million
in cash and 166,221 shares of the Company's common stock. The excess of purchase
price  over  net  assets  acquired  ($3.1  million)  is  being  amortized  on  a
straight-line  basis over 25 years. Since the transactions were accounted for as
purchases,  operating  results for these  acquisitions have been included in the
accompanying   consolidated   financial   statements   from   the  date  of  the
transactions.

Non-comparability - 1996 vs. 1995

         Because the eleven Founding Companies operated as separate  independent
entities prior to the Mergers,  comparisons between the consolidated  results of
the Company for the year ended  December  31, 1996,  and the pro forma  combined
historical  results of the eleven Founding Companies for the year ended December
31, 1995, are difficult to make for numerous reasons, including the following:

1.   In 1996,  the  Founding  Companies  were all  subsumed  within  the  common
     management  of the  Company.  This  resulted  among other things in a) each
     Founding  Company  being  subjected  to  an   administrative   charge,   b)
     reallocation  of costs,  such as,  for  instance,  common  insurance  being
     acquired  for the  Company  and its  subsidiaries  as a  whole,  and c) the
     Founding  Companies  being relieved of the necessity of performing  various
     administrative functions for themselves.

2.   In 1996,  the  Company as a new  entity  began the  process of merging  and
     rationalizing  operations of the previously  unrelated Founding  Companies.
     For example, a) Olympic, Orbit/Lightspeed and the Manhattan Region of Click
     were combined into one Manhattan  Region of the Company,  b) the balance of
     Click,  Court and American were  combined into the Northeast  Region of the
     Company,  c) Silver Star and Crown-Bestway were combined into the Southeast
     Region of the Company,  and d) work was rationalized and reallocated  among
     the former Founding Companies.

3.   The Company  incurred  approximately  $4.5 million in expenses  during 1996
     related  to  corporate  overhead  and the  costs of  operating  as a public
     company, compared to approximately $300,000 in 1995.

4.   Most of the Founding  Companies  were operated as Subchapter S corporations
     prior to the effective date of the Mergers.

         The  selected  financial  data  presented  in this report  includes the
actual  financial  results of the Company for the years ended  December 31, 1995
and 1996. The pro forma combined  historical  results  reflect the operations of
the Combined  Founding  Companies for the period from January 1 to September 30,
1995 and the results of operations of  Consolidated  Delivery & Logistics,  Inc.
and  Subsidiaries  for the year ended December 31, 1995. For all the reasons set
forth above and others,  combined  results are not  indicative  of results  that
would have been  achieved if the Founding  Companies  had actually been combined
during those  periods,  and may not be  comparable  to or  indicative  of future
performance.  Nonetheless,  the following  section  discusses  consolidated 1996
results  compared  to pro forma  combined  historical  1995  results to indicate
general trends affecting operations.  For the above stated reasons a comparative
presentation  of 1994  compared to 1995 has not been  presented.  The  following
section  should be read with the foregoing  caveats as to  non-comparability  in
mind.

Disclosure Regarding Forward-Looking Statements

         The Private  Securities  Litigation Reform Act of 1995 provides a "safe
harbor" for forward looking statements.  Certain  information  contained in this
Form 10-K includes  information that is forward  looking,  such as the Company's
expectations for future performance,  its growth and acquisition strategies, its
anticipated  liquidity and capital needs and its future  prospects.  The matters
referred to in such forward  looking  statements  could be affected by the risks
and  uncertainties   related  to  the  Company's   business.   These  risks  and
uncertainties include, but are not limited to, the effect of economic and market
conditions,  the  Company's  lack of  prior  operating  history,  the  Company's
non-compliance  with the financial  covenants  contained in the Credit Agreement
and the results  thereof,  the ability of the Company to successfully  integrate
the  business  of  acquired  companies,  the impact of  competition,  as well as
certain other risks  described  elsewhere  herein.  Subsequent  written and oral
forward looking statements  attributable to the Company or persons acting on its
behalf are expressly  qualified in their entirety by the  cautionary  statements
contained herein and elsewhere in this Form 10-K.

Results of Operations

Revenues

         Consolidated  Delivery's  revenues  increased  13.7  percent  to $171.0
million in 1996 from $150.4 million in 1995. In spite of the loss of significant
revenue in the  Company's  contract  logistics  business,  the Company  achieved
revenue  growth in all  other  areas of it's  business.  Revenue  in the  ground
delivery business, including rush/demand,  scheduled and routed and distribution
services  increased 11.4 percent from $91.4 million in 1995 to $101.8 million in
1996. Air courier produced a 22.1 percent increase to $52.0 million in 1996 from
$42.6 million in 1995.  Revenue in the Company's  logistics business grew by 4.9
percent  from $16.4  million in 1995 to $17.2  million in 1996.  This growth was
achieved in a variety of logistics  programs  including  fulfillment and project
services.  The Company's contract logistics revenue declined $3.5 million due to
the   cancellation   and/or   non-renewal  of  several   long-term   contractual
relationships.

         The  Company  expects to  continue  revenue  growth in all areas of its
business.  Ground  delivery  revenue has benefited from the acquisition of three
companies in the Northeast during 1996 and the Company expects  continued growth
in product and sample distribution, particularly in the pharmaceutical industry.
Continued  demand in home delivery as well as the continuing  trend to outsource
warehouse  and delivery  functions  should also  contribute.  The  Company's air
courier  revenues  will also  continue  to grow.  In 1996,  internal  growth was
augmented by the acquisition of two companies which  solidified and expanded the
New York to Los Angeles air route.

         Although the Company  demonstrated  modest growth in overall  logistics
services, the product fulfillment and project services revenues contributed most
of the growth in this  area.  The  significant  decline  in  contract  logistics
revenues during 1996 contributed to the Company's  decision to sell its contract
logistics  subsidiary  early in 1997 (see Note 16 to the Company's  Consolidated
Financial Statements).


<PAGE>


Cost of Revenues

         Cost of  revenues  include,  among  other  things,  payment to employee
drivers,  owner  operators and  independent  contractors as well as agents,  air
freight  carriers,  commercial  airlines,  and pick-up and  delivery  fees.  The
increase in these costs during 1996 caused the Company's gross profit percentage
to decline  from 30.2  percent for 1995 to 29.4  percent  for 1996.  Among other
factors  contributing  to  increased  costs  of  revenues  are a  change  in the
Company's  general  business  mix to lower  margin  business,  mobilization  and
start-up costs for several large  distribution  contracts and the effect of fuel
surcharges from several air carriers.  While the gross profit percentage slipped
somewhat,  gross  profit  increased  by $4.8  million or 10.5 percent from $45.5
million in 1995 to $50.3 million in 1996.

Selling, General and Administrative Expenses

         Selling,  general  and  administrative  expenses  increased  from  27.3
percent of revenue in 1995 to 30.1 percent of revenue in 1996. Selling,  general
and  administrative  expenses include salaries,  sales commissions and travel to
support the Company's marketing and sales effort. Also included are the expenses
of maintaining the Company's  information systems,  human resources,  financial,
legal,  procurement and other  administrative  functions.  The increase includes
$4.2 million in expenses  necessary in the  establishment and maintenance of the
Company's  corporate  and  administrative  infrastructure  as a public  company.
During the fourth quarter of 1996, the Company  recognized the impact of several
non-recurring charges totaling  approximately $1.4 million which included salary
and  contract  settlements,  abandonment  of  operating  leases and other  costs
associated with management  headcount reduction and other consolidation  issues.
The remainder of the increase of  approximately  $4.8 million is attributable to
administrative and other costs associated with the increased revenue base of the
Company.

Operating Income

         For the reasons  described  above,  primarily  the increase in selling,
general  and  administrative  expenses  including  the  impact of  non-recurring
charges,  operating  income  decreased from operating  income of $4.4 million in
1995 to an operating loss of $1.2 million in 1996.

         Interest  expense  decreased by 8.7 percent from  $882,000 for the year
ended December 31, 1995 to $805,000 for the year ended  December 31, 1996.  This
decrease  results from  refinancing  of the  Founding  Companies  existing  debt
carrying higher interest rates than the Company's  current Credit Agreement (See
Liquidity and Capital Resources).

     As a result of the foregoing the Company recorded a net loss of $683,000 in
1996, compared to net income of $2.0 million in 1995.
         As a result of the losses in 1996, the Company has  instituted  certain
actions  including the sale of DSI,  elimination  of redundant  overhead and the
design of more effective financial and operating management information systems.
The  Company  is  presently  considering  the  implementation  of  a  management
compensation system based on business unit results for 1997.

Liquidity and Capital Resources

         Working  capital at December  31,  1996 of $5.5  million  represents  a
decrease of $2 million  when  compared to $7.5  million as of December 31, 1995.
Cash and cash  equivalents  decreased  by $4.9  million  from $6.6 million as of
December 31, 1995 to $1.7 million as of December 31, 1996.  The decrease in cash
is primarily due to the use of cash by operations of approximately $3.6 million,
the purchases of businesses using  approximately  $2.3 million,  the addition of
equipment  and  leasehold  improvements  of  approximately  $1.5 million  offset
somewhat  by  cash  provided  from  financing   activities  (net  borrowing)  of
approximately $2.4 million.

         Capital  expenditures  amounted  to $730,000  and $1.5  million for the
years ended December 31, 1995 and 1996,  respectively.  These  expenditures were
used primarily to upgrade  equipment and maintain and expand Company  facilities
in the ordinary course of business and its consolidation efforts.

         The Company was provided  $5.6 million and $2.4 million from  financing
activities  for the years  ended  December  31, 1995 and 1996  respectively.  On
November 27, 1995 the Company  completed the Offering  which involved the public
sale of 3,200,000  shares of Common Stock.  The net proceeds were  approximately
$3.5 million  after  payment of the cash  portion of the purchase  price for the
Founding Companies.  During 1996 the Company borrowed approximately $4.5 million
to finance the addition of equipment  mentioned above,  repay long-term debt and
for general working capital purposes.

     At December 31, 1996, as a result of losses during 1996, the Company was in
violation  of  certain  of the  financial  covenants  contained  in  the  Credit
Agreement,  including  leverage,  interest and fixed charge coverage ratios.  In
April 1997, the Company entered into the Forbearance Agreement pursuant to which
the Banks waived any default arising out of the Company's failure to comply with
the covenants referenced above and agreed not to exercise any remedies under the
Credit  Agreement in respect thereof until April 1, 1998.  Pursuant to the terms
of the Forbearance Agreement, amounts available for borrowing under the Facility
were reduced to approximately $8.8 million until June 15, 1997 and,  thereafter,
to the lesser of $8.8 million or an amount  determined on a formula basis taking
into account the Company's  eligible accounts  receivable and any pre-tax losses
incurred after March 31, 1997. The interest rates borne by borrowings  under the
Facility  were  increased  on  variable  rate  loans to prime  plus 2.5% and may
increase  to prime  plus  3.5% if the  Company  does  not  comply  with  certain
provisions in the Forbearance  Agreement (fixed rate loans expiring in June 1997
will bear interest at LIBOR plus 4.5%), the types of borrowings available to the
Company  were  reduced  and  the  commitment  fees  payable  to the  Banks  were
increased.  In  addition,  under the  Forbearance  Agreement,  the Company  must
maintain a  consolidated  net worth of at least $6.8  million,  may not make any
acquisitions  and is required to  establish  certain  separate  cash  collection
accounts. All amounts outstanding under the Facility will become due and payable
on April 1, 1998.  The Company is  currently  seeking to replace  the  Facility.
However,  there  can be no  assurance  that the  Company  will be able to obtain
replacement  financing or that such  replacement  financing will be available on
terms  acceptable  to the  Company.  In the event that the  Company is unable to
comply  with the terms of the  Forbearance  Agreement,  the Banks  will have the
right,  under the Credit  Agreement,  to exercise  certain  remedies,  including
accelerating the repayment of any loans outstanding thereunder.  There can be no
assurance that the Banks will continue to forbear from exercising their remedies
in those  circumstances.  If the Banks demand repayment of the loans outstanding
under the Facility and no replacement financing is available,  the Company might
be required to significantly curtail its operations. See Item 1. Business.

     The consolidated  financial  statements  included herein have been prepared
assuming that the Company will continue as a going concern. The Company suffered
a loss from  operations  and is in violation of certain loan covenants that give
the lenders the right to  accelerate  the due date of their loans.  As discussed
more fully in Note 8 to the consolidated  financial statements,  the lenders and
the Company have executed a Forbearance and Amendment  Agreement with respect to
such default, during which time the Company plans to seek replacement financing.
No  assurance  can be given that  replacement  financing  can be obtained or, if
obtained,  what the terms and conditions  thereof will be.  Management  believes
based on results to date and  projected  results for the  remainder of 1997 that
cash flow from  operations  will be sufficient to meet its cash  requirements in
the next twelve months. See Item 1. Business.


<PAGE>


Recently Issued Accounting Pronouncement

         The  Financial  Accounting  Standards  Board has issued a new standard,
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"). SFAS 128 establishes  standards for computing and presenting earnings per
share.  SFAS 128  simplifies  the  standards  for  computing  earnings per share
previously  found in APB  Opinion No. 15,  "Earnings  Per Share," and makes them
comparable  to  international  earnings  per share  standards.  It replaces  the
presentation of primary earnings per share with a presentation of basic earnings
per share. It also requires dual  presentation of basic and diluted earnings per
share on the face of the income  statement for all entities with complex capital
structures and requires a reconciliation of the numerator and denominator of the
basic  earnings per share  computation  to the numerator and  denominator of the
diluted  earnings per share  computation.  The Company is required to adopt this
standard as of December 15, 1997 and early adoption is not  permitted.  SFAS 128
requires  restatement  of all  prior  period  earnings  per  share  calculations
presented.  The Company has not determined the effect  adoption of SFAS 128 will
have on earnings per share.

Inflation

         Inflation  has not had a material  impact on the  Company's  results of
operations for the last three years.



<PAGE>


Item 8.  Financial Statements and Supplementary Data.





                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S>                                                                                                            <C>

                                                                                                               Page

Report of Independent Public Accountants........................................................................23

Consolidated Balance Sheets as of December 31, 1995 and 1996....................................................24

Consolidated Statements of Operations For The Period From Inception (June 30, 1994) Through December 31, 1994 and
    For The Years Ended December 31, 1995 and 1996..............................................................25

Consolidated  Statements of Changes in Stockholders'  Equity For The Period From
    Inception (June 30, 1994) Through  December 31, 1994 and For The Years Ended
    December 31, 1995 and 1996..................................................................................26

Consolidated Statements of Cash Flows For The Period From Inception (June 30, 1994) Through December 31, 1994 and
    For The Years Ended December 31, 1995 and 1996..............................................................27

Notes to Consolidated Financial Statements......................................................................28
</TABLE>



<PAGE>




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS





To Consolidated Delivery & Logistics, Inc.:


We have audited the  accompanying  consolidated  balance sheets of  Consolidated
Delivery &  Logistics,  Inc. (a Delaware  corporation)  and  subsidiaries  as of
December  31,  1995  and  1996  and  the  related  consolidated   statements  of
operations,  stockholders'  equity and cash flows for the period from  inception
(June 30, 1994) through  December 31, 1994 and for the years ended  December 31,
1995 and 1996. These consolidated financial statements and the schedule referred
to below are the responsibility of the Company's management.  Our responsibility
is to  express  an  opinion  on  these  consolidated  financial  statements  and
schedules based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of  Consolidated
Delivery & Logistics, Inc. and subsidiaries as of December 31, 1995 and 1996 and
the  results  of their  operations  and their  cash  flows for the  period  from
inception  (June 30,  1994)  through  December  31, 1994 and for the years ended
December 31, 1995 and 1996, in conformity  with  generally  accepted  accounting
principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements  taken as a whole.  The  schedule  listed  in the index to
financial statement schedules is the responsibility of the Company's  management
and is  presented  for purposes of complying  with the  Securities  and Exchange
Commission's  rules  and is not part of the  basic  financial  statements.  This
schedule has been subjected to the auditing  procedures applied in the audits of
the  basic  financial  statements  and,  in our  opinion,  fairly  states in all
material  respects  the  financial  data  required  to be set forth  therein  in
relation to the basic financial statements taken as a whole.

