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

                                    FORM 10-K/A
                               -------------------

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

For the fiscal year ended December 31, 1995        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. |X|

     The  aggregate  market value of voting stock held by  nonaffiliates  of the
registrant was $25,837,975 as of March 25, 1996.

     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 15, 1996
   Common Stock, $.001 par value                                      6,629,569

     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, 1995.





<PAGE>


31

                               TABLE OF CONTENTS


                                                                            Page

                                     PART I

Item  1.  Business...........................................................  2
Item  2.  Properties......................................................... 14
Item  3.  Legal Proceedings.................................................. 14
Item  4.  Submission of Matters to a Vote of Security Holders................ 15

                                     PART II

Item  5.  Market for Registrant's Common Stock and Related Stockholder
            Matters.......................................................... 16
Item  6.  Selected Financial Data............................................ 17
Item  7.  Management's Discussion and Analysis of Financial Condition and
            Results of Operations............................................ 22
Item  8.  Financial Statements and Supplementary Data........................F-1
Item  9.  Changes in and Disagreements with Accountants on Accounting and
            Financial Disclosure...........................................F-160
                                     PART III

Item  10. Directors, Executive Officers, Promoters and Control Persons of
            the Registrant.................................................III-1
Item  11. Executive Compensation...........................................III-2
Item  12. Security Ownership of Certain Beneficial Owners and Management...III-2
Item  13. Certain Relationships and Related Transactions...................III-2
                                     PART IV

Item  14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...IV-1

          Signatures........................................................IV-8


<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 acquisition
(the "Combination") 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").  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  Founding  Companies  and  by  implementing  an
opportunistic  acquisition program once it has obtained sufficient financing for
such a program.  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.  The Company also intends to pursue growth
through  acquisitions  designed to augment the Company's  existing customer base
and services and to penetrate  attractive new markets.  The Company  believes it
will be successful in attracting and acquiring  other high quality  delivery and
distribution  companies as a result of its operating strategy,  enhanced capital
base and increased  visibility.  However,  in light of the recent decline in the
market  value  of  the  Common  Stock,  the  Company  will  require  significant
additional  capital  resources to finance its planned  acquisition  program.  No
assurance can be given that the Company will obtain the financing  necessary for
its  acquisition  program  or as to the terms and  timing  thereof.  See Item 1.
Business - Risk  Factors and Item 7.  Management's  Discussion  and  Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources.

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 1995.  The
Company believes that several factors,  including the following, are driving the
growth and resulting consolidation of the industry:


<PAGE>


         Outsourcing.  Commercial  and  industrial  companies,  which  are major
consumers of same-day delivery and logistics services,  have continued to follow
the trend toward  controlling  costs by outsourcing their 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 leading  provider of same-day
ground and air delivery and logistics services.  The Company's strategy consists
of the following three initiatives:

         Realize Internal Growth Opportunities.  As a result of the Combination,
the  Company  can  offer  the  existing  customer  base of each of the  Founding
Companies an expanded  range of services and geographic  coverage.  In addition,
the  Combination  allows the Company to internalize  business  opportunities  by
redirecting  services purchased from other delivery companies.  The Company also
expects to gain  additional  business  by being  able to offer new and  existing
customers  single  source  solutions  for ground and air delivery and  logistics
needs on a national and multi-regional basis.

         Achieve  Increased  Operating  Efficiencies.  The  Company  expects  to
achieve  increased  operating  efficiencies  by reducing  costs and  heightening
productivity.  The  Company  intends to  accomplish  this by  rationalizing  and
consolidating  operations to increase the density of its delivery  routes and to
improve the  productivity of personnel,  equipment and facilities.  In addition,
the  Company  believes  that its size and  purchasing  power  will  enable it to
achieve  significant  economies in areas such as insurance  coverage and vehicle
costs.

         Pursue Growth Through  Acquisitions.  The Company's acquisition program
will focus on further  penetrating  existing markets and entering new geographic
regions.  Acquisitions  in existing  markets will increase route density and the
Company  expects to integrate the acquired  companies'  customer bases without a
corresponding  increase  in  operating  costs.  At the same  time,  the  Company
believes that such "tuck-in"  acquisitions  will provide  enhanced cross selling
opportunities.  The Company also intends to acquire leading service providers in
new regions that will serve as platforms from which the Company can  consolidate
a  given  service  area  by  completing  and  integrating  additional  "tuck-in"
acquisitions.  The Company  believes it will be  successful  in  attracting  and
acquiring other high quality delivery and logistics companies as a result of its
operating strategy, enhanced capital base and increased visibility.  However, in
light of the recent decline in the market value of the Common Stock, the Company
will require  significant  additional  capital  resources to finance its planned
acquisition  program. No assurance can be given that the Company will obtain the
financing  necessary for its  acquisition  program or as to the terms and timing
thereof. See Item 1. Business - Risk Factors and Item 7. Management's Discussion
and Analysis of Financial  Condition  and Results of  Operations - Liquidity and
Capital Resources.


<PAGE>


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.

         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,  the
pick-up  and   delivery  of  state   lottery   tickets,   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.
The Company  monitors the shipment  throughout the delivery  stream and provides
proof of delivery. 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 buys cargo space on an as-needed basis.

Logistics

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

         Contract  Logistics.  The Company custom designs and manages integrated
networks for the transportation,  warehousing, sorting, routing and distribution
of customers'  products.  The Company  specializes in providing  these logistics
services to  companies  which  require  timely  distribution  and  tracking of a
product or  promotion  throughout  a specific  region or  nationwide.  A typical
logistics  project  entails  coordinating  the pick up,  sorting and delivery of
large quantities of a promotional piece to thousands of retailers  utilizing the
services of a large number of independent delivery companies.  Typical customers
include consumer  products  companies,  manufacturers and wholesalers of various
products.

         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.

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 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 businesses of the
Founding  Companies  vary in  terms  of the  types of  ground  services  and the
geographic  and time  sensitive  nature of the  services  provided,  no  general
standard  exists for the systems used to operate those  businesses.  The Company
plans to obtain new hardware and software  systems 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 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.
Upon  receipt by the 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  relationships
established  by  the  Founding   Companies  with  their  regional  and  national
customers.   The  Company  also  employs  certain  direct   response   marketing
techniques.

         The Company  intends to designate a senior  executive to coordinate and
implement the Company's marketing strategy. No agreements or understandings have
been entered into as of the date hereof.

         The  Company  anticipates  that  each of the  Founding  Companies  will
operate  under its own name for a period of time in order to  preserve  customer
relationships.  As part of the Company's  integration strategy,  however,  after
such  transition  period  the names of each of the  Founding  Companies  will be
changed to include the name "Consolidated Delivery & Logistics, Inc."

         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 competitors in the same-day
ground delivery  business are U.S.  Delivery  Systems,  Inc. ("USDS") and United
Transnet,  Inc. ("Transnet").  However, USDS does not currently compete with the
Company in the air delivery business and has only recently entered the logistics
market  through  acquisition.  In  addition,   Transnet's  business  is  heavily
concentrated in the banking industry and is dominated by scheduled deliveries of
checks and other items for processing. In addition to competing with the Company
for  the  provision  of  services,   USDS  and  Transnet  are  also  significant
competitors of the Company in the market for  acquisition  candidates.  USDS was
recently acquired by Corporate Express, Inc.

         In addition to the same-day ground and air delivery  services  provided
by the Company,  customers also utilize  next-day and two-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.


<PAGE>


The Combination

         In  November  1995 the Company  acquired  eleven  businesses  providing
same-day  ground  and  air  delivery  and  logistics  services.   The  aggregate
consideration  paid by the Company for the Founding  Companies was approximately
$29,604,000  in cash and 2,935,702  shares of Common Stock,  par value $.001 per
share (the "Common Stock"), for an aggregate value of approximately $67,769,000.
The  consideration  paid  for the  Founding  Companies  was  determined  through
arms-length  negotiations among the Company and  representatives of the Founding
Companies.  The factors  considered by the parties in  determining  the purchase
prices included,  among others, the historical  operating results and the future
prospects of the Founding Companies.

         A summary of certain terms of the  acquisition  of each of the Founding
Companies follows:

         American.  Under an agreement among Mr. Stephen J. Zrowka, who became a
director of the Company upon closing of the Offering,  Mr. John LoPresti and Mr.
William  Starace,  the  Company  acquired  by  merger  all  of  the  issued  and
outstanding  stock of  American  Courier  Express,  Inc.  ("American  Courier").
American  Courier,  which is  headquartered  in  Edison,  New  Jersey,  has been
operating  a  same-day  delivery  service  business  for  over  six  years.  The
consideration  paid by the Company for American Courier consisted of $536,000 in
cash and 102,485 shares of Common Stock.  In connection  with this  transaction,
Mr.  Zrowka,  Mr.  LoPresti  and  Mr.  Starace  each  entered  into a  five-year
covenant-not-to-compete and a five-year employment agreement with the Company.

         Bestway/Crown.  Under an agreement with Mr. Philip Snyder, who became a
director of the Company upon closing of the Offering,  and Mr. Norton Hight, the
Company  acquired by merger all of the issued and  outstanding  stock of Bestway
Distribution Services,  Inc. and Crown Courier Systems, Inc.  ("Bestway/Crown").
Bestway/Crown,  which is headquartered in Miami,  Florida,  has been operating a
same-day  delivery  service  business  for  over  20  years  and  currently  has
operations in Fort Myers, Miami,  Orlando,  Tampa and West Palm Beach,  Florida.
The consideration paid by the Company for Bestway/Crown  consisted of $1,921,000
in cash and 192,063 shares of Common Stock. In connection with this transaction,
Mr.  Hight,  Mr.  Snyder and Mr.  Martin  Galinsky each entered into a five-year
covenant-not-to-compete and a five-year employment agreement with the Company.

         Click.  Under an agreement  with Mr.  Howard E.  Kronick,  who became a
director of the Company upon closing of the Offering, Mr. Andrew B. Kronick, Mr.
David  Kronick,  Mr.  Kenneth J. Tunnell,  Mr. Philip  Panasci and certain other
stockholders,  the Company  acquired by merger all of the issued and outstanding
stock of Click Messenger Service,  Inc. and related companies ("Click").  Click,
which is  headquartered in Cranford,  New Jersey,  has been operating a same-day
delivery  service  business for over 35 years and  currently  has  operations in
Kearny, New Jersey and Albany,  Buffalo,  Maspeth,  New York City, Rochester and
Syracuse, New York. The consideration paid by the Company for Click consisted of
$1,772,000 in cash and 177,212 shares of Common Stock.  In connection  with this
transaction,  Mr. Howard E. Kronick,  Mr. Andrew B. Kronick,  Mr. David Kronick,
Mr.    Tunnell   and   Mr.    Panasci    will    entered    into   a   five-year
covenant-not-to-compete  and an employment agreement with the Company for a term
of five years.

         Court.  Under  an  agreement  with Mr.  Juan  Camandona,  who  became a
director of the Company upon closing of the  Offering,  and Mr. Jack  McCorkell,
the Company acquired by merger all of the issued and outstanding  stock of Court
Courier  Systems,  Inc.  and  a  related  company  ("Court").  Court,  which  is
headquartered  in Edison,  New Jersey,  has been  operating a same-day  delivery
service  business  for  over 16  years  and  currently  has  operations  in East
Hartford, Connecticut; Augusta, Maine; Milford, Massachusetts; Atlantic City and
Edison, New Jersey and Albany,  Buffalo,  Rochester and Syracuse,  New York. The
consideration  paid by the Company for Court consisted of $1,753,000 in cash and
175,362  shares of Common  Stock.  In  connection  with  this  transaction,  Mr.
Camandona    and    Mr.    McCorkell    each    entered    into   a    five-year
covenant-not-to-compete and a five-year employment agreement with the Company.

         DSI. Under an agreement with Mr. David Mathia, who became a director of
the Company upon closing of the Offering,  the Company acquired by merger all of
the issued and outstanding stock of Distribution Solutions  International,  Inc.
("DSI").  DSI,  which is  headquartered  in Traverse  City,  Michigan,  has been
operating  a  logistics  services  business  for  over  five  years  and  has an
additional location in Philadelphia, Pennsylvania. The consideration paid by the
Company for DSI  consisted of  $1,372,000  in cash and 137,239  shares of Common
Stock. In connection with this transaction,  Mr. Mathia entered into a five-year
covenant-not-to-compete and a five-year employment agreement with the Company.

         National.  Under an  agreement  with Mr. Labe  Leibowitz,  who became a
director of the Company upon closing of the  Offering,  Mr. Irwin  Leibowitz and
another  stockholder,  the  Company  acquired  by merger  all of the  issued and
outstanding  stock of  Clayton/National  Courier  Systems,  Inc.  and a  related
company ("National").  National,  which is headquartered in St. Louis, Missouri,
has been operating a same-day ground and air delivery  service business for over
23 years and currently has operations in San Francisco,  California,  St. Louis,
Missouri  and Seattle,  Washington.  The  consideration  paid by the Company for
National  consisted of $3,154,000 in cash and 290,357 shares of Common Stock. In
connection  with this  transaction,  Mr. Irwin  Leibowitz and Mr. Labe Leibowitz
each entered into a five-year covenant-not-to-compete and a five-year employment
agreement with the Company.

         Olympic.  Under  an  agreement  with Mr.  Curtis  Hight,  who  became a
director of the Company upon closing of the  Offering,  Mr.  Norton  Hight,  Mr.
Philip Snyder, Mr. Neil Wattenberg,  Mr. Jeffrey Kravet and Mr. Bruce Cohen, the
Company  acquired by merger all of the issued and  outstanding  stock of Olympic
Courier  Systems,  Inc. and a related  company  ("Olympic").  Olympic,  which is
headquartered  in New York City, has been operating a same-day  delivery service
business for over 12 years and currently has  operations in Long Island City and
New York City,  New York.  The  consideration  paid by the  Company  for Olympic
consisted  of  $1,166,000  in cash  and  116,644  shares  of  Common  Stock.  In
connection  with this  transaction,  Mr. Curtis Hight,  Mr. Norton Hight and Mr.
Snyder each entered into a five-year  covenant-not-to-compete  with the Company.
In addition, Mr. Curtis Hight entered into a five-year employment agreement with
the Company,  Mr. Wattenberg entered into a four year employment  agreement with
the Company and Mr. Kravet and Mr. Cohen each entered into three-year employment
agreements with the Company. As part of their employment agreements, each of Mr.
Wattenberg,  Mr. Kravet and Mr. Cohen entered into a covenant not-to-compete for
a period of two years following the termination of their employment.

         Orbit/Lightspeed.  Under an agreement with Mr. Robert Wyatt, who became
a director of the  Company  upon  closing of the  Offering,  Mr. Rick Katz,  Mr.
Jeremy Weinstein and Mr. Stephen Gilchick, the Company acquired by merger all of
the issued and outstanding stock of Orbit/Lightspeed  Courier Systems,  Inc. and
related companies ("Orbit/Lightspeed"). Orbit/Lightspeed, which is headquartered
in New York City, has been operating a same-day  delivery  service  business for
over five years and currently has operations in Bayonne, New Jersey and New York
City. The consideration  paid by the Company for  Orbit/Lightspeed  consisted of
$1,890,000 in cash and 194,000 shares of Common Stock.  In connection  with this
transaction, Mr. Wyatt, Mr. Katz and Mr. Weinstein each entered into a five-year
covenant-not-to-compete  and a five-year  employment agreement with the Company.
In addition, Mr. Gilchick entered into a five-year  covenant-not-to-compete  and
an affiliate,  Insight Plus,  Inc.,  was retained by the Company as a consultant
for a period of three years.

         Securities  Courier.  Under an agreement with Mr.  Vincent  Brana,  who
became a director  of the  Company  upon  closing of the  Offering,  the Company
acquired by merger all of the issued and outstanding stock of Securities Courier
Corporation  ("Securities Courier").  Securities Courier, which is headquartered
in South Hackensack,  New Jersey, has been operating a same-day delivery service
business for over 22 years and currently has operations in South Hackensack, New
Jersey and at 17 customer locations throughout New Jersey and New York City. The
consideration paid by the Company for Securities Courier consisted of $3,740,000
in cash and 357,301 shares of Common Stock. In connection with this transaction,
Mr.  Brana  entered  into a  five-year  covenant-not-to-compete  and a five-year
employment  agreement with the Company.  In connection  with the  acquisition of
Securities Courier, the Company acquired all of the outstanding stock of Liberty
Transfer  Corp.,  a contractor  to  Securities  Courier,  in exchange for 16,667
shares of Common Stock and entered into a five-year  employment  agreement and a
five-year non-compete agreement with that company's president, Mr. John Bailey.

         Silver Star.  Under an agreement with Mr. Michael Brooks,  who became a
director of the Company upon closing of the Offering, and Ms. Bonnie Silver, the
Company  acquired  by merger all of the issued and  outstanding  stock of Silver
Star Express,  Inc. and related companies ("Silver Star"). Silver Star, which is
headquartered in Miami,  Florida, has been operating a same-day delivery service
business  for over seven  years and  currently  has  operations  in Fort  Myers,
Jacksonville,  Miami, Orlando and Tampa, Florida; Atlanta and Valdosta, Georgia;
Indianapolis,   Indiana;  New  Orleans  and  Shreveport,  Louisiana;  Baltimore,
Maryland; Cinnaminson and Elizabeth, New Jersey; Saugerties, New York; Akron and
Dayton, Ohio and Nashville, Tennessee. The consideration paid by the Company for
Silver Star  consisted of $3,338,000 in cash and 307,327 shares of Common Stock.
In connection  with this  transaction,  Mr. Michael  Brooks,  Ms. Silver and Mr.
Peter  Silver  each  entered  into a five-year  covenant-not-to-compete  and Mr.
Michael Brooks and Mr. Silver each entered into a five-year employment agreement
with the  Company.  In  addition,  Mr.  Harry  Brooks  entered  into a five-year
covenant-not-to-compete  and was retained by the Company as a  consultant  for a
period of three years.

         SureWay.  Under an agreement  with Mr.  William  Beaury and Mr.  Thomas
LoPresti,  each of whom  became a director of the  Company  upon  closing of the
Offering,  Mr. Joseph  Caruvana,  Mr. Randall Catlin and Mr. Michael Berry,  the
Company  acquired by merger all of the issued and  outstanding  stock of SureWay
Air Traffic  Corporation and a related company  ("SureWay").  SureWay,  which is
headquartered  in Long Island City,  New York, has been operating a same-day air
delivery service business for 20 years. In addition,  SureWay provides logistics
and ground delivery  services.  SureWay currently has operations in Los Angeles,
California;  Washington,  D.C.;  Chicago,  Illinois;  Clifton,  New Jersey; Long
Island City, New York and Greensboro,  North Carolina, and sales agent locations
in  Phoenix,  Arizona;  Atlanta,  Georgia;  Miami and  Tampa,  Florida;  Boston,
Massachusetts;  Detroit, Michigan;  Minneapolis,  Minnesota;  Cincinnati,  Ohio;
Philadelphia, Pennsylvania and Dallas and Houston, Texas. The consideration paid
by the Company for SureWay consisted of $8,962,000 in cash and 869,045 shares of
Common Stock. In connection with this transaction, Mr. Beaury, Mr. Caruvana, Mr.
Catlin and Mr.  LoPresti  each entered into a five-year  covenant-not-to-compete
and a five-year  employment agreement with the Company. Mr. Berry entered into a
five-year  covenant-not-to-compete  and a two-year employment agreement with the
Company.

         In addition to the  acquisition of the Founding  Companies as described
above,  simultaneously  with  the  Combination,  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.

         Since  the  Combination,  the  Company  has  begun to  rationalize  the
operations of the other  Founding  Companies  by, among other things,  combining
operations where feasible and eliminating redundant facilities.  In this regard,
Orbit/Lightspeed  and Click's  Manhattan  operations have been consolidated into
Olympic.  Recently,  the  Company  appointed  General  Managers  for each of its
Northeast  and  Southeast  Regions to better  coordinate  the  operations of the
Founding Companies and to manage the integration process.


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.


<PAGE>


Intellectual Property

         The  Company  has applied for  Federal  service  mark  registration  of
"Consolidated  Delivery & Logistics,  Inc." and the associated  Company logo. 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."

Employees and Independent Owner/Operators

         At December 31, 1995, the Company employed  approximately 2,800 people,
1,500 of whom were employed as drivers,  500 as  messengers,  400 in operations,
200 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
owner/operators  as of December 31, 1995.  From time to time,  federal and state
authorities  have  sought  to assert  that  independent  owner/operators  in the
transportation industry, including those utilized by the Company, are employees,
rather than independent  contractors.  The Company believes that the independent
owner/operators  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  owner/operators,  the
Company's operating costs would increase.
See "Risk Factors - Independent 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  Combination.  The Founding  Companies  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 - The Combination.  During
the course of the  preparation  of its 1995  financial  statements,  the Company
discovered certain errors in the preliminary  information  provided to it by the
individual  Founding  Companies  relating to results  for the fourth  quarter of
1995.  These  errors  related  solely to the fourth  quarter of 1995 and did not
affect any other fiscal period. The financial  statements for the fourth quarter
of 1995 and for the year ended  December 31, 1995  contained  herein reflect the
correction  of these  errors.  The  Company has begun to take  certain  actions,
including  the hiring of  additional  experienced  supervisors,  to improve  the
training  and  supervision  of its  accounting  staff so that senior  management
receives  accurate  financial  information  on  a  timely  basis.  See  Item  7.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations - Overview.

Acquisition Strategy

         One of the Company's business strategies is to increase its revenues by
acquiring  other  companies  performing  similar  ground  and air  delivery  and
logistics  services.  There can be no assurance that the Company will be able to
acquire,  profitably manage or successfully  integrate such additional companies
into  the  Company.  In  addition,   there  can  be  no  assurance  that  future
acquisitions will further the successful implementation of the Company's overall
strategy, or that such acquisitions will ultimately produce returns that justify
the investment therein. See Item 1. Business - Strategy.

         The Company  currently intends to use Common Stock for all or a portion
of the  consideration  to be paid in future  acquisitions.  However,  the recent
decline  in the market  value of the  Company's  Common  Stock has  reduced  the
attractiveness of the Common Stock as an acquisition  medium.  As a result,  the
Company will be required to utilize more of its cash resources, if available, in
order to effect its  acquisition  program.  The Company  currently does not have
sufficient  cash resources to fund its  acquisition  program.  Accordingly,  the
Company's  growth  through  acquisitions  will be  limited  unless it is able to
obtain  additional  capital through  additional debt or equity  financings.  The
Company is currently  discussing the terms of a proposed credit facility with an
institutional lender.  However,  there can be no assurance that the Company will
be able to obtain such financing if and when it is needed or that, if available,
it will be  available  on  terms  the  Company  deems  acceptable.  See  Item 7.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations - Liquidity and Capital Resources.  As a result, the Company might be
unable to implement successfully its acquisition strategy.

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  competitors  in the
same-day  ground  delivery  business  are  USDS and  Transnet.  In  addition  to
competing with the Company for the provision of services,  USDS and Transnet are
also  significant  competitors  of the  Company in the  market  for  acquisition
candidates.  USDS was recently acquired by Corporate Express,  Inc. 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 Owner/Operators

         From time to time,  federal and state authorities have sought to assert
that independent owner/operators in the transportation industry, including those
utilized by the Company, are employees, rather than independent contractors. The
Company  believes that the independent  owner/operators  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 owner/operators, the Company's operating costs would increase.
See Item 1. Business - Employees and Independent Owner/Operators.

         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
has  reimbursed  those  employees for all or a portion of the costs of operating
those vehicles.  The Company believes that these  reimbursement  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  $25,000,000  for each such  accident
(subject   to   applicable   deductibles),    and   requires   its   independent
owner/operators 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
15,  1996,  6,629,569  shares of Common Stock were issued and  outstanding.  The
3,200,000 shares sold in the Offering are generally freely tradeable, except for
shares acquired by affiliates of the Company.

         Simultaneously  with the closing of the Offering,  the  stockholders of
the Founding Companies  received,  in the aggregate,  2,935,702 shares of Common
Stock as a portion of the  consideration  for their  businesses.  Certain  other
stockholders of the Company held, in the aggregate, an additional 493,867 shares
of Common  Stock.  None of these  3,429,569  shares were issued in  transactions
registered under the Securities Act of 1933, as amended (the "Securities  Act"),
and, accordingly,  such shares may not be sold except in transactions registered
under  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 $2,000,000 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.

         All of the stockholders of the Founding  Companies,  the holders of the
Debentures,  the  existing  stockholders  of the  Company and the  officers  and
directors  of the  Company  have  agreed for a period  ending May 18,  1996 (the
"Lockup Period") not to request or demand the filing of a registration statement
with  respect to,  offer,  sell,  contract to sell or  otherwise  dispose of any
shares of Common Stock (or any  securities  convertible  into or  exercisable or
exchangeable  for Common Stock) or grant any options or warrants to purchase any
shares  of Common  Stock  without  the  prior  written  consent  of  PaineWebber
Incorporated  ("PaineWebber").  The Company  has also  agreed  during the Lockup
Period not to register for sale, file a registration  statement with respect to,
offer,  sell,  contract to sell or  otherwise  dispose of or issue any shares of
Common Stock (or any securities  convertible into or exercisable or exchangeable
for Common  Stock) or grant any options or  warrants  to purchase  any shares of
Common Stock without the prior written consent of PaineWebber except for (i) the
grant  of up to  490,559  options  pursuant  to  the  Company's  Employee  Stock
Compensation  Program (the "Employee Stock Compensation  Program") and the grant
of  4,500  options  pursuant  to  the  Company's  1995  Stock  Option  Plan  for
Independent Directors (the "Director Plan" and, together with the Employee Stock
Compensation Program, the "Stock Option Plans"),  provided that at least 100,000
of the options that may be granted  pursuant to the Employee Stock  Compensation
Program  must be granted at an exercise  price per share equal to the greater of
(a) $13 per share and (b) the fair market  value of the Common Stock on the date
of grant,  (ii) the  issuance of shares of Common Stock upon the exercise by the
holders  thereof of their right to convert the Debentures  into shares of Common
Stock,  (iii) the issuance of shares of Common Stock in  connection  with future
acquisitions,  provided that the Company may issue such shares only if the party
to whom such shares are issued agrees in writing not to offer, sell, contract to
sell or otherwise dispose of any such shares or grant any options or warrants to
purchase any such shares without the prior written  consent of  PaineWebber  for
the  balance  of the  Lockup  Period,  (iv) the  filing of a shelf  registration
statement to register an additional  5,000,000 shares of Common Stock for use by
the  Company  as all or a  portion  of the  consideration  to be paid in  future
acquisitions and (v) the filing of the registration  statements  described below
to register  the shares of Common Stock  reserved  for issuance  under the Stock
Option Plans.

         As of March 15,  1996,  the  Company  had  outstanding  under the Stock
Option Plans options to purchase an aggregate of 494,319 shares of Common Stock,
none of which were  exercisable  as of that date.  The  Company  intends to file
registration statements on Form S-8 in the near future registering the shares of
Common  Stock  issuable  upon the  exercise of options  granted  under the Stock
Option Plans. As a result, such shares will be eligible for resale in the public
market, unless held by affiliates of the Company.

Reliance on Key Personnel

         The Company's  operations are dependent on the continued efforts of its
executive  officers  and on the senior  management  of the  Founding  Companies.
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,  Executive  Officers,  Promoters and Control
Persons 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.
Furthermore,  delays in  obtaining  approvals  for the  transfer  of  permits or
licenses,  or failure to obtain such approvals,  could impede the implementation
of the Company's acquisition program. See Item 1. Business - Regulation.

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 intends to
obtain bank financing for working capital purposes. The Company anticipates that
its  ability to pay cash  dividends  on the  Common  Stock may be limited by the
terms of that financing.  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, 1995, the Company operated from 64 leased facilities
(excluding 11 authorized sales agent locations of SureWay). 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).

State                                                     Number of Facilities
-----                                                     --------------------
New York....................................................................  23
Florida.....................................................................  10
New Jersey..................................................................  10
California..................................................................   2
Georgia......................................................................  2
Louisiana....................................................................  2
Ohio.........................................................................  2
Connecticut..................................................................  1
Illinois.....................................................................  1
Indiana......................................................................  1
Maine........................................................................  1
Maryland.....................................................................  1
Massachusetts................................................................  1
Michigan.....................................................................  1
Missouri.....................................................................  1
North Carolina...............................................................  1
Pennsylvania.................................................................  1
Tennessee....................................................................  1
Washington...................................................................  1
Washington, D.C..............................................................  1

         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.

         As of December 31, 1995, the Company owned and/or leased  approximately
500 cars and 300  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.

         The aggregate rental expense for the combined Founding  Companies prior
to the Combination (the "Combined Founding Companies") for the nine months ended
September  30, 1995 was  approximately  $3.7  million and the  Company's  rental
expense for the three months  ended  December  31, 1995 was  approximately  $1.9
million. See Note 12 to the Company's Consolidated Financial Statements and Note
13  to  the  Combined  Founding  Companies'  Financial  Statements  for  further
information relating to these leases.


Item 3.  Legal Proceedings

         Olympic, as the successor to Orbit/Lightspeed,  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/Lightspeed's  messengers  voted  against  a  local  of  the  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.
The Company is defending  the action  vigorously.  In the event that the General
Counsel  for the  NLRB is  successful,  the  Company  believes  that it would be
required to hold a new representation election.

         In March  1996,  a purported  class  action  lawsuit was filed  against
Olympic, Orbit/Lightspeed, 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, as the successor to  Orbit/Lightspeed,  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.  The suit, which claims violations of contract,  minimum wage
and overtime  statutes,  and the civil  provisions  of the federal RICO statute,
seeks an  unspecified  amount of  compensatory  and  punitive  damages  from the
Orbit/Lightspeed  Parties,  as well as attorney's fees and other  expenses.  The
Company believes that the plaintiff's  claims are without merit and is defending
the action vigorously. The Company does not believe that this action will have a
material  adverse  effect on the financial  position or results of operations of
the Company.

         In January 1996,  Assumption  Holdings Corp.  ("Assumption)  filed suit
against the Company in the United States  District Court for the District of New
Jersey  alleging that  Securities  Courier had breached an agreement under which
Assumption  was  entitled  to  certain  fees  and  10% of  Securities  Courier's
authorized  capital stock.  The complaint  seeks damages of  approximately  $1.1
million.  The action is at a preliminary  stage and,  therefore,  the Company is
unable at this time to determine  whether the action is  meritorious.  Under the
terms of its  acquisition  of  Securities  Courier,  the  Company is entitled to
indemnification  from Mr.  Brana for any costs or damages in excess of $100,000.
Accordingly,  the Company does not believe that this action will have a material
adverse  effect on the  financial  position  or  results  of  operations  of the
Company.

         In February 1996,  Liberty Mutual Insurance Company ("Liberty  Mutual")
filed an action against Securities Courier,  Mr. 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. The 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 attorney's
fees and other expenses.  The action is at a preliminary  stage and,  therefore,
the  Company  is  unable  at this  time  to  determine  whether  the  action  is
meritorious.  Under the terms of its  acquisition  of  Securities  Courier,  the
Company is entitled to  indemnification  from Mr. Brana for any costs or damages
in excess of  $100,000.  Accordingly,  the Company  does not  believe  that this
action will have a material adverse effect on the financial  position or results
of operations of the Company.

         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
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 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 25, 1996.

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


                                           1996           Low               High
           First Quarter (through March 25, 1996)        $5.75            $11.75

         On March 25, 1996, the last reported sale price of the Common Stock was
$6.25 per share. As of March 15, 1996, there were approximately 125 shareholders
of record of Common Stock and, based on security position listings,  the Company
believes there were approximately 1,500 beneficial holders of the Common Stock.

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.  In  addition,  the  Company  intends  to obtain  bank
financing for working capital purposes. The Company anticipates that its ability
to pay cash  dividends  on the Common Stock will be limited by the terms of that
financing. 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)

         Consolidated  Delivery  &  Logistics,  Inc. (the "Company") merged (the
"Combination") 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,  1991,  1992,  1993,  and  1994 and the nine  month  period  ended
September  30, 1995 and the balance  sheet data as of December 31,  1991,  1992,
1993  and  1994  are  that  of the  Combined  Founding  Companies  prior  to the
Combination (the "Combined Founding Companies") on a historical basis except for
pro forma data. 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-combination results to be achieved by the Company after the Combination.

         The  following  selected  financial  data with  respect to the Combined
Founding  Companies'  combined  statements  of  operations  for the years  ended
December 31, 1993 and 1994 and the nine month period  ended  September  30, 1995
and with respect to the Combined Founding  Companies' combined balance sheets as
of  December  31, 1993 and 1994 have been  derived  from the  Combined  Founding
Companies'  combined  financial  statements that appear  elsewhere  herein.  The
selected  financial  data with  respect to  Consolidated  Delivery &  Logistics,
Inc.'s  consolidated  statement of  operations  for the three month period ended
December 31, 1995 and with respect to Consolidated Delivery & Logistics,  Inc.'s
consolidated  balance  sheet as of  December  31,  1995 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)

Income Statement Data:

                                                                 Consolidated
                                                                  Delivery &
                           Combined Founding Companies          Logistics, Inc.
                  ------------------------------------------- and Subsidiaries
                                                             ------------------
                                                              For The
                                                               Nine    For The
                                                              Months Year Ended
                        For The Years Ended December 31,       Ended   December
                                                             September  31, Pro
                  --------------------------------------------   30,    Forma
                    1991     1992     1993     1994     1995   1995(3)    (1)
                  -------- -------- -------- -------- -------- ------- --------
                  (Unaudited)
Revenues          $103,525 $111,972 $121,752 $137,544 $111,406 $39,036 $150,442
Cost of revenues    70,579   77,028   84,437   95,350   77,547  27,439  104,986
                  -------- -------- -------- -------- -------- ------- --------
     Gross profit   32,946   34,944   37,715   42,194   33,859  11,597   45,456
Selling general and
administrative
expense             31,624   34,299   36,015   40,338   29,777  11,301   41,079
                  -------- -------- -------- -------- -------- ------- --------
     Operating income1,322      645    1,300    1,856    4,082     296    4,377
Interest and other
income (expense), net (559)     349       58     (414)    (425)     91     (333)
                  -------- -------- -------- -------- -------- ------- --------
     Income before

       income taxes    763      994    1,358    1,442    3,657     387    4,044
Pro forma provision
for income taxes (2)   374      632      636      721    1,475     582    2,057
                  -------- -------- -------- -------- -------- ------- --------

     Net income (loss)$389     $362     $722     $721   $2,182   ($195)  $1,987
                  ======== ======== ======== ======== ======== ======= ========

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

Pro forma net income
per share (3)                                                              $.29
                                                                       ========



<PAGE>



Balance Sheet Data:

                                                                    Consolidated
                                                                     Delivery &
                                                                     Logistics,
                                                                      Inc. and
                                Combined Founding Companies         Subsidiaries
                         ----------------------------------------  -------------
                                        December 31,                December 31,
                         ----------------------------------------  -------------
                          1991      1992       1993       1994          1995
                         ------  --------- ----------  ----------  -------------
                               (Unaudited)
Working capital            $887     $1,290     $3,211      $3,548       $7,542
Equipment and improvements,
 net                      1,992      3,255      3,651       3,102        3,925
Total assets             18,484     21,453     23,045      23,869       32,840
Long-term debt, net of
current  maturities       2,407      3,226      3,680       1,164        3,027
Stockholders' equity      3,719      4,149      5,212       5,568        8,311

(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)  Pro forma  income  tax  provisions  have been provided for certain Founding
     Companies.  See Notes 3 and 11 to the Combined Founding Companies Financial
     Statements.

(3)  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 Combination, (ii) 2,935,700
     shares issued to the  stockholders of the Founding  Companies in connection
     with the Combination, (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.

(4)  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 income  statement
     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  Combination are not
     significant.


<PAGE>


         The Founding Companies are collectively  considered predecessors to the
Company.  The following table represents selected  information of the individual
Founding  Companies  for the three most recent  fiscal  years and the nine month
period ended September 30, 1995.

                                   Year Ended                  Nine Months Ended
                                   December 31,                   September 30,
                            --------------------------------
                            1992          1993          1994            1995
                            ----          ----          ----            ----
                                    (in thousands)                  (unaudited)

SureWay
       Revenues.          $29,644       $31,954      $36,662          $31,571
       Gross profit        11,810        13,188       15,253           12,787
       SG&A.....           11,459        12,855       14,535           11,005
       Net income         $   176      $    186      $   399          $ 1,051
                          =======      ========      =======          =======

Securities Courier
       Revenues.          $17,647       $17,804      $18,698          $12,802
       Gross profit         1,874         1,503        2,197            1,712
       SG&A.....            1,803         1,813        1,855            1,415
       Net income (loss)  $  (215)     $   (346)     $   108          $   150
                          =======     =========      =======          =======

National
       Revenues.          $11,776       $12,472      $15,018          $11,996
       Gross profit         4,811         5,016        5,673            4,636
       SG&A.....            5,102         4,942        5,248            4,496
       Net income         $    55    $      137      $   130          $     2
                          =======    ==========      =======          =======

Silver Star
       Revenues.          $14,649       $14,972      $15,139          $10,143
       Gross profit         3,869         3,549        4,026            2,467
       SG&A.....            3,020         2,931        3,441            2,057
       Net income         $   576     $     346      $   451          $   276
                          =======     =========      =======          =======

Click
       Revenues.           $7,132        $7,647       $8,861           $9,267
       Gross profit         2,080         1,746        1,980            2,471
       SG&A.....            2,065         1,699        1,935            1,890
       Net income (loss)  $   (31)     $     25      $   (10)          $  300
                          =======      ========      =======           ======

Bestway/Crown
       Revenues.           $6,955        $6,686       $9,603           $8,206
       Gross profit         3,031         2,961        3,735            2,901
       SG&A.....            3,311         3,170        3,390            2,756
       Net income (loss)  $   (35)     $      7      $   261           $  147
                          =======      ========      =======           ======

Court
       Revenues.           $5,690        $6,929       $8,768           $7,395
       Gross profit           787         1,343        1,675            1,417
       SG&A.....              907         1,211        1,498            1,274
       Net income (loss)  $  (162)     $     (9)     $  (165)          $  (57)
                          =======      ========      =======           ======

Orbit/Lightspeed
       Revenues.           $7,458        $7,777       $8,020           $6,442
       Gross profit         2,128         2,245        2,205            1,827
       SG&A.....            2,347         2,191        2,166            1,450
       Net income (loss)  $  (147)     $     48       $   32           $  223
                          =======      ========       ======           ======

DSI
       Revenues.           $4,263        $6,796       $6,862           $6,217
       Gross profit         1,113         1,803        1,480              964
       SG&A.....            1,137         1,459        2,011              931
       Net income (loss)  $   (57)      $   205       $ (541)          $    6
                          =======       =======       ======           ======


<PAGE>




                                                                    For The Nine
                                                                    Months Ended
                           For the Years Ended December 31,       September 30,
                            1992          1993          1994            1995
Olympic
         Revenues.         $5,163        $6,181        $5,766             $4,219
         Gross profit       2,589         3,037         2,626              1,925
         SG&A.....          2,510         2,916         2,610              1,905
         Net income      $     38      $    111      $     29           $      1
                         ========      ========      ========           ========

American
         Revenues.         $1,596        $2,533        $4,146             $3,149
         Gross profit         774         1,003         1,343                750
         SG&A.....            637           829         1,422                598
         Net income (loss) $   68        $   90        $  (62)          $     84
                          =======        ======        ======           ========




<PAGE>


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

         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 Data of the Company, the Combined Financial Statements of
the  Combined  Founding  Companies,  the  Financial  Statements  of the Founding
Companies and the related Notes thereto appearing elsewhere herein.

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.  Simultaneously,  with the closing of the
Company's  initial  public  offering in November,  1995,  separate  wholly-owned
subsidiaries of the Company merged with each of the eleven  Founding  Companies.
Prior to the  Merger,  each of the  Founding  Companies  operated  as a separate
independent  entity.  The Company selected October 1, 1995 as the effective date
of the Merger.  For the nine months ended  September 30, 1994 and 1995, the year
ended  December 31, 1994 and the three months period ended December 31, 1994 the
combined Financial Statements included 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.  Results for the three
months  ended  December  31, 1995  reflect the  consolidated  operations  of the
Company  after  giving  effect to this Merger and the  Offering.  The  pro-forma
results for the year ended December 31, 1995 is the sum of the nine month period
ended  September 30, 1995 and the three month period ended December 31, 1995. As
a result,  combined  results may not be  comparable  to or  indicative of future
performance.

         The  Founding  Companies  derive their  revenues  from fees charged for
ground and air delivery and logistics  services.  Although  revenues from ground
delivery  services account for the majority of total revenues,  certain Founding
Companies  have  recently  experienced  higher  revenue  growth  rates  from air
delivery and logistics  services.  Management expects this trend to continue (i)
for  logistics,  as a result of increased  emphasis on inventory  management and
outsourcing  and (ii) for air  delivery,  as a result of  increased  emphasis on
timely delivery.

         Costs of revenues  relating to ground  delivery  consist  primarily  of
salaries and fees paid to drivers,  messengers and independent operators.  These
fees are  established  as a  percentage  of the gross  revenues  generated.  The
primary costs of revenues for air delivery services include  purchased  services
from  commercial air carriers and other delivery  agents.  Costs of revenues for
logistics  services consist primarily of purchased  services for warehousing and
local ground and air delivery services. Gross profit margins tend to be lower in
the first half of the year due to lower revenue volume and higher costs incurred
during the winter months.

         Prior to the Combination,  most of the Founding Companies elected to be
treated as S Corporations  under the Internal  Revenue Code of 1986, as amended.
Upon consummation of the Combination,  the Company  terminated the S Corporation
elections of the  Founding  Companies.  For  purposes of the Combined  Financial
Statements  presented elsewhere herein, pro forma Federal income taxes have been
provided for the Founding  Companies  as if all of the  Founding  Companies  had
filed  C  Corporation  tax  returns.  See  Notes  3 and 11 to  the  Consolidated
Financial Statements.

         During the course of the  preparation  of its  audited  1995  financial
statements, the Company discovered certain errors in the preliminary information
provided to it by the individual  Founding Companies relating to results for the
fourth  quarter of 1995.  These errors  related  solely to the fourth quarter of
1995 and did not affect any other fiscal  period.  The financial  statements for
the fourth  quarter of 1995 and for the year ended  December 31, 1995  contained
herein  reflect the  correction of these  errors.  The Company has begun to take
certain actions, including the hiring of additional experienced supervisors,  to
improve the  training and  supervision  of its  accounting  staff so that senior
management  receives accurate financial  information on a timely basis. See Item
1. Business - Risk Factors.

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 ability of the
Company to successfully integrate the business of acquired companies, the impact
of competition,  both for customers and for acquisition candidates, the need for
financing to implement  the Company's  strategic  plan, 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

Three Months Ended December 31, 1995 Compared to Historical Combined Three
                     Months Ended December 31, 1994

         The combined results for the three month period ended December 31, 1994
may not be  comparable  to the  consolidated  results for the three month period
ended  December 31, 1995 due to the effect of the merger and offering  described
elsewhere.

         Revenues for the fourth  quarter of 1995  increased  $2.7  million,  or
7.4%,  to $39.0  million  from  $36.3  million  for the  fourth  quarter of 1994
primarily as a result of increased air and ground delivery  revenues at Sureway,
Click and  Bestway.  These  increases  were  partially  offset by a decrease  in
revenues at  Securities  Courier,  resulting  from a lost contract in the fourth
quarter of 1994, and at Silver Star, resulting from the sale of two terminals in
the fourth  quarter of 1994.  For the fourth  quarter of 1995,  ground  delivery
revenues  increased  approximately  $0.5 million (2.2%),  air delivery  revenues
increased  approximately $1.0 million (9.9%) and logistics revenues increased by
approximately  $1.2 million (37.3%) over the comparable  period in 1994.  Ground
delivery revenues increased  primarily due to additional  business from existing
customers as well as the addition of new customers in the consumer  products and
pharmaceutical  industries.  The  increase in air delivery  revenues  during the
fourth quarter of 1995 was largely attributable to new customers in the printing
and graphic arts industries and to increased demand from existing customers. The
increase in logistics revenues was primarily attributable to the addition of new
customers and increased demand from existing customers.

         Operating  income for the three month period ended December 31, 1995 of
$306,000  represented an increase of $178,000 from operating  income of $128,000
for the three months ended  December 31, 1994. The increase is  attributable  to
the revenue growth as discussed above.

         Interest expense for the fourth quarter of 1995 decreased  $49,000,  or
15.2%, to  $274,000 from $323,000 for the fourth quarter of 1994 primarily as a
result of a lower level of indebtedness.

         The provision for income taxes for the fourth quarter of 1995 increased
$344,000,  or 144.5%,  to $582,000 from $238,000 for the fourth  quarter of 1994
primarily  as a result of a  provision  for  potential  tax matters and a higher
level of taxable income.

         For the reasons discussed above, net loss for the fourth quarter of 
1995  decreased  $68,000,  or 26.9%,  to $185,000 from  $253,000 for  the fourth
quarter of 1994.

Nine Months Ended September 30, 1995 Compared to Nine Months Ended September 30,
                         1994 (Unaudited)

         Revenues for the nine months ended  September 30, 1995 increased  $10.2
million,  or 10.1%,  to $111.4  million from $101.2  million for the nine months
ended  September 30, 1994  primarily as a result of internal  growth by SureWay,
Click,  National and Court. For the nine months ended September 30, 1995, ground
delivery  revenues  increased  approximately  $3.6 million (5.6%),  air delivery
revenues  increased  approximately  $4.5 million (16.6%) and logistics  revenues
increased by  approximately  $2.1 million (21.1%) over the comparable  period of
1994. Ground delivery revenues  increased  primarily due to additional  business
from existing customers of Click, National and Court, offset in part by declines
in revenues  at  Securities  Courier  and Silver Star for the reasons  described
above.  Ground  delivery  revenues also increased as a result of the addition of
new  customers  in the  consumer  products and  pharmaceutical  industries.  The
increase in air delivery  revenues  during the nine months ended  September  30,
1995 was largely  attributable to new customers in the printing and graphic arts
industries  and to increased  demand from  existing  customers  of SureWay.  The
increase in logistics revenues was primarily attributable to additional business
from  existing  customers  of  Bestway/Crown  and  DSI  in  the  pharmaceutical,
publishing and consumer products industries.

         Gross profit for the nine months  ended  September  30, 1995  increased
$5.0 million,  or 17.3%, to $33.9 million from $28.9 million for the nine months
ended September 30, 1994 primarily as a result of increased revenues at SureWay,
Click and  National.  These  increases  were  partially  offset by a decrease in
revenues at Silver Star for the reasons  described  above.  Gross profit  margin
increased to 30.4% for the nine months ended  September  30, 1995 from 28.6% for
the nine months ended  September  30, 1994.  The increase in gross profit margin
resulted  primarily  from higher air delivery  revenues at SureWay and increased
efficiencies achieved by Click and National in their ground delivery operations.

         SG&A for the nine  months  ended  September  30,  1995  increased  $2.6
million,  or 9.6%, to $29.8 million from $27.2 million for the nine months ended
September 30, 1994. As a percentage of revenues, SG&A decreased to 26.7% for the
nine  months  ended  September  30,  1995 from 26.9% for the nine  months  ended
September 30, 1994. The increase in the dollar amount of SG&A resulted primarily
from  increased  costs  relating  to ongoing  staff and  facility  expansion  to
generate  and support the  increased  revenue  volume as  discussed  above.  The
decrease in SG&A as a  percentage  of revenues  was  primarily  attributable  to
spreading costs over increased revenues.

         For the reasons  described above,  operating income for the nine months
ended September 30, 1995 increased $2.4 million, or 141.2%, to $4.1 million from
$1.7 million for the nine months ended  September  30,  1994.  Operating  margin
increased to 3.7% for the nine months ended September 30, 1995 from 1.7% for the
comparable period in 1994.

         Interest expense for the nine months ended September 30, 1995 increased
$80,000, or 15.2%, to $608,000 from $528,000 for the nine months ended September
30, 1994 primarily as a result of increased borrowings.

         For the reasons  discussed  above, net income for the nine months ended
September  30, 1995  increased  $1.5  million,  or 214.3%,  to $2.2 million from
$700,000 for the nine months ended September 30, 1994.

Pro Forma Year Ended December 31, 1995 Compared to Historical Combined Year 
                    Ended December 31, 1994

         Revenues for 1995 increased  $12.9 million,  or 9.4%, to $150.4 million
from  $137.5  million  for 1994  primarily  as a result  of  internal  growth by
SureWay,  Click,  Bestway  and  Court,  offset in part by a revenue  decline  at
Securities Courier.  For 1995, ground delivery revenues increased  approximately
$4.1 million (4.7%), air delivery revenues increased  approximately $5.5 million
(14.8%) and logistics  revenues  increased by approximately $3.3 million (25.2%)
over 1994.  Ground  delivery  revenues  increased  primarily  due to  additional
business from existing customers of Click,  Bestway and Court, offset in part by
declines  in  revenues  at  Securities  Courier  and Silver Star for the reasons
described  above.  Ground  delivery  revenues also  increased as a result of the
addition  of  new  customers  in  the  consumer   products  and   pharmaceutical
industries.  The  increase  in air  delivery  revenues  during  1995 was largely
attributable to new customers in the printing and graphic arts industries and to
increased demand from existing  customers of SureWay.  The increase in logistics
revenues  was  primarily  attributable  to  additional  business  from  existing
customers  of  Bestway/Crown  and  DSI in  the  pharmaceutical,  publishing  and
consumer products industries and new logistics customers for SureWay.