                               ARTHUR ANDERSEN LLP


Roseland, New Jersey
April 15, 1997



<PAGE>


            CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands except share data)


                                                       ASSETS
<TABLE>
<S>                                                                             <C>                  <C>

                                                                                            December 31,
                                                                                --------------------------------------
                                                                                      1995                1996
                                                                                ------------------  ------------------
CURRENT ASSETS:
  Cash and cash equivalents, including $50,000 of restricted cash
     (Note 2)                                                                            $6,589              $1,725
  Accounts receivable, less allowance for doubtful accounts of $1,285
     and $1,705 in 1995 and 1996, respectively (Note 8)                                  18,555              22,858
  Deferred income taxes (Notes 2 and 10)                                                    660               1,046
  Prepaid expenses and other current assets (Note 4)                                      1,082               1,430
                                                                                ------------------  ------------------

     Total current assets                                                                26,886              27,059

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net (Notes 2 and 5)
                                                                                          3,925               4,316
INTANGIBLE ASSETS, net (Notes 2, 3 and 6)                                                   652               3,844
SECURITY DEPOSITS AND OTHER ASSETS                                                          807                 471
                                                                                ------------------  ------------------

           Total assets                                                                 $32,270             $35,690
                                                                                ==================  ==================




                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Short-term borrowings (Note 8)                                                         $2,803              $7,200
  Current maturities of long-term debt (Note 8)                                           2,907               1,152
  Accounts payable                                                                        5,986               6,760
  Accrued expenses and other current liabilities (Note 7 and 15)                          5,637               5,720
  Income taxes payable (Notes 2 and 10)                                                     957                 218
  Deferred revenue (Note 2)                                                               1,054                 537
                                                                                ------------------  -------------------


     Total current liabilities                                                           19,344              21,587
                                                                                ------------------  -------------------


LONG-TERM DEBT, net of current maturities (Note 8)                                        3,027               3,415
                                                                                ------------------  -------------------


DEFERRED INCOME TAXES PAYABLE (Notes 2 and 10)                                            1,543               1,027
                                                                                ------------------  -------------------


OTHER LONG-TERM LIABILITIES (Note 15)                                                        45                 931
                                                                                ------------------  -------------------


COMMITMENTS AND CONTINGENCIES (Notes 11 and 13)

STOCKHOLDERS' EQUITY (Notes 12 and 13):
  Preferred stock, $.001 par value; 2,000,000 shares authorized; no
     shares issued and outstanding                                                            0                   0
  Common stock, $.001 par value; 30,000,000 shares authorized in
     1995 and 1996; 6,629,569 and 6,795,790 shares issued and
     outstanding in 1995 and 1996, respectively                                               7                   7
  Additional paid-in capital                                                              8,499               9,601
  Accumulated deficit                                                                      (195)               (878)
                                                                                ------------------  -------------------


      Total stockholders' equity                                                          8,311               8,730
                                                                                ------------------  -------------------


            Total liabilities and stockholders' equity                                  $32,270             $35,690
                                                                                ==================  ===================
</TABLE>







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


<PAGE>


            CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        (in thousands except share data)
<TABLE>
<S>                                                            <C>                 <C>                    <C>

                                                               For The Period
                                                               From Inception
                                                               (June 30, 1994)         For The Year          For The Year
                                                                   Through                Ended                   Ended
                                                                 December 31,          December 31,           December 31,
                                                                     1994                  1995                   1996
                                                              -------------------  ---------------------  ----------------------

      Revenues (Note 2)                                                  $0                $39,036               $171,049
      Cost of revenues                                                    0                 27,439                120,768
                                                              -------------------  ---------------------  ----------------------

        Gross profit                                                      0                 11,597                 50,281

      Selling, general and administrative expenses                        0                 11,301                 51,464
                                                              -------------------  ---------------------  ----------------------

        Operating income (loss)                                           0                    296                 (1,183)

      Other (income) expense:
        Interest income                                                   0                    (17)                   (89)
        Interest expense                                                  0                    274                    805
        Other income, net                                                 0                   (348)                  (372)
                                                              -------------------  ---------------------  ----------------------
                                                                          0                    (91)                   344
                                                              -------------------  ---------------------  ----------------------

      Income (loss) before provision for (benefit from)
        income taxes                                                      0                    387                 (1,527)

      Provision for (benefit from) income taxes
       (Notes 2 and 10)                                                   0                    582                   (844)
                                                              -------------------  ---------------------  ----------------------

         Net loss                                                        $0                  ($195)                 ($683)
                                                              ===================  =====================  ======================

      Net loss per share (Note 2)                                                                ($.10)                 ($.10)
                                                                                   =====================  ======================

      Weighted average shares outstanding (Note 2)                                       2,059,894              6,677,546
                                                                                   =====================  ======================
</TABLE>


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


<PAGE>


            CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (NOTE 12)
   FOR THE PERIOD FROM INCEPTION (JUNE 30, 1994) THROUGH DECEMBER 31, 1994 AND
                 FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996
                        (in thousands except share data)


<TABLE>
<S>                                      <C>             <C>             <C>             <C>               <C>

                                                                           Additional                            Total
                                                  Common Stock               Paid-In        Accumulated      Stockholders'
                                         -------------------------------
                                            Shares           Amount         Capital          Deficit           Equity
                                        ---------------- --------------- --------------- ----------------  ---------------

   Issuance of Common Stock                 2,100,000      $   2              $   0          $   0              $   2
                                        ---------------- --------------- --------------- ----------------  ---------------
   BALANCE AT
      DECEMBER 31, 1994                     2,100,000          2                  0              0                  2
   Repurchase of shares pursuant
      to a termination agreement           (1,400,000)        (1)                 0              0                 (1)
   Reduction in ownership of
      shares pursuant to a
      management agreement                   (305,577)         0                  0              0                  0
   Issuance of common stock:
     Public offering, net of offering
      costs                                 3,200,000          3             33,148              0             33,151
     Acquisition of Founding
      Companies                             2,935,700          3                 (3)             0                  0
     Distributions to Founding
      Companies' Stockholders                       0          0            (29,604)             0            (29,604)
     Shares issued in connection
      with termination agreement               99,446          0                  0              0                  0
   Equity of Founding Companies                     0          0              5,972              0              5,972
   Distributions to stockholders                    0          0               (949)             0               (949)
   Charge to capital in an amount
      equal to the current income
      tax benefit of S Corporations                 0          0                (65)             0                (65)
   Net loss                                         0          0                  0           (195)              (195)
                                        ---------------- --------------- --------------- ----------------  ---------------
   BALANCE AT
      DECEMBER 31, 1995                     6,629,569         $7             $8,499          ($195)            $8,311

   Shares issued in connection with
      acquisitions of businesses              166,221          0              1,102              0              1,102
   Net loss                                         0          0                  0           (683)              (683)
                                        ---------------- --------------- --------------- ----------------  ---------------
   BALANCE AT
      DECEMBER 31, 1996                     6,795,790         $7             $9,601          ($878)            $8,730
                                        ================ =============== =============== ================  ===============
</TABLE>


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


<PAGE>





            CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
<TABLE>
<S>                                                                          <C>                     <C>              <C>

                                                                              For the Period From
                                                                                   Inception              For The Years Ended
                                                                                (June 30, 1994)               December 31,
                                                                                                   ---------------------------------
                                                                                   Through
    CASH FLOWS FROM OPERATING ACTIVITIES:                                      December 31, 1994         1995             1996
                                                                             ---------------------  ---------------- ---------------
      Net loss                                                                        $0                ($195)           ($683)
      Adjustments to reconcile net loss to net cash provided by (used in)
          operating activities -
      Loss on disposal of equipment and leasehold improvements                         0                   63               29
      Depreciation and amortization                                                    0                  452            1,626
      Provision for doubtful accounts                                                 0                  204            1,422
      Capital contribution equal to current income taxes of S Corporations             0                  (65)               0
      Deferred income tax expense.                                                     0                   77             (752)
      Changes in operating assets and liabilities
          (Increase) decrease in -
              Accounts receivable                                                      0                 (312)          (4,907)
              Prepaid expenses and other current assets                                0                3,039             (300)
              Other assets                                                             0                  140              499
          Increase (decrease) in -
              Accounts payable, accrued liabilities and income taxes payable           0                 (797)          (1,243)
              Other long-term liabilities                                              0                  (33)             736
 
                                                                             ---------------------  ---------------- ---------------
                     Net cash provided by (used in) operating activities               0                2,573           (3,573)
                                                                             ---------------------  ---------------- ---------------

  CASH FLOWS FROM INVESTING ACTIVITIES:
       Additions to equipment and leasehold improvements                                0                 (730)          (1,462)
       Proceeds from sales of equipment and leasehold improvements                     0                    0               66
       Purchases of businesses, net of cash acquired                                   0                 (651)          (2,278)
       Other, net                                                                      0                  (26)               0
                                                                             ---------------------  ---------------- ---------------
                     Net cash used in investing activities                             0               (1,407)          (3,674)
                                                                             ---------------------  ---------------- ---------------
  CASH FLOWS FROM FINANCING ACTIVITIES:
      Short-term borrowings, net                                                       0                  550            4,397
       Proceeds from 8% Subordinated Convertible Debentures                            0                2,000                0
       Proceeds from long-term debt                                                    0                  513              113
       Repayments of long-term debt                                                    0               (1,411)          (3,077)
      Issuance of Common Stock, net of offering costs                                  2               33,151                0
       Cash acquired through acquisition of Founding Companies                         0                1,172                0
      Distributions to stockholders                                                    0                 (949)               0
       Distributions to Founding Companies' Stockholders                               0              (29,604)               0
       Deferred financing costs                                                        0                    0             (152)
       Issuances of Common Stock in connection with purchases of businesses            0                    0            1,102
       Repurchase of Common Stock                                                      0                   (1)               0
                                                                             ---------------------  ---------------- ---------------
                     Net cash provided by financing activities                         2                5,421            2,383
                                                                             ---------------------  ---------------- ---------------
                     Net increase (decrease) in cash and cash equivalents              2                6,587           (4,864)
    CASH AND CASH EQUIVALENTS, beginning of period                                     0                    2            6,589
                                                                             =====================  ================ ===============
    CASH AND CASH EQUIVALENTS, end of period                                          $2               $6,589           $1,725
                                                                             =====================  ================ ===============

    SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
      Cash paid for interest                                                          $0                 $177             $831
      Cash paid for income taxes                                                       0                  383              878
                                                                             =====================  ================ ===============

    SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES:
      Capital lease obligations incurred                                              $0                 $238             $202
                                                                             =====================  ================ ===============
</TABLE>

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


<PAGE>


            CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 (1)     ORGANIZATION AND BUSINESS:

Consolidated  Delivery & Logistics,  Inc.  ("CD&L") was founded in June 1994. In
November 1995,  simultaneously  with the closing of the Company's initial public
offering (the  "Offering")  separate  wholly-owned  subsidiaries  of the Company
merged with each of the eleven Founding Companies (the "Mergers"). Consideration
for the acquisition of these  businesses  consisted of a combination of cash and
common stock of CD&L, par value $0.001 per share.  The assets and liabilities of
the acquired  companies at September  30, 1995,  were recorded by the Company at
their historical amounts.  These eleven businesses are referred to herein as the
"Founding  Companies".  CD&L and its subsidiaries  are collectively  referred to
herein as the "Company."

The Company  provides an extensive  network of same-day  ground and air delivery
and  logistics  services to a wide range of  commercial,  industrial  and retail
customers.  The Company's ground delivery operations  currently are concentrated
on the East  Coast,  with a  strategic  presence  in the Midwest and on the West
Coast. The Company's logistics services are provided on a national basis and its
air delivery  services are provided  throughout  the United  States and to major
cities around the world.

The  consolidated  financial  statements  included  herein  have  been  prepared
assuming that the Company will continue as a going concern. The Company suffered
a loss from  operations  and is in violation of certain loan covenants that give
the lenders the right to  accelerate  the due date of their loans.  As discussed
more fully in Note 8, the lenders and the Company  have  executed a  Forbearance
and  Amendment  Agreement  (the  "Forbearance  Agreement")  with respect to such
default,  during which time the Company plans to seek replacement financing.  No
assurance  can be given  that  replacement  financing  can be  obtained  or,  if
obtained,  what the terms and conditions  thereof will be.  Management  believes
based on results to date and  projected  results for the  remainder of 1997 that
cash flow from  operations  will be sufficient to meet its cash  requirements in
the next twelve months. See Item 1.
Business.


(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation -

The accompanying  consolidated  financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany balances
and transactions have been eliminated.

Use of Estimates in Preparation of the Financial Statements -

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities  at the date of the  consolidated  financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents -

The Company considers all highly liquid investments with original  maturities of
three months or less to be cash  equivalents.  Cash  equivalents  are carried at
cost, which approximates market value.  Included in cash and cash equivalents is
cash  restricted  for a  national  marketing  and  advertising  program  for the
Company's sales agency agreements (see Note 11).

Equipment and Leasehold Improvements -

Equipment  and  leasehold  improvements  are recorded at cost.  Depreciation  is
computed using the  straight-line  method over the estimated useful lives of the
assets.  Leasehold  improvements  and  assets  subject  to  capital  leases  are
amortized over the shorter of the terms of the leases or lives of the assets.

Deferred Financing Costs -

The costs incurred for obtaining  financing,  including all legal and accounting
fees are  included  in other  assets in the  accompanying  consolidated  balance
sheets and are amortized over the life of the related debt (2 years).

Intangible Assets -

Intangible   assets  consist  of  goodwill,   customer  lists,   and  noncompete
agreements.  Goodwill  represents the excess of the purchase price over the fair
value of assets of businesses acquired and is amortized on a straight-line basis
over 25 years.  Customer lists and noncompete  agreements are amortized over the
estimated period to be benefited, generally from 3 to 5 years.

Revenue Recognition -

Revenue is  recognized  when the  shipment is  completed,  or for the  logistics
business, when services are rendered to customers and expenses are recognized as
incurred. Certain customers pay in advance, giving rise to deferred revenue.

Income Taxes -

The Company has implemented  Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes." This statement  provides for a liability approach
to  accounting  for  income  taxes.  Deferred  income  taxes  are  provided  for
differences in the  recognition of assets and  liabilities for tax and financial
reporting  purposes.  Temporary  differences  result  primarily from accelerated
depreciation and  amortization  for tax purposes,  various accruals and reserves
being  deductible  for tax  purposes  in future  periods  and  certain  Founding
Companies  reporting  on the cash  basis for income  tax  purposes  prior to the
Mergers.

Long-Lived Assets -

Statement  of  Financial  Accounting  Standards  No.  121,  "Accounting  for the
Impairment  of  Long-Lived  Assets and  Long-Lived  Assets to be  Disposed  of,"
requires,  among other things,  that an entity review its long-lived  assets and
certain related  intangibles for impairment  whenever  changes in  circumstances
indicate that the carrying amount of an asset may not be fully recoverable. As a
result of its review,  the Company  does not believe  that any such changes have
occurred  that  would  result  in an  impairment  in the  recoverability  of its
long-lived assets.

Stock Based Compensation -

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation"  ("SFAS 123")  requires that an entity  account for employee stock
compensation under a fair value based method.  However,  SFAS 123 also allows an
entity  to  continue  to  measure  compensation  cost for  employee  stock-based
compensation  plans  using  the  intrinsic  value  based  method  of  accounting
prescribed by APB Opinion No. 25,  "Accounting  for Stock Issued to  Employees,"
("Opinion 25"). Entities electing to remain with accounting under Opinion 25 are
required to make pro forma  disclosures  of net income and earnings per share as
if the fair value based method of  accounting  under SFAS 123 had been  applied.
The  Company  has  elected to  continue  to  account  for  employee  stock-based
compensation  under  Opinion 25 and provide the required  pro forma  disclosures
(see Note 13).


<PAGE>


Net Loss Per Share -

The net loss  per  common  share is  computed  by  dividing  the net loss by the
weighted   average  number  of  common  shares  and  common  share   equivalents
outstanding  during the period.  The  computation  of net loss per share for the
year ended  December 31, 1995 is based upon  2,059,894  weighted  average shares
outstanding  which includes (i) the weighted average portion of 2,100,000 shares
issued in 1994 for the formation of CD&L,  (ii) the weighted  average portion of
1,705,577 shares redeemed and canceled and 99,446 shares  subsequently  reissued
related to a termination  agreement (see Note 12) and (iii) the weighted average
portion of 6,135,700  shares issued in connection with the Offering and Mergers.
The  computation  of net loss per share for the year ended  December 31, 1996 is
based upon  6,677,546  weighted  average shares  outstanding  which includes (i)
6,629,569  shares issued prior to 1996 and (ii) the weighted  average portion of
166,221 shares issued in connection  with the  acquisitions  of businesses.  The
conversion of the debentures (see Note 8) and stock options (see Note 13) is not
included in the 1995 and 1996 computations as the effect would be antidilutive.

         The  Financial  Accounting  Standards  Board has issued a new standard,
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"). SFAS 128 establishes  standards for computing and presenting earnings per
share.  SFAS 128  simplifies  the  standards  for  computing  earnings per share
previously  found in APB  Opinion No. 15,  "Earnings  Per Share," and makes them
comparable  to  international  earnings  per share  standards.  It replaces  the
presentation of primary earnings per share with a presentation of basic earnings
per share. It also requires dual  presentation of basic and diluted earnings per
share on the face of the income  statement for all entities with complex capital
structures and requires a reconciliation of the numerator and denominator of the
basic  earnings per share  computation  to the numerator and  denominator of the
diluted  earnings per share  computation.  The Company is required to adopt this
standard as of December 15, 1997 and early adoption is not  permitted.  SFAS 128
requires  restatement  of all  prior  period  earnings  per  share  calculations
presented.  The Company has not determined the effect  adoption of SFAS 128 will
have on earnings per share.

Reclassifications -

Certain  reclassifications  have  been  made to the  prior  year's  consolidated
financial statements in order to conform to the 1996 presentation.

(3)      BUSINESS COMBINATIONS:

In November 1995,  the Company  purchased  certain assets of two Companies.  The
total  consideration  paid  in  these  transactions   aggregated   approximately
$900,000.  The assets  acquired  include  accounts  receivable,  customer lists,
machinery  and  equipment  and  various  other  assets.  The  transactions  were
accounted for as purchases and resulted in excess of the purchase price over net
assets acquired  (goodwill) of $501,000.  One of the Companies  acquired was 50%
owned by stockholders of the Company.

During  1996,  the Company  acquired  certain  assets  from and assumed  certain
liabilities  of four Companies and agreed to provide  continuing  service to the
customers of another Company in transactions accounted for as purchases.  Two of
the businesses  acquired  provide air courier  services and three provide ground
delivery.  The total consideration paid in these transactions is contingent upon
future  activity and is estimated to aggregate  $3.3 million,  which consists of
$2.2 million in cash,  75,312  shares of Common Stock at $8 per share and 90,909
shares  of  Common   Stock  at  $5.50  per  share.   The  Company  also  assumed
approximately  $185,000 of debt due to the former  owners of one of the acquired
businesses and their relatives. Of this amount $3.1 million has been assigned to
the excess of purchase price over net assets of businesses  acquired  (goodwill)
and other intangible assets. Final determinations of the individual  acquisition
costs will be made by April 2000.

The results of the acquired  businesses have been reflected in the  accompanying
consolidated  statements of operations since their respective acquisition dates.
The results of operations of the acquired businesses prior to their acquisitions
are not material to the Company's consolidated statements of operations.
(4)      PREPAID EXPENSES AND OTHER CURRENT ASSETS:

Prepaid expenses and other current assets consist of the following
 (in thousands) -
<TABLE>
<S>                                                                                                   <C>              <C>

                                                                                                              December 31,
                                                                                                      ------------------------------
                                                                                                          1995            1996
                                                                                                      --------------  --------------
               Prepaid insurance                                                                              $198            $282
               Prepaid office and other supplies                                                               387             191
               Employee advances and other receivables                                                         311             326
               Shipping charges                                                                                  0              96
               Other                                                                                           186             535
                                                                                                      --------------  --------------


                                                                                                            $1,082          $1,430
                                                                                                      ==============  ==============
</TABLE>


(5)      EQUIPMENT AND LEASEHOLD IMPROVEMENTS:

Equipment and leasehold improvements consist of the following (in thousands) -
<TABLE>
<S>                                                                               <C>               <C>               <C>

                                                                                                               December 31,
                                                                                                    --------------------------------
                                                                                   Useful Lives          1995             1996
                                                                                   ------------                               
                                                                                                    ---------------   --------------
                Transportation and warehouse equipment                              3-7 years             $3,823            $5,151
                Office equipment                                                    3-7 years              4,943             5,433
                Other equipment                                                     5-7 years                907               729
                Leasehold improvements                                             Lease period            1,103             1,387
                                                                                                    ---------------   --------------
                                                                                                          10,776            12,700
                Less - accumulated depreciation and amortization                                          (6,851)           (8,384)
                                                                                                    ---------------   --------------

                                                                                                          $3,925            $4,316
                                                                                                    ===============   ==============
</TABLE>


Leased equipment under capitalized leases (included above) consists of the
 following  (in thousands) -
<TABLE>
<S>                                                                                                 <C>               <C>

                                                                                                             December 31,
                                                                                                    --------------------------------
                                                                                                         1995             1996
                                                                                                    ----------------  --------------
               Equipment                                                                                  $1,103            $1,424
               Less - accumulated amortization                                                              (459)             (667)
                                                                                                    ----------------  --------------


                                                                                                            $644              $757
                                                                                                    ================  ==============
</TABLE>


(6)      INTANGIBLE ASSETS:

Intangible assets (see Note 3) consist of the following (in thousands) -
<TABLE>
<S>                                                                                                  <C>              <C>

                                                                                                              December 31,
                                                                                                     -------------------------------
                                                                                                          1995            1996
                                                                                                     ---------------  --------------
              Goodwill                                                                                       $564           $3,675
              Noncompete agreements                                                                           177              277
              Customer lists                                                                                  141              167
              Other                                                                                            15              165
                                                                                                     ---------------  --------------
                                                                                                              897            4,284
              Less - accumulated amortization                                                                (245)            (440)
                                                                                                     ---------------  --------------

                                                                                                             $652           $3,844
                                                                                                     ===============  ==============
</TABLE>



<PAGE>


(7)   ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

Accrued expenses and other current liabilities consist of the following 
 (in thousands) -
<TABLE>
<S>                                                                                                  <C>              <C>

                                                                                                              December 31,
                                                                                                     -------------------------------
                                                                                                          1995            1996
                                                                                                     ---------------  --------------
              Payroll and related expenses                                                                 $2,345           $2,790
              Workers compensation and medical                                                              1,125              816
              Amounts due to independent contractors                                                          367              605
              Professional fees                                                                               977              413
              Rent                                                                                            162              408
              Other                                                                                           661              688
                                                                                                     ---------------  --------------

                                                                                                           $5,637           $5,720
                                                                                                     ===============  ==============
</TABLE>





(8)      SHORT-TERM BORROWINGS AND LONG-TERM DEBT:

Short-term borrowings -

At  December  31,  1995 and 1996,  the  Company  had  available  lines of credit
aggregating   $3.1  million  and  $10  million,   respectively.   The  Company's
outstanding  borrowings on such lines of credit are payable to various banks and
totaled,  respectively  $2.8 million at December  31, 1995,  and $7.2 million at
December 31, 1996.

In May 1996, the Company entered into a two-year  agreement with Summit Bank and
Mellon  Bank  N.A.  to  establish  a  revolving  credit  facility  (the  "Credit
Agreement").  Credit availability is based on certain criteria, up to an initial
maximum amount of $15 million,  which may under certain  conditions be increased
to $25 million,  and is secured by  substantially  all of the assets,  including
certain cash balances, accounts receivable, equipment and leasehold improvements
and intangible assets of the Company and its subsidiaries.  The Credit Agreement
provides for fixed rate and variable  rate loans.  Interest  rates on fixed rate
borrowings are based on the London Inter-bank Offered Rate (7.53% at December 31
1996) and variable rate  borrowings are based on margins over the banks' lending
rates (8.75% at December 31, 1996). Borrowings under the line of credit averaged
approximately  $6.6 million with an average  interest rate of 8.23% for the year
ended December 31, 1996. Maximum borrowings were $7.3 million in the same period

At December 31,  1996,  as a result of losses  during  1996,  the Company was in
violation  of  certain  of the  financial  covenants  contained  in  the  Credit
Agreement,  including  leverage,  interest and fixed charge coverage ratios.  In
April 1997, the Company entered into the Forbearance Agreement pursuant to which
the Banks waived any default arising out of the Company's failure to comply with
the covenants referenced above and agreed not to exercise any remedies under the
Credit  Agreement in respect thereof until April 1, 1998.  Pursuant to the terms
of the Forbearance  Agreement,  amounts available for borrowing under the Credit
Agreement  were reduced to  approximately  $8.8 million until June 15, 1997 and,
thereafter,  to the lesser of $8.8 million or an amount  determined on a formula
basis taking into account the Company's  eligible  accounts  receivable  and any
pre-tax  losses  incurred  after March 31,  1997.  The  interest  rates borne by
borrowings  under the Credit  Agreement were increased on variable rate loans to
prime  plus 2.5% and may  increase  to prime plus 3.5% if the  Company  does not
comply with certain  provisions in the Forbearance  Agreement  (fixed rate loans
expiring  in June 1997 will bear  interest  at LIBOR  plus  4.5%),  the types of
borrowings available to the Company were reduced and the commitment fees payable
to the Banks were increased. In addition,  under the Forbearance Agreement,  the
Company must maintain a consolidated net worth of at least $6.8 million, may not
make any  acquisitions  and is  required  to  establish  certain  separate  cash
collection  accounts.  All amounts  outstanding  under the Credit Agreement will
become due and  payable on April 1, 1998.  The Company is  currently  seeking to
replace  the  Credit  Agreement.  However,  there can be no  assurance  that the
Company will be able to obtain  replacement  financing or that such  replacement
financing  will be available on terms  acceptable  to the Company.  In the event
that  the  Company  is  unable  to  comply  with the  terms  of the  Forbearance
Agreement,  the  Banks  will have the  right,  under the  Credit  Agreement,  to
exercise  certain  remedies,  including  accelerating the repayment of any loans
outstanding  thereunder.  There can be no assurance that the Banks will continue
to forbear from exercising their remedies in those circumstances.

In 1995, the Company had several  available  lines of credit which bore interest
at rates ranging from prime plus 0.75% to prime plus 1.5%. These lines of credit
were  collateralized  by certain  Founding  Companies  accounts  receivable  and
guaranteed  by  certain  stockholders.  Borrowings  under  the  lines of  credit
averaged  approximately  $2.4 million with an average interest rate of 9.75% for
the year ended December 31, 1995.  Maximum  borrowings were  approximately  $2.9
million for the year ended December 31, 1995. In 1996,  average borrowings under
the  previous  lines of credit were  approximately  $2.5 million with an average
interest  rate of 8.2%.  Maximum  borrowings  for 1996 were  approximately  $2.9
million. These lines of credit were repaid during 1996.

Long-Term Debt -

Long-term debt consists of the following (in thousands) -
<TABLE>
<S>                                                                                          <C>           <C>

                                                                                                   December 31,
                                                                                             -------------------------
                                                                                                1995         1996
                                                                                             -----------  ------------
         8% Subordinated Convertible Debentures (a)                                              $2,000        $2,000
         Seller-financed debt on acquisitions, includes annual and quarterly installments
             through April 1998 and monthly payments based on collected revenues
             through September 2000 with interest imputed at the rate of 9%.
                                                                                                    490         1,348
         Capital lease obligations due through August 2000 with interest at rates ranging
             from 7.5% to 21.65% and secured by the related property                                428           636
         Various equipment and vehicle notes payable to banks and finance companies due
             through January 2000 with interest ranging from 8.0% to 11.75% and secured by
             various assets of certain Founding Companies                                           321           341
         Debt due to former owners, their relatives, and employees of a business acquired
             by the Company in 1996, with quarterly principal and interest payments through
             September 2001 together with interest at a rate of 8%.                                   0           185
         Term loans payable to various banks due through September 1998. Interest ranging
             from 5% to 12.5%, interest and principal payable monthly and secured by
             various assets of the Founding Companies .  The term loans were repaid during
             1996.                                                                                1,593             0
         Notes payable to various  stockholders of the Founding Companies due on
             various dates through April 1998. Interest ranging from 6% to prime
             plus .5% with  interest and  principal  payable in varying  amounts
             ranging  from due on demand to April 1998.  The notes  payable were
             repaid during 1996.
                                                                                                    515             0
         Notes payable due on various dates through April 1998. Interest ranging
             from 7.25% to 10% with  interest  and  principal  payable  monthly,
             secured  by various  assets of the  Founding  Companies.  The notes
             payable were repaid during 1996.
                                                                                                    469             0
         Small business  administration loan with monthly principal and interest
             payments  and a final  payment  due in December  1998.  Interest is
             payable  at prime  plus 1% and  secured  by all of the  assets of a
             subsidiary  of the  Company  and a personal  guarantee  of a former
             shareholder of the subsidiary. The loan was
             repaid during 1996.                                                                     74             0
         Other                                                                                       44            57
                                                                                             -----------  ------------




                                                                                                  5,934         4,567
         Less - Current maturities                                                                2,907         1,152
                                                                                             -----------  ------------




                                                                                                 $3,027        $3,415
                                                                                             ===========  ============
</TABLE>



<PAGE>



a)   In September 1995, the Company issued $2 million in the aggregate principal
     amount  of  its  8%  Subordinated  Convertible  Debentures  due  2000  (the
     "Debentures").  The Debentures  mature on August 21, 2000.  Interest on the
     Debentures  accrues at the rate of 8% per annum  from the date of  issuance
     and is  payable  quarterly  on each  February  21,  May 21,  August  21 and
     November 21. The Debentures are redeemable at the option of the Company, in
     whole or in part, without premium or penalty at any time on or after August
     18, 1998, at their face amount plus accrued and unpaid interest, if any, to
     the date of redemption.  The Debentures are redeemable at the option of the
     holder, in whole but not in part,  without premium or penalty,  at any time
     after August 21, 1998. The Debentures are  convertible  into 180,995 shares
     of Common  Stock at the option of the holder  through  August 20, 2000 at a
     conversion  price  equal  to 85%  of  the  initial  public  offering  price
     ($11.05).