         Gross profit for 1995 increased $3.3 million, or 7.7%, to $45.5 million
from $42.2  million  for 1994  primarily  as a result of  increased  revenues at
SureWay  and Click.  These  increases  were  partially  offset by a decrease  in
revenues at Silver Star for the reason described above.

         SG&A for 1995 increased $741,000,  or 1.8%, to $41.1 million from $40.3
million for 1994. As a percentage of revenues,  SG&A decreased to 27.3% for 1995
from  29.3%  for 1994.  The  increase  in the  dollar  amount  of SG&A  resulted
primarily from increased costs relating to ongoing staff and facility  expansion
to generate and support the increased  revenue  volume as discussed  above.  The
decrease in SG&A as a  percentage  of revenues  was  primarily  attributable  to
spreading costs over increased revenues.

         For the reasons  described  above,  operating income for 1995 increased
$2.5 million,  or 135.8%, to $4.4 million from $1.9 million for 1994.  Operating
margin increased to 2.9% for 1995 from 1.3% for 1994.

         Interest expense for 1995 decreased $28,000,  or 3.1%, to $882,000 from
$910,000 for 1994 primarily as a result of repayments of certain indebtedness in
connection with the Combination.

         For the reasons  discussed above, net income for 1995 increased $1.3
million,  or 175.6%,  to $2.0 million from $721,000 for 1994.

Historical Combined Year Ended December 31, 1994 Compared to Historical Combined
                     Year Ended December 31, 1993

         Revenues for 1994 increased $15.7 million,  or 12.9%, to $137.5 million
from  $121.8  million  for 1993  primarily  as a result  of  internal  growth by
SureWay, Bestway/Crown and National. In 1994, ground delivery revenues increased
by  approximately  $9.5  million  (12.3%),  air delivery  revenues  increased by
approximately   $4.9  million  (15.3%)  and  logistics   revenues  increased  by
approximately  $1.3 million  (11.2%) over 1993  results.  The increase in ground
delivery   revenues  was  primarily   attributable   to  new  customers  in  the
pharmaceutical  and consumer products  industries in New Jersey, New York, Maine
and Connecticut. The growth in air delivery revenues resulted primarily from the
addition  of new sales  agency  offices by SureWay  and  increased  demand  from
existing  customers of SureWay and National in the advertising and entertainment
industries. The increase in logistics revenues was primarily attributable to the
entry into the logistics business by Bestway/Crown.

         Gross  profit  for 1994  increased  $4.9  million,  or 13.1%,  to $42.2
million from $37.3 million for 1993 primarily as a result of increased  revenues
at SureWay, Bestway/Crown and Securities Courier. These increases were partially
offset by a decrease  in revenues at DSI and at  Olympic.  Gross  profit  margin
remained  consistent  from the previous period despite the impact in 1994 of the
unexpected cancellation by a customer of DSI of a significant logistics project.

         SG&A for 1994 increased $4.3 million,  or 11.9%,  to $40.3 million from
$36.0 million for 1993. As a percentage of revenues, SG&A decreased slightly due
to the spreading of costs over  increased  revenues.  The increase in the dollar
amount of SG&A resulted primarily from increased costs relating to ongoing staff
and facility  expansion to generate and support the increased  revenue volume as
discussed above.

         For the reasons  discussed  above,  operating income for 1994 increased
$600,000, or 46.2%, to $1.9 million from $1.3 million for 1993. Operating margin
increased to 1.3% from 1.1% for the comparable period.

         Other income for 1994 decreased  $353,000,  or 44.6%,  to $438,000 from
$791,000 for 1993. Other income during both 1994 and 1993 consists  primarily of
gains on sales of certain assets by National and Silver Star.

         Interest  expense for 1994 increased  $120,000,  or 15.2%,  to $910,000
from $790,000 in 1993 due to increased  borrowings for working  capital needs at
an interest rate of 33.6% by Court.  The Company repaid this debt with a portion
of the net proceeds of the Offering.

         For  the  reasons  discussed  above,  net  income  remained  relatively
unchanged from the previous period.

Liquidity and Capital Resources

         On  November  27,  1995,  the Company  completed  the  Offering,  which
involved the public sale of  3,200,000  shares of Common Stock at a price of $13
per share. The net proceeds of the Offering were approximately $33.2 million. Of
this  amount,  $29.6  million was used to pay the cash  portion of the  purchase
price for the  Founding  Companies.  The Company  also used the net  proceeds to
repay approximately $2.3 million of debt during 1995.

         During  1995,  net  cash  provided  by  operating  activities  was $1.9
million.  Capital expenditures in 1995 totaled $2.1 million.  These expenditures
were used primarily to upgrade  equipment and maintain and expand  facilities in
the  ordinary  course of  business.  In many cases,  drivers  provide  their own
delivery vehicles, which reduces the Companies capital expenditures and overhead
costs.  In addition to the uses  described  above,  these  expenditures  will be
incurred to improve and enhance  existing systems and to conduct a comprehensive
evaluation  with  respect  to the  establishment  of an  integrated  information
management system.

         The Company used $495,000 in investing activities during 1995, relating
primarily to capital  expenditures  and the purchases of businesses.  These uses
were  offset in part by the  repayment  of  stockholder  loans by certain of the
former stockholders of the Founding Companies.

         During  1995,  net  cash  provided  by  financing  activities  was $2.8
million,  relating primarily to the Offering, the issuance of the Debentures and
the net proceeds from short-term  borrowings and long-term  debt.  These amounts
were offset in part by repayments, distributions paid to the former stockholders
of the Founding  Companies in connection  with the Combination and certain other
distributions paid to stockholders.

         Total  indebtedness of the Company was approximately $9.3 million as of
December 31, 1995, consisting primarily of bank loans, capitalized leases, notes
due to the  stockholders  of the  Founding  Companies,  equipment  loans,  other
working  capital  loans and $2.0  million  in  aggregate  principal  amounts  of
Debentures. Such indebtedness bears interest at rates ranging from 5.0% to 27.0%
with weighted average interest rate of approximately 11.8%.

         Management  believes that cash flow from operations,  together with its
current sources of liquidity and borrowing  capacity,  are sufficient to support
the   Company's   operations   and  general   business  and  capital   liquidity
opportunistic  acquisition  program. The Company currently intends to use Common
Stock  for  all  or a  portion  of  the  consideration  to  be  paid  in  future
acquisition.  However,  the recent  decline in the market value of the Company's
Common  Stock  has  reduced  the  attractiveness  of  the  Common  Stock  as  an
acquisition medium. As a result, the Company will be required to utilize more of
its cash resources,  if available,  in order to effect its acquisition  program.
The  Company  currently  does not have  sufficient  cash  resources  to fund its
acquisition program. Accordingly, the Company's growth through acquisitions will
be limited unless it is able to obtain  additional  capital  through  additional
debt or equity  financing.  The company is currently  discussing  the terms of a
proposed credit facility with an institutional lender.  However, there can be no
assurance  that the Company will be able to obtain such financing if and when it
is needed or that, if available, it will be available on terms the Company deems
acceptable.  As a result, the Company might be unable to implement  successfully
its acquisition strategy.

         The  Financial  Accounting  Standards  Board has issued a new standard,
"Accounting for Stock-Based  Compensation"  ("SFAS 123"). 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  expects to
continue to account for employee  stock-based  compensation under Opinion 25 and
provide the required pro forma disclosures.

Inflation

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

SureWay Results of Operations

Three Months Ended December 31, 1995 Compared to pro forma Combined Three Months
                     Ended December 31, 1994

         The combined results for the three month period ended December 31, 1994
may not be  comparable  to the  consolidated  results for the three month period
ended  December 31, 1995 due to the effect of the merger and offering  described
elsewhere.

         Revenues increased $2.1 million for the three months ended December 31,
1995 to $11.6 million from $9.5 million for the three months ended  December 31,
1994  primarily as a result of increased  demand from existing  customers and an
increased demand from new customers in SureWay Logistics Division.

         Operating  income  increased  by  $655,000  from an  operating  loss of
$77,000 for the three months ended  December 31, 1994 to an operating  profit of
$579,000 for the three months ended December 31, 1995.

         For the reasons  discussed  above,  net income increased from a loss of
$54,000 for the three months ended December 31, 1994 by $214,000 to $160,000 for
the three months ended December 31, 1995.

Nine Months Ended September 30, 1995 Compared to Nine Months Ended September 30,
                          1994 (Unaudited)

         Revenues for the nine months ended  September 30, 1995  increased  $4.4
million, or 16.2%, to $31.6 million from $27.2 million for the nine months ended
September 30, 1994  primarily as a result of internal  growth from new customers
in the  printing and graphic arts  industries  as well as increased  demand from
existing customers.

         Gross profit for the nine months  ended  September  30, 1995  increased
$1.9 million,  or 17.4%, to $12.8 million from $10.9 million for the nine months
ended  September  30,  1994  primarily  as a result  of  increased  revenues  as
described above. Gross profit margin remained relatively  unchanged for the nine
months ended September 30, 1995.

         SG&A for the nine months ended  September 30, 1995 increased  $900,000,
or 8.9%, to $11.0 million from $10.1 million for the nine months ended September
30, 1994.  As a percentage  of  revenues,  SG&A  decreased to 34.9% for the nine
months ended  September 30, 1995 from 37.3% for the nine months ended  September
30, 1994.  The increase in the dollar  amount of SG&A  resulted  primarily  from
increased costs relating to ongoing staff and facility expansion to generate and
support the increased revenue volume as discussed above. The decrease in SG&A as
a percentage  of revenues was  primarily  attributable  to spreading  costs over
increased revenues.

         For the reasons  described above,  operating income for the nine months
ended September 30, 1995 increased  $1,005,000,  or 126.4%, to $1.8 million from
$795,000  for the  nine  months  ended  September  30,  1994.  Operating  margin
increased to 5.6% for the nine months ended September 30, 1995 from 2.9% for the
comparable period of 1994.

         Interest expense for the nine months ended September 30, 1995 increased
$19,000,  or 27.5%,  to $88,000 from $69,000 for the nine months ended September
30, 1994 primarily as a result of increased borrowings.

         For the reasons  discussed  above, net income for the nine months ended
September 30, 1995 increased $647,000,  or 142.8%, to $1.1 million from $453,000
for the nine months ended September 30, 1994.

Year Ended December 31, 1994 Compared to Year Ended December 31, 1993

         Revenues for 1994  increased $4.7 million,  or 14.7%,  to $36.7 million
from $32.0  million for 1993  primarily as a result of the addition of new sales
agency offices and increased  demand from existing  customers in the advertising
and entertainment industries.

         Gross  profit  for 1994  increased  $2.1  million,  or 15.9%,  to $15.3
million from $13.2 million for 1993 primarily as a result of increased  revenues
as described  above.  Gross profit margin increased to 41.6% for 1994 from 41.3%
for 1993. The increase in gross profit margin resulted  primarily from increased
efficiencies.

         SG&A for 1994 increased $1.7 million,  or 13.2%,  to $14.6 million from
$12.9 million for 1993. As a percentage of revenues, SG&A decreased to 39.6% for
1994 from 40.2% for 1993.  The  increase in the dollar  amount of SG&A  resulted
primarily from increased costs relating to ongoing staff and facility  expansion
to generate and support the increased  revenue  volume as discussed  above.  The
decrease in SG&A as a  percentage  of revenues  was  primarily  attributable  to
spreading costs over increased revenues.

         For the reasons  described  above,  operating income for 1994 increased
$385,000,  or 115.6%,  to $718,000  from  $333,000  for 1993.  Operating  margin
increased to 2.0% for 1994 from 1.1% for 1993.

         Interest  expense for 1994  decreased  $3,000, or 3.1%, to $97,000 from
$100,000 for 1993  primarily as a result of decreased borrowings.

         For  the  reasons  discussed  above, net  income for  1994 increased 
$213,000,  or 114.5%,  to $399,000 from $186,000 for 1993.

Year Ended December 31, 1993 Compared to Year Ended December 31, 1992

         Revenues for 1993  increased  $2.4  million,  or 8.1%, to $32.0 million
from $29.6  million for 1992  primarily as a result of the addition of new sales
agency  offices and from new  customers in the  entertainment,  advertising  and
financial industries .

         Gross  profit  for 1993  increased  $1.4  million,  or 11.9%,  to $13.2
million from $11.8 million for 1992 primarily as a result of increased  revenues
as described  above.  Gross profit margin increased to 41.3% for 1993 from 39.8%
for 1992. The increase in gross profit margin resulted  primarily from increased
efficiencies.

         SG&A for 1993 increased $1.4 million,  or 12.2%,  to $12.9 million from
$11.5 million for 1992. As a percentage of revenues, SG&A increased to 40.2% for
1993 from 38.7% for 1992.  The  increase in the dollar  amount of SG&A  resulted
primarily from increased costs relating to ongoing staff and facility  expansion
to generate and support the increased revenue volume as discussed above.

         For the reasons described above,  operating income for 1993 decreased 
$18,000,  or 5.1%, to $333,000 from $351,000 for 1992. Operating margin remained
relatively unchanged for 1993.

         Interest expense for 1993 decreased $35,000, or 25.9%, to $100,000 from
$135,000 for 1992 primarily as a result of decreased borrowings.

         For the reasons discussed above, net income for 1993 increased $10,000,
or 5.7%,  to  $186,000  from $176,000 for 1992.

Securities Courier Results of Operations

Three Months Ended December 31, 1995 Compared to pro forma Combined Three Months
                     Ended December 31, 1994

         The combined results for the three month period ended December 31, 1994
may not be  comparable  to the  consolidated  results for the three month period
ended  December 31, 1995 due to the effect of the merger and offering  described
elsewhere.

         Revenues  for the three months  ended  December  31, 1995  decreased by
$464,000 from $4.6 million for the three months ended  December 31, 1994 to $4.1
million  primarily  as the  result of a contract  lost in the fourth  quarter of
1995.

         Operating  income fell by $268,000  from  $154,000 for the three months
ended  December  31,  1994 to a loss of  $114,000  for the  three  months  ended
December 31, 1995 primarily  attributable  to the decline in revenues  discussed
above.

         Net income  decreased  $137,000 from $52,000 for the three months ended
December 31, 1994 to a net loss of $84,000 for the three  months ended  December
31, 1995 primarily due to the reduction in Revenues discussed above.

Nine Months Ended September 30, 1995 Compared to Nine Months Ended September 30,
                          1994 (Unaudited)

         Revenues for the nine months ended  September 30, 1995  decreased  $1.3
million,  or 9.2%, to $12.8 million from $14.1 million for the nine months ended
September  30,  1994  primarily  as a result of a  contract  lost in the  fourth
quarter of 1994.

         Gross profit for the nine months  ended  September  30, 1995  increased
$100,000,  or 6.3%,  to $1.7 million from $1.6 million for the nine months ended
September  30, 1994  primarily as a result of operating  efficiencies  and lower
insurance  costs.  Gross  profit  margin  increased to 13.4% for the nine months
ended  September  30, 1995 from 11.0% for the nine months  ended  September  30,
1994. The increase in gross profit margin resulted  primarily from the operating
efficiencies and lower insurance costs referred to above.

         SG&A for the nine months ended  September 30, 1995 remained  relatively
unchanged  for the nine months  ended  September  30, 1994.  As a percentage  of
revenues,  SG&A increased to 11.1% for the nine months ended  September 30, 1995
from 9.7% for the nine months ended  September 30, 1994 primarily as a result of
the decreased revenues described above.

         For the reasons  described above,  operating income for the nine months
ended September 30, 1995 increased $108,000, or 57.1%, to $297,000 from $189,000
for the nine months ended September 30, 1994. Operating margin increased to 2.3%
for the nine months ended September 30, 1995 from 1.3% for the comparable period
of 1994.

         Interest expense for the nine months ended September 30, 1995 decreased
$49,000, or 26.1%, to $139,000 from $188,000 for the nine months ended September
30, 1994 primarily as a result of decreased borrowings.

         For the reasons  discussed  above, net income for the nine months ended
September 30, 1995 increased  $95,000,  or 172.7%,  to $150,000 from $55,000 for
the nine months ended September 30, 1994.

Year Ended December 31, 1994 Compared to Year Ended December 31, 1993

         Revenues for 1994 increased  $900,000,  or 5.1%, to $18.7 million from
$17.8 million for 1993 primarily as a result of internal growth.

         Gross profit for 1994  increased  $700,000,  or 46.7%,  to $2.2 million
from $1.5  million  for 1993  primarily  as a result of  increased  revenues  as
described  above and operating  efficiencies.  Gross profit margin  increased to
11.8% for 1994 from 8.4% for 1993. The increase in gross profit margin  resulted
primarily from a reduction in vehicle operating and rental expenses.

         SG&A for 1994  increased  $100,000,  or 5.6%, to $1.9 million from $1.8
million for 1993. As a percentage of revenues,  SG&A  decreased to 9.9% for 1994
from  10.1%  for 1993.  The  increase  in the  dollar  amount  of SG&A  resulted
primarily from increased costs relating to ongoing staff and facility  expansion
to generate and support the increased  revenue  volume as discussed  above.  The
decrease in SG&A as a  percentage  of revenues  was  primarily  attributable  to
spreading costs over increased revenues.

         For the reasons  described  above,  operating income for 1994 increased
$653,000,  or 210.6%,  to $343,000 from an operating  loss of $310,000 for 1993.
Operating margin increased to 1.9% for 1994 from a negative 1.7% for 1993.

         Interest expense for 1994 decreased $28,000, or 10.4%, to $240,000 from
$268,000 for 1993 primarily as a result of decreased  borrowings and the effects
of interest rate reductions on certain municipal indebtedness.

         For  the  reasons  discussed  above,  net income for  1994 increased
$454,000,  or 131.2%,  to $108,000 from a net loss of $346,000 for 1993.

Year Ended December 31, 1993 Compared to Year Ended December 31, 1992

         Revenues for 1993 increased  $200,000,  or 1.1%, to $17.8 million from
$17.6 million for 1992 primarily as a result of internal growth.

         Gross profit for 1993  decreased  $400,000,  or 21.1%,  to $1.5 million
from  $1.9  million  for 1992  primarily  as a  result  of  increased  insurance
expenses.  Gross profit  margin  decreased to 8.4% for 1993 from 10.6% for 1992.
The decrease in gross profit margin resulted  primarily from the increased costs
described above.

         SG&A for 1993 remained relatively unchanged from 1992.

         For the reasons  described  above,  operating income for 1993 decreased
$381,000,  or 536.6%,  to an operating loss of $310,000 from operating income of
$71,000 for 1992.  Operating  margin also  decreased to a negative 1.7% for 1993
from 0.4% for 1992.

         Interest expense for 1993 decreased $27,000,  or 9.2%, to $268,000 from
$295,000  for 1992  primarily  as a  result  of the  effects  of  interest  rate
reductions on certain municipal indebtedness.

         For the reasons  discussed  above,  net loss for 1993 was $346,000  
compared to a net loss of $215,000 for 1992.

National Results of Operations


Three Months Ended December 31, 1995 Compared to pro forma Combined Three Months
                          Ended December 31, 1994

         The combined results for the three month period ended December 31, 1994
may not be  comparable  to the  consolidated  results for the three month period
ended  December 31, 1995 due to the effect of the merger and offering  described
elsewhere.

        Revenues remained  consistent at $4.3 million for the three months ended
December 31, 1995 and 1994.

        Operating  income increased by $87,000 from an operating loss of $24,000
for the three months ended  December 31, 1994 to an operating  income of $63,000
for  the  three  months  ended  December  31,  1995  as a  result  of  increased
efficiencies in operations.

        Net income increased by $77,000 from a net loss of $13,000 for the three
months  ended  December 31, 1994 to a net income of $64,000 for the three months
ended December 31, 1995.

Nine Months Ended September 30, 1995 Compared to Nine Months Ended September 30,
                               1994 (Unaudited)

         Revenues for the nine months ended  September 30, 1995  increased  $1.3
million, or 12.1%, to $12.0 million from $10.7 million for the nine months ended
September 30, 1994 primarily as a result of internal growth.

         Gross profit for the nine months  ended  September  30, 1995  increased
$700,000,  or 17.9%, to $4.6 million from $3.9 million for the nine months ended
September  30, 1994  primarily  as a result of  increased  revenues as described
above.  Gross  profit  margin  increased  to  38.6%  for the nine  months  ended
September 30, 1995 from 36.3% for the nine months ended  September 30, 1994. The
increase in gross profit margin resulted primarily from increased efficiencies.

         SG&A for the nine months ended  September 30, 1995 increased  $600,000,
or 15.4%,  to $4.5 million from $3.9 million for the nine months ended September
30, 1994.  As a percentage  of  revenues,  SG&A  increased to 37.5% for the nine
months ended  September 30, 1995 from 36.3% for the nine months ended  September
30, 1994.  The increase in the dollar  amount of SG&A  resulted  primarily  from
increased costs relating to ongoing staff and facility expansion to generate and
support the increased revenue volume as discussed above.

         For the reasons described above,  operating income for the nine months
ended September 30,  1995 increased $146,000 to $141,000 from an operating  loss
of $5,000 for the nine months  ended  September 30,  1994.  Operating margin 
increased to 1.1% for the nine months ended September 30, 1995.

         Interest expense for the nine months ended September 30, 1995 increased
$24,000, or 55.8%, to $67,000 from $43,000 for the nine ended September 30, 1994
primarily as a result of increased borrowings.

         For the reasons  discussed  above, net income for the nine months ended
September 30, 1995  increased  $1,000,  or 50.0%,  to $2,000 from $1,000 for the
nine months ended September 30, 1994.

Year Ended December 31, 1994 Compared to Year Ended December 31, 1993

         Revenues for 1994  increased $2.5 million,  or 20.0%,  to $15.0 million
from $12.5  million  for 1993  primarily  as a result of  increased  demand from
existing customers in the computer and medical services industries.

         Gross profit for 1994  increased  $700,000,  or 14.0%,  to $5.7 million
from $5.0  million  for 1993  primarily  as a result of  increased  revenues  as
described above.  Gross profit margin decreased to 37.8% for 1994 from 40.2% for
1993.  The decrease in gross profit margin  resulted  primarily  from a changing
customer mix resulting in a higher amount of lower margin business.

         SG&A for 1994  increased  $300,000,  or 6.1%, to $5.2 million from $4.9
million for 1993. As a percentage of revenues,  SG&A decreased to 34.9% for 1994
from  39.6%  for 1993.  The  increase  in the  dollar  amount  of SG&A  resulted
primarily from increased costs relating to ongoing staff and facility  expansion
to generate and support the increased  revenue  volume as discussed  above.  The
decrease in SG&A as a  percentage  of revenues  was  primarily  attributable  to
spreading costs over increased revenues.

         For the reasons  described  above,  operating income for 1994 increased
$351,000,  or 474.3%,  to  $425,000  from  $74,000  for 1993.  Operating  margin
increased to 2.9% for 1994 from 0.6% for 1993.

         Other income for 1994 decreased  $375,000,  or 183.8%, to an expense of
$171,000  from  income  of  $204,000  in 1993.  Other  income  in 1993  resulted
primarily from the sale of certain assets.

         Interest expense remained relatively unchanged for 1994.

         For the reasons discussed above, net income for 1994 decreased  $7,000,
or 5.1%,  to  $130,000  from $137,000 for 1993.

Year Ended December 31, 1993 Compared to Year Ended December 31, 1992

         Revenues for 1993  increased  $700,000,  or 5.9%, to $12.5 million from
$11.8 million for 1992  primarily as a result of increased  demand from existing
customers in the computer and medical services industries.

         Gross profit for 1993 increased $200,000, or 4.2%, to $5.0 million from
$4.8 million for 1992  primarily as a result of increased  revenues as described
above.  Gross profit margin decreased to 40.2% for 1993 from 40.9% for 1992. The
decrease in gross profit margin resulted  primarily from a changing customer mix
resulting in a higher amount of lower margin business.