The  aggregate  amounts  of  annual  principal   maturities  of  long-term  debt
(excluding  capital lease obligations) as of December 31 1996 are as follows (in
thousands) -
<TABLE>
<S>                                                                                                               <C>

        1997                                                                                                        $903
        1998                                                                                                         506
        1999                                                                                                         340
        2000                                                                                                       2,148
        2001                                                                                                          34
                                                                                                            -----------------

          Total                                                                                                   $3,931
                                                                                                            =================
</TABLE>




The  Company  leases  certain  transportation   equipment  under  capital  lease
agreements  which expire at various dates. At December 31, 1996,  minimum annual
payments under capital leases, including interest, are as follows (in thousands)
-
<TABLE>
<S>                                                                                                            <C>

        1997                                                                                                        $292
        1998                                                                                                         212
        1999                                                                                                         146
        2000                                                                                                          62
                                                                                                               ---------------

          Total minimum payments                                                                                     712
        Less - Amounts representing interest                                                                         (76)
                                                                                                               ---------------

          Net minimum payments                                                                                       636
        Less - Current portion of obligations under capital leases                                                  (249)
                                                                                                               ---------------

          Long-term portion of obligations under capital leases                                                     $387
                                                                                                               ===============
</TABLE>




(9)      EMPLOYEE BENEFIT PLANS:

Several of the Founding Companies had defined  contribution plans, which allowed
for voluntary pretax contributions by the employees. The Founding Companies paid
all  general  and  administrative  expenses  of the plans and in some cases made
matching contributions on behalf of the employees.  The Company adopted a 401(k)
retirement plan during 1996 and merged all of the former Founding  Company plans
into the newly  adopted  plan.  Substantially  all  employees  are  eligible  to
participate  in the plan and are permitted to  contribute  between 1% and 20% of
their  annual  salary.   The  Company  has  the  right  to  make   discretionary
contributions which will be allocated to each eligible participant.  The Company
did not make a contribution for the year ended December 31, 1996.


<PAGE>


(10)     INCOME TAXES:

Federal and state  income tax  provision  (benefit)  for the years ended 
December 31, 1995 and 1996 are as follows (in thousands) -
<TABLE>
<S>                                                                            <C>              <C>

                                                                                    1995              1996
                                                                               ---------------- ------------------
           Federal-
             Current                                                                     $424              $28
             Deferred                                                                      77             (752)
           State                                                                           81             (120)
                                                                               ---------------- ------------------


                                                                                         $582            ($844)
                                                                               ================ ==================
</TABLE>

The  differences in Federal income taxes provided and the amounts  determined by
applying the Federal  statutory  tax rate (34%) to income  (loss)  before income
taxes for the years ended December 31, 1995 and 1996,  result from the following
(in thousands) -
<TABLE>
<S>                                                                           <C>                <C>

                                                                                    1995              1996
                                                                              -----------------  ----------------

            Tax at statutory rate                                                        $132              ($519)
            Add (deduct) the effect of-
              State income taxes                                                           53                (79)
              Nondeductible expenses and other, net                                        27                 65
              Provision for potential tax matters                                         400                  0
              Reduction of estimated taxes provided in the prior year                       0               (311)
              Other                                                                       (30)                 0
                                                                              -----------------  ----------------


                                                                                         $582              ($844)
                                                                              =================  ================
</TABLE>


The Founding Companies filed "short-period" Federal tax returns through November
30, 1995. In connection with such filings the Company  provided  $400,000 during
1995 to cover any potential exposures related to the filings.

The components of deferred income tax liabilities and assets, are as follows
(in thousands) -
<TABLE>
<S>                                                                         <C>                 <C>

                                                                                       December 31,
                                                                            -----------------------------------
                                                                                 1995                1996
                                                                            ----------------    ---------------
          Current deferred income tax asset -
             Allowance for doubtful accounts                                          $513                $690
             Reserves and other, net                                                   147                 356
                                                                            ----------------    ---------------
                                                                                                
                 Total deferred income tax asset                                      $660              $1,046
                                                                            ================    ===============

          Non-current deferred income tax liability -
             Cash to accrual differences, net                                      ($1,158)              ($369)
             Accumulated depreciation and amortization                                (385)               (658)
                                                                            ----------------    ---------------
                                                                                                
                 Total deferred income tax liability                               ($1,543)            ($1,027)
                                                                            ================    ===============
</TABLE>




<PAGE>


(11)     COMMITMENTS AND CONTINGENCIES:

 Operating Leases -

The  approximate  minimum  rental  commitments  of the Company,  under  existing
agreements as of December 31, 1996, are as follows (in thousands) -
<TABLE>
<S>                                                                                                  <C>

1997                                                                                                 $3,694
1998                                                                                                  2,921
1999                                                                                                  2,231
2000                                                                                                  1,406
2001                                                                                                    884
Thereafter                                                                                            2,161
</TABLE>


Rent expense  related to operating  leases  amounted to  approximately 
$1.9 million and $4.4 million for the years ended December 31, 1995 and 1996,
respectively.

Litigation -

         On March 19,  1997,  a  purported  class  action  complaint,  captioned
Gapszewicz v.  Consolidated  Delivery & Logistics,  Inc., et al. (97 Civ. 1939),
was filed in the United States  District Court for the Southern  District of New
York against the Company,  certain of the Company's present and former executive
officers,  and the  co-managing  underwriters  of the Company's  initial  public
offering (the  "Offering").  The gravamen of the complaint is that the Company's
registration statement for the Offering contained misstatements and omissions of
material fact in violation of the federal securities laws and that the Company's
financial  statements  included  in the  registration  statement  were false and
misleading and did not fairly  reflect the Company's  true financial  condition.
The complaint seeks the certification of a class consisting of purchasers of the
Company's  Common  Stock from  November  21, 1995  through  February  27,  1997,
rescission  of the  Offering,  attorneys'  fees and other  damages.  The Company
believes that the  allegations  contained in the complaint are without merit and
intends to defend the action vigorously.

         On April 14, 1997, the Company  received  notice that a purported class
action  complaint  was filed  against  the  Company,  certain  of the  Company's
directors,  and the  co-managing  underwriters  of the Company's  initial public
offering.  The complaint  was filed by the  plaintiff  Morris Rubin on behalf of
buyers of  Consolidated  Delivery &  Logistics,  Inc.'s  stock during the period
November  20, 1995 through  February 27, 1997.  As of April 15, 1997 the Company
had not yet been served with the complaint and therefore  cannot comment further
on the allegations contained therein.

The Company and its  subsidiaries  are from time to time,  parties to litigation
arising in the normal course of their  business,  most of which involves  claims
for  personal  injury and  property  damage  incurred in  connection  with their
operations.  Management believes that none of these actions, including the above
actions,  will have a  material  adverse  effect on the  financial  position  or
results of operations of the Company and its subsidiaries.

Sales Agency Agreements -

The  Company  has  entered  into  sales  agency   agreements  with   independent
contractors  with  varying  terms to perform  courier  services on behalf of the
Company.  The independent  contractors  provide marketing and sales services and
the Company  provides the resources to perform courier  services.  In connection
with these  transactions the Company retains from the independent  contractors a
fee for services  rendered of approximately  10% of revenues.  Sales agency fees
totaled $1 million and $3.8 million in 1995 and 1996, respectively.


<PAGE>


(12)     STOCKHOLDERS' EQUITY:

In September  1995, CD&L amended its Articles of  Incorporation  to increase the
number of authorized shares of Common Stock from 20,000,000 to 30,000,000 and to
authorize  2,000,000 shares of Preferred Stock. The Company's Board of Directors
may direct the  issuance of the  Company's  $.001 par value  Preferred  Stock in
series and may, at the time of issuance,  determine the rights,  preferences and
limitations of each series.

Pursuant to a Representation Agreement, dated November 15, 1994 (as amended, the
"Representation  Agreement"),  between the Company and CTA Group,  LLC  ("CTA"),
David T. Lardier  agreed to lend or  otherwise  advance to the Company all funds
necessary  to effect the Mergers and to provide CTA with all funds  necessary to
provide the services to be provided by CTA under the  Representation  Agreement,
including  but not  limited  to, the funds  necessary  to retain and pay certain
professional expenses incurred in connection therewith. In exchange, the Company
agreed upon  completion of the Mergers to reimburse Mr.  Lardier for the amounts
advanced.

At June 30, 1995, CTA had incurred expenses totaling  approximately $1.3 million
in connection with the Mergers  (consisting  primarily of professional  fees and
expenses) for which it had not been reimbursed by Mr.  Lardier.  Under the terms
of the  Representation  Agreement,  Messrs.  Mattei  and  Wojak had the right to
require the Company to repurchase  the 1,400,000  shares of common stock held by
Mr. Lardier at a price of $1,000 (his original purchase price) in the event that
Mr. Lardier did not advance funds needed to complete the Mergers.

Pursuant to Mr. Lardier's failure to perform under the Representation Agreement,
CTA  redeemed  his  shares  for  his  original  purchase  price.  Pursuant  to a
Termination Agreement,  dated August 14, 1995 (the "Termination  Agreement") the
Company agreed to permit Mr. Lardier to assign 99,446 shares of common stock and
his contingent right to repayment of funds advanced plus interest (fixed at $1.2
million) to certain of Mr. Lardier's creditors in exchange for their releases of
all claims against CTA and the Company. In addition, Mr. Lardier agreed that CTA
was not entitled to any fee upon the completion of the Mergers.  The Company has
also agreed to release Mr. Lardier from any obligation to fund the  unreimbursed
expenses incurred by CTA prior to the date of the Termination  Agreement and his
continuing obligation to fund future expenses.

Under a management  agreement in 1995,  certain officers reduced their ownership
of Common Stock by 305,577 shares to an aggregate of 394,423 shares.


(13)     STOCK OPTION PLANS:

The Company has two stock option  plans under which  employees  and  independent
directors may be granted  options to purchase  shares of Company Common Stock at
or above the fair market value at the date of grant.  Options  generally vest in
one to four years and expire in 10 years.

Employee Stock Compensation Program -

In September 1995, the Board of Directors  adopted,  and the stockholders of the
Company  approved  the  Company's  Employee  Stock  Compensation   Program  (the
"Employee Stock Compensation Program").  The Employee Stock Compensation Program
authorizes the granting of incentive stock options,  non-qualified supplementary
options, stock appreciation rights, performance shares and stock bonus awards to
key employees of the Company,  including those employees  serving as officers or
directors of the Company.  The Company has reserved  1,400,000  shares of Common
Stock for issuance in connection with the Employee Stock  Compensation  Program.
The Employee Stock  Compensation  Program is  administered by a committee of the
Board  of  Directors  (the  "Administrators")  made  up  of  directors  who  are
disinterested  persons.  Options and awards  granted  under the  Employee  Stock
Compensation  Program will have an exercise or payment price as  established  by
the  Administrators  provided that the exercise price of incentive stock options
may not be less than the fair market value of the underlying  shares on the date
of grant. Unless otherwise  specified by the Administrators,  options and awards
will vest in four  equal  installments  on the first,  second,  third and fourth
anniversaries of the date of grant.

1995 Stock Option Plan for Independent Directors -

In September 1995, the Board of Directors  adopted,  and the stockholders of the
Company approved, the Company's 1995 Stock Option Plan for Independent Directors
(the   "Director   Plan").   The  Director  Plan   authorizes  the  granting  of
non-qualified  stock  options to  non-employee  directors  of the  Company.  The
Company has reserved  100,000  shares of Common Stock for issuance in connection
with the Director Plan. The Director Plan is  administered by a committee of the
Board  of  Directors  (the  "Committee"),  none of  whom  will  be  eligible  to
participate  in the Director  Plan.  The Director  Plan  provides for an initial
grant of an option to purchase  1,500 shares of Common Stock upon  election as a
director of the  Company,  a second  option to purchase  1,000  shares of Common
Stock upon the one-year  anniversary of such director's  election and subsequent
annual options for 500 shares of Common Stock upon the  anniversary of each year
of service as a director.  Options  granted under the Director Plan will have an
exercise price per share equal to the fair market value of the underlying shares
on the date of grant and are fully exercisable one year after the date of grant.

Information regarding the Company's stock option plans is summarized below:
<TABLE>
<S>                                       <C>                    <C>                 <C>               <C>

                                                      Employee Stock
                                                     Compensation Plan                         Director Plan
                                          ----------------------------------------   -----------------------------------
                                               Shares            Exercise Price         Shares         Exercise Price
                                          ------------------    ------------------   -------------    ------------------
     Shares under option:
       Outstanding at
       January 1, 1995                                 0                                    0
         Granted                                 390,500             $13.00             4,500              $13.00
         Exercised                                     0                                    0
         Canceled                                      0                                    0
                                          ------------------                         -------------

       Outstanding at
       December 31, 1995                         390,500             $13.00             4,500              $13.00
         Granted                                 216,706 (1)     $6.13 - $13.00         3,000               $4.75
         Exercised                                     0                                    0
         Canceled                                (52,138)                                   0
                                          ------------------                         -------------

       Outstanding at
       December 31, 1996                         555,068         $6.13 - $13.00         7,500          $4.75 - $13.00
                                          ==================                         =============
</TABLE>



(1)  Includes 100,179 grants approved by the Compensation Committee of the Board
     of Directors  in January 1996 that were priced  effective as of the date of
     the Mergers (November 27, 1995).

At December  31, 1996,  options  available  for grant under the  Employer  Stock
Compensation   Program  and  the  Director   Plan  total   844,932  and  92,500,
respectively.

Effective  January 1, 1996,  the Company  adopted the provisions of SFAS 123. As
permitted  by SFAS 123,  the  Company  has chosen to  continue  to  account  for
stock-based  compensation  using the  intrinsic  value method.  Accordingly,  no
compensation expense has been recognized for its stock-based compensation plans.
Had the fair value  method of  accounting  been applied to the  Company's  stock
option plans,  which requires  recognition of compensation cost ratably over the
vesting period of the underlying equity instruments, net loss and loss per share
in 1996 and 1995 would not have been  affected  as the fair value of the options
was less  than the  exercise  price.  The fair  value  was  estimated  using the
Black-Scholes option pricing model based on the weighted average market price at
grant date of $13.00 in 1995 and $11.37 in 1996 and the  following  assumptions:
risk free interest rate of 6.5% for 1995 and 1996, expected life of 10 years for
1995 and 1996 and volatility of 82% for 1995 and 1996.


<PAGE>


(14)     RELATED PARTY TRANSACTIONS:

Notes Payable To Stockholders -

A director and a stockholder of the Company together with their spouses obtained
a $500,000 bank line of credit which was used to provide  working  capital.  The
line, which expired in August of 1996, bore interest at prime plus 1/2%, and was
guaranteed by a subsidiary  of the Company.  The  outstanding  balance under the
line of credit was repaid by the Company during 1996.

A subsidiary of the Company repaid a relative of the subsidiary's  former owners
$67,000 in connection with a loan outstanding as of December 31, 1995.

Leasing Transactions -

Certain  subsidiaries  of the Company paid an aggregate of $217,000 and $851,000
for the years ended December 31, 1995 and 1996, respectively, in rent to certain
directors,  stockholders  or  Companies  owned and  controlled  by  directors or
stockholders of the Company.  Rent is paid for office,  warehouse facilities and
transportation equipment.

Administrative Fees and Other -

The Company paid sales  commissions  and consulting fees of $229,000 in 1995 and
$2.1 million in 1996 to  companies  affiliated  through  common  ownership  with
directors or stockholders  of the Company or to former  employees of the Company
or its subsidiaries.

In connection with the merger discussed in Note 2,  stockholders of the Founding
Companies  entered  into  five-year  covenants-not-to-compete  with the Company.
Additionally, certain of the stockholders received employment contracts.

(15)   RESTRUCTURING CHARGE:

During the fourth quarter of 1996, the Company  recognized the impact of several
non-recurring charges totaling $1.4 million ($0.12 per share). The restructuring
charge includes salary and contract settlements, abandonment of operating leases
and  other  costs  associated  with  management  headcount  reduction  and other
consolidation  issues.  At December 31,  1996,  $602,000 was included in accrued
expenses and $781,000 was included in other  liabilities  related to this charge
in the accompanying consolidated financial statements.

(16)   SUBSEQUENT EVENTS:

On January  31,  1997,  the  Company  sold a  subsidiary  involved  in  contract
logistics,  headquartered  in Traverse City,  Michigan,  to its former owner and
president in exchange for 137,239 shares of the Company's  Common Stock,  valued
at  approximately  $4.38 per share.  In  connection  with the sale,  the Company
recorded a gain of approximately  $830,000 before  applicable  Federal and state
income taxes in the first  quarter of 1997.  Revenues from this  operation  were
approximately  $8.2  million and $4.6  million for the years ended  December 31,
1995 and 1996, respectively,  and $400,000 for the month ended January 31, 1997.
Operating  losses were  approximately  $123,000 and $650,000 for the years ended
December 31, 1995 and 1996, respectively and $20,000 for the month ended January
31, 1997.

On January 31,  1997,  a  subsidiary  of the Company  contracted  with a vehicle
leasing  company to lease 175 delivery  vehicles.  The net present  value of the
three-year  agreement,  which is being accounted for as a capitalized  lease, is
estimated at $2.3 million. Receipt of the vehicles is expected to begin in March
1997 and conclude by May 1997.


<PAGE>




    Item 9. Changes in and Disagreements with Accountants on Accounting and
                              Financial Disclosures

         Not applicable.



<PAGE>


III-2


                                                     PART III


Item 10.  Directors and Executive Officers of the Company

       The Company hereby  incorporates by reference the applicable  information
from its definitive proxy statement for its 1997 Annual Meeting of Stockholders,
except for certain  information  relating to the  Company's  executive  officers
which is provided below.

Executive Officers

       The following table sets forth certain information as of February 5, 1997
concerning each of the Company's executive officers:


<TABLE>
<S>                                     <C>    <C>

                 Name                   Age                       Position

   Albert W. Van Ness, Jr.              54     Chairman of the Board, Chief Executive Officer
                                               and Director
   William T. Brannan                   48     President, Chief Operating Officer and Director
   Joseph G. Wojak                      59     Executive Vice President, Chief Financial
                                               Officer, Secretary and Director
   William T. Beaury                    44     Vice Chairman - Strategic Planning and Director
   Cynthia A. Gentile                   31     General Counsel and Assistant Secretary
   Norton F. Hight                      63     Vice President - Corporate Development
   Joseph J. Leonhard                   45     Vice President - Controller
</TABLE>



 .........Albert  W. Van Ness, Jr. has served as the Chairman of the Board, Chief
Executive  Officer and Director of the Company since February 1997. He remains a
Managing  Partner of Club  Quarters,  LLC, a hotel  development  and  management
company,  since  October 1992.  From June 1990 until October 1992,  Mr. Van Ness
served as Director  Consultant  of Managing  People  Productivity,  a consulting
firm.  Prior  thereto,  from 1982  until June  1990,  Mr. Van Ness held  various
executive  offices with Cunard Line Limited,  a passenger  ship and luxury hotel
company,  including  Executive Vice President and Chief Operating Officer of the
Cunard  Leisure  Division and Managing  Director and President of the Hotels and
Resorts  Division.  Prior  thereto,  Mr.  Van Ness  served as the  President  of
Seatrain Intermodal Services, Inc., a cargo shipping company.

 .........William  T.  Brannan has served as the  President  and Chief  Operating
Officer of the Company  since  November  1994.  From January 1991 until  October
1994, Mr. Brannan served as President,  Americas Region - US Operations, for TNT
Express Worldwide,  a major  European-based  overnight express delivery company.
Mr.  Brannan has 23 years of  experience  in the  transportation  and  logistics
industry.

 .........Joseph  G.  Wojak has served as the  Executive  Vice  President,  Chief
Financial Officer and Secretary since June 1994. Prior thereto, from May 1994 to
June 1994, Mr. Wojak served as a consultant to the Company.  From September 1990
until May 1994,  Mr. Wojak was a financial and management  consultant.  Prior to
September  1990,  Mr. Wojak served as the  Executive  Vice  President  and Chief
Financial Officer of The Howard Savings Bank. The Howard Savings Bank was placed
under Resolution Trust Corporation receivership in October 1992.


<PAGE>


 .........William  T. Beaury has served as the Vice Chairman - Strategic Planning
since December 1995. Prior thereto, Mr. Beaury was a co-founder and the Chairman
and a director  of SureWay  Air  Traffic  Corporation  ("SureWay")  and  SureWay
Logistics Inc.,  since 1984 and October 1993,  respectively,  both of which were
acquired by the Company in the Mergers. In addition,  since 1975, Mr. Beaury has
served as President  of Assets  Management  Limited,  an  investment  management
company  which  previously  owned 74% of  SureWay.  Mr.  Beaury  has 20 years of
experience in the same-day ground and air delivery industry. Mr. Beaury also has
been a member of the Air  Conference  of America  since  1980,  The  Advertising
Production Club since 1988, and a member of the Presidents Association - the CEO
Division of the American Management Association.

 .........Cynthia  A. Gentile has been General Counsel and Assistant Secretary of
the Company since May 1996 and June 1995, respectively.  From May 1995 until May
1996,  Ms.  Gentile was the  Assistant  General  Counsel of the  Company.  Prior
thereto, Ms. Gentile was a consultant to the Swiss Bank Corporation from October
1994 to May  1995.  From  February  1993  until  May 1994,  Ms.  Gentile  was an
associate with the law firm of Detisch,  Christensen & Wood. Prior thereto, from
September  1992 until  February  1993 Ms.  Gentile was an associate  with Smith,
Smith & Kring.

 .........Norton  F. Hight has been  Vice-President-Corporate  Development of the
Company since December 1995.  From March 1995 to December 1995, Mr. Hight served
as Chairman and CEO of Crown Courier Systems,  which was acquired by the Company
in the Mergers.  Prior  thereto,  Mr. Hight served as President of Crown Courier
Systems  from May 1974 to March 1995.  From June 1976 to March 1995,  Mr.  Hight
served as President of Bestway  Distribution  Services (formerly Bestway Cartage
Corp.),  which  was  acquired  by the  Company  in the  Mergers.  Mr.  Hight has
twenty-two years  experience in the same-day  delivery  industry.  Mr. Hight has
been a member of the Messenger  Courier  Association  of the Americas since 1990
and served on the Board of  Directors.  Mr.  Hight has also been a member of the
Florida  Messenger  Association  since 1988 where he also served on the Board of
Directors.

 .........Joseph  J.  Leonhard has been the  Controller of the Company since June
1995 and was  appointed to the  position of  Vice-President  in May 1996.  Prior
thereto,  from June 1987 until June 1995,  Mr.  Leonhard was the  Controller and
Chief Financial Officer of Scientific Devices East, Inc.

Item 11.  Executive Compensation

       The Company hereby  incorporates by reference the applicable  information
from its definitive proxy statement for its 1997 Annual Meeting of Stockholders.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

       The Company hereby  incorporates by reference the applicable  information
from its definitive proxy statement for its 1997 Annual Meeting of Stockholders.


Item 13.  Certain Relationships and Related Transactions

       The Company hereby  incorporates by reference the applicable  information
from its definitive proxy statement for its 1997 Annual Meeting of Stockholders.



<PAGE>



IV-5


                                                      PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K


(a)(1)  Financial Statements

       See Item 8. Financial Statements and Supplementary Data.

(a)(2)  Financial Statement Schedules

                                      INDEX TO FINANCIAL STATEMENT SCHEDULES
<TABLE>
<S>                                                                                                         <C>

                                                                                                            Page
CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES:
       Schedule II - Consolidated Valuation and Qualifying Accounts -
           For the period from inception (June 30, 1994) through December 31, 1994 and
            for the years ended December 31, 1995 and 1996...................................................S-1
</TABLE>


         All other  schedules  called for by  Regulation  S-X are not  submitted
because  they  are not  applicable  or not  required  or  because  the  required
information is not material or is included in the financial  statements or notes
thereto.


(a)(3)  Exhibits

         The Exhibits listed in (c) below are filed herewith.


(b)  Reports on Form 8-K

         None.


(c)  Exhibits
<TABLE>
<S>                  <C>

      Exhibit                                                 Description
       Number
        3.1          Second Restated  Certificate of  Incorporation  of  Consolidated  Delivery &  Logistics,  Inc.
                     (filed as Exhibit 3.1 to the Company's  Registration Statement on Form S-1 (File No. 33-97008)
                     and incorporated herein by reference).

        3.2          Amended and Restated By-laws of Consolidated Delivery & Logistics,  Inc. (filed as Exhibit 3.2
                     to the  Company's  Registration  Statement on Form S-1 (File No.  33-97008)  and  incorporated
                     herein by reference).

        4.1          Form  of  certificate  evidencing  ownership  of  Common  Stock  of  Consolidated   Delivery &
                     Logistics,  Inc.  (filed as Exhibit 4.1 to the  Company's  Registration  Statement on Form S-1
                     (File No. 33-97008) and incorporated herein by reference).

        4.2          Instruments  defining  the  rights of  holders  of the  Company's  long-term  debt (not  filed
                     pursuant to  Regulation  S-K Item  601((b)(4)(iii);  to be  furnished to the  Commission  upon
                     request).

        10.1         Consolidated Delivery & Logistics,  Inc. Employee Stock Compensation Program (filed as Exhibit
                     10.1 to the Company's  Registration Statement on Form S-1 (File No. 33-97008) and incorporated
                     herein by reference).

        10.2         Consolidated  Delivery &  Logistics,  Inc.  1995 Stock Option Plan for  Independent  Directors
                     (filed  as  Exhibit  10. 2 to the  Company's  Registration  Statement  on Form S-1  (File  No.
                     33-97008) and incorporated herein by reference).

        10.3         Employment Agreement, dated as of February 5, 1997, with Albert W. Van Ness, Jr.

        10.4         Employment  Agreement,  dated as of September 8, 1995, with
                     John  Mattei  (filed  as  Exhibit  10.5  to  the  Company's
                     Registration  Statement on Form S-1 (File No. 33-97008) and
                     incorporated herein by reference).

        10.5         Amendment,  dated April 11, 1996, to Employment  Agreement,
                     with John Mattei  (filed as Exhibit  10.5 to the  Company's
                     Quarterly  Report on Form 10-Q for the fiscal quarter ended
                     March 31, 1996 (File No. 0-26954) and  incorporated  herein
                     by reference).

        10.6         Employment  Agreement,  dated as of  September 8,  1995,  with  William T.  Brannan  (filed as
                     Exhibit  10.6 to the  Company's  Registration  Statement on Form S-1 (File No.  33-97008)  and
                     incorporated herein by reference).

        10.7         Employment Agreement,  dated as of September 8,  1995, with Joseph G.  Wojak (filed as Exhibit
                     10.7 to the Company's  Registration Statement on Form S-1 (File No. 33-97008) and incorporated
                     herein by reference).

        10.8         Employment  Agreement,  dated as of  September 15,  1995,  with  William T.  Beaury  (filed as
                     Exhibit  10.9 to the  Company's  Registration  Statement on Form S-1 (File No.  33-97008)  and
                     incorporated herein by reference).

        10.9         Employment Agreement,  dated as of September 15, 1995, with
                     Vincent  Brana  (filed as  Exhibit  10.11 to the  Company's
                     Registration  Statement on Form S-1 (File No. 33-97008) and
                     incorporated herein by reference).

       10.10         Employment Agreement,  dated as of September 15, 1995, with
                     Michael  Brooks  (filed as Exhibit  10.12 to the  Company's
                     Registration  Statement on Form S-1 (File No. 33-97008) and
                     incorporated herein by reference).

       10.11         Employment Agreement,  dated as of September 15, 1995, with
                     Norton  Hight  (filed  as  Exhibit  10.18 to the  Company's
                     Registration  Statement on Form S-1 (File No. 33-97008) and
                     incorporated herein by reference).

       10.12         Employment  Agreement,  dated as of  September 15,  1995,  with  Andrew B.  Kronick  (filed as
                     Exhibit  10.21 to the  Company's  Registration  Statement on Form S-1 (File No.  33-97008) and
                     incorporated herein by reference).

       10.13         Employment Agreement,  dated as of September 15, 1995, with
                     Labe  Leibowitz  (filed as Exhibit  10.24 to the  Company's
                     Registration  Statement on Form S-1 (File No. 33-97008) and
                     incorporated herein by reference).

       10.14         Employment Agreement,  dated as of September 15, 1995, with
                     Thomas  LoPresti  (filed as Exhibit  10.26 to the Company's
                     Registration  Statement on Form S-1 (File No. 33-97008) and
                     incorporated herein by reference).

       10.15         Employment Agreement,  dated as of September 15, 1995, with
                     Robert  Wyatt  (filed  as  Exhibit  10.35 to the  Company's
                     Registration  Statement on Form S-1 (File No. 33-97008) and
                     incorporated herein by reference).

       10.16         Forbearance and Amendment Agreement dated as of April 14, 1997.

        11.1         Statement Regarding Computation of Net Loss Per Share.

        21.1         List of subsidiaries of Consolidated Delivery & Logistics, Inc.

        23.1         Consent of Independent Public Accountants

        25.1         Power of Attorney

        27.1         Financial Data Schedule (for electronic submission only)
</TABLE>



<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934,  the registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on April 15, 1997.