         SG&A for 1993  decreased  $200,000,  or 3.9%, to $4.9 million from $5.1
million for 1992. As a percentage of revenues,  SG&A decreased to 39.6% for 1993
from  43.3%  for 1992.  The  decrease  in the  dollar  amount  of SG&A  resulted
primarily from the sale of certain  assets in 1993,  offset in part by increased
costs  relating to ongoing staff and facility  expansion to generate and support
the  increased  revenue  volume as  discussed  above.  The decrease in SG&A as a
percentage of revenues was primarily attributable to such sale and the spreading
of costs over increased revenues.

         For the reasons  described  above,  operating income for 1993 increased
$365,000,  or 125.4%,  to $74,000 from an  operating  loss of $291,000 for 1992.
Operating margin increased to 0.6% for 1993 from a loss of 2.4% for 1992.

         Other income for 1993 decreased  $253,000,  or 55.4%,  to $204,000 from
$457,000 in 1992.  Other income in 1993 and 1992 resulted primarily from the 
sale of certain assets.

         Interest expense for 1993 decreased $23,000, or 32.9%, to $47,000 from
$70,000 for 1992 primarily as a result of decreased borrowings.

         For the reasons discussed above, net income for 1993 increased $82,000,
or 149.1%,  to $137,000 from $55,000 for 1992.




<PAGE>



                                                        F-8
Item 8.  Financial Statements and Supplementary Data




                                           INDEX TO FINANCIAL STATEMENTS


Page

Consolidated Delivery & Logistics, Inc.
    Report of Independent Public Accountants.................................F-3
    Balance Sheet............................................................F-4
    Statement of Operations..................................................F-5
    Statement of Stockholders' Equity........................................F-6
    Statement of Cash Flows..................................................F-7
    Notes to Financial Statements............................................F-8

Combined Founding Companies
    Report of Independent Public Accountants................................F-17
    Combined Balance Sheets.................................................F-18
    Combined Statements of Income...........................................F-19
    Combined Statements of Stockholders' Equity.............................F-20
    Combined Statements of Cash Flows.......................................F-21
    Notes to Combined Financial Statements..................................F-23

SureWay Air Traffic Corporation
    Report of Independent Public Accountants................................F-36
    Consolidated Balance Sheets.............................................F-37
    Consolidated Statements of Income.......................................F-38
    Consolidated Statements of Stockholders' Equity.........................F-39
    Consolidated Statements of Cash Flows...................................F-40
    Notes to Consolidated Financial Statements..............................F-41

Securities Courier Corporation
    Report of Independent Public Accountants................................F-48
    Balance Sheets..........................................................F-49
    Statements of Operations................................................F-50
    Statements of Stockholders' Deficit.....................................F-51
    Statements of Cash Flows................................................F-52
    Notes to Financial Statements...........................................F-53

National Courier, Inc. and National Express, Inc.
    Report of Independent Public Accountants................................F-59
    Combined Balance Sheets.................................................F-60
    Combined Statements of Operations ......................................F-61
    Combined Statements of Stockholders' Equity.............................F-62
    Combined Statements of Cash Flows.......................................F-63
    Notes to Combined Financial Statements..................................F-64

Silver Star Express, Inc. and Related Companies
    Report of Independent Public Accountants................................F-70
    Combined Balance Sheets.................................................F-71
    Combined Statements of Income...........................................F-72
    Combined Statements of Stockholders' Equity.............................F-73
    Combined Statements of Cash Flows.......................................F-74
    Notes to Combined Financial Statements .................................F-75



<PAGE>




Page
Click Messenger Service, Inc. and Related Companies
    Report of Independent Public Accountants................................F-82
    Combined Balance Sheets.................................................F-83
    Combined Statements of Operations.......................................F-84
    Combined Statements of Stockholders' Equity (Deficit)t..................F-85
    Combined Statements of Cash Flows.......................................F-86
    Notes to Combined Financial Statements..................................F-87

Crown Courier Systems, Inc. and Bestway Distribution Services, Inc.
    Report of Independent Public Accountants................................F-93
    Combined Balance Sheets.................................................F-94
    Combined Statements of Operations.......................................F-95
    Combined Statements of Stockholders' Equity.............................F-96
    Combined Statements of Cash Flows.......................................F-97
    Notes to Combined Financial Statements..................................F-98

Court Courier Systems, Inc.
    Report of Independent Public Accountants...............................F-104
    Consolidated Balance Sheets............................................F-105
    Consolidated Statements of Operations..................................F-106
    Consolidated Statements of Stockholders' Deficit.......................F-107
    Consolidated Statements of Cash Flows..................................F-108
    Notes to Consolidated Financial Statements ............................F-109

Orbit/Lightspeed Courier Systems, Inc. and Related Companies
    Report of Independent Public Accountants...............................F-116
    Combined Balance Sheets................................................F-117
    Combined Statements of Operations .....................................F-118
    Combined Statements of Stockholders' Equity............................F-119
    Combined Statements of Cash Flows......................................F-120
    Notes to Combined Financial Statements.................................F-121

Distribution Solutions International, Inc.
    Report of Independent Public Accountants...............................F-127
    Balance Sheets.........................................................F-128
    Statements of Operations...............................................F-129
    Statements of Stockholder's Equity (Deficit)...........................F-130
    Statements of Cash Flows...............................................F-131
    Notes to Financial Statements..........................................F-132

Olympic Courier Systems, Inc. and Related Company
    Report of Independent Public Accountants...............................F-139
    Combined Balance Sheets................................................F-140
    Combined Statements of Income..........................................F-141
    Combined Statements of Stockholders' Equity............................F-142
    Combined Statements of Cash Flows......................................F-143
    Notes to Combined Financial Statements.................................F-144

American Courier Express, Inc.
    Report of Independent Public Accountants...............................F-149
    Balance Sheets.........................................................F-150
    Statements of Operations...............................................F-151
    Statements of Stockholders' Equity.....................................F-152
    Statements of  Cash Flows..............................................F-153
    Notes to Financial Statements..........................................F-154







                                     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 of December
31,  1994  and 1995  and the  related  consolidated  statements  of  operations,
stockholders'  equity  and cash flows for the period  from  inception  (June 30,
1994) to  December  31, 1994 and for the year ended  December  31,  1995.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements 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, 1994 and 1995 and
the  results  of their  operations  and their  cash  flows for the  period  from
inception  (June 30, 1994) to December 31, 1994 and for the year ended  December
31, 1995, in conformity with generally accepted accounting principles.



                                                            ARTHUR ANDERSEN LLP


Roseland, New Jersey
March 19, 1996



<PAGE>


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


                                   ASSETS
                                                        December 31,
                                          --------------------------------------
                                                       1994                1995
                                          ------------------  ------------------
CURRENT ASSETS:
  Cash and cash equivalents (Note 3)                    $2               $6,589
  Accounts receivable, less allowance for
   doubtful accounts of $1,285 in 1995
   (Note 9)                                              0               18,555
  Deferred income taxes (Note 11)                        0                  660
  Prepaid expenses and other current
    assets (Note 5)                                      0                1,652
                                          ------------------  ------------------

     Total current assets                                2               27,456

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net
 (Notes 3 and 6)                                         0                3,925
OTHER ASSETS (Notes 3 and 7)                             0                1,459
                                          ------------------  ------------------


     Total assets                                       $2              $32,840
                                          ==================  ==================



                    LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Short-term borrowings (Note 9)                        $0               $2,803
  Current portion of long-term debt
   (Note 9)                                              0                3,477
  Accounts payable                                       0                5,986
  Accrued expenses and other current
   liabilities (Note 8)                                  0                5,637
  Income taxes payable (Note 11)                         0                  957
  Deferred revenue (Note 3)                              0                1,054
                                         ------------------  -------------------

     Total current liabilities                           0               19,914
                                         ------------------  -------------------

LONG-TERM DEBT (Note 9)                                  0                3,027
                                         ------------------  -------------------

DEFERRED INCOME TAXES PAYABLE (Notes 3 and 11)           0                1,543
                                         ------------------  -------------------

OTHER LONG-TERM LIABILITIES                              0                   45
                                         ------------------  -------------------


COMMITMENTS AND CONTINGENCIES  (Notes 12
 and 14) STOCKHOLDERS'  EQUITY (Notes 13
 and 14):
  Preferred stock, $.001 par value;
   2,000,000 shares authorized; no shares
   issued and outstanding                                0                    0
  Common stock, $.001 par value;
   20,000,000 and 30,000,000 shares
   authorized, respectively; 2,100,000
   and 6,629,569 shares issued and outstanding,
   respectively                                          2                    7
  Additional paid-in capital                             0                8,499
  Accumulated deficit                                    0                 (195)
                                         ------------------  -------------------


      Total stockholders' equity                         2                8,311
                                         ------------------  -------------------


      Total liabilities and stockholders' equity        $2              $32,840
                                         ==================  ===================

     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)

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

      REVENUES (Note 3)                                  $0             $39,036
      COST OF REVENUES                                    0              27,439
                                           ----------------  -------------------

         Gross profit                                     0              11,597

      SELLING, GENERAL AND ADMINISTRATIVE
           EXPENSES                                       0              11,301
                                           ----------------  -------------------

         Operating income                                 0                 296

      OTHER INCOME (EXPENSE):
        Other income, net                                 0                 348
        Interest income                                   0                  17
        Interest expense                                  0                (274)
                                           ----------------  -------------------
                                                          0                  91
                                           ----------------  -------------------

      INCOME BEFORE INCOME TAXES...........               0                 387

      PROVISION FOR INCOME TAXES (Notes 3
        and 11)                                           0                 582
                                           ----------------  -------------------

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

      NET LOSS PER SHARE (Note 3)                                         ($.10)
                                                             ===================

      WEIGHTED AVERAGE SHARES OUTSTANDING (Note 3)                     2,059,894
                                                             ===================


       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 13)
  FOR THE PERIOD FROM INCEPTION (JUNE 30, 1994) THROUGH DECEMBER 31, 1994 AND
                     FOR THE YEAR ENDED DECEMBER 31, 1995
                       (in thousands except share data)



                                                      Additional        Total
                                         Common Stock  Paid-In     Stockholders'
                                       ----------------      Accumulated
                                        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
                                       =========  ===  =======  =====  =======

       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)

                                                            For The
                                                          Period From
                                                           Inception    For The
                                                         (June 30, 1994)  Year
                                                              Through    Ended
                                                           December 31, December
CASH FLOWS FROM OPERATING ACTIVITIES: ......................   1994    31, 1995
                                                             --------   --------
  Net income (loss) .........................................$     0   ($   195)
  Adjustments to reconcile net income (loss) to net cash
      provided by operating activities -
  Adjustment to conform fiscal year-ends of certain Founding
      Companies ............................................       0          0
  Loss on disposal of equipment and leasehold improvements .       0         63
  Depreciation and amortization ............................       0        452
  Capital contribution equal to current income taxes of
      S Corporations .......................................       0        (65)
  Deferred income tax expense ..............................       0         77
  Changes in operating assets and liabilities
    (Increase) decrease in -
      Accounts receivable, net .............................       0       (108)
      Prepaid expenses and other current assets ............       0      2,469
      Other assets .........................................       0        140
    Increase (decrease) in -
      Accounts payable, accrued liabilities and income taxes
           payable .........................................       0       (537)
      Deferred revenue .....................................       0       (260)
      Other long-term liabilities ..........................       0        (33)
                                                             --------   --------
                                                                               
              Net cash provided by operating activities ....       0      2,003
                                                             --------   --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to equipment and leasehold improvements ........       0       (730)
  Purchases of businesses ..................................       0       (651)
  Decrease in loans from stockholders ......................       0          0
  Other, net ...............................................       0        (26)
                                                             --------   --------
              Net cash used in investing activities ........       0     (1,407)
                                                             --------   --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Short-term borrowings, net ...............................       0        550
  Proceeds from 8% Subordinated Convertible Debentures .....       0      2,000
  Proceeds from long-term debt .............................       0      1,083
  Repayments of long-term debt .............................       0     (1,411)
  Issuance of Common Stock, net of offering costs ..........       2     33,151
  Cash acquired through acquisition of Founding Companies ..       0      1,172
  Distributions to stockholders ............................       0       (949)
  Distributions to Founding Companies' Stockholders ........       0    (29,604)
  Repurchase of Common Stock ...............................       0         (1)
                                                             --------   --------
              Net cash provided by financing activities .          2      5,991
                                                             --------   --------
              Net increase in cash and cash equivalents ..         2      6,587
CASH AND CASH EQUIVALENTS, beginning of year .............         0          2
                                                             ========   ========
CASH AND CASH EQUIVALENTS, end of year ..................   $      2   $  6,589
                                                             ========   ========

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

SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES:
  Capital lease obligations incurred ....................   $      0   $    238
                                                             ========   ========
      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
                        (in thousands except share data)

(1)      ORGANIZATION AND BUSINESS:

Consolidated  Delivery & Logistics,  Inc. ("CD&L") was founded in June 1994. 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.

In  November  1995,   CD&L  acquired  eleven   businesses  (the   "Combination")
simultaneously  with the closing of an initial public offering (the "Offering").
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  "Common
Stock").  These  eleven  businesses  are  referred  to herein as the  ("Founding
Companies").  CD&L and its subsidiaries  are collectively  referred to herein as
the "Company."

(2)      BASIS OF PRESENTATION:

The  accompanying  consolidated  financial  statements  include  results  of the
Founding  Companies  subsequent to September 30, 1995.  October 1, 1995 has been
used as the  effective  date of the  acquisition  of the Founding  Companies for
accounting  purposes.  The assets and  liabilities of the Founding  Companies at
September 30, 1995, were recorded by CD&L at their historical  amounts.  See the
combined  financial  statements  of the Founding  Companies  included  elsewhere
herein.

The following  footnotes do not present comparative balance sheet information as
consolidated  balance sheet items for CD&L were not  significant at December 31,
1994.

(3)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation -

The  consolidated  financial  statements  include  the  accounts of CD&L 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 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.

Equipment and Leasehold Improvements -

Equipment is 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.



<PAGE>


Deferred Financing Costs -

Debt  issuance   costs  are  included  in  other  assets  in  the   accompanying
consolidated balance sheets and are expensed over the life of the related debt.

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 -

Certain of the Founding  Companies were S  Corporations  for income tax purposes
and,  accordingly,  any  income tax  liabilities  for the  periods  prior to the
acquisition  date are the  responsibility  of the respective  stockholders.  For
purposes of the  consolidated  financial  statements,  Federal and state  income
taxes have been  provided as if these  companies  had filed C  Corporations  tax
returns for the pre-acquisition periods. The current income tax expense of the S
Corporations  is  reflected  in  the  consolidated  financial  statements  as an
adjustment to additional paid-in capital. 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 revenue
and expense 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 acquired  businesses  reporting on the cash basis for
income tax purposes prior to their acquisition by the Company.

Long-Lived Assets -

During  1995,  the Company  adopted the  provisions  of  Statement  of Financial
Accounting  Standards  No. 121,  "Accounting  for the  Impairment  of Long-Lived
Assets  and  Long-Lived  Assets  to be  Disposed  of,"  ("SFAS  121").  SFAS 121
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 impairment currently
exists related to its long-lived assets.

Stock Based Compensation -

The Financial Accounting Standards Board has issued a new standard, Statement of
Financial   Accounting   Standards   No.  123,   "Accounting   for   Stock-Based
Compensation"  ("SFAS  123").  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  expects  to  continue  to  account  for  employee
stock-based  compensation  under  Opinion 25 and provide the  required pro forma
disclosures.

Net Income (Loss) Per Share -

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 13) and (iii) the  weighted  average  portion of  6,135,700
shares issued in connection with the Offering.  The conversion of the debentures
(see Note 9) and stock options (see Note 14) is not included in the  computation
as the effect would be antidilutive.



<PAGE>


(4)      BUSINESS COMBINATIONS:

In November 1995, the Company purchased through one of its subsidiaries  certain
assets from  National  Metro Courier  ("National  Metro").  The assets  acquired
include  customer lists,  machinery and equipment and various other assets.  The
purchase price of $150 is payable as follows:  $50 upon signing of the agreement
and $50 on each of the first two anniversary dates of signing the agreement.

In November 1995, the Company purchased through one of its subsidiaries  certain
assets from Medexpress Systems, Inc. ("Medexpress"). The assets acquired include
accounts receivable,  customer lists,  machinery and equipment and various other
assets.  The purchase price will be calculated as 10% of Medexpress'  total 1995
and 1996  revenues and 5% of 1997  revenues,  not to exceed  $750.  For the year
ended December 31, 1995,  Medexpress'  revenues  totaled  approximately  $1,500.
Medexpress was 50% owned by stockholders of CD&L.

The  acquisitions  have been  treated as  purchases  and the results of National
Metro  and  Medexpress  have been  reflected  in the  accompanying  consolidated
statements of operations since their respective  acquisition  dates. The results
of operations of National Metro and Medexpress  prior to their  acquisitions are
not material to CD&L's consolidated statements of operations.

(5)      PREPAID EXPENSES AND OTHER CURRENT ASSETS:

Prepaid expenses and other current assets consist of the following as of
      December 31, 1995 -

Prepaid insurance .....................   $  768
Prepaid office supplies ...............      387
Employee advances and other receivables      130
Other .................................      367
                                          ------


                                          $1,652
                                          ======

(6)      EQUIPMENT AND LEASEHOLD IMPROVEMENTS:

Equipment and leasehold improvements consists of the following as of
      December 31, 1995 -

                                                  Useful Lives
Transportation and warehouse equipment .........   3-5 years      $  3,823
Office equipment ...............................   5-8 years         4,943
Other equipment ................................   5-8 years           907
Leasehold improvements .........................   Lease period      1,103
                                                                  --------
                                                                    10,776
Less - accumulated depreciation and amortization                    (6,851)
                                                                  --------

                                                                  $  3,925
                                                                  ========

Leased equipment under capital leases (included above) consists of the following
as of December 31, 1995 -

Equipment .....................   $ 1,103
Less - accumulated amortization      (459)
                                  -------


                                  $   644
                                  =======

(7)      OTHER ASSETS:

Other assets consist of the following as of December 31, 1995 -

Intangibles, amortized on a straight-line basis over 5 years   $  514
Security deposits ..........................................      489
Other ......................................................      456
                                                               ------

                                                               $1,459
                                                               ======



<PAGE>


(8)      ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

Accrued expenses and other current liabilities consist of the following as of
      December 31, 1995 -

Payroll and related expenses .........   $2,345
Workers compensation and medical .....    1,125
Rent and professional fees ...........    1,139
Amounts due to independent contractors      367
Other ................................      661
                                         ------

                                         $5,637
                                         ======




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

Short-term borrowings -

At December 31, 1995, the Company had available lines of credit totaling $3,050.
The  Company's  outstanding  borrowings  on such lines of credit are  payable to
various  banks and total $2,803 at December  31, 1995.  The lines of credit bear
interest at rates  ranging from prime plus 0.75% (9.25% at December 31, 1995) to
prime  plus  1.5%  (10% at  December  31,  1995).  These  lines  of  credit  are
collateralized by certain Founding Companies accounts  receivable and guaranteed
by  certain  stockholders.   Borrowings  under  the  lines  of  credit  averaged
approximately  $2,445 with an average  interest rate of 9.75% for the year ended
December 31, 1995.  Maximum  borrowings were  approximately  $2,853 for the year
ended December 31, 1995.

Long-Term Debt -

Long-term debt consists of the following as of December 31, 1995 -


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 (a) .......................................................   $1,593
8% Subordinated Convertible Debentures (b) ..........................    2,000
Notes payable to various stockholders of the Founding Companies
due on various dates through April 1998. Interest ranging from
6% to prime plus .5% (9% at December 31, 1995) with interest and
principal payable in varying amounts ranging from due on demand
to April 1998 .......................................................      905
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 ........    1,139
Various equipment and vehicle notes payable to banks and finance
companies due through January 2000 with interest ranging from 8.9%
to 15% and secured by various assets of certain Founding Companies ..      321
Capital lease obligations due through January 2000 with interest
at rates ranging from 8% to 27% and secured by the related property .      428
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% (9.5% at December 31, 1995) and secured
by all of the assets of a subsidiary of the Company and a personal
guarantee of a former shareholder of the subsidiary .................       74
Other ...............................................................       44
                                                                         ------

                                                                         6,504
Less - Current maturities ...........................................    3,477
                                                                         ------

                                                                        $3,027
                                                                         ======
 


<PAGE>


a) One of the term loan agreements  contains certain financial  covenants which,
among other things, requires a subsidiary of the Company to maintain minimum net
worth, working capital, total liabilities to net worth and debt service coverage
ratios, as defined.  The subsidiary is further prohibited from paying dividends,
spending in excess of $125 on equipment purchases, entering into certain capital
lease agreements or merging. The subsidiary is not in compliance with those loan
covenants, as a result of the merger with CD&L. Therefore, amounts due under the
line of credit are  classified as short-term  in the  accompanying  consolidated
financial statements.

b) 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,
commencing February 21, 1996. 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  commencing and ending on 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  obligations
(excluding capital lease obligations) are as follows as of December 31, 1995 -

   1996   $3,329
   1997      526
   1998      200
   1999       20
   2000    2,001
          ------

Total     $6,076
          ======




The  Company  leases  certain  transportation   equipment  under  capital  lease
agreements  which expire at various dates. At December 31, 1995,  minimum annual
payments under capital leases, including interest, are as follows -

                                                      1996   $173
                                                      1997    138
                                                      1998    100
                                                      1999     69
                                                      2000     30
                                                             ----

  Total minimum payments .................................    510
Less - Amounts representing interest .....................     82
                                                             ----

  Net minimum payments ...................................    428
Less - Current portion of obligations under capital leases    148
                                                             ----

  Long-term portion of obligations under capital leases ..   $280
                                                             ====




(10)     EMPLOYEE BENEFIT PLANS:

Several of the Founding Companies have defined  contribution  plans, which allow
for voluntary pretax contributions by the employees.  The Founding Companies pay
all  general  and  administrative  expenses  of the plans and in some cases make
matching  contributions on behalf of the employees.  For the year ended December
31, 1995 the Founding Companies had expenses of $17,000 related to contributions
to these  plans.  The  Company  intends  to merge all such  plans into a Company
sponsored plan to be adopted during 1996.



<PAGE>


(11)     INCOME TAXES:

CD&L will file a  consolidated  Federal  income tax return  which  includes  the
operations  of  all  Founding   Companies  and  acquired  business  for  periods
subsequent  to the  acquisition  date.  The  Founding  Companies  intend to file
"short-period"  Federal tax returns  through  November 30, 1995. For purposes of
preparing the consolidated financial statements,  Federal and state income taxes
have been  provided  as if all  companies  were C  Corporations  for  income tax
purposes.  The S  Corporation  status  of  acquired  S  Corporations  terminated
effective with the closing date of the acquisitions.

Federal and state income taxes for the year ended December 31, 1995 are as
      follows -


Federal-
  Current    $424
  Deferred     77
State-
  Current      81
             ----


             $582
             ====

The  differences in Federal income taxes provided and the amounts  determined by
applying the Federal  statutory tax rate (34%) to income before income taxes for
the year ended December 31, 1995 result from the following -



Tax at statutory rate .................   $ 132
Add (deduct) the effect of-
  State income taxes ..................      53
  Nondeductible expenses and other, net      27
  Provision for potential tax matters .     400
  Other ...............................     (30)
                                          -----


                                          $ 582
                                          =====

As discussed above, the Founding Companies intend to file "short-period" Federal
tax returns  through  November 30,  1995.  In  connection  with such filings the
Company  has  provided  $400 to cover any  potential  exposures  related  to the
filings.

The components of deferred income tax liabilities and assets as of December 31,
      1995 are as follows -


Deferred income tax liabilities -
   Cash to accrual differences, net ........   ($1,158)
   Accumulated depreciation and amortization      (385)
                                               =======
       Total deferred income tax liabilities   ($1,543)
                                               =======

Deferred income tax assets -
   Allowance for doubtful accounts .........   $   513
   Reserves and other, net .................       147
                                               =======
       Total deferred income tax assets ....   $   660
                                               =======

Total net deferred income tax liabilities ..   ($  883)
                                               =======



<PAGE>


(12)     COMMITMENTS AND CONTINGENCIES:

 Operating Leases -

Rent expense related to operating  leases amounted to  approximately  $1,926 for
the year ended December 31, 1995. The approximate  minimum rental commitments of
the Company, under existing agreements as of December 31, 1995, are as follows -

      1996   $2,891
      1997    2,414
      1998    2,003
      1999    1,707
      2000    1,128
Thereafter    1,431
             ======

Litigation -

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 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 pays the independent  contractors a fee for
services  rendered of approximately 10% of revenues less direct costs associated
with the performance of the services.  For the year ended December 31, 1995, the
Company paid approximately $1,007 under such agreements.

(13)     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  Combination 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  Combination to reimburse Mr. Lardier for
the amounts advanced.

At June 30, 1995, CTA had incurred  expenses  totaling  approximately  $1,300 in
connection with the Combination  (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 (his original purchase price) in the event that Mr.
Lardier did not advance funds needed to complete the Combination.



<PAGE>


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
$1,150) 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 Combination.  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,  certain officers agreed to reduce their ownership
of Common Stock by 305,577 shares to an aggregate of 394,423 shares.

(14)     STOCK OPTION PLANS:

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.

On November  27,  1995,  the Board  granted  390,500  options to employees at an
exercise  price  of $13 per  share,  the  price  of the  Company's  stock at the
Offering date. No options have been exercised as of December 31, 1995.

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.

On November 27, 1995, the Board granted 1,500 shares to each of three  directors
at $13 per share,  the price of the Company's stock at the date of the Offering.
No shares have been exercised as of December 31, 1995.



<PAGE>


(15)     RELATED PARTY TRANSACTIONS:

Note Payable To Stockholders -

A director and a stockholder of the Company together with their spouses obtained
a $500 bank line of credit which is used to provide working  capital.  The line,
which  expires  in  August of 1996,  bears  interest  at prime  plus 1/2% (9% at
December 31, 1995), and is guaranteed by a subsidiary of the Company.

Leasing Transactions -

Certain subsidiaries of the Company paid an aggregate of $217 for the year ended
December 31, 1995 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 and  consulting  fees of $229 to  companies  affiliated
through common ownership with directors or stockholders of the Company.

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



<PAGE>








                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To the Combined Founding Companies:


We have  audited  the  accompanying  combined  balance  sheets  of the  Combined
Founding Companies  (identified in Note 1) as of December 31, 1993 and 1994, and
the related combined statements of income,  stockholders'  equity and cash flows
for the years ended  December  31,  1993 and 1994 and for the nine months  ended
September 30, 1995. These combined  financial  statements are the responsibility
of the Combined Founding Companies' management. Our responsibility is to express
an opinion on these combined financial statements 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 combined 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 combined  financial  statements  referred to above  present
fairly,  in all  material  respects,  the  financial  position  of the  Combined
Founding  Companies as of December  31, 1993 and 1994,  and the results of their
operations  and their cash flows for the years ended  December 31, 1993 and 1994
and for the nine months ended  September 30, 1995, in conformity  with generally
accepted accounting principles.


                                                    ARTHUR ANDERSEN LLP


Roseland, New Jersey
March 19, 1996

<PAGE>





                         COMBINED FOUNDING COMPANIES
                           COMBINED BALANCE SHEETS
                                (in thousands)

                                   ASSETS
                                                                 December 31,
                                                            --------------------
                                                              1993        1994
                                                            --------    --------
CURRENT ASSETS:
   Cash and cash equivalents ...........................   $  1,675    $  2,399
   Accounts receivable, less allowance for doubtful
     accounts of $822 and $1,092 in 1993 and 1994,
     respectively (Notes 9 and 14) .....................     13,601      13,918
   Prepaid expenses and other current assets (Note 4) ..      1,178       1,478
   Loans receivable from stockholders (Note 14) ........        122       2,195
                                                           --------    --------
         Total current assets ..........................     16,576      19,990
EQUIPMENT AND LEASEHOLD IMPROVEMENTS,                         3,651       3,102
   net (Notes 3 and 6)
NOTES RECEIVABLE FROM STOCKHOLDERS
   (Note 14) ...........................................      2,020          67
OTHER ASSETS (Notes 3 and 7) ...........................        798         710
                                                           --------    --------
         Total assets ..................................   $ 23,045    $ 23,869
                                                           ========    ========

                 LIABILITIES AND STOCKHOLDERS' EQUITY
                        
CURRENT LIABILITIES:
   Short-term borrowings (Note 9) ......................   $  1,369    $  2,021
   Current portion of long-term debt (Note 9) ..........      2,317       3,403
   Accounts payable ....................................      4,914       6,150
   Accrued expenses and other current liabilities(Note 8)     3,572       4,234
   Income taxes payable (Note 11) ......................         73         276
   Deferred revenue (Note 3) ...........................      1,120         358
                                                           --------    --------
         Total current liabilities .....................     13,365      16,442
LONG-TERM DEBT (Note 9) ................................      3,680       1,164
DEFERRED INCOME TAXES PAYABLE (Notes 3 and 11) .........        679         615
OTHER LONG-TERM LIABILITIES ............................        109          80
COMMITMENTS AND CONTINGENCIES (Notes 13 and 14)
STOCKHOLDERS' EQUITY (Note 12):
   Common stock ........................................         91          92
   Additional paid-in capital ..........................      2,489       2,704
   Retained earnings ...................................      3,718       4,142
   Less - Treasury stock ...............................     (1,086)     (1,370)
                                                           --------    --------
  Total stockholders' equity ...........................      5,212       5,568
                                                           --------    --------
         Total liabilities and stockholders' equity ....   $ 23,045    $ 23,869
                                                           ========    ========

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


<PAGE>


                        COMBINED FOUNDING COMPANIES
                       COMBINED STATEMENTS OF INCOME
                               (in thousands)


                                                                    For The Nine
                                               For The Year Ended   Months Ended
                                                  December 31,        September
                                             ----------------------
                                                1993         1994     30, 1995
                                             ---------    ---------    ---------
REVENUES (Note 3) .......................   $ 121,752    $ 137,544    $ 111,406
COST OF REVENUES ........................      84,437       95,350       77,547
                                            ---------    ---------    ---------
         Gross profit ...................      37,315       42,194       33,859
SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES ..............................      36,015       40,338       29,777
                                            ---------    ---------    ---------
         Operating income ...............       1,300        1,856        4,082
                                            ---------    ---------    ---------
OTHER INCOME (EXPENSE):
  Other income ..........................         791          438          130
  Interest income .......................          57           58           53
  Interest expense ......................        (790)        (910)        (608)
                                            ---------    ---------    ---------
                                                   58         (414)        (425)
                                            ---------    ---------    ---------
INCOME BEFORE INCOME TAXES                      1,358        1,442        3,657

PRO FORMA PROVISION FOR INCOME TAXES
  (Notes 3 and 11) ......................         636          721        1,475
                                            ---------    ---------    ---------
   Net income ...........................   $     722    $     721    $   2,182
                                            =========    =========    =========


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

<PAGE>



                        COMBINED FOUNDING COMPANIES
                COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
               FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
             AND FOR THE NINE MONTHS ENDED SEPTEMBER  30, 1995
                      (in thousands except share data)


                                             Additional                   Total
                                Common Stock  Paid-In Retained Treasury  Stock-
                              ---------------                           holders'
                                Shares    Amt Capital Earnings   Stock   Equity
                              ----------- --- ------- -------- -------- --------

BALANCE AT DECEMBER 31, 1992 1,124,978  $  91 $ 1,908 $  3,247 ($ 1,097)$ 4,149
  Distribution to stockholders       0      0       0     (251)       0    (251)
  Capital contribution equal
    to the current income
    taxes of S Corporation ..        0      0     602        0        0     602
  (Purchase) Retirement of
    treasury stock ..........     (125)     0     (21)       0       11     (10)
  Net income ................        0      0       0      722        0     722
                             ---------  ----- ------- -------- -------- -------
                                                                              
BALANCE AT DECEMBER 31, 1993 1,124,853     91   2,489    3,718   (1,086)  5,212
  Issuance of common stock ..    1,000      1       0        0        0       1
  Distribution to stockholders       0      0     (33)    (297)       0    (330)
  Capital contribution equal
    to the current income
    taxes of S Corporation ..        0      0     248        0        0     248
  Purchase of treasury stock         0      0       0        0     (284)   (284)
  Net income ................        0      0       0      721        0     721
                             ---------  ----- ------- -------- -------- -------
                                                                            
BALANCE AT DECEMBER 31, 1994 1,125,853     92   2,704    4,142   (1,370)  5,568
  Distribution to stockholders       0      0     (55)  (2,109)       0  (2,164)
  Capital contribution equal
    to the current income
    taxes of S Corporation ..        0      0     281        0        0     281
  Adjustment to conform year-
    end......................        0      0     (13)     118        0     105
  Net income ................        0      0       0      118        0     105
                             ---------  ----- ------- -------- -------- -------

BALANCE AT SEPTEMBER 30,1995 1,125,853  $  92 $ 2,917  $ 4,333 ($ 1,370)$ 5,972
                             =========  ===== ======= ======== ======== =======

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


<PAGE>



                         COMBINED FOUNDING COMPANIES
                      COMBINED STATEMENTS OF CASH FLOWS
                                (in thousands)


                                                            For The Nine
                                        For The Year Ended  Months Ended
                                           December 31,       September
                                        ------------------
                                          1993       1994     30, 1995
                                        -------    -------    -------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income ........................   $   722    $   721    $ 2,182
  Adjustments to reconcile net income
  to net cash provided by operating
  activities -
  Adjustment to conform fiscal
  year-ends of certain Founding .....         0          0        105
  Companies
  Loss on disposal of equipment and
  leasehold improvements ............        10        219        229
  Depreciation and amortization .....     1,168      1,347        884
  Capital contribution equal to
  current income taxes of ...........       602        248        281
  S Corporations
  Deferred income tax expense .......        44        (64)       249
  Changes in operating assets and
  liabilities
  (Increase) decrease in -
  Accounts receivable, net ..........    (2,071)      (317)    (4,334)
  Prepaid expenses and other current       (221)      (300)      (332)
  assets
  Other assets ......................       313         88       (352)
  Increase (decrease) in -
  Accounts payable and accrued ......       437      2,100      1,977
  liabilities
  Deferred revenue and other current
  liabilities .......................       740       (762)     1,626
  Other long-term liabilities .......        76        (29)      (264)

                                        -------    -------    -------

 Net cash provided by operating .....     1,820      3,251      2,251
 activities

                                         -------    -------    -------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Additions to equipment and leasehold
 improvements .......................    (1,476)    (1,016)    (1,397)
 (Increase) decrease in loans
 receivable from stockholders .......       382       (120)       (39)
                                        -------    -------    -------
Net cash used in investing activities    (1,094)    (1,136)    (1,436)

<PAGE>


                       COMBINED FOUNDING COMPANIES
                     COMBINED STATEMENTS OF CASH FLOWS
                               (in thousands)




                                                            For The Nine
                                        For The Year Ended  Months Ended
                                           December 31,      September
                                        ------------------
                                          1993      1994      30, 1995
                                        -------    -------    -------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Net short-term borrowings ..........   $   360    $   652    $   442
 Principal payments on long-term debt    (3,798)    (1,849)    (2,203)
 Proceeds from long-term borrowings .     2,572        135      1,883
 Issuance of stock ..................         0          1          0
 Distributions to stockholders ......      (251)      (330)    (2,164)
 Purchase of treasury stock .........       (10)         0          0
                                        -------    -------    -------
 Net cash used in financing
 activities .........................    (1,127)    (1,391)    (2,042)
                                        -------    -------    -------
Net increase (decrease) in cash and
 cash equivalents ...................      (401)       724     (1,227)
CASH AND CASH EQUIVALENTS, beginning
 of period ..........................     2,076      1,675      2,399
                                        -------    -------    -------

CASH AND CASH EQUIVALENTS, end of ...   $ 1,675    $ 2,399    $ 1,172
 period
                                        =======    =======    =======


SUPPLEMENTAL DISCLOSURE OF CASH FLOW
 INFORMATION:
 Cash paid for interest .............   $   814    $   855    $   584
 Cash paid for income taxes .........       295        295        656
                                        =======    =======    =======


SUPPLEMENTAL SCHEDULE OF NONCASH
 FINANCING ACTIVITIES:
 Issuance of note payable to purchase
 treasury stock .....................   $     0    $   284    $     0
 Capital lease obligations incurred .        99          0         78
                                        =======    =======    =======

    The accompanying notes to combined financial statements are an integral part
of these statements.
<PAGE>

                           COMBINED FOUNDING COMPANIES
                     NOTES TO COMBINED FINANCIAL STATEMENTS
                        (in thousands except share data)


(1)       ORGANIZATION AND BUSINESS:

The following companies are collectively referred to herein as the "Founding 
Companies;" American Courier Express, Inc. ("American"), Bestway Distribution
Systems, Inc.("Bestway"), Click Messenger Service, Inc. ("Click"), Court Courier
Systems, Inc. ("Court"), Distributions Solutions International, Inc. ("DSI"),
National Courier, Inc. ("National"), Olympic Courier Systems, Inc. ("Olympic"),
Orbit/Lightspeed Courier Systems, Inc.("Orbit"), Securities Courier Corporation 
("Securities"), Silver Star Express, Inc.("Silver Star") and SureWay Air Traffic
Corporation ("SureWay"). The Founding Companies are in the business of providing
same day ground and air delivery and logistics services.

(2)       BASIS OF PRESENTATION:

On November  27,  1995,  simultaneously  with the Closing of its initial  public
offering  (the  Offering),  Consolidated  Delivery  and  Logistics,  Inc.  (CDL)
acquired  by  merger  each  of  the  Founding  Companies  (the  "Merger").   The
accompanying  combined  financial  statements  are presented on a combined basis
without giving effect to the Merger or the Offering.  The assets and liabilities
of the Combined Founding Companies are reflected at their historical amounts.

By  September  30,  1995,  in  management's  opinion,  effective  control of the
Founding  Companies had been  transferred to CDL with all assets and liabilities
being recorded at their historical cost. Therefore, all operating results of the
Founding  Companies from September 30, 1995 forward have been  recognized in the
consolidated financial statements of CDL and subsidiaries.

Court and American have previously  reported on a March 31 and January 31 fiscal
year-end,  respectively.  However,  to be  consistent  with the  other  Founding
Companies, the financial statements for the nine months ended September 30, 1995
have been combined with the other Founding Companies. The duplication of Court's
three months and  American's  one month of operations  for the nine months ended
September 30, 1995 have been reflected as an adjustment to retained earnings.

(3)       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Use of Estimates in the Preparation of the Financial Statements

The  preparation  of  the  combined  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 combined
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results could differ from those estimates.



<PAGE>


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.

Equipment and Leasehold Improvements-

Equipment is 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 -

Debt issuance costs are included in prepaid expenses and current assets (Note 4)
and other assets (Note 7) in the accompanying combined balance sheets and are
expensed over the life of the related debt.

Revenue Recognition -

Revenue is  recognized  when the  shipment is  completed  or, in the case of the
Founding  Companies'  logistics  businesses,   when  services  are  rendered  to
customers  and expenses are  recognized  as incurred.  Certain  customers pay in
advance, giving rise to deferred revenue.

 Income Taxes -

Certain of the Founding  Companies  elected to be treated for Federal income tax
purposes as S Corporations and, accordingly, any income tax liabilities were the
responsibility of the respective  stockholders.  For purposes of these financial
statements,  pro forma Federal  income taxes have been provided for the Founding
Companies  as if all of the  Founding  Companies  had  filed C  Corporation  tax
returns.  The  current  income  tax  expense  is  reflected  as an  increase  to
additional  paid-in  capital.  The  Founding  Companies'  S  Corporation  status
terminated with the effective date of the Merger discussed in Note 2.

Deferred income taxes are provided for differences in the recognition of revenue
and expense for tax and  financial  reporting  purposes.  Temporary  differences
result primarily from accelerated depreciation and amortization for tax purposes
and various  accruals and reserves  being  deductible for tax purposes in future
periods.



<PAGE>


(4)      PREPAID EXPENSES AND OTHER CURRENT ASSETS:

Prepaid expenses and other current assets consist of the following -

                                                                  December 31,
                                                                 1993     1994
                                                                ------   ------
Prepaid insurance ...........................................   $  799   $  929
Employee advances and other receivables .....................       17      111
Prepaid rent ................................................       92       62
Notes receivable (Note 5) ...................................       65      168
Deferred financing costs ....................................        0       54
Other .......................................................      205      154
                                                                ------   ------

                                                                $1,178   $1,478
                                                                ======   ======

(5)       NOTES RECEIVABLE:

Notes receivable consist of the following -
                                                                    December 31,
                                                                    1993   1994
                                                                    ----   ----
Notes receivable (a) ............................................   $ 70   $ 77
Affiliate note receivable (b) ...................................      0    100
Other note receivable ...........................................      0     28
                                                                    ----   ----

                                                                      70    205
Less- Current portion (Note 4) ..................................     65    168
                                                                    ----   ----

Long-term portion (Note 7) ........................ .............   $  5   $ 37
                                                                    ====   ====

(a)  In  1992  and  1994  in  three  separate  transactions,  Silver  Star  sold
distribution routes,  customer lists and related equipment in certain terminals.
In  connection  with these sales,  Silver Star  received  notes in the aggregate
amount of $206.  The notes are payable in monthly  installments.  In  connection
with these sales, Silver Star entered into three-year noncompete agreements,  as
defined, with two of the purchasers.  Silver Star recorded a gain on the sale of
approximately  $164 which is included in other income in the  accompanying  1994
combined statements of income.

(b)      This note is receivable from an affiliate through common ownership. 
Interest is payable semiannually at 8% and the principal is due on demand.



<PAGE>


(6)       EQUIPMENT AND LEASEHOLD IMPROVEMENTS:

Equipment and leasehold improvements consist of the following -

                                                     Useful       December 31,
                                                     Lives       1993     1994
                                                   ----------    ------  ------
Transportation and warehouse equipment
                                                   3-5 years     $3,909  $3,955
Office equipment ...............................   5-8 years      3,675   4,060
Other equipment ................................   5-8 years        190      97
Leasehold improvements .....................         Over the
                                                  lease period      674     697
                                                                 ------  ------

                                                                  8,448   8,809
Less- Accumulated depreciation ...............................    4,797   5,707
                                                                 ------  ------

                                                                 $3,651  $3,102
                                                                 ======  ======

Leased equipment under capital leases (included above) consists of the
      following -

                                   December 31,
                                  1993     1994
                                 ------   ------
Equipment ....................   $1,849   $1,621
Less- Accumulated amortization      971    1,173
                                 ------   ------

                                 $  878   $  448
                                 ======   ======

(7)       OTHER ASSETS:

Other assets consist of the following -
                                    December 31,
                                     1993   1994
                                     ----   ----
Security deposits ................   $325   $403
Deferred financing costs .........     75      2
Long-term note receivable (Note 5)      5     37
Rent receivable ..................     41     65
Deferred software costs ..........     16     62
Other ............................    336    141
                                     ----   ----

                                     $798   $710
                                     ====   ====




<PAGE>


(8)      ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

Accrued expenses and other current liabilities consist of the following -
<TABLE>
<S>
<C>                                                                     <C>                <C>      
                                                                                  December 31,
                                                                            1993               1994
                                                                        --------------     --------------
Payroll and related expenses                                                 $2,100            $2,306
Workers compensation and medical                                                484               624
Commissions and rebates                                                         222               223
Rent and professional fees                                                       92               116
Amounts due to independent contractors                                          175                94
Other                                                                           499               871
                                                                        --------------     --------------

                                                                             $3,572            $4,234
                                                                        ==============     ==============
</TABLE>

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

 Lines of Credit -

Lines of credit payable to various banks, in the  outstanding  amounts of $1,369
and $2,021 at December 31, 1993 and 1994,  respectively,  bear interest at rates
ranging from 7.05% to 8.00% and 6.75% to 33.60% in 1993 and 1994,  respectively.
These lines of credit are  collateralized by certain Founding Companies accounts
receivable and guaranteed by certain stockholders.

Borrowings under the lines of credit averaged  approximately  $1,457, $1,794 and
$2,364 with average  interest rates of 7.46%,  12.26% and 12.23%,  respectively,
for the years ended  December  31,  1993 and 1994 and for the nine months  ended
September 30, 1995.  Maximum borrowings were  approximately  $1,433,  $1,996 and
$3,296 for the years  ended  December  31, 1993 and 1994 and for the nine months
ended September 30, 1995, respectively.

Long-Term Debt -

Long-term debt consists of the following -
<TABLE>
<S>                                                                             <C>                  <C>
                                                                                            December 31,
                                                                                      1993                1994
                                                                                ------------------   ----------------
Term loans payable to various banks due through May 2000.  Interest ranging from
  5% to prime plus 1.5%, interest and principal payable
  monthly secured by various assets of the Founding Companies (a)                   $2,776                $2,076
Notes payable to various stockholders of the Founding Companies due on
  various dates through August 1996. Interest ranging from 5% to 10% with
  interest and principal payable monthly (See Note 14)                                 488                   619
Notes payable to various customers due on various dates through
  February 1997. Interest ranging from 8.5% to 13.7% with interest and
  principal payable quarterly, secured by various assets of the Founding
  Companies                                                                            188                   138
Notes payable to various suppliers due through 1995. Payments due monthly
                                                                                       383                   229
Note payable to D&D Partners by Securities with monthly payments of $9,
  final payment due July 1995, interest at 10%                                           0                    69
Loan payable to the parents of a shareholder of American. The loan is
  payable in equal monthly installments of $1, including interest at
  10.375%, through 2001                                                                 47                    41

</TABLE>

<PAGE>



<TABLE>
<S>                                                                             <C>                     <C>
                                                                                            December 31,
                                                                                      1993                1994
                                                                                ------------------   ----------------
Liability for nonpayment of unemployment taxes for certain employees,
  payable $1 each month, with final payment due August 15, 1997                        $34                   $32
Various equipment and vehicle notes payable to banks and financing
  companies due through January 2000, interest ranging from 6% to 21%,
  secured by various assets of certain Founding Companies                              900                   774
Capital lease obligations due through January 2000 with interest at rates
  ranging from 8% to 27%, secured by the related property                              994                   494
Small business administration loan, monthly principal and interest
  payments of $2, with a final  payment due in December  1998,  interest rate at
  prime plus 1%, secured by all of the assets of DSI and a
  personal guarantee of its shareholder                                                114                    95
Other                                                                                   73                     0
                                                                                -----------------   ----------------

                                                                                     5,997                 4,567
Less - Current maturities                                                            2,317                 3,403
                                                                                -----------------   ----------------

                                                                                    $3,680                $1,164
                                                                                =================   ================
</TABLE>


 (a) One of the term loan agreements contains certain financial covenants which,
among other  things,  requires  SureWay to maintain  minimum net worth,  working
capital,  total  liabilities to net worth and debt service coverage  ratios,  as
defined. SureWay is further prohibited from paying dividends, spending in excess
of $125 on equipment  purchases,  entering into certain capital lease agreements
or  merging.  SureWay  has not met  certain  of  these  requirements  and it has
obtained a waiver from the bank. In May 1995, SureWay renegotiated its term loan
with  the  bank  and  increased  the  term  loan  to  $1,400  from  $1,350.  The
renegotiated  terms of the  loan  agreement  are  substantially  similar  to the
existing  agreement  except for monthly  payments of principal of $23 with final
maturity  in May  2000.  SureWay  is  required  to  maintain  minimum  financial
covenants,  as newly  defined,  and is  prohibited  from  entering  into certain
transactions as set forth above.

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

                                                                                                December 31
                                                                                             -------------------
1995                                                                                                $3,010
1996                                                                                                   674
1997                                                                                                   316
1998                                                                                                    49
1999                                                                                                    19
2000                                                                                                     5
Thereafter                                                                                               0
                                                                                             ------------------

  Total                                                                                             $4,073
                                                                                             ==================
</TABLE>




<PAGE>



The Founding  Companies  lease certain  transportation  equipment  under capital
lease  agreements  which expire at various dates. At December 31, 1994,  minimum
annual payments under capital leases including interest are as follows -

<TABLE>
<S>                                                                                              <C>  
                                                                                                    December 31
                                                                                                 ------------------
1995                                                                                                      $414
1996                                                                                                        66
1997                                                                                                        46
1998                                                                                                         1
                                                                                                 ------------------

  Total minimum payments                                                                                   527

Less - Amounts representing interest                                                                        33
                                                                                                 -----------------

  Net minimum payments                                                                                     494

Less - Current portion of obligations under capital leases                                                 393
                                                                                                 -----------------

  Long-term portion of obligations under capital leases                                                   $101
                                                                                                 =================
</TABLE>


 (10)     EMPLOYEE BENEFIT PLANS:

Several of the Founding Companies have defined  contribution  plans, which allow
for voluntary pretax contributions by the employees.  The Founding Companies pay
all  general  and  administrative  expenses  of the plans and in some cases make
matching contributions on behalf of the employees.  For the years ended December
31, 1993 and 1994 and for the nine months ended September 30, 1995, the Founding
Companies had expenses of approximately $60, $62 and $47, respectively,  related
to contributions to these plans.