                           CONSOLIDATED DELIVERY & LOGISTICS, INC.



                           By: ___________________________
                               Albert W. Van Ness, Jr.,
                               Chairman of the Board and Chief Executive Officer

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
and in the capacities indicated on April 15, 1997.

<TABLE>
<S>                                                                                  <C>

                       Signature                                                     Capacity


               __________________________                 Chairman of the Board, Chief Executive Officer (Principal
                Albert W. Van Ness, Jr.                   Executive Officer) and Director


               __________________________                 President, Chief Operating Officer and Director
                   William T. Brannan


               __________________________                 Executive Vice President, Chief Financial Officer (Principal
                    Joseph G. Wojak                       Financial and Accounting Officer), Secretary and Director


               __________________________                 Vice Chairman-Strategic Planning and Director
                   William T. Beaury


               __________________________                 Director
                    Vincent P. Brana


               __________________________                 Director
                     Michael Brooks


               __________________________                 Director
                   Andrew B. Kronick


               __________________________                 Director
                     Labe Leibowitz


               __________________________                 Director
                    Thomas LoPresti


               __________________________                 Director
                      John Mattei


               __________________________                 Director
                   Kenneth W. Tunnell


               __________________________                 Director
                      Robert Wyatt
</TABLE>






































*By: _________________________
         Joseph G. Wojak,
         Attorney-in-Fact


<PAGE>


                                                        S-1
<PAGE>

                                                                     Schedule II

            CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)


<TABLE>
<S>                                  <C>                 <C>              <C>               <C>              <C>

                                       Balance             Charged       
                                          at              to Costs                                             Balance
                                       Beginning             and                                                at End
         Description                   of Period          Expenses         Write-offs          Other              of
                                                                               (a)              (b)             Period
-------------------------------     ---------------     --------------    --------------    -------------    -------------
For the period  from  inception  (June 30,  1994)  through  December  31, 1994 -
  Allowance for
  doubtful accounts                       $0                 $0                $0                $0               $0
-------------------------------     ===============     ==============    ==============    =============    =============

For the year ended
   December 31, 1995 -
   Allowance for doubtful
   accounts                               $0                $204              ($48)            $1,129           $1,285
                                    ===============     ==============    ==============    =============    =============

For the year ended
   December 31, 1996 -
   Allowance for doubtful
   accounts                             $1,285             $1,422           ($1,002)             $0             $1,705
                                    ===============     ==============    ==============    =============    =============
</TABLE>


(a)      Represents write-offs net of recoveries.
(b)      Represents the addition of the Founding Companies.
























        The  accompanying  notes to  consolidated  financial  statements  are an
integral part of this schedule.


<PAGE>


20



                                                 INDEX TO EXHIBITS
<TABLE>
<S>            <C>                                                                                        <C>

    Exhibits                                                                                              Page

     10.16     Forbearance and Amendment Agreement dated April 14, 1997                                      2

      11.1     Statement Regarding Computation of Net Loss Per Share                                         13

      21.1     List of Subsidiaries of Consolidated Delivery & Logistics, Inc.                               15

      23.1     Consent of Independent Public Accountants                                                     16

      25.1     Power of Attorney                                                                             17

      27.1     Financial Data Schedule (for electronic submission only)                                      19
</TABLE>


<PAGE>


                                                                    EXHIBIT 11.1
                       FORBEARANCE AND AMENDMENT AGREEMENT

                           dated as of April 14, 1997

                                      among

                     CONSOLIDATED DELIVERY & LOGISTICS, INC.

                              SUBSIDIARY BORROWERS

                           THE BANKS SIGNATORY HERETO

                                       and

                                   SUMMIT BANK

                                    as Agent

                                       and

                                MELLON BANK, N.A.

                                   as Co-Agent


<PAGE>


                  FORBEARANCE AND AMENDMENT AGREEMENT  ("Agreement") dated as of
April 14, 1997 among  CONSOLIDATED  DELIVERY & LOGISTICS,  INC.,  a  corporation
organized under the laws of Delaware (the "Borrower"),  each of the Subsidiaries
of  the  Borrower  which  is a  signatory  hereto  (individually  a  "Subsidiary
Borrower" and  collectively  the "Subsidiary  Borrowers" and,  together with the
Borrower,  the  "Obligors"),  each of the  banks  which  is a  signatory  hereto
(individually  a "Bank"  and  collectively  the  "Banks")  and  SUMMIT  BANK (as
successor to UNITED JERSEY BANK), a banking corporation organized under the laws
of the State of New Jersey,  as agent for the Banks (in such capacity,  together
with its  successors  in such  capacity,  the "Agent") and MELLON BANK,  N.A., a
national  banking  association,  as  co-agent  for the Banks (in such  capacity,
together with its successors in such capacity, the "Co-Agent").

                  WHEREAS,  the Obligors,  the Agent, the Co-Agent and the Banks
are parties to that certain Credit Agreement  ("Credit  Agreement")  dated as of
May 31,  1996,  pursuant to which the Banks have  extended  credit and  provided
certain financial accommodations to the Obligors; and

                  WHEREAS,  the  Borrower  has  informed  the Banks that,  as of
December 31, 1996, March 31, 1997, and as of the date hereof, it is in breach of
certain of the  financial  covenants  contained in the Credit  Agreement  and it
anticipates  that it will  continue to be unable to comply  with such  financial
covenants during fiscal year 1997; and

                  WHEREAS,  the Borrower has requested that the Banks waive such
defaults and forbear from  exercising  their rights and remedies under the terms
of the Credit  Agreement  for a limited  period of time in order to provide  the
Borrower and the Obligors with an  opportunity to seek  substitute  financing to
repay the amounts owing to the Banks; and

                  WHEREAS,  the Banks have  agreed to enter into this  Agreement
subject  to the  amendments  to the  Credit  Agreement  and the other  terms and
conditions contained herein.

                  NOW  THEREFORE,  in  consideration  of  the  mutual  covenants
contained  herein and other good and  valuable  consideration,  the  receipt and
sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
follows.

                  1.       Definitions.  Except  as  otherwise  defined  herein,
words and  terms  defined  in the Credit Agreement shall have the same meaning
when used herein.

                  2. Waiver and Forbearance. Subject to the terms and conditions
contained  herein,  the Banks do hereby agree that,  as of December 31, 1996 and
during the period  commencing  on January 1, 1997 and ending on the date of this
Agreement, the Banks shall and do hereby (i) waive any breach by the Borrower of
the financial  covenants  contained in Sections 8.01, 8.02, 8.03 and 8.04 of the
Credit Agreement (the "Subject  Financial  Covenants") and (ii) agree to forbear
from  exercising any rights or remedies under the terms of the Credit  Agreement
in respect of any breach of the Subject Financial  Covenants occurring as of the
date of this Agreement and through April 1, 1998.

                  3.       Amendment to Credit  Agreement.  Effective  as of 
April 14,  1997,  the  Borrower,  the other Obligors, the Banks, the Agent and
the Co-Agent hereby amend and modify the Credit Agreement as follows:

                  3.1.     The following  definitions  set forth in Section 1.01
of the Credit  Agreement  shall be amended to read as follows:

                  "Applicable Commitment Fee Rate" means 0.50% per annum.

                  "Applicable Margin" means (a) with respect to Fixed Rate Loans
outstanding  as of April 14,  1997,  4.50% per  annum,  and (b) with  respect to
Variable Rate Loans (i) until June 30, 1997, 2.50% per annum and (ii) as of June
30,  1997 and  thereafter,  3.50%  per  annum;  provided,  however,  that if the
Borrower  shall  deliver to the Banks a Commitment  Letter on or before June 16,
1997, then the  "Applicable  Margin" shall remain 2.50% per annum for so long as
such Commitment Letter remains in effect.

                  "Available  Commitment"  means (i)  $8,750,000  until June 15,
1997 and (ii) as of June 16,  1997 and any date  thereafter,  the  lesser of (A)
$8,750,000 or (B) the Borrowing Base as of such date.

                  "Eligible  Accounts  Receivable"  means,  as of any date,  the
aggregate amount of all accounts  receivable at such date owing to the Obligors,
or  any  of  them,   which  accounts   receivable  meet  all  of  the  following
requirements:

                  (a) such account  receivable  represents a complete  bona fide
transaction which requires no further act under any circumstances on the part of
any Obligor to make such account receivable payable by the account debtor;

                  (b) such account  receivable  shall not be unpaid more than 90
days beyond its original  invoice date,  unless the account  debtor thereof is a
Rated Customer,  in which event such account receivable shall not be unpaid more
than 150 days beyond its original invoice date;

                  (c) such account receivable is not evidenced by chattel paper,
a note or an instrument of any kind, unless the same has been pledged to, and is
in the possession of, the Agent under the terms of the Pledge Agreement;

                  (d) the account debtor with respect to such account receivable
is not, to the best of each Obligor's knowledge, insolvent or the subject of any
bankruptcy or insolvency  proceedings of any kind or of any other  proceeding or
action,  which might have a  materially  adverse  effect on the business of such
account debtor;

                  (e) if such account  receivable arises from the performance of
services,  such services have been fully rendered in the ordinary course of such
Obligor's business;

                  (f)      the  principal  office or  corporate  headquarters 
of the account  debtor with  respect thereto is located within the United States
of America;

                  (g) such account  receivable is a valid,  legally  enforceable
obligation of the account debtor with respect  thereto and is not subject to any
present or contingent, and each Obligor has no knowledge of the existence of any
facts which may form the basis for any future, offset, counterclaim,  recoupment
or any other  offset for credits,  advancements  or  adjustments  by the account
debtor because of returned, inferior or damaged goods or unsatisfactory services
or for any other  reason or other  defense on the part of such  account  debtor,
including without  limitation,  any account payable owing by any Obligor to such
account debtor;

                  (h) title and legal  ownership to such account  receivable  is
vested in an Obligor, free and clear of any Lien other than a first priority and
perfected Lien in favor of the Agent pursuant to the Security Documents;

                  (i)      such  account  receivable  is not owing  from any 
Obligor,  Consolidated  Entity or any Affiliate of any Obligor or Consolidated 
Entity;

                  (j) such account  receivable  is not subject to any  provision
prohibiting its assignment or requiring  notice of or consent to such assignment
or which renders such account  receivable void or  unenforceable in the event of
any assignment;

                  (k) such  account  receivable  (or portion  thereof)  does not
represent  amounts  owing as an  unearned  discount,  service  charge,  deferred
interest,  late fee or similar service charge, nor shall such account receivable
include any rebilling of any existing account receivable;

                  (l)      the account  debtor with respect to such  account 
receivable  is not the United  States government or any Governmental Authority;

                  (m) such  accounts  receivable  is not owing  from an  account
debtor as to whom 25% or more of the accounts  receivable  owing to the Obligors
from such  account  debtor are  unpaid  for more than 90 days past the  original
invoice date (unless such account debtor is a Rated Customer);

                  (n) to the extent that the account  debtor with respect to any
account  receivable  is the  account  debtor  with  respect to more than 25% (in
dollar amount) of all accounts  receivable of the Obligors,  such portion of the
accounts  receivable of such account  debtor which exceeds such 25% shall not be
included within "Eligible Accounts Receivable";

                  (o)      such account  receivable  is evidenced by a written 
invoice or other  documentation in form and substance satisfactory to the Banks;

                  (p)      such account receivable is payable in U.S. Dollars by
the account debtor;

                  (q)      such  account  receivable  is in an amount not less
than the amount  represented  by the Obligors to be owing by the account debtor
in respect of such account receivable; and

                  (r) such account  receivable is not owing by an account debtor
whom the Banks have  reasonably  determined to be  uncreditworthy  (whether as a
result  of  the  Banks'   receipt  of  an   unsatisfactory   credit   report  or
unsatisfactory experience by any Bank or Obligor with such account debtor).

                  "Revolving Credit Termination Date" means April 1, 1998.

                  3.2.      The following definitions shall be added to Section
1.01 of the Credit Agreement.

                  "Borrowing  Base" means,  as of any date, 50% of the aggregate
amount of Eligible  Accounts  Receivable  as of such date less the  Consolidated
Pre-tax Loss arising since March 31, 1997 through such date.

                  "Borrowing Base  Certificate"  means a certificate,  in a form
reasonably  acceptable to the Banks,  duly completed,  executed and delivered by
the chief financial  officer of the Borrower  reflecting  computations  for each
Obligor.

                  "Commitment  Letter" means a letter or other written agreement
issued  to  the  Borrower  which  (i)  is  duly  executed  and  delivered  by an
established and reputable  commercial or institutional  lender, (ii) is accepted
in writing by the  Borrower in a timely  manner,  (iii) does not  require,  as a
condition to its acceptance,  the payment of any fees or expenses which have not
been paid,  (iv) evidences the obligation of such lender to provide the Borrower
with sufficient  financing to repay all Senior  Obligations,  (v) provides for a
closing thereunder within 60 days of the date thereof, (vi) does not contain any
conditions  to closing  other than  standard and ordinary  conditions  generally
required  in similar  financing  transactions  and (vii) has not been  modified,
rescinded or terminated  and is in full force and effect in accordance  with its
terms.

                  "Consolidated Pre-tax Loss" means, with respect to any period,
the pre-tax loss for the Consolidated Entities for such period, as determined on
a consolidated basis in accordance with GAAP.

                  "Operating Account" means a demand deposit account established
and maintained by the Borrower at the Principal Office of the Agent.

                  3.3.  Section  2.01(b) of the Credit  Agreement  is amended to
read as follows:  "The Loans may only be  outstanding  as  Variable  Rate Loans;
provided, however, that any Fixed Rate Loan which is outstanding as of April 14,
1997 may continue to be  outstanding  until the end of the  applicable  Interest
Period at which  time such Fixed  Rate Loan  shall  convert  to a Variable  Rate
Loan."

                  3.4.  Section 2.04 of the Credit  Agreement is amended to read
as follows:  "The  Obligor  which  intends to effect a borrowing  shall give the
Agent and Co-Agent  notice of each borrowing to be made hereunder as provided in
Section  2.08.  Not  later  than 3:00  p.m.  (eastern  time) on the date of such
borrowing,  each Bank  shall,  through  its  Lending  Office and  subject to the
conditions  of this  Agreement,  make the amount of the Loan to be made by it on
such day  available  to the Agent at the  Principal  Office  and in  immediately
available  funds for the  account of the Agent.  The amount so  received  by the
Agent shall,  subject to the conditions of this Agreement,  be made available to
such  Obligor,  in  immediately  available  funds,  by the Agent  crediting  the
Operating Account."

                  3.5.  Section 2.05 of the Credit  Agreement is amended to read
as follows:  "Subject to the provisions of Section 6.10 hereof, the Borrower (on
behalf  of  itself  and  the  other  Obligors)  shall  have  the  right  to make
prepayments  of  principal  at any  time or from  time;  provided  that  (i) the
Borrower  shall give the Agent  notice of each such  prepayment  as  provided in
Section 2.08,  (ii) no Fixed Rate Loan  outstanding  as of April 14, 1997 may be
prepaid unless the Borrower provides the Agent for the account of each Bank with
compensation  in  accordance  with  Section  3.05  and  (iii) if at any time the
aggregate  amount of Loans  outstanding  exceeds the Available  Commitment,  the
Borrower shall immediately,  without any requirement of notice or demand, prepay
the Loans in a sufficient amount so that the aggregate  principal amount thereof
does not exceed the Available Commitment."

                  3.6.   Sections 2.06 and 2.07(a) of the Credit Agreement are
deleted.

                  3.7.  Section 2.08 of the Credit  Agreement is amended to read
as follows:  "Notices to the Agent of each  borrowing  pursuant to Section 2.04,
each  prepayment  pursuant to Section 2.05 and each  reduction or termination of
the Available Commitment pursuant to Section 2.07 shall be irrevocable and shall
be effective only if received by the Agent and the Co-Agent not later than 11:00
a.m. (eastern time) and (a) in the case of borrowings and prepayments, given the
same  Banking  Day  and (b) in the  case of  reductions  or  termination  of the
Available  Commitment,  given three Banking Days prior thereto. Each such notice
shall  specify the Loans to be  borrowed  or prepaid and the amount  (subject to
Section  2.09)  to be  borrowed  or  prepaid  and the date of the  borrowing  or
prepayment  (which shall be a Banking Day). Each such notice of reduction of the
Available  Commitment shall specify the amount to be so reduced. The Agent shall
promptly  and, in any event,  within two Banking  Days,  notify the Banks of the
contents of each such notice."

                  3.8. Section 2.11 of the Credit Agreement is amended by adding
the  following  paragraph  (e) thereto:  "(e) In the event the Borrower does not
deliver  a  Commitment  Letter  to the Banks on or  before  June 15,  1997,  the
Borrower  shall pay to the Agent on June 16, 1997,  for the account of each Bank
(to  be  shared  pro  rata  based  on  each  Bank's  Commitment  Percentage),  a
non-refundable fee of $50,000."

                  3.9. Section 4.02 of the Credit Agreement is amended by adding
the following to the end of such Section:  "(iii) since March 31, 1997, no event
or condition has occurred  which has caused or is  reasonably  likely to cause a
Material Adverse Effect,  (iv) commencing June 16, 1997, the Borrower shall have
delivered  to the  Banks a  Borrowing  Base  Certificate,  dated as of a date no
earlier  than two Banking  Days prior to the date of the making of such Loan and
(v) the aggregate  principal  amount of all Loans  outstanding as of the date of
such Loan (and after  giving  effect  thereto)  does not  exceed  the  Available
Commitment."

                  3.10.  Section  6.08 of the  Credit  Agreement  is  amended by
adding  the  following  paragraph  (o)  thereto:  "(o)  Not  later  than 25 days
following  the last day of each  month,  a  certificate  of the chief  financial
officer of the Borrower  stating whether the Borrower was, as of the last day of
the immediately prior month, in compliance with the Net Worth Covenant set forth
in Section 8.06 below together with the calculation thereof."

                  3.11.   Section 6.10 of the Credit Agreement is amended to 
read as follows:

                  "(a) (i) Not later than May 2, 1997, each Subsidiary  Borrower
shall  establish a special  account  ("Special  Account") with a depository bank
(each a "Depository") selected by such company (and reasonably acceptable to the
Banks)  for the sole  purpose  of the  receipt of all  collections  of  accounts
receivable  of such  company  and  (ii)  unless  otherwise  provided  herein  or
otherwise directed by the Banks following the occurrence of an Event of Default,
all  collections of accounts  receivable  received by each such company shall be
deposited  in the  respective  above-described  Special  Account of such company
immediately upon receipt thereof.

                  (b) Not later than May 15, 1997, (i) each Subsidiary  Borrower
shall execute,  and cause its respective  Depository to execute,  and deliver to
the Banks a blocked account  agreement,  substantially  in the form of Exhibit G
attached hereto,  with respect to the applicable Special Account. So long as any
Depository  has not  received  written  notice  from the Agent  that an Event of
Default has occurred and that funds in the Special Account should be remitted to
the Concentration  Account,  such Depository  shall,  prior to June 16, 1997, be
entitled to release funds in its Special  Account to its  respective  Subsidiary
Borrower depositor at the request of such company.

                  (c) At any time  subsequent to July 15, 1997,  the Banks shall
have the right,  upon not less than 15 days'  notice,  to direct each Obligor to
instruct  (to be  completed  within two weeks of such  instruction)  all account
debtors,  and otherwise  take any and all actions and steps,  so that payment of
all of its  accounts  receivable  shall be  remitted  to one or more post office
boxes  (collectively,  the "Lockbox") which shall be under the sole dominion and
control  of the  Agent (or any agent or  representative  acting on its  behalf).
Prior to or concurrently with the establishment of the Lockbox, each Obligor and
the Agent  shall  enter  into a lockbox  agreement  (the  "Lockbox  Agreement"),
substantially in the form of Exhibit H attached hereto.

                  (d) Commencing (i) as of June 15, 1997 or (ii) if the Borrower
shall have  delivered  a  Commitment  Letter to the Banks on or before  June 15,
1997,  then as of the earlier to occur of (1) the  termination  or expiration of
such  Commitment  Letter or (2) July 15, 1997,  the Borrower will  establish and
maintain at the Principal  Office of the Agent a special  account in the name of
the Borrower (the  "Concentration  Account").  As of and after the  commencement
date set forth in the preceding  sentence,  the Borrower and the other  Obligors
shall, on a daily basis,  cause (and Agent is hereby  irrevocably  authorized to
cause,  without further consent or action of or objection by the Borrower or the
other Obligors) the transfer of all funds from the Special Accounts and from the
Lockbox to the Concentration  Account.  All funds in the  Concentration  Account
shall then be  applied  (without  further  action or consent of or notice to any
Obligor) by the Agent daily, subject to the Agent's standard clearing procedures
and clearing periods for deposited funds, as follows:  (i) first, to the payment
or reimbursement  of all fees,  charges and expenses owing by any Obligor to the
Banks, the Agent or the Co-Agent under the Facility  Documents,  (ii) second, to
the  payment of all  accrued  and unpaid  interest  then due and owing under the
Loans and (ii) third, to the repayment of the outstanding  principal  balance of
all Loans.  Any available  funds  remaining  after full payment of the foregoing
shall be transferred to the Operating  Account of the Borrower  maintained  with
the Agent.

                  (e) Any Loans to Borrower shall be made,  pursuant and subject
to the terms and conditions of this  Agreement,  by the Agent's  depositing such
sums into the  Operating  Account.  At no time  shall any  proceeds  of Loans be
deposited in the Concentration Account or any Special Account.

                  (f)  Except as  expressly  set forth in  paragraph  (b) above,
neither the  Borrower  nor any other  Obligor  shall have any right to withdraw,
claim, demand or otherwise assert any interest in, to or under any funds held or
deposited  in any Special  Account.  At no time shall the  Borrower or any other
Obligor  have any right to  withdraw,  claim,  demand or  otherwise  assert  any
interest  in, to or under any funds  held or  deposited  in the  Lockbox  or the
Concentration Account."

                  3.12.  Section 7.10(b) of the Credit Agreement is deleted.

                  3.13.  Section 7.11 of the Credit  Agreement is amended to 
read as follows:  "Make, or permit any of its Subsidiaries to make, any
Acquisition."

                  3.14.  Section  8.03 of the Credit  Agreement  is deleted and
a new Section  8.06 is added to the Credit Agreement to read as follows:

                  "Net Worth  Covenant.  As of April 1, 1997 and at all times 
thereafter,  the  Borrower  will not permit its Consolidated Net Worth to be 
less than $6,800,000."

                  3.15.  Section  9.01(c)(i)  is amended to read as follows:  
"the  Borrower  or any Obligor  shall fail to perform or observe any term, 
covenant or agreement contained in Sections 2.03 or 6.10 or Articles 7 or 8".


                  3.16.  [deleted]

                  3.17.  Section 12.03 of the Credit  Agreement is amended by
deleting the first  sentence  thereof and inserting the following in its stead:

                  "The Borrower and each Obligor agree to pay or reimburse  each
of the Banks and the Agent on demand for: (a) all reasonable out-of-pocket costs
and expenses (including, without limitation, the reasonable fees and expenses of
counsel for each Bank and the Agent) in connection with (i) after the occurrence
of an Event of Default, protecting,  advising and defending the interests of the
Banks hereunder and under any  modification,  supplement or waiver of any of the
terms  of this  Agreement  or any of the  other  Facility  Documents;  (ii)  the
negotiation or preparation of any  modification,  supplement or waiver of any of
the terms of this Agreement or any of the other Facility  Documents  (whether or
not consummated) and all related agreements and documents;  (iii) any Default or
any  enforcement  or  collection  proceedings  resulting  therefrom,  including,
without limitation, all manner of participation in or other involvement with (A)
bankruptcy,  insolvency,  receivership,  foreclosure,  winding up or liquidation
proceedings,   (B)  judicial  or   regulatory   proceedings   and  (C)  workout,
restructuring or other negotiations or proceedings  (whether or not the workout,
restructuring  or transaction  contemplated  thereby is  consummated);  (iv) all
audit fees,  including the fees of the Receivables  Audit,  all search fees, all
filing  fees and all other  fees and  expenses  arising in  connection  with the
foregoing;  and (v) the enforcement of this Section 12.03; and (b) all transfer,
stamp,  documentary or other similar taxes, assessments or charges levied by any
governmental  or revenue  authority  in respect of this  Agreement or any of the
other Facility Documents or any other document referred to herein or therein (or
any  amendments  or  modifications  thereof)  and all  costs,  expenses,  taxes,
assessments   and  other  charges   incurred  in  connection  with  any  filing,
registration,  recording or perfection of any security interest  contemplated by
any Security Document or any other document referred to therein.

                  3.18.  Section  12.05(a)(i) of the Credit Agreement is amended
by deleting the following phrase therefrom: "provided, however, that within five
Banking Days of its receipt of such notice, the Borrower shall have the right to
reasonably object to such assignment."

                  4.       Receivables Audit; Lien Searches.

                  4.1. At the sole expense of the Borrower,  the Banks shall (i)
appoint and retain an agent or representative firm or person to perform an audit
and evaluation of the Obligors'  accounts  receivable (the "Receivables  Audit")
and (ii) order and obtain copies of lien, tax and judgment searches  identifying
all  financing  statements,  liens and judgments of record or filed against each
Obligor  in all  jurisdictions  reasonably  requested  by the Banks  (the  "Lien
Search").

                  4.2. The Borrower and the Obligors shall promptly  provide all
cooperation,  information  and assistance as may be reasonably  requested by the
Banks in  connection  therewith  so that such Lien Search  shall be completed as
soon as possible and such  Receivables  Audit may be commenced no later than May
5, 1997 and completed as soon as possible;  provided, however, that if, prior to
May 5, 1997, the Borrower shall deliver to the Banks the written statement of an
established and reputable  commercial or institutional lender (the "New Lender")
stating that (i) such New Lender is  considering  providing  the  Borrower  with
sufficient  financing to repay all Senior Obligations,  (ii) the New Lender will
cause a Receivables  Audit (as herein  described) to be commenced on or prior to
May 5, 1997 and (iii) the New Lender will, without  representation,  provide the
Banks, on a confidential  basis, with copies of all reports,  analyses and other
findings of such Receivables  Audit, then, in such event, the Borrower may delay
the commencement of a Receivables  Audit on behalf of the Banks hereunder for so
long as such  Receivables  Audit on behalf of the New Lender is being diligently
conducted,  provided,  however,  such  delay  shall not  exceed 30 days from the
Banks' receipt of the aforementioned written statement from the New Lender.

                  4.3. The Borrower and the Obligors  acknowledge and agree that
the Receivables Audit shall include the confirmation of account balances and the
Banks (or such agent or firm) shall have the right to contact account debtors in
writing in connection therewith. All costs and expenses incurred by the Banks in
connection  with the  Receivables  Audit and Lien Search  shall be payable  upon
demand and shall be deemed Senior Obligations. The Banks agree to share, without
representation  or recourse,  the written reports  produced from the Lien Search
and  Receivables  Audit  with any  prospective  lender  evaluating  a  potential
financing  arrangement  with the  Obligors  so long as such  prospective  lender
executes a confidentiality agreement reasonably acceptable to the Banks.

                  5. Final  Maturity  Date; No Duty to Extend.  The Borrower and
the  Obligors  shall take any and all actions and steps as may be  necessary  in
order to repay in full all Senior  Obligations on or before the Revolving Credit
Termination Date. THE BORROWER AND EACH OBLIGOR  EXPRESSLY  ACKNOWLEDGE THAT THE
BANKS HAVE NO OBLIGATION OR DUTY OF ANY KIND, WHETHER EXPRESS OR IMPLIED, TO (1)
EXTEND THE REVOLVING  CREDIT  TERMINATION DATE OR RENEW OR PROVIDE ANY EXTENSION
OF CREDIT  BEYOND SUCH DATE OR (2)  CONSIDER,  REVIEW OR SUBMIT FOR APPROVAL ANY
REQUEST FOR ANY SUCH  EXTENSION  OR RENEWAL.  ANY SUCH REQUEST MAY OR MAY NOT BE
CONSIDERED BY THE BANKS IN THEIR SOLE AND ABSOLUTE DISCRETION OR, IF CONSIDERED,
MAY OR MAY NOT BE  GRANTED  OR  APPROVED,  OR MAY BE  SUBJECT  TO SUCH TERMS AND
CONDITIONS,   INCLUDING  WITHOUT  LIMITATION,   CONDITIONS  REGARDING  BORROWING
AVAILABILITY,  COLLATERAL, LOCKBOX ARRANGEMENTS,  GUARANTEES, SUBORDINATIONS AND
USE OF  PROCEEDS,  ALL AS THE BANKS MAY  DETERMINE  IN THEIR  SOLE AND  ABSOLUTE
DISCRETION.  THE  BORROWER  AGREES NOT TO RELY UPON,  AND THE BANKS SHALL NOT BE
BOUND  BY,  ANY   STATEMENT,   REPRESENTATION   OR  ACTION  OF  ANY  OFFICER  OR
REPRESENTATIVE  OF ANY BANK  UNLESS  THE SAME  SHALL BE  EVIDENCED  BY A WRITTEN
INSTRUMENT DULY EXECUTED AND DELIVERED BY AN AUTHORIZED OFFICER OF EACH BANK.

                  6.       Conditions  Precedent.  This Agreement, and the terms
and provisions  contained herein, including the  forbearance  and amendment set
forth  herein,  shall not become  effective  until the receipt by the Banks of
each of the following:

                  (a)      an original  copy of this  Agreement,  duly  executed
and  delivered by the Borrower and each Obligor;

                  (b) a Certificate  of the Secretary or Assistant  Secretary of
each of the  Obligors  (i)  attesting  to all  corporate  action  taken  by such
Obligor,  including  resolutions  of its  Board of  Directors,  authorizing  the
execution, delivery and performance of this Agreement, (ii) certifying the names
and true  signatures  of the  officers of such Obligor  authorized  to sign this
Agreement and (iii)  verifying that there has been no change to the  certificate
of  incorporation or by-laws of such Obligor since the initial closing under the
Credit Agreement, except as attached to such certificate;

                  (c)      [deleted]

                  (d)      a fee of $12,500 for each Bank;

                  (e)  [deleted]

                  (f) to  the  extent  of any  bills  presented  as of the  date
hereof,  payment or  reimbursement  for all reasonable  out-of-pocket  costs and
expenses  incurred  by each Bank as of the date  hereof in  connection  with the
negotiation  and  preparation  of this Agreement and  protecting,  analyzing and
defending the interests of the Banks hereunder,  including  without  limitation,
the reasonable fees and disbursements of counsel for each Bank; and

                  (g) all financial and other information regarding the business
and financial condition of the Borrower and each Obligor,  including projections
and statements of cash flow, as shall be reasonably requested by the Banks.