(11)      INCOME TAXES:

CDL and subsidiaries intend to file a consolidated Federal income tax return for
the year ended December 31, 1995 and thereafter.  The Founding  Companies intend
to file  "short-period"  Federal tax returns  through  November  30,  1995.  For
purposes of preparing  these combined  financial  statements,  Federal and state
income taxes have been  provided for certain of the  Founding  Companies  (which
filed as S  Corporations  prior to their merger with CDL) as if these  companies
were C Corporations for income tax purposes.

The Founding Companies have implemented Statement of Financial Accounting
Standards No. 109 for all periods. This statement provides for a liability 
approach to accounting for income taxes.


<PAGE>


Combined Federal and state income taxes are as follows -
<TABLE>
<S>                                                    <C>                <C>                    <C>

                                                                                                  For The Nine
                                                              For The Years Ended                 Months Ended
                                                                 December 31,                     September 30,
                                                            1993               1994                    1995
                                                       --------------    ---------------       -------------------
Federal -
  Current                                                     $503              $497                      $955
  Deferred                                                     (55)              (60)                      183
State -
  Current                                                      188               284                       337
                                                       --------------    ---------------        -------------------

                                                              $636              $721                    $1,475
                                                       ==============    ===============        ===================
</TABLE>


The  differences in Federal income taxes provided and the amounts  determined by
applying  the Federal  statutory  tax rate (34%) to income  before  income taxes
result from the following -
<TABLE>
<S>                                                       <C>                <C>                    <C>

                                                                                                       For The Nine
                                                                 For The Years Ended                   Months Ended
                                                                    December 31,                      September 30,
                                                               1993               1994                     1995
                                                          --------------    ---------------        -------------------
Tax at statutory rate                                            $462               $490                      $1,243
Add (deduct) the effect of -
  State income taxes                                              124                188                         222
  Nondeductible expenses and other, net                            32                 66                          82
  Other                                                            18                (23)                        (72)
                                                          --------------    ---------------        -------------------

                                                                 $636               $721                      $1,475
                                                          ==============    ===============        ===================
</TABLE>



<PAGE>


 (12)     STOCKHOLDERS' EQUITY:

Common Stock of the Founding Companies consists of the following-
<TABLE>
<S>                                                                                             <C>          <C>

                                                                                                   December 31,
                                                                                                 1993         1994
                                                                                                --------     --------
Sure Way Air Traffic Corporation and Subsidiary
Common Stock, $.02 par value: 300,000 shares authorized, 100,000 issued and                         $2          $2
  outstanding
Securities Courier Corporation
Common Stock, $30 par value: 100 shares authorized, issued and outstanding                           3           3
National Courier, Inc. and National Express, Inc.
National Courier, Inc., Common Stock, $10 par value: 3,000 shares authorized,
  340 issued and outstanding                                                                         3           3
National Express, Inc., Common Stock, $1 par value: 50,000 shares authorized,
  20,000 issued and outstanding                                                                     20          20
Silver Star Express, Inc. and Related Companies
Silver Star Express, Inc., Common Stock, $10 par value: 100 shares authorized,
  20 issued and outstanding                                                                          0           0
Silver Star Express North, Inc., Common Stock, $1 par value: 1,000 shares
  authorized, 100 issued and outstanding                                                             0           0
All World Brokers, Inc., Common Stock, $10 par value: 100 shares authorized, 25
  issued and outstanding                                                                             1           1
Parcel Delivery Company of Florida, Inc., Common Stock, $1 Par Value, 10,000
  shares authorized, 1,000 issued and outstanding                                                    1           1
Click Messenger Service, Inc., and Related Companies
Common Stock, no par value, 3,300 shares authorized, 410 shares issued and                          20          20
  outstanding
Crown Courier Systems, Inc., and Bestway Distribution Services, Inc.
Crown Courier Systems, Inc., Common Stock, $10 par value: 100 shares authorized,
  issued, and outstanding                                                                            1           1
Bestway Distribution Services, Inc., Common Stock, $1 par value, 1,000 shares
  authorized, 200 issued and outstanding                                                             1           1
Court Courier Systems, Inc., and Subsidiary
Common Stock, $.001 Par Value: 10,000,000 shares authorized, 1,000,000 issued
  and outstanding                                                                                    1           1
Orbit/Lightspeed Courier Systems, Inc.
Orbit/Lightspeed Courier Systems, Inc., Common Stock, no par value: 200 shares
  authorized, 60 issued and outstanding                                                             31          31
O/L Warehousing, Inc., Common Stock, no par value: 200 shares authorized, issued
  and outstanding                                                                                    0           0
BMBA, Inc., Common Stock, no par value: 200 shares authorized, issued and                            0           0
  outstanding
NWC Trucking Corporation, Common Stock, no par value: 1,000 shares authorized,
  issued and outstanding                                                                             0           1
Orbit/Lightspeed Courier Systems, Inc., Preferred Stock, $250 par value: 400
  shares authorized, no shares issued or outstanding                                                 0           0
Distribution Solutions International, Inc.
Common Stock, $1 Par Value: 50,000 shares authorized, 1,000 shares issued and
  outstanding                                                                                        1           1
Olympic Courier Systems, Inc. and Related Company
Common Stock, no par value: 140 shares issued and outstanding                                        0           0
American Courier Express, Inc.
Common Stock, no par value: 2,400 shares authorized, 958 issued and outstanding                      6           6
                                                                                                -------     -------

                                                                                                   $91         $92
                                                                                                =======     =======
</TABLE>

<PAGE>




 (13)     COMMITMENTS AND CONTINGENCIES:

Operating Leases -

Rent  expense  related to operating  leases  amounted to  approximately  $4,399,
$4,482 and $3,681 for the years  ended  December  31,  1993 and 1994 and for the
nine months ended September 30, 1995, respectively.

The approximate minimum rental commitments of the Company, under existing
      agreements, are as follows -
<TABLE>
<S>                                                                                       <C>

                                                                                             December 31
                                                                                          ------------------
1995                                                                                              $2,523
1996                                                                                               2,363
1997                                                                                               2,271
1998                                                                                               1,499
1999                                                                                               1,285
2000                                                                                               2,819
Thereafter                                                                                             0
</TABLE>


Litigation -

The Founding  Companies 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  will have a material  adverse
effect on the  financial  position  or results  of  operations  of the  Founding
Companies.

 Sales Agency Agreements -

SureWay has entered into sales agency  agreements with  independent  contractors
with  varying  terms to  perform  courier  services  on behalf of  SureWay.  The
independent  contractors  provide  marketing  and  sales  services  and  SureWay
provides the resources to perform  courier  services.  In connection  with these
transactions  SureWay  pays  the  independent  contractors  a fee  for  services
rendered of approximately  10% of revenues less direct costs associated with the
performance of the services.  For the years ended December 31, 1993 and 1994 and
for the nine months ended September 30, 1995, SureWay paid approximately $3,330,
$3,827 and $2,638, respectively under such agreements.



<PAGE>



(14)      RELATED PARTY TRANSACTIONS:

Related Party Receivables -

At December 31, 1993 and 1994, certain of the Founding Companies had receivables
from  the  stockholders  and  officers  of  approximately  $2,142  and  $2,262 ,
respectively  which are included in the  accompanying  combined  balance sheets.
Such  receivables  consist  primarily  of  amounts  due  from a  stockholder  of
Securities.  The loan is unsecured, and is noninterest bearing. These notes were
paid in full upon completion of the Merger.

Note Payable To Stockholders -

The  stockholders  of  Bestway  and their  spouses  obtained a $500 bank line of
credit which is used to provide  working  capital for Bestway and another entity
owned by the stockholders (the  "Affiliate").  The line, which expired in August
of 1995,  bears  interest at prime (6.0% and 8.5% at December 31, 1993 and 1994,
respectively)  plus 1/2%, is  guaranteed  by Bestway and the Affiliate  and, the
amount  which may be borrowed at any given time,  is limited to  percentages  of
accounts  receivable  of  Bestway  and the  Affiliate,  as  defined.  The  trade
receivables of Bestway and the Affiliate are pledged as collateral for the line.
The average borrowings by Bestway were  approximately  $259, $245 and $120, with
corresponding  average  interest  rates of 7.25%,  8.25% and 9.36% for the years
ended  December 31, 1993 and 1994 and the nine months ended  September 30, 1995,
respectively.

Leasing Transactions -

Crown rents one of its  facilities  on a month to month basis from an  affiliate
related through common ownership. Rents paid to the affiliate,  included in rent
expense,  amounted to $226, $160 and $120, for the years ended December 31, 1993
and 1994 and for the nine months ended September 30, 1995, respectively.

Orbit  also  leases  one  of  its  three  offices  from a  twenty  five  percent
shareholder.  The rent paid to the  shareholder for the years ended December 31,
1993 and 1994 and the nine months ended  September 30, 1995,  was  approximately
$98, $76 and $35, respectively.

Silver Star leases various  facilities  from  affiliates  related through common
ownership. Rents paid to these affiliates, included in rent expense, amounted to
$41,  $101 and $90 for the years  ended  December  31, 1993 and 1994 and for the
nine months ended September 30, 1995, respectively.

On January 5, 1991,  SureWay  financed the purchase of a telephone system from a
majority  shareholder  in the amount of $41 over five years at 15%  interest per
year.

Securities  leases  transportation  equipment  from a company which is partially
owned  by a  stockholder.  Lease  expense  related  to  these  transactions  was
approximately  $1,200,  $425 and $170, for the years ended December 31, 1993 and
1994 and for the nine months ended September 30, 1995, respectively.

Click rents  office  space in a building  owned by a  stockholder.  Rent expense
related to these  transactions was approximately $24, $24 and $18, for the years
ended  December  31, 1993 and 1994 and for the nine months ended  September  30,
1995, respectively.

National leases transportation equipment from a company which is partially owned
by  its   stockholders.   Lease  expense  related  to  these   transactions  was
approximately  $184,  $163 and $112,  for the years ended  December 31, 1993 and
1994 and for the nine months September 30, 1995, respectively.

National rents office space in a building  owned by a stockholder.  Rent expense
related to these  transactions was approximately  $73, $75 and $64 for the years
ended  December  31, 1993 and 1994 and for the nine months ended  September  30,
1995, respectively.

 Administrative Fees -

Crown  charged an affiliate  through  common  ownership an  administrative  fee,
included  in  other  income  for  management  and  bookkeeping   services  which
approximated  $119,  $34 and $34, for the years ended December 31, 1993 and 1994
and for the nine months ended  September  30, 1995,  respectively.  In addition,
Crown  performed  delivery  services for the  affiliate  and revenues  from this
affiliate were  approximately $14, $49 and $21, for the years ended December 31,
1993 and 1994 and for the nine months ended September 30, 1995, respectively.

For the years ended  December  31,  1993 and 1994 and for the nine months  ended
September 30, 1995, Orbit paid approximately $236, $238 and $102,  respectively,
in consulting fees to a corporation owned by a twenty five percent shareholder.

DSI paid salary and medical benefits for an employee of a company which is owned
by  the  stockholder  of  DSI.   Payroll  related   expenses  for  the  employee
approximated $75, $82 and $87 for the years ended December 31, 1993 and 1994 and
for the nine months ended September 30, 1995, respectively.

During 1995,  Securities entered into a consulting  agreement with a corporation
owned by a principal shareholder.  For the nine months ended September 30, 1995,
Securities paid approximately $34, under this agreement.

Other -

In 1994,  SureWay  repurchased  14,200  shares  of  stock at $284  from a former
shareholder's spouse.

SureWay has a sales and consulting agreement with J.P.J. Express, Inc., an 
entity one-third of which is owned by the brother of a principal stockholder of
the Company. SureWay paid commissions to J.P.J. Express, Inc. of approximately 
$580 and $607 in 1993 and 1994, respectively. For the nine months ended 
September 30, 1995, SureWay paid commissions to J.P.J. Express, Inc. of
approximately $506. Such agreement terminates January 1, 1999, subject to 
automatic renewal for additional three year periods.

In connection with the Merger discussed in Note 2,  stockholders of the Founding
Companies   entered   into   five-year    covenants-not-to-compete   with   CDL.
Additionally,  the Merger agreements provided for certain of the stockholders to
receive  employment  contracts and for certain  stockholders  to be appointed to
CDL's Board of Directors.



<PAGE>


 (15)     ACQUISITIONS:

Asset Purchase -

Effective  January 30, 1995,  Crown purchased  substantially  all of the assets,
including  the  assignment  of  customer  contracts,  of a  delivery  service in
Florida.  The  purchase  price is a  maximum  of $132 but  limited  based on the
measurement of income, as defined, over a 180-day period. In connection with the
acquisition,  which is being accounted for as a purchase,  the principals of the
purchased  company  entered into a five-year  noncompete  agreement  with Crown.
Additionally,  Crown entered into a three-year  employment agreement with one of
the principals.

 Purchase Of Customer List -

On April 28, 1995,  Crown  purchased a customer list from a delivery  service in
Florida.  The purchase price will be equal to 10% of gross revenue,  as defined,
received over a two-year period.

In March 1995,  Securities  signed a contract with an entity to provide services
to  Securities  such as labor,  vehicles,  insurance  coverage  and other  costs
relative to the courier  aspect of the business.  In connection  with the Merger
the Company will also acquire this entity.



<PAGE>











                     REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To the Stockholders of

         SureWay Air Traffic Corporation:


We have  audited the  accompanying  consolidated  balance  sheets of SureWay Air
Traffic  Corporation (a New York  corporation) and subsidiary as of December 31,
1993 and 1994, and the related consolidated statements of income,  stockholders'
equity and cash flows for the years ended December 31, 1993 and 1994 and for the
nine months  ended  September  30,  1995.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements 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 SureWay Air Traffic
Corporation  and subsidiary as of December 31, 1993 and 1994, and the results of
their  operations and their cash flows for the years ended December 31, 1993 and
1994 and for the nine months  ended  September  30,  1995,  in  conformity  with
generally accepted accounting principles.


                                                       ARTHUR ANDERSEN LLP


Roseland, New Jersey
March 19, 1996



<PAGE>




                 SUREWAY AIR TRAFFIC CORPORATION AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS



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

                                                      ASSETS
                                                                                                           December 31
                                                                                                           -----------
                                                                                                     1993               1994
                                                                                                    ---------          ---------
CURRENT ASSETS:
  Cash and cash equivalents............................................................              $309,313           $284,929
  Accounts receivable, less allowance for doubtful accounts of $251,444
  and $276,966 in 1993 and 1994, respectively (Notes 7 and 8)..........................             4,817,847          5,940,018
  Prepaid expenses and other current assets (Note 3)...................................               128,888            295,418
                                                                                                    ---------          ---------

         Total current assets..........................................................             5,256,048          6,520,365
EQUIPMENT, net (Notes 2 and 4).........................................................               341,007            354,563
OTHER ASSETS (Notes 5 and 9)...........................................................               128,788            145,986
                                                                                                    ---------          ---------

         Total assets..................................................................            $5,725,843         $7,020,914
                                                                                                    =========          =========



                                                         LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Line of credit (Note 7)..............................................................                    $0           $150,000
  Current portion of long-term debt (Note 8)...........................................               359,637            572,124
  Accounts payable.....................................................................             1,857,790          2,454,801
  Accrued expenses and other current liabilities (Note 6)..............................               605,270          1,147,640
  Income taxes payable (Note 9)........................................................                13,272             66,002
                                                                                                    ---------          ---------

         Total current liabilities.....................................................             2,835,969          4,390,567
                                                                                                    ---------          ---------

LONG-TERM DEBT (Note 8)................................................................               724,570            350,352
                                                                                                    ---------          ---------

COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS' EQUITY:
  Common stock.........................................................................                 2,000              2,000
  Additional paid-in capital...........................................................             1,195,300          1,195,300
  Retained earnings....................................................................             2,031,822          2,430,513
  Less - Treasury stock; at cost 18,070 shares in 1993 and 32,270 shares
  in 1994 (Note 11)....................................................................            (1,063,818)        (1,347,818)
                                                                                                    ---------          ---------

         Total stockholders' equity....................................................             2,165,304          2,279,995
                                                                                                    ---------          ---------

         Total liabilities and stockholders' equity....................................            $5,725,843         $7,020,914
                                                                                                    =========          =========
</TABLE>



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



<PAGE>



                 SUREWAY AIR TRAFFIC CORPORATION AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME


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

                                                                                                                     For the Nine
                                                                                                                    Months Ended
                                                                                For The Years Ended December 31     September 30,
                                                                                    1993              1994               1995
                                                                                 -----------       -----------       -----------

REVENUES (Note 2)........................................................        $31,953,823       $36,662,104       $31,570,734
COST OF REVENUES.........................................................         18,765,863        21,408,837        18,783,469

                                                                                 -----------       -----------       -----------

         Gross profit....................................................         13,187,960        15,253,267        12,787,265
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES..................................................         12,855,059        14,535,049        11,004,592

                                                                                 -----------       -----------       -----------

         Operating income................................................            332,901           718,218         1,782,673

                                                                                 -----------       -----------       -----------

OTHER INCOME AND EXPENSE:
  Other income...........................................................            102,000           125,850            57,285
  Interest expense.......................................................            (99,702)          (96,728)          (87,725)

                                                                                  -----------       -----------       -----------

                                                                                       2,298            29,122           (30,440)

                                                                                 -----------       -----------       -----------

         Income before income taxes......................................            335,199           747,340         1,752,233
PROVISION FOR INCOME TAXES (Notes 2 and 9)...............................            149,085           348,649           700,893

                                                                                 -----------       -----------       -----------

         Net income......................................................           $186,114          $398,691        $1,051,340
                                                                                 ===========       ===========       ===========

</TABLE>

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



<PAGE>




                 SUREWAY AIR TRAFFIC CORPORATION AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
                AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995





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


                                                                                                                         Total
                                                  Common Stock       Additional       Retained         Treasury      Stockholders'
                                                Shares    Amount   Paid-In Capital     Earnings          Stock           Equity

BALANCE AT DECEMBER 31, 1992                    100,000     $2,000    $1,195,300       $1,845,708     $(1,063,818)      $1,979,190
  Net income................................          0          0             0          186,114               0          186,114

                                               --------     ------    ----------       ----------     -----------       ----------


BALANCE AT DECEMBER 31, 1993                    100,000      2,000     1,195,300        2,031,822      (1,063,818)       2,165,304
  Purchase of treasury stock (Note 11)                0          0             0                0        (284,000)        (284,000)
  Net income................................          0          0             0          398,691               0          398,691

                                               --------     ------    ----------       ----------     -----------       ----------


BALANCE AT DECEMBER 31, 1994                    100,000      2,000     1,195,300        2,430,513      (1,347,818)       2,279,995
  Net income................................          0          0             0        1,051,340               0        1,051,340

                                               --------     ------    ----------       ----------     -----------       ----------


BALANCE AT SEPTEMBER 30, 1995                   100,000     $2,000    $1,195,300       $3,481,853     $(1,347,818)      $3,331,335
                                               ========     ======    ==========       ==========     ===========       ==========

</TABLE>


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



<PAGE>


                 SUREWAY AIR TRAFFIC CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<S>                                                                                        <C>            <C>           <C>    
                                                                                                                        For the Nine
                                                                                             For The Years Ended        Months Ended
                                                                                                 December 31           September 30,
                                                                                             1993           1994            1995
                                                                                             --------      --------      ----------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income.......................................................................          $186,114      $398,691      $1,051,340
  Adjustments to reconcile net income to net cash
   provided by operating activities -
       Depreciation and amortization...............................................           158,869       129,203         113,991
       Changes in operating assets and liabilities-
       Increase in accounts receivable.............................................          (295,041)   (1,122,171)     (2,147,610)
       (Increase) decrease in prepaid expenses and other
         current assets............................................................          (121,053)     (166,530)         46,346
       (Increase) decrease in other assets.........................................           (22,870)      (17,198)        (43,501)
       Increase (decrease) in accounts payable.....................................            77,327       597,011        (140,676)
       Increase in accrued expenses, other current liabilities
         and income taxes payable..................................................           163,828       595,100         763,468
                                                                                             --------      --------      ----------
                                                                                         

         Net cash provided by (used in) operating activities.......................           147,174       414,106        (356,642)
                                                                                             --------      --------      ----------
                                                                                         

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of equipment...........................................................          (174,190)     (142,759)       (650,102)
                                                                                             --------      --------      ----------
                                                                                         

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings on long-term debt.....................................................                 0             0       1,515,110
  Payments on long-term debt.......................................................          (379,957)     (445,731)       (893,295)
  Net borrowings under line of credit..............................................                 0       150,000         100,000
                                                                                             --------      --------      ----------
                                                                                         
         Net cash provided by (used in) financing
           activities..............................................................          (379,957)     (295,731)        721,815
                                                                                             --------      --------      ----------



         Net decrease in cash and cash
           equivalents.............................................................          (406,973)      (24,384)       (284,929)



CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD...................................           716,286       309,313         284,929
                                                                                             --------      --------      ----------

                                                                                        

CASH AND CASH EQUIVALENTS AT END OF PERIOD.........................................          $309,313      $284,929              $0

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

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

  Cash paid for interest...........................................................           $99,702      $104,269        $104,487

  Cash paid for income taxes.......................................................           202,442       239,414         292,152

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

SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES:

  Issuance of note payable to purchase treasury stock
     of the Company................................................................                $0      $284,000              $0
                                                                                         ============= =============== =============
</TABLE>

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


<PAGE>



                 SUREWAY AIR TRAFFIC CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




(1)       BUSINESS AND ORGANIZATION:

         SureWay  Air  Traffic   Corporation  (the  "Company")  is  in  the  air
courier/express  industry,  providing  domestic  and  international  delivery of
freight. It has offices in New York and four other states.

         The Company and its  stockholders  entered into a definitive  agreement
with  Consolidated  Delivery &  Logistics,  Inc.  ("CDL")  pursuant to which the
Company  merged with CDL (the  "Merger") on November 27, 1995.  All  outstanding
shares of the Company were  exchanged  for cash and shares of CDL's common stock
concurrent  with the  consummation  of the initial public offering of the common
stock of CDL.

(2)       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles Of Consolidation -

         The  consolidated  financial  statements  include  the  accounts of the
Company and its  wholly-owned  subsidiary  Sureway  Logistics.  All  significant
intercompany transactions have been eliminated.

Use of Estimates in the Preparation of the Financial Statements -

         The preparation of the consolidated  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.

 Equipment -

         Equipment  is recorded  at cost.  Depreciation  is  computed  using the
straight-line method over the estimated useful lives of the assets.

 Revenue Recognition -

         Revenue is recognized when the shipment is completed or, in the case of
the logistics business, when services are rendered to customers and expenses are
recognized as incurred.

 Income Taxes -

         Deferred  income  taxes  result  from  temporary   differences  in  the
recognition of accounting  transactions for tax and financial reporting purposes
as a result of using  the  liability  method of  accounting  for  income  taxes.
Temporary  differences  result  primarily  from  accelerated   depreciation  and
amortization for tax purposes and various accruals and reserves being deductible
for tax purposes in future periods.

 Reclassifications-

         Certain  reclassifications  have  been made to prior  years'  financial
statements to conform to the current period presentation.

 (3)      PREPAID EXPENSES AND OTHER CURRENT ASSETS:

         Prepaid expenses and other current assets consist of the following -

<TABLE>
<S>                                                                                   <C>         <C>
                                                                                         December 31
                                                                                      1993          1994
                                                                                    --------      --------
Loans to employees............................................................            $0       $53,030
Prepaid rent..................................................................             0        26,676
Prepaid insurance.............................................................        62,172       180,141
Prepaid income taxes..........................................................        55,954             0
Other.........................................................................        10,762        35,571
                                                                                    --------      --------
                                                                                 

                                                                                    $128,888      $295,418
                                                                                    ========      ========
</TABLE>


 (4)     EQUIPMENT:

         Equipment consists of the following -

<TABLE>
<S>                                                      <C>                 <C>              <C>
                                                                                   December 31
                                                         Useful Lives          1993            1994
                                                         ------------        --------         --------

Transportation equipment...........................       3-5 years          $470,470         $498,474
Other and communication equipment..................       5-7 years           296,863          327,145
Furniture and fixtures.............................       5-8 years           102,265           90,248
Data processing equipment..........................        5 years            159,708          188,150
Leasehold improvements.............................     Over the lease
                                                            period           --------         --------
                                                                              206,643          213,516

                                                                             --------         --------

         Subtotal..................................                         1,235,949        1,317,533
Less - Accumulated depreciation and amortization...
                                                                             (894,942)        (962,970)

                                                                             --------         --------

         Total.....................................                          $341,007         $354,563
                                                                             ========         ========
</TABLE>

<PAGE>


(5)      OTHER ASSETS:

         Other assets consist of the following -

<TABLE>
<S>                                                                                  <C>           <C>
                                                                                          December 31
                                                                                       1993         1994
                                                                                     --------      --------
  Security deposits...........................................................        $82,694      $112,815
  Deferred income tax asset...................................................         21,094        33,171
  Other.......................................................................         25,000             0
                                                                                     --------      --------
 
                                                                                     $128,788      $145,986
                                                                                     ========      ========
</TABLE>


(6)      ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

         Accrued expenses and other current liabilities consist of the 
following -

<TABLE>
<S>                                                                               <C>          <C>
                                                                                      December 31
                                                                                  1993          1994
                                                                                  --------    ---------
Payroll and related costs...............................................          $277,264     $421,952
Self-insured medical costs..............................................            52,540      109,217
Commissions and sales licensee fees.....................................           199,458      209,314
Professional fees.......................................................            55,290       79,197
Other...................................................................            20,718      327,960
                                                                                  --------    ---------

                                                                                  $605,270   $1,147,640
                                                                                  ========   ==========
</TABLE>


 (7)     LINE OF CREDIT:

         The  Company  has a line of credit of  $500,000  available  from a bank
which expired on June 30, 1995 and was renewed for the same amount. During April
and May of 1995, the Company had an additional $300,000  outstanding on a bridge
loan which was repaid in June 1995.  At  December  31,  1994,  the  Company  had
$150,000  outstanding on this line which was subsequently paid in full. The line
is secured by  accounts  receivable  and is  guaranteed  by the  officers of the
Company.  Borrowings bear interest at a rate of 1.0% above the Bank's prime rate
(8.5% at December 31, 1994).  The maximum  balance  outstanding was $300,000 and
$800,000  and the average  balance  outstanding  was $75,000  and  $529,500  for
December 31, 1994 and September 30, 1995, respectively.

(8)      LONG-TERM DEBT:

         Long-term debt consists of the following -


<PAGE>


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

                                                                                      December 31
                                                                                 1993             1994
                                                                               ---------        --------
Notes payable to  shareholder  in monthly  installments  through August 15, 1996
  bearing interest at 5% and 10%, to repurchase Company stock....
                                                                                 $29,274        $193,241
Term loan payable in monthly  installments through May 2000, bearing interest at
  the bank's  prime  rate (8.5% at  December  31,  1994) plus 1.5%.  The loan is
  collateralized by accounts receivable and is guaranteed by
  officers of the Company (a).........................................         1,031,250         712,500

Various equipment and vehicle notes payable in monthly installments, with
  original average maturities of three years, at interest rates ranging 
  from 8.5% to 21%, secured by the equipment and vehicles.............            23,683          16,735
                                                                               ---------        --------
                                                                            

          Subtotal....................................................         1,084,207         922,476
Less - Current maturities.............................................          (359,637)       (572,124)
                                                                               ---------        --------



         Total long-term debt.........................................          $724,570        $350,352
                                                                               =========        ========

</TABLE>

         (a) The term loan agreement contains certain financial covenants which,
among  others,  requires  the Company to  maintain a minimum net worth,  working
capital,  total  liabilities to net worth and debt service coverage  ratios,  as
defined.  The Company is further  prohibited from paying dividends,  spending in
excess of $125,000 on equipment  purchases,  entering into certain capital lease
agreements or merging, as defined. The Company has not met certain of these debt
requirements  and it has  obtained  a waiver  from the bank.  In May  1995,  the
Company  renegotiated its term loan with the bank and increased the term loan to
$1,400,000 from  $1,350,000.  The  renegotiated  terms of the loan agreement are
substantially similar to the existing agreement,  except for monthly payments of
principal of $23,333 with final maturity in May 2000. The Company is required to
maintain the minimum financial covenants as newly defined and is prohibited from
similar transactions defined above.

         The aggregate amounts of annual principal maturities of long-term 
          obligations are as follows -
<TABLE>
<S>                                                                                    <C>

                                                                                          December 31

1995.................................................................................        $572,124
1996.................................................................................         345,178
1997.................................................................................           3,449
1998.................................................................................           1,725
1999.................................................................................               0
2000.................................................................................               0

                                                                                       -----------------

         Total.......................................................................        $922,476
                                                                                       =================
</TABLE>
<PAGE>



(9)      INCOME TAXES:

         The following  income tax  information is presented in accordance  with
Statement of Financial  Accounting  Standards  No. 109. The income tax provision
and  deferred  income tax  assets  and  liabilities  for the three  years  ended
December  31,  1994,  and the nine  months  ended  September  30, 1995 have been
determined in accordance with such statement.

         The components of the provision for income taxes are as follows -
<TABLE>
<S>                                                            <C>              <C>         <C>

                                                                                           For The Nine
                                                                  For The Years Ended      Months Ended
                                                                      December 31          September 30,
                                                                   1993          1994          1995
                                                               -------------    --------      --------

Federal...................................................        $103,823      $222,231      $543,192
State.....................................................          45,262       126,418       157,701

                                                               -------------    --------      --------

                                                                  $149,085      $348,649      $700,893
                                                               =============    ========      ========
</TABLE>


         Deferred  income taxes are provided for  differences in the recognition
of revenues and expenses for tax and  financial  reporting  purposes.  Temporary
differences result primarily from accelerated  depreciation and various reserves
being deductible for tax purposes in future periods.

         The  differences  in federal  income  taxes  provided  and the  amounts
determined  by applying the  statutory  tax rate (34%) to income  before  income
taxes result from the following -
<TABLE>
<S>                                                           <C>          <C>             <C>

                                                                                       For The Nine
                                                              For The Years Ended      Months Ended
                                                                  December 31          September 30,
                                                               1993         1994           1995
                                                              --------     --------        --------

Income tax at statutory rate.........................         $113,968     $254,096        $595,759
Add (deduct) -
  State income taxes (net)...........................           29,873       83,436         104,083
  Nondeductible expenses.............................            5,244       11,117           1,051

                                                              --------     --------        --------

         Income tax expense..........................         $149,085     $348,649        $700,893
                                                              ========     ========        ========
</TABLE>

<PAGE>



(10)      COMMITMENTS AND CONTINGENCIES:

Litigation -

         The Company is, from time to time, a party to litigation arising in the
normal course of business.  Management  believes that none of these actions will
have a  material  adverse  effect  on  the  financial  position  or  results  of
operations of the Company.

 Sales Agency Agreements -

         The Company has entered into a sales agency  agreement 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 pays the independent contractors a fee for
services  rendered of approximately 10% of revenues less direct costs associated
with the performance of the services.  For the years ended December 31, 1993 and
1994,  and for the nine months  ended  September  30,  1995,  the  Company  paid
$3,330,067,  $3,826,531  and  $2,638,212  and under  such  agreements,  which is
included in selling,  general and  administrative  expenses in the  accompanying
statements of income.

 Commitments -

         The Company leases office space and office and transportation equipment
under operating leases with varying terms.  Rent expense related to these leases
amounted to $560,575,  $687,000  and  $620,727 for the years ended  December 31,
1993 and 1994 and for the nine months ended September 30, 1995, respectively.

         The approximate minimum annual rental commitments of the Company, under
existing lease agreements, over the next five years, are as follows -
<TABLE>
<S>                                                                             <C>
                                                                               December 31
                                                                                ----------
1995.....................................................................         $519,563
1996.....................................................................          509,408
1997.....................................................................          513,121
1998.....................................................................          517,230
1999.....................................................................          534,044
Thereafter...............................................................          825,595

                                                                                ----------

                                                                                $3,418,961
                                                                                ==========
</TABLE>


(11)      RELATED PARTY TRANSACTIONS:

         On January 5, 1991,  the Company  financed  the purchase of a telephone
system from a majority  shareholder  in the amount of $41,000 over five years at
15% interest per year.  During 1994,  the Company  repurchased  14,200 shares of
stock from a former shareholder's wife for $284,000.

         The Company has a sales and consulting  agreement with J.P.J.  Express,
Inc.,  an  entity  one-third  of which is owned by the  brother  of a  principal
stockholder of the Company. The Company paid commissions to J.P.J. Express, Inc.
of  approximately  $580,000,  $607,000 and $506,000 in 1993 and 1994 and for the
nine months ended September 30, 1995,  respectively.  Such agreement  terminates
January 1, 1999, subject to automatic renewal for additional three year periods.



<PAGE>











                        REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Stockholders of

         Securities Courier Corporation:


We  have  audited  the  accompanying   balance  sheets  of  Securities   Courier
Corporation (a New York  corporation)  as of December 31, 1993 and 1994, and the
related statements of operations,  stockholders'  deficit and cash flows for the
years ended  December 31, 1993 and 1994 and for the nine months ended  September
30, 1995.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements 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 financial  statements  referred to above present fairly, in
all material respects,  the financial position of Securities Courier Corporation
as of December 31, 1993 and 1994, and the results of its operations and its cash
flows for the years  ended  December  31,  1993 and 1994 and for the nine months
ended  September 30, 1995,  in conformity  with  generally  accepted  accounting
principles.


                                              ARTHUR ANDERSEN LLP


Roseland, New Jersey
March 19, 1996



<PAGE>




                         SECURITIES COURIER CORPORATION
                                 BALANCE SHEETS



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

                                     ASSETS
                                                                                                            December 31
                                                                                                       1993             1994
                                                                                                     ----------      ----------
CURRENT ASSETS:
  Cash and cash equivalents......................................................                       $12,915         $15,525
  Accounts receivable, less allowance for doubtful accounts of $22,000
     and $20,000 at December 31, 1993 and 1994                                                          510,213         453,897
  Loan receivable from stockholder (Note 10).....................................                             0       2,026,173
  Prepaid expenses and other current assets (Note 3).............................                       567,853         528,145

                                                                                                     ----------      ----------

         Total current assets....................................................                     1,090,981       3,023,740
EQUIPMENT, net (Notes 2 and 4)...................................................                       876,978         476,751
LONG-TERM LOAN RECEIVABLE FROM STOCKHOLDER (Note 10).............................                     2,019,592               0
OTHER ASSETS (Notes 2 and 5).....................................................                       112,464          67,500

                                                                                                     ----------      ----------

         Total assets............................................................                    $4,100,015      $3,567,991

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



                                                      LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
  Current portion of long-term debt (Note 7).....................................                      $900,159      $1,973,391
  Accounts payable...............................................................                       657,705         797,490
  Accrued expenses and other current liabilities (Note 6)........................                       457,636         842,159
  Deferred revenue (Note 2)......................................................                       604,627         215,668

                                                                                                     ----------      ----------

         Total current liabilities...............................................                     2,620,127       3,828,708

                                                                                                     ----------      ----------

LONG-TERM DEBT (Note 7)..........................................................                     1,932,659          75,287

                                                                                                     ----------      ----------

COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS' DEFICIT:
  Common stock, $30 par value: 100 shares authorized, issued and
     outstanding.................................................................                         3,000           3,000
  Additional paid-in capital.....................................................                             0           8,300
  Accumulated deficit............................................................                      (455,771)       (347,304)

                                                                                                     ----------      ----------

         Total stockholders' deficit.............................................                      (452,771)       (336,004)

                                                                                                     ----------      ----------

         Total liabilities and stockholders' deficit.............................                    $4,100,015      $3,567,991
                                                                                                     ==========      ==========
</TABLE>


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



<PAGE>




                         SECURITIES COURIER CORPORATION
                            STATEMENTS OF OPERATIONS


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

                                                                                                                For The Nine
                                                                                                                 Months Ended
                                                                              For The Years Ended December 31    September 30
                                                                                  1993              1994             1995
                                                                                -----------       -----------     -----------

REVENUES (Notes 2 and 11)..............................................         $17,804,310       $18,698,399     $12,801,686
COST OF REVENUES.......................................................          16,301,604        16,500,939      11,089,413

                                                                                -----------       -----------     -----------

         Gross profit..................................................           1,502,706         2,197,460       1,712,273
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 10).................
                                                                                -----------       -----------     -----------
                                                                                  1,812,803         1,854,936       1,415,437

                                                                                -----------       -----------     -----------

         Operating income (loss).......................................            (310,097)          342,524         296,836

                                                                                -----------       -----------     -----------

OTHER INCOME AND EXPENSE:
  Other income and expense.............................................              66,300           113,065          92,931
  Interest expense (Note 7)............................................            (267,920)         (240,122)       (138,941)

                                                                                -----------       -----------     -----------

                                                                                   (201,620)         (127,057)        (46,010)

                                                                                -----------       -----------     -----------

  Income (loss) before income taxes....................................            (511,717)          215,467         250,826

PRO FORMA PROVISION (BENEFIT) FOR INCOME TAXES (Notes 2 and 8).........            (166,200)          107,000         100,330

                                                                                -----------       -----------     -----------

         Net income (loss).............................................           $(345,517)         $108,467        $150,496
                                                                                ===========       ===========     ===========
</TABLE>


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



<PAGE>




                         SECURITIES COURIER CORPORATION
                       STATEMENTS OF STOCKHOLDERS' DEFICIT
                 FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
                AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995



<TABLE>
<S>                                                       <C>       <C>         <C>            <C>           <C>
                                                                                                                 Total
                                                             Common Stock       Additional     Accumulated   Stockholders'
                                                          Shares    Amount   Paid-In Capital     Deficit        Equity
                                                          ------    ------   ---------------   -----------   ------------
BALANCE AT DECEMBER 31, 1992..........................       100    $3,000           $0          $(110,254)   $(107,254)
  Net loss............................................         0         0            0           (345,517)    (345,517)

                                                          ------    ------   ---------------   -----------   ------------

BALANCE AT DECEMBER 31, 1993..........................       100     3,000            0           (455,771)    (452,771)
  Capital contribution equal to current income
    taxes of S corporation............................         0         0        8,300                  0        8,300
  Net income..........................................         0         0            0            108,467      108,467

                                                          ------    ------   ---------------   -----------   ------------

BALANCE AT DECEMBER 31, 1994..........................       100     3,000        8,300           (347,304)    (336,004)
  Net income..........................................         0         0            0            150,496      150,496
                                                          ------    ------   ---------------   -----------   ------------



BALANCE AT SEPTEMBER 30, 1995.........................       100    $3,000       $8,300          $(196,808)   $(185,508)
                                                          ======    ======   ===============   ===========   ============
</TABLE>


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



<PAGE>



                         SECURITIES COURIER CORPORATION
                            STATEMENTS OF CASH FLOWS

<TABLE>
<S>                                                                                         <C>          <C>          <C>
                                                                                                                    For The Nine
                                                                                                                     Months Ended
                                                                                            For The Years Ended      September 30
                                                                                                December 31
                                                                                              1993         1994          1995
                                                                                            ---------     --------     --------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss).................................................................        $(345,517)    $108,467     $150,496
  Adjustments to reconcile net income to net cash provided by (used in) operating
  activities -
     Loss on disposal of equipment..................................................                0            0      198,947
     Depreciation and amortization..................................................          432,263      496,773      162,529
     Decrease in accounts receivable................................................          151,582       56,316       72,788
     (Increase) decrease in prepaid expenses and other current assets...............         (554,378)      44,964       11,099
     (Increase) decrease in other assets............................................         (118,734)      24,661      (73,391)
     Increase (decrease) in accounts payable........................................         (437,831)     139,785       74,105
     Increase (decrease) in accrued expenses and other
       current liabilities..........................................................          182,454      384,523      (65,866)
     Increase (decrease) in deferred revenue........................................          224,812     (388,959)     324,129

                                                                                            ---------     --------     --------

         Net cash provided by (used in) operating activities........................         (465,349)     866,530      854,836

                                                                                            ---------     --------     --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of equipment............................................................         (284,005)     (81,499)    (130,054)
  Increase (decrease) in stockholder loan receivable................................          368,628       (6,581)     (15,185)
  Capital contribution for taxes of S Corporation...................................                0        8,300            0

                                                                                            ---------     --------     --------

         Net cash provided by (used in) investing activities........................           84,623      (79,780)    (145,239)

                                                                                            ---------     --------     --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments under short-term obligations.............................................         (200,000)           0            0
  Proceeds from long-term debt......................................................        2,097,744      192,000      115,485
  Principal payments under long-term debt and capital lease obligation..............       (1,520,031)    (976,140)    (675,902)

                                                                                            ---------     --------     --------

         Net cash provided by (used in) financing activities........................          377,713     (784,140)    (560,417)

                                                                                            ---------     --------     --------

         Net increase (decrease) in cash and cash equivalents                                  (3,013)       2,610      149,180

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD....................................          $15,928      $12,915       15,525


                                                                                            ---------     --------     --------


CASH AND CASH EQUIVALENTS AT END OF PERIOD..........................................          $12,915      $15,525     $164,705

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

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest............................................................         $311,454     $234,066     $137,881
  Cash paid for income taxes........................................................                0        1,464       45,720
                                                                                            =========     ========     ========
</TABLE>

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



<PAGE>




                         SECURITIES COURIER CORPORATION
                          NOTES TO FINANCIAL STATEMENTS





(1)       BUSINESS AND ORGANIZATION:

         Securities  Courier   Corporation  (the  "Company")   provides  courier
services to banks and brokerage firms in New Jersey, New York and Pennsylvania.

         The Company and its  stockholders  entered into a definitive  agreement
with  Consolidated  Delivery &  Logistics,  Inc.  ("CDL")  pursuant to which the
Company  merged with CDL (the  "Merger") on November 27, 1995.  All  outstanding
shares of the Company were  exchanged  for cash and shares of CDL's common stock
concurrent  with the  consummation  of the initial public offering of the common
stock of CDL.

(2)       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Use of Estimates in the Preparation of the Financial Statements -

         The  preparation  of  the  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 financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

 Equipment -

         Equipment  is recorded  at cost.  Depreciation  is  computed  using the
straight-line  method over the  estimated  useful  lives of the  assets.  Assets
subject to capital leases are amortized over the terms of the leases.

 Deferred Financing Costs -

         Debt  issuance  costs of $75,234  net of  accumulated  amortization  of
$6,270 and $21,317 at December 31, 1993 and 1994, respectively,  are included in
other assets and other current assets in the accompanying balance sheets and are
expensed  over  the  life  of  the  related  debt.  These  costs  relate  to the
refinancing of certain bank loans in 1993.

 Revenue Recognition -

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



<PAGE>


 Income Taxes -

         The Company has elected to be treated for Federal and state  income tax
purposes as an S Corporation  and,  accordingly,  any income tax liabilities are
the  responsibility  of  the  stockholders.  For  purposes  of  these  financial
statements, Federal and state income taxes have been provided for the Company as
if the Company  had filed C  Corporation  tax  returns.  The current  income tax
expense  (benefit) is reflected as an adjustment to additional  paid-in capital.
The Company's S Corporation  status  terminated  with the effective  date of the
Merger discussed in Note 1.

 Reclassifications-

         Certain  reclassifications  have  been made to prior  years'  financial
statements to conform to the current period presentation.

(3)       PREPAID EXPENSES AND OTHER CURRENT ASSETS:

         Prepaid expenses and other current assets consist of the following -

<TABLE>
<S>                                                                              <C>             <C>
                                                                                        December 31
                                                                                        1993         1994
                                                                                     --------      --------
Prepaid insurance.............................................................       $390,646      $373,700
Prepaid income taxes..........................................................        174,000        99,400
Deferred financing costs......................................................              0        53,917
Other.........................................................................          3,207         1,128

                                                                                     --------      --------

                                                                                     $567,853      $528,145
                                                                                     ========      ========
</TABLE>

(4)       EQUIPMENT:

         Equipment consists of the following -
<TABLE>
<S>                                                    <C>            <C>                <C>

                                                          Useful                 December 31
                                                          Lives           1993              1994
                                                        ---------       ----------       ----------
Transportation equipment...........................     3-5 years       $1,556,330       $1,685,472
Other equipment....................................     3-5 years          114,960           56,027

                                                                        ----------       ---------- 

                                                                         1,671,290        1,741,499
Less -- Accumulated depreciation and amortization..
                                                                        ----------       ---------- 
                                                                          (794,312)      (1,264,748)

                                                                        ----------       ---------- 

                                                                          $876,978         $476,751
                                                                        ==========       ========== 
</TABLE>


         Leased  transportation  equipment  under  capital  leases  included  in
equipment  above  consists of the following -
<TABLE>
<S>                                                                   <C>                 <C>

                                                                                December 31
                                                                           1993            1994
                                                                        ----------       ---------- 
Equipment..........................................................      $1,263,827      $1,252,616
Less -- Accumulated amortization...................................        (561,764)       (960,570)

                                                                        ----------       ---------- 

                                                                           $702,063        $292,046
                                                                        ==========       ========== 
</TABLE>


(5)       OTHER ASSETS:

         Other assets consist of the following -
<TABLE>
<S>                                                                      <C>                <C>

                                                                                  December 31
                                                                             1993            1994
                                                                        ----------       ----------
Deferred financing costs..............................................     $68,964               $0
Rent receivable.......................................................      40,500           64,500
Other.................................................................       3,000            3,000

                                                                        ----------       ----------

                                                                          $112,464          $67,500
                                                                        ==========       ========== 
</TABLE>

(6)       ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

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

                                                                                  December 31
                                                                            1993             1994
                                                                        ----------       ----------
Payroll and related benefits..........................................    $197,396         $604,819
Other accrued liabilities.............................................     260,240          237,340

                                                                        ----------       ----------

                                                                          $457,636         $842,159
                                                                        ==========       ========== 
</TABLE>



(7)       LONG-TERM DEBT:

         Long-term debt consists of the following -

<TABLE>
<S>                                                                    <C>             <C>
                                                                             December 31
                                                                        ----------------------
                                                                        1993              1994
                                                                      ----------       ----------
Note payable to bank (a)........................................      $1,368,888      $1,063,443
Note payable to bank (b)........................................         246,269         234,765
Vehicle loans from banks and financing companies (c)............         132,356         127,580
Notes payable to financing company (d)..........................         208,245         173,163
Note payable to insurance company (e)...........................         175,370          55,371
Note payable to investment partnership (f)......................               0          69,441
Capital lease obligations (g)...................................         701,690         324,915

                                                                      ----------       ----------

                                                                       2,832,818       2,048,678
Less -- Current maturities......................................        (900,159)     (1,973,391)

                                                                      ----------       ----------

                                                                      $1,932,659         $75,287
                                                                      ==========       ==========
</TABLE>



         (a)      Monthly principal payments of $7,779,  with a final balloon 
payment due July 1998,  interest rate is at prime (8.5% at December 31,  1994, 
respectively)  plus 1%,  collateralized  by Company  assets.  The Company repaid
this debt upon the completion of the Merger (see Note 1).

         (b) Monthly  principal  and interest  payments of $1,977,  with a final
balloon payment due July 1998, interest rate is at 5%, collateralized by Company
assets. The Company repaid this debt upon the completion of the Merger (see Note
1).

         (c)  Various  loans for  transportation  equipment,  aggregate  monthly
payments of $6,020,  final payments due in 1996 and 1997, interest rates ranging
from 9% to 9.5%, secured by certain transportation equipment.

         (d)      Various notes  payable to financing  company for financing of
Company  insurance  policies  which matured in 1995.

         (e)  Note  payable  to  insurance  company  for  workers'  compensation
premiums,  monthly payments of $5,000, noninterest bearing with final payment in
October 1995.

         (f)      Note  payable to D&D  Partners  with  monthly  payments  of 
$9,009 with a final  payment  made in July 1995 and interest at 10%.

         (g) Various lease obligations for transportation equipment, maturing in
1995 and 1997,  interest is imputed at 9%, secured by vehicles under these lease
obligations.

         The aggregate amounts of annual principal  maturities of long-term debt
(excluding capital lease obligations) are as follows -
<TABLE>
<S>                                                                                           <C>
                                                                                             December 31
                                                                                              ----------
1995...............................................................................           $1,663,460
1996...............................................................................               44,765
1997...............................................................................               15,538
                                                                                              ----------

         Total.....................................................................           $1,723,763
                                                                                              ==========
</TABLE>


         The Company leases certain transportation equipment under capital lease
agreements which expire at various dates.  Minimum annual payments under capital
leases are as follows -
<TABLE>
<S>                                                                                          <C>

                                                                                             December 31
                                                                                              ----------
1995.................................................................................          $321,171
1996.................................................................................             6,336
1997.................................................................................            10,439
                                                                                              ----------


          Total minimum payments.....................................................           337,946
Less -- Amounts representing interest................................................           (13,031)

                                                                                              ----------

         Net minimum payments........................................................           324,915
Less -- Current portion of obligations under capital leases..........................          (309,931)

                                                                                              ----------

Long-term portion of obligations under capital leases................................           $14,984
                                                                                              ==========
</TABLE>

<PAGE>


(8)    INCOME TAXES:

         The following  income tax  information is presented in accordance  with
Statement  of Financial  Accounting  Standard No. 109 as if the Company had been
subject to Federal and state income taxes throughout the periods presented.