                  7.       Effect.  Except as  expressly  set forth  herein,  
all of the terms and  provisions  set forth in the Credit Agreement are, and
shall continue, in full force and effect.

                  8.  Termination of Forbearance,  etc.. In the event of (i) any
breach by the  Borrower  or any  Obligor  of any  term,  covenant  or  agreement
contained herein,  (ii) any representation or warranty of the Obligors contained
herein shall prove to have been  incorrect  in any material  respect on or as of
the date  hereof,  or (iii) the  occurrence  of any Event of  Default  under the
Credit Agreement or any of the Facility  Documents,  then, without limitation of
any right set forth in the Credit  Agreement,  any Bank may, at its sole option,
declare  (x) the  forbearance  described  in Section 2 of this  Agreement  to be
terminated  and of no force  and  effect,  (y) the  Available  Commitment  to be
terminated,  whereupon neither the Borrower nor any Obligor shall have the right
to request any further Loan and (z) the Senior Obligations to be immediately due
and payable.

                  9. Representations, etc. In order to induce the Banks to enter
into this Agreement, the Obligors hereby represent,  warrant, covenant and agree
that, except as set forth in the most recent draft copy of the Borrower's Annual
Report on Form  10-K for the  fiscal  year  ended  December  31,  1996,  and the
financial  statements  and notes thereto set forth in Item 8 therein (the "Draft
10-K") delivered to the Banks prior to the date hereof:

                  (a) The Draft 10-K is complete and correct and fairly presents
the  financial  condition of the Obligors as of such date and the results of the
operations  of the  Obligors  for the fiscal  periods  covered  thereby,  all in
accordance with GAAP consistently  applied,  which Draft 10-K is to be finalized
upon execution of this Agreement.

                  (b) Except for the  litigation  reflected  by the Class Action
Complaint commenced against the Borrower and other defendants by John Gaspzcwicz
in the  United  States  District  Court,  Southern  District  of New  York,  No.
97CIV.1939  (which  is  deemed  incorporated  into  Schedule  II of  the  Credit
Agreement),  all of the representations and warranties set forth in the Facility
Documents are true,  complete and correct in all material  respects on and as of
the date  hereof with the same force and effect as if made on and as of the date
hereof and as if set forth at length herein.

                  (c) Except for the breach of the Subject Financial  Covenants,
no Default or Event of Default  presently  exists and is continuing on and as of
the date hereof.

                  (d) Since March 31, 1997,  no event or condition  has occurred
which has caused or is reasonably likely to cause a Material Adverse Effect.

                  (e) Each  Obligor  has full power and  authority  to  execute,
deliver and perform any action or step which is necessary to carry out the terms
of this  Agreement;  this Agreement has been duly executed and delivered by each
Obligor and is the legal,  valid and binding  obligation  of each Obligor and is
enforceable in accordance with its terms, subject to any applicable  bankruptcy,
insolvency,  general  equity  principles  or other  similar laws  affecting  the
enforcement of creditors' rights generally.

                  (f) The execution,  delivery and performance of this Agreement
will  not  (i)  violate  any  provision  of any  existing  law,  statute,  rule,
regulation or ordinance, (ii) conflict with, result in a breach of or constitute
a default under (A) the certificate of  incorporation of each Obligor or (B) any
order, judgment, award or decree of any court, governmental authority, bureau or
agency,  or (C) any  mortgage,  indenture,  lease  or other  material  contract,
agreement or undertaking to which any Obligor is a party or by which any Obligor
or any of its properties or assets may be bound, or (iii) result in the creation
or  imposition  of any lien or other  encumbrance  upon or with  respect  to any
property or asset now owned or  hereafter  acquired by any  Obligor,  other than
those created or imposed by the Facility Documents.

                  (g) No consent, license, permit, approval or authorization of,
exemption by, notice to, report to, or registration,  filing or declaration with
any person is required in connection with the execution,  delivery,  performance
or validity of this Agreement or the  transactions  contemplated  thereby by the
Obligors.

                  (h) Except for the sale of  Distribution  Solutions,  Inc. and
the merger of Crown-Bestway Corp. into Silver Star Express, Inc., Schedule IV of
the Credit  Agreement  sets forth,  as of the date hereof,  the name of (a) each
Subsidiary  of  the  Borrower  and  (b)  each  Affiliate  that  is  owned  by  a
Consolidated  Entity, that has an ownership interest in a Consolidated Entity or
that has entered into a transaction with any Consolidated  Entity,  in each case
showing the  jurisdiction of its  incorporation  or organization and showing the
percentage of each Person's  ownership of the  outstanding  stock or partnership
interests of such  Subsidiary or  Affiliate.  All of the  outstanding  shares of
capital stock and all of the partnership  interests of each Subsidiary  owned by
the Borrower, either directly or indirectly,  are validly issued, fully paid and
nonassessable  (except  for  statutory  wage  claims),  and all such  shares  or
interests are owned free and clear of all Liens (other than as created under the
Security  Documents).  Except as set forth in said Schedule IV, no  Consolidated
Entity  owns or holds  the  right to  acquire  any  shares of stock or any other
security or interest in any other Person.

                  (i) After giving effect to the  provisions of this  Agreement,
(i) the Borrower is currently  solvent and has no intention to file or acquiesce
in any bankruptcy or insolvency proceedings at any time hereafter,  and (ii) the
waiver  provided  by this  Agreement  is  sufficient  for it to  reorganize  its
financial affairs, and if an Event of Default shall occur, the Borrower and each
Obliger  acknowledge that the Banks shall be entitled (and the Borrower and each
Obligor  hereby  consent) to relief from any automatic stay which may be imposed
under Section 362 of Title 11 of the U.S.  Code,  or under any other  applicable
provision  thereof,  and to exercise  all rights and remedies to which it may be
entitled.

                  (j) The Obligors  confirm that all of the Secured  Obligations
are due and owing in accordance with their  respective terms and are not subject
to, and the Obligors hereby release and waive, any claim, counterclaim,  defense
or offset of any kind or nature.  The Borrower and each Obligor  further release
and discharge  each Bank,  the Agent and the Co-Agent from any claim,  demand or
liability of any kind or nature  arising in connection  with or relating to this
Agreement and the consummation of the transactions contemplated herein.

                  (k) The  Obligors  confirm  and  acknowledge  that  they  were
represented by counsel of their  choosing in connection  with this Agreement and
have entered into this  Agreement with full  understanding  of each of the terms
and provisions hereof.

                  10.      Further  Covenants.  To induce  the Banks to enter
into this  Agreement,  the  Obligors further covenant and agree as follows:

                  (a) The Borrower  shall  deliver to the Banks a true,  correct
and complete  copy of its Annual  Report on Form 10-K for the fiscal year ending
December 31, 1996 no later than 5:00 p.m.,  April 15, 1997,  which Annual Report
shall be  substantially  identical to the Draft 10-K (except for such changes as
shall be identified by the Borrower prior to the execution of this Agreement).

                  (b) Each Obligor shall execute, from time to time, immediately
upon request of any Bank, UCC-1 financing  statements necessary or desirable for
the Banks to further reflect of record their security  interests in the property
of the Obligors.

                  11.      General  Provisions.  All of the terms and provisions
of  Article  12 of the  Credit Agreement are incorporated herein by reference as
if set forth at length herein.

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement to be duly executed as of the day and year first above written.
                                            BORROWER:

                                         CONSOLIDATED DELIVERY & LOGISTICS, INC.

                                     By:
                                            Name:
                                            Title:

                                     By:
                                            Name:
                                            Title:


                                         (signatures continued on next page)

                                            SUBSIDIARY BORROWERS:

                                            AMERICAN COURIER, INC.

                                     By:
                                            Name:
                                            Title:

                                     By:
                                            Name:
                                            Title:

                                            CLICK MESSENGER SERVICE, INC.

                                     By:
                                            Name:
                                            Title:

                                     By:
                                            Name:
                                            Title:

                                            COURT COURIER SYSTEMS, INC.

                                     By:
                                            Name:
                                            Title:

                                     By:
                                            Name:
                                            Title:

                                            SILVER STAR EXPRESS, INC.

                                     By:
                                            Name:
                                            Title:

                                     By:
                                            Name:
                                            Title:

                                          CLAYTON/NATIONAL COURIER SYSTEMS, INC.

                                    By:
                                            Name:
                                            Title:

                                     By:
                                            Name:
                                            Title:


                                         (signatures continued on next page)



                                            SUREWAY LOGISTICS CORPORATION

                                     By:
                                            Name:
                                            Title:

                                     By:
                                            Name:
                                            Title:

                                            NATIONAL EXPRESS COMPANY, INC.

                                     By:
                                            Name:
                                            Title:

                                     By:
                                            Name:
                                            Title:

                                            OLYMPIC COURIER SYSTEMS, INC.

                                     By:
                                            Name:
                                            Title:

                                     By:
                                            Name:
                                            Title:

                                            SECURITIES COURIER CORPORATION

                                     By:
                                            Name:
                                            Title:

                                     By:
                                            Name:
                                            Title:

                                            SUREWAY AIR TRAFFIC CORPORATION

                                     By:
                                            Name:
                                            Title:

                                     By:
                                            Name:
                                            Title:






                                         (signatures continued on next page)

                                           CLICK MESSENGER SERVICE OF N.Y., INC.

                                     By:
                                            Name:
                                            Title:

                                     By:
                                            Name:
                                            Title:

                                            SUMMIT BANK, as Agent

                                     By:
                                            Name:
                                            Title:

                                            MELLON BANK, N.A., as Co-Agent

                                     By:
                                            Name:
                                            Title:

                                            BANKS:

                                            SUMMIT BANK

                                     By:
                                            Name:
                                            Title:

                                            MELLON BANK, N.A.

                                     By:
                                            Name:
                                            Title:




<PAGE>


                                                                    EXHIBIT 11.1

            CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES

                               NET LOSS PER SHARE

                 FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

                                      (In Thousands Except Share Information)
<TABLE>
<S>                                                                                <C>                   <C>

SHARES CONSIDERED:                                                                        1995                1996
                                                                                   ------------------    ---------------

Weighted  average  portion of 2,100,000  common shares issues in connection with
the formation of CD&L adjusted to reflect  1,400,000  common shares redeemed and
canceled in connection  with a termination  agreement and 305,577  common shares
redeemed and canceled in connection with a management agreement
                                                                                        1,450,479               394,423

Weighted  average  portion of 99,446 common  shares  issued in connection  with a
termination agreement                                                                      37,871                99,446

Weighted  average portion of 2,935,700  common shares issued to the  stockholders
of the Founding Companies                                                                 273,462             2,935,700

Weighted  average  portion of 3,200,000  common shares sold in the Initial Public
Offering                                                                                  298,082             3,200,000

Weighted  average  portion of 166,221 common shares issued in connection with the
acquisitions of businesses                                                                      0                47,977
                                                                                   ------------------    ---------------

         Total common shares considered                                                 2,059,894             6,677,546
                                                                                   ================== == ===============

NET LOSS                                                                                    ($195)                ($683)
                                                                                   ================== == ===============

NET LOSS PER SHARE (a)                                                                      ($.10)                ($.10)
                                                                                   ================== == ===============
</TABLE>


(a)      The conversion of the Company's debentures and stock options are
excluded from the computation as the effect would be antidilutive.







<PAGE>


                                                                    Exhibit 21.1

                              LIST OF SUBSIDIARIES


1.    American Courier, Inc.
2.    Clayton/National Courier Systems, Inc.
3.    Click Messenger Service, Inc.
4.    Click Messenger Service of N.Y., Inc.
5.    Court Courier Systems, Inc.
6.    National Express Company, Inc.
7.    Olympic Courier Systems, Inc.
8.    Securities Courier Corporation
9.    Silver Star Express, Inc.
10.   SureWay Air Traffic Corporation
11.   SureWay Logistics Corporation


<PAGE>


                                                                   EXHIBIT 23.1




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS





To Consolidated Delivery & Logistics, Inc.:


As independent public accountants, we hereby consent to the incorporation of our
reports  included  in this  Form  10-K,  into  the  Company's  previously  filed
Registration Statements on Form S-8 (File Nos. 333-3321 and 333-3323).

                               ARTHUR ANDERSEN LLP


Roseland, New Jersey
April 15, 1997


<PAGE>

                                                                    Exhibit 25.1

                                POWER OF ATTORNEY

     WHEREAS, the undersigned officers and directors of Consolidated  Delivery &
Logistics,  Inc. (the  "Company")  desire to authorize  Albert W. Van Ness, Jr.,
William T.  Brannan  and Joseph G. Wojak to act as their  attorneys-in-fact  and
agents,  for the purpose of executing and filing the Company's  Annual Report on
Form 10-K, including all amendments thereto;

                  NOW, THEREFORE,

                  KNOW  ALL  MEN BY  THESE  PRESENTS,  that  each  person  whose
signature  appears  below  constitutes  and  appoints  Albert W. Van Ness,  Jr.,
William T.  Brannan and Joseph G. Wojak,  and each of them,  his true and lawful
attorney-in-fact  and agent, with full power of substitution and resubstitution,
to execute  the  Company's  Annual  Report on Form 10-K,  including  any and all
amendments  and  supplements  thereto,  and to file the same,  with all exhibits
thereto,  and other documents in connection  therewith,  with the Securities and
Exchange Commission,  granting unto said  attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and  necessary to be done in and about the  premises,  as fully and to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said  attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes,  may lawfully do or cause to be done by virtue
hereof.

                  IN WITNESS  WHEREOF,  the undersigned have executed this power
of attorney in the following capacities as of the15th day of April, 1997.
<TABLE>
<S>                                                         <C>

                        SIGNATURE                                                    TITLE

______________________________                              Chairman  of the Board,  Chief  Executive  Officer  and
Albert W. Van Ness, Jr.                                     Director (Principal Executive Officer)

______________________________                              Chief Operating Officer and Director
William T. Brannan

______________________________                              Executive Vice President,  Chief Financial  Officer and
Joseph G. Wojak                                             Director (Principal Financial and Accounting Officer)

______________________________                              Vice Chairman-Strategic Planning and Director
William T. Beaury

______________________________                              Director
Vincent P. Brana


<PAGE>



______________________________                              Director
Michael Brooks

______________________________                              Director
Andrew B. Kronick

______________________________                              Director
Labe Leibowitz

______________________________                              Director
Thomas LoPresti

______________________________                              Director
John Mattei

______________________________                              Director
Kenneth W. Tunnell

______________________________                              Director
Robert Wyatt
</TABLE>