         The components of the provision for income taxes are as follows -
<TABLE>
<S>                                                             <C>                <C>           <C>
                                                                                                For The Nine
                                                                                               Months Ended
                                                                        December 31            September 30,
                                                                    1993           1994             1995
                                                                    ---------    --------         --------

Federal...................................................          $(174,000)    $82,900          $77,756
State.....................................................              7,800      24,100           22,574

                                                                    ---------    --------         --------

                                                                    $(166,200)   $107,000         $100,330
                                                                    =========    ========         ========
</TABLE>



         The  differences  in federal  income  taxes  provided  and the  amounts
determined  by applying the  statutory  tax rate (34%) to income  before  income
taxes result from the following -
<TABLE>
<S>                                                               <C>          <C>              <C>
                                                                                              For The Nine
                                                                                              Months Ended
                                                                        December 31           September 30,
                                                                    1993         1994             1995
                                                                  ---------    --------         --------

Income tax (benefit) at statutory rate....................        $(174,000)    $73,300          $85,300
Add -
  State income taxes net of Federal benefit...............            5,100      15,900           14,900
  Nondeductible expenses..................................            2,700      17,700              130
  Other...................................................                0         100                0

                                                                  ---------    --------         --------

                                                                  $(166,200)   $107,000         $100,330
                                                                  ---------    --------         --------
</TABLE>

(9)       COMMITMENTS AND CONTINGENCIES:

Litigation -

         The Company is, from time to time, a party to litigation arising in the
normal course of business.  Management  believes that none of these actions will
have a  material  adverse  effect  on  the  financial  position  or  results  of
operations of the Company.



<PAGE>


 Commitments -

         The Company leases,  under operating leases,  office and transportation
equipment  with lease terms of greater than one year.  Rent  expense  related to
these leases  amounted to  $1,626,384,  $1,346,947  and $1,348,192 for the years
ended  December 31, 1993 and 1994 and the nine months ended  September 30, 1995,
respectively.

         The approximate minimum annual rental commitments of the Company, under
existing lease agreements, over the next five years, are as follows -
<TABLE>
<S>                                                                                                <C>
                                                                                                      December 31
                                                                                                   ------------------
1995..........................................................................................            $273,568
1996..........................................................................................             196,657
1997..........................................................................................             189,750
1998..........................................................................................             189,750
1999..........................................................................................             189,750
Thereafter....................................................................................                   0

                                                                                                   ------------------

                                                                                                        $1,039,475
                                                                                                   ==================
</TABLE>


(10)      RELATED PARTY TRANSACTIONS:

 Leasing Transactions -

         The Company  leases  transportation  equipment  from a company which is
partially owned by a stockholder.  Lease expense  related to these  transactions
was  approximately  $1,200,000,  $425,000  and  $169,000,  for the  years  ended
December  31, 1993 and 1994 and for the nine months  ended  September  30, 1995,
respectively.

 Related Party Receivables -

         The  Company  had  a  noninterest  bearing  loan  receivable  from  its
president and majority  stockholder of $2,019,592 and $2,026,173 at December 31,
1993 and 1994, respectively.  The loan, which has no repayment terms, was repaid
in conjunction with the acquisition of the Company's common stock by CDL and the
initial public offering of CDL's common stock (see Note 1).

(11)      ACQUISITIONS:

         In March 1995,  the Company signed a contract with an entity to provide
services to the Company such as labor,  vehicles,  insurance  coverage and other
costs relative to the courier aspect of the business.  The results of operations
and  financial  position of this entity have been  included in the  accompanying
financial statements since that entity's inception.

(12)      SIGNIFICANT CUSTOMERS:

         Included  in  revenues   are  three   customers   who   accounted   for
approximately  72%, 68%, and 75% of revenues for the years ended  December 31,
1993 and 1994, and for the nine months ended September 30, 1995, respectively.



<PAGE>











             REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Stockholders of

         National Courier, Inc. and
           National Express, Inc.:


We have audited the accompanying  combined  balance sheets of National  Courier,
Inc. and National Express, Inc. (Missouri  Corporations) as of December 31, 1993
and 1994,  and the related  combined  statements  of  operations,  stockholders'
equity and cash flows for the years ended December 31, 1993 and 1994 and for the
nine months  ended  September  30,  1995.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements 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 combined  financial  statements  referred to above  present
fairly, in all material  respects,  the combined  financial position of National
Courier,  Inc. and National Express,  Inc. as of December 31, 1993 and 1994, and
the  results  of their  operations  and their  cash  flows  for the years  ended
December 31, 1993 and 1994 and for the nine months ended  September 30, 1995, in
conformity with generally accepted accounting principles.


                                                     ARTHUR ANDERSEN LLP


Roseland, New Jersey
March 19, 1996



<PAGE>




                NATIONAL COURIER, INC. AND NATIONAL EXPRESS, INC.
                             COMBINED BALANCE SHEETS


<TABLE>
<S>                                                                                                  <C>               <C>
                                     ASSETS
                                                                                                               December 31
                                                                                                          1993            1994
CURRENT ASSETS:
  Cash and cash equivalents....................................................................            $164,044         $84,786
  Accounts receivable, less allowance of $59,000 in 1993 and $45,000 in 1994 for
  doubtful accounts (Note 7)...................................................................           1,530,665       1,886,398
  Prepaid expenses and other current assets (Note 3)...........................................             197,955         317,324

                                                                                                     ---------------   ------------

         Total current assets..................................................................           1,892,664       2,288,508
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net (Notes 2 and 4)......................................             300,913         303,632
OTHER ASSETS (Note 5)..........................................................................              21,920         183,613

                                                                                                     ---------------   ------------

         Total assets..........................................................................          $2,215,497      $2,775,753

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



                                                        LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Revolving lines of credit (Note 7)...........................................................            $638,784        $834,825
  Accounts payable.............................................................................             513,671         756,119
  Accrued expenses and other current liabilities (Note 6)......................................             434,028         342,656
  Due to stockholders (Note 12)................................................................                   0          17,998

                                                                                                     ---------------   ------------

         Total current liabilities.............................................................           1,586,483       1,951,598

                                                                                                     ---------------   ------------

COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS' EQUITY  (Note 11):
  Common stock.................................................................................              23,400          23,400
  Additional paid-in capital...................................................................             129,019         193,821
  Retained earnings............................................................................             476,595         606,934

                                                                                                     ---------------   ------------

         Total stockholders' equity............................................................             629,014         824,155

                                                                                                     ---------------   ------------

         Total liabilities and stockholders' equity............................................          $2,215,497      $2,775,753
                                                                                                     ===============   ============
</TABLE>



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



<PAGE>




                NATIONAL COURIER, INC. AND NATIONAL EXPRESS, INC.
                        COMBINED STATEMENTS OF OPERATIONS

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


                                                                                                                   For The Nine
                                                                                                                  Months Ended
                                                                                    For The Years Ended            September 30
                                                                                  1993              1994               1995
                                                                               -----------       -----------       -----------

REVENUES (Notes 2 and 13).............................................         $12,472,258       $15,018,440       $11,995,900
COST OF REVENUES......................................................           7,456,230         9,345,411         7,359,690

                                                                               -----------       -----------       -----------

  Gross profit........................................................           5,016,028         5,673,029         4,636,210
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 8).................

                                                                                 4,942,313         5,248,339         4,495,705

                                                                               -----------       -----------       -----------

         Operating income ............................................              73,715           424,690           140,505



OTHER INCOME AND EXPENSE:
  Sale of division (Note 14)..........................................             337,027                 0                 0
  Other expense ......................................................            (133,510)         (171,175)          (92,235)
  Interest expense....................................................             (46,517)          (48,541)          (67,323)

                                                                               -----------       -----------       -----------

                                                                                   157,000          (219,716)         (159,558)

                                                                               -----------       -----------       -----------

         Income (loss) before income taxes............................             230,715           204,974           (19,053)

PRO FORMA PROVISION FOR (BENEFIT FROM) INCOME TAXES (Notes 2 and 9)...              94,035            74,635           (21,016)

                                                                               -----------       -----------       -----------

         Net income...................................................            $136,680          $130,339            $1,963
                                                                               ===========       ===========       ===========
</TABLE>

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



<PAGE>




                NATIONAL COURIER, INC. AND NATIONAL EXPRESS, INC.
                   COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
                AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995

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

                                                                 Common Stock
                                                            ----------------------                                     Total
                                                                  (Note 11)          Additional      Retained       Stockholders'
                                                              Shares     Amount    Paid-In Capital   Earnings          Equity


BALANCE AT DECEMBER 31, 1992.............................       20,340     $23,400      $37,637       $371,247          $432,284
  Distributions to stockholders..........................            0           0            0        (31,332)          (31,332)
  Capital contribution equal to current income taxes
     of S corporations...................................            0           0       91,382              0            91,382
  Net income.............................................            0           0            0        136,680           136,680

                                                            ----------   ---------    ---------     ----------        ----------

BALANCE AT DECEMBER 31, 1993.............................       20,340      23,400      129,019        476,595           629,014
  Capital contribution equal to current income taxes
     of S corporations...................................            0           0       64,802              0            64,802
  Net income.............................................            0           0            0        130,339           130,339

                                                            ----------   ---------    ---------     ----------        ----------

BALANCE AT DECEMBER 31, 1994.............................       20,340      23,400      193,821        606,934           824,155
  Distributions to stockholders..........................            0           0      (76,370)             0           (76,370)
  Charge to capital in an amount equal to current
     income tax benefit of S corporations................            0           0      (27,760)             0           (27,760)
  Net income.............................................            0           0            0          1,963             1,963

                                                            ----------   ---------    ---------     ----------        ----------

BALANCE AT SEPTEMBER 30, 1995............................       20,340     $23,400      $89,691       $608,897          $721,988
                                                            ==========   =========    =========     ==========        ==========
</TABLE>

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



<PAGE>




                NATIONAL COURIER, INC. AND NATIONAL EXPRESS, INC.
                        COMBINED STATEMENTS OF CASH FLOWS

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

                                                                                                                     For The Nine
                                                                                            For The Years Ended      Months Ended
                                                                                                December 31          September 30
                                                                                                -----------          ------------
                                                                                              1993        1994           1995
                                                                                              ----        ----           ----

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income .......................................................................         $136,680     $130,339      $1,963

                                                                                          ------------ ----------- --------------

  Adjustments to reconcile net income to net cash provided by (used in) operating
   activities -
       Loss on disposal of equipment and leasehold improvements.....................            7,871        7,186           0
       Depreciation and amortization of equipment and leasehold improvements                  112,510      106,354     113,345
       Charge to capital in an amount equal to current income tax
           benefit of S corporations................................................           91,382       64,802     (27,760)
       Changes in operating assets and liabilities -
         Increase in accounts receivable............................................         (101,589)    (355,733)   (343,001)
         (Increase) decrease in prepaid expenses and other current assets..........           270,716     (119,369)    138,348
         (Increase) decrease in other assets........................................          118,853     (161,693)    (32,804)
         Increase (decrease) in accounts payable ...................................         (182,944)     242,448      59,646
         Increase (decrease) in accrued expenses and other current liabilities......           89,136      (91,372)     32,948
         Increase (decrease) in due to stockholders.................................                0       17,998     (17,998)

                                                                                          ------------ ----------- --------------

         Total adjustments..........................................................          405,935     (289,379)    (77,276)

                                                                                          ------------ ----------- --------------

         Net cash provided by (used in) operating activities........................          542,615     (159,040)    (75,313)

                                                                                          ------------ ----------- --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of equipment and leasehold improvements.................................      ------------ ----------- --------------
                                                                                              (86,280)    (116,259)   (133,103)

                                                                                          ------------ ----------- --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from short-term borrowings...............................................          200,000      196,041     123,630
  Principal payments of short-term obligations......................................         (500,000)           0           0
  Distributions to stockholders.....................................................          (31,332)           0     (76,370)
  Principal payments under capital lease obligations................................          (21,596)           0           0

                                                                                          ------------ ----------- --------------

         Net cash provided by (used in) financing activities........................         (352,928)     196,041     123,630

                                                                                          ------------ ----------- --------------

         Net increase (decrease) in cash and cash equivalents.......................          103,407      (79,258)    (84,786)


CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD....................................           60,637      164,044      84,786

                                                                                          ------------ ----------- --------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD..........................................         $164,044      $84,786          $0

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


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the year for:
     Interest.......................................................................          $46,517      $48,541     $65,235
     Income taxes...................................................................            1,567        1,514      90,101
                                                                                          ============ =========== ==============
</TABLE>

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


<PAGE>




                NATIONAL COURIER, INC. AND NATIONAL EXPRESS, INC.
                     NOTES TO COMBINED FINANCIAL STATEMENTS




(1)       BUSINESS AND ORGANIZATION:

         The accompanying  combined financial statements include the accounts of
National Courier, Inc. and National Express, Inc. (collectively, the "Company").
The Company provides courier and package delivery  services to most major cities
in the United States utilizing public carriers and out-of-town courier services.

         The Company and its  stockholders  entered into a definitive  agreement
with  Consolidated  Delivery &  Logistics,  Inc.  ("CDL")  pursuant to which the
Company  merged with CDL (the  "Merger") on November 27, 1995.  All  outstanding
shares of the Company were  exchanged  for cash and shares of CDL's common stock
concurrent  with the  consummation  of the initial public offering of the common
stock of CDL.

(2)       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis Of Presentation -

         The companies  discussed in Note 1 were under the common control of the
two stockholders. All significant intercompany transactions have been eliminated
in combination.

Use of Estimates in the Preparation of the Financial Statements -

         The preparation of the combined 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 combined
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results could differ from those estimates.

 Equipment And Leasehold Improvements -

         Equipment is recorded at cost.  Leasehold  improvements  are  amortized
over the  lives  of the  respective  leases  or the  lives of the  improvements,
whichever is shorter.  Depreciation  and  amortization  are  computed  using the
straight-line method over the estimated useful lives of the assets.

 Revenue Recognition -

         Revenue is  recognized  when the shipment is completed and expenses are
recognized as incurred.



<PAGE>


 Income Taxes -

         The Company has elected to be treated for Federal and state  income tax
purposes as an S Corporation  and,  accordingly,  any income tax liabilities are
the  responsibility  of  the  stockholders.  For  purposes  of  these  financial
statements, Federal and state income taxes have been provided for the Company as
if the Company  had filed C  Corporation  tax  returns.  The current  income tax
expense  (benefit) is reflected as an adjustment to additional  paid-in capital.
The Company's S Corporation  status  terminated  with the effective  date of the
Merger discussed as in Note 1.

Reclassifications -

         Certain  reclassifications have been made to the prior years' financial
statements to conform to the current period presentation.

(3)       PREPAID EXPENSES AND OTHER CURRENT ASSETS:

         Prepaid expenses and other current assets consist of the following -
<TABLE>
<S>                                                                                   <C>               <C>
                                                                                            December 31
                                                                                         1993          1994
                                                                                     ------------- ------------
Supplies........................................................................          $138,974     $111,392
Prepaid insurance...............................................................            50,059       28,753
Other...........................................................................             8,922      177,179

                                                                                     ------------- ------------

                                                                                          $197,955     $317,324
                                                                                     ============= ============
</TABLE>


(4)      EQUIPMENT AND LEASEHOLD IMPROVEMENTS:

         Equipment and leasehold improvements consist of the following -
<TABLE>
<S>                                                              <C>            <C>              <C>

                                                                                        December 31
                                                                Useful Lives       1993             1994
                                                                ------------       ----             ----
Office equipment..........................................       5-7 years         $869,798        $910,982
Leasehold improvements....................................        3 years           358,368         368,705

                                                                              ---------------  ------------

                                                                                  1,228,166       1,279,687
Less- Accumulated depreciation and amortization...........                         (927,253)       (976,055)

                                                                              ---------------  ------------

                                                                                   $300,913        $303,632
</TABLE>


(5)       OTHER ASSETS:

         Other assets consist of the following -
<TABLE>
<S>                                                                                     <C>         <C>

                                                                                            December 31
                                                                                         1993         1994
                                                                                      -----------  ---------
Deferred software costs.........................................................        $15,633      $61,622
Security deposits...............................................................          6,287       50,081
Maintenance agreements..........................................................              0       71,910

                                                                                      -----------  ---------

                                                                                        $21,920     $183,613
                                                                                      ===========  =========
</TABLE>


         Certain  development  costs  related  to  computer  software  have been
capitalized  and are  included in other  assets.  Amortization  is computed on a
straight-line  basis over the estimated  economic  life of the asset,  generally
three years.

(6)       ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

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

                                                                                            December 31
                                                                                         1993          1994
                                                                                     -------------  ----------
Accrued payroll and payroll taxes.............................................          $417,359      $323,812
Other current liabilities.....................................................            16,669        18,844

                                                                                     -------------  ----------

                                                                                        $434,028      $342,656
                                                                                     =============  ==========
</TABLE>

(7)       REVOLVING LINES OF CREDIT:

         Borrowings  outstanding  under  revolving  lines of credit from a bank,
which  are  secured  by the  Company's  accounts  receivable  and  the  personal
guarantee  of the owners,  were  $638,784  and $834,825 at December 31, 1993 and
1994,  respectively.  The lines of credit expire on May 1, 1996.  Interest is at
the  bank's  prime  lending  rate  plus  3/4%  (9 1/4% at  December  31,  1994).
Short-term borrowings under the lines are as follows -
<TABLE>
<S>                                                                             <C>          <C>          <C>

                                                                                                         For The Nine
                                                                               For The Years Ended      Months Ended
                                                                                   December 31           September 30
                                                                                   -----------           ------------
                                                                                1993          1994           1995
                                                                                ----          ----           ----
Average amount outstanding during the period (total of monthly outstanding
  principal balances divided by the number of months).................           $652,910     $849,566         $952,380
Weighted average interest rate during the period (actual interest expense
  on short-term borrowings divided by average short-term borrowings
  outstanding)........................................................              7.05%        7.70%            9.61%
</TABLE>

(8)       EMPLOYEE BENEFIT PLANS:

         During  1994,  the Company  established  a 401(k)  profit  sharing plan
covering  substantially all full-time employees of the Company who have one year
of service and are age twenty-one or older. At its  discretion,  the Company can
contribute up to 25% of participant  contributions  up to a maximum of 6% of the
eligible  employee's  salary.  The Company recorded charges of $9,775 and $8,588
for matching  contributions for the year ended December 31, 1994 and nine months
ended September 30, 1995.



<PAGE>


(9)       INCOME TAXES:

         The following  income tax  information is presented in accordance  with
Statement of Financial  Accounting  Standards No. 109 as if the Company had been
subject to Federal and state income taxes throughout the periods presented.  The
components of the provision for (benefits  from) income taxes are  summarized as
follows -
<TABLE>
<S>                                                                       <C>           <C>          <C>

                                                                                                   For The Nine
                                                                          For The Years Ended     Months Ended
                                                                              December 31         September 30
                                                                           1993        1994            1995
                                                                           ----        ----            ----

Federal............................................................         $72,845     $59,737       $(16,287)
State..............................................................          21,190      14,898         (4,729)

                                                                        -----------   ---------     ----------

                                                                            $94,035     $74,635       $(21,016)
                                                                        ===========   =========     ==========
</TABLE>


         The  differences  in federal  income  taxes  provided  and the  amounts
determined  by applying the  statutory  tax rate (34%) to income  (loss)  before
income taxes result from the following -
<TABLE>
<S>                                                                          <C>            <C>         <C>    

                                                                                                        For The Nine
                                                                              For The Years Ended      Months Ended
                                                                                  December 31           September 30
                                                                                  -----------           ------------
                                                                               1993         1994            1995
                                                                               ----         ----            ----

Income tax (benefit) at statutory rate................................          $78,443      $69,691        $(6,478)
Add (deduct) -
  State income taxes, net of Federal benefit..........................           13,985        9,833         (3,121)
  Nondeductible expenses and other....................................            1,607      (4,889)        (11,147)

                                                                                -------      -------       --------

         Income tax (benefit) expense.................................          $94,035      $74,635       $(21,016)
                                                                                =======      =======       ========
</TABLE>

(10)     COMMITMENTS AND CONTINGENCIES:

Litigation -

         The Company is, from time to time, a party to litigation arising in the
normal course of business.  Management  believes that none of these actions will
have a  material  adverse  effect  on  the  financial  position  or  results  of
operations of the Company.

Commitments -

         The Company leases office space and equipment  under  operating  leases
with lease terms of greater than one year. For the years ended December 31, 1993
and 1994 and the nine months ended September 30, 1995, rent expense  amounted to
$268,448, $222,613 and $173,166 , respectively.



<PAGE>


         The approximate minimum annual rental commitments of the Company, under
existing lease agreements, are as follows -
<TABLE>
<S>                                                                                            <C>

                                                                                                  December 31
                                                                                               -----------------
1995......................................................................................          $159,628
1996......................................................................................           161,628
1997......................................................................................            99,939
1998......................................................................................            12,168
1999......................................................................................            12,168
Thereafter................................................................................           121,680

                                                                                               -----------------

                                                                                                    $567,211
                                                                                               =================
</TABLE>

(11)      COMMON STOCK:

         Common stock of each of the combined entities at December 31, 1993 and
 1994, is as follows -
<TABLE>
<S>                                                               <C>       <C>               <C>              <C>  

                                                                                                Shares
                                                                  Par                         Issued and       Common
                                                                   Value      Authorized      Outstanding       Stock
                                                                              -----------     ----------       ---------
National Courier, Inc..........................................     $10          3,000              340           $3,400
National Express, Inc..........................................      1          50,000           20,000           20,000

                                                                              -----------     ----------       ---------

                                                                                53,000           20,340          $23,400
                                                                              ===========     ==========       =========
</TABLE>

(12)      RELATED PARTY TRANSACTIONS:

         At  December  31,  1994,  the Company had a  noninterest  bearing  loan
payable to its  stockholders  of $17,998 which was repaid during the nine months
ended September 30, 1995.

         National  leases  transportation  equipment  from a  company  which  is
partially owned by its stockholders. Lease expense related to these transactions
was approximately $184,300,  $162,600, and $112,200 for the years ended December
31,  1993  and  1994  and  for  the  nine  months  ended   September  30,  1995,
respectively.

         National rents office space in a building owned by a stockholder.  Rent
expense related to these  transactions was  approximately  $73,200,  $75,200 and
$64,200 for the years ended  December  31, 1993 and 1994 and for the nine months
ended September 30, 1995, respectively.



<PAGE>


(13)      SIGNIFICANT CUSTOMERS:

         Included in revenues is one customer who  accounted  for  approximately
10% of revenues in 1994. No other customer individually  accounted for more than
10% of the Company's  revenues for the years ended  December 31, 1993 or 1994 or
the nine months ended September 30, 1995.

(14)      SALE OF DIVISION:

         Included  in  other  income  and  expense  in 1993 are the  results  of
operations of the Company's  former Air Courier  Division.  In December 1992 the
Company  decided to  restructure  its Air  Courier  Division  and in  connection
therewith  sold  such  business  in  April  1993.  Proceeds  of  the  sale  were
approximately  $760,000  and were  offset  by  disposal  costs of  approximately
$456,000.



<PAGE>













                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To the Stockholders of

         Silver Star Express Inc.:


We have audited the accompanying  combined balance sheets of Silver Star Express
Inc. (a Florida  corporation) and Related  Companies as of December 31, 1993 and
1994, and the related combined  statements of income,  stockholders'  equity and
cash  flows  for the years  ended  December  31,  1993 and 1994 and for the nine
months ended June 30, 1995. These financial statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements 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 combined  financial  statements  referred to above  present
fairly, in all material respects, the financial position of Silver Star Express,
Inc. and Related  Companies as of December 31, 1993 and 1994, and the results of
their  operations and their cash flows for the years ended December 31, 1993 and
1994 and for the nine months  ended  September  30,  1995,  in  conformity  with
generally accepted accounting principles.


                                                    ARTHUR ANDERSEN LLP


Roseland, New Jersey
March 19, 1996



<PAGE>




                 SILVER STAR EXPRESS, INC. AND RELATED COMPANIES

                             COMBINED BALANCE SHEETS


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

                                     ASSETS
                                                                                                             December 31
                                                                                                         1993           1994
                                                                                                        ----------     ----------
CURRENT ASSETS:
  Cash and cash equivalents....................................................................           $733,088     $1,329,070
  Accounts receivable..........................................................................          1,057,234        835,281
  Prepaid expenses and other current assets (Note 3)...........................................            114,514        179,486
  Stockholder receivables (Note 13)............................................................            113,466        167,434
  Notes receivable - current (Note 4)..........................................................             64,500        168,513

                                                                                                        ----------     ----------

         Total current assets..................................................................          2,082,802      2,679,784
EQUIPMENT, net (Notes 2, 5 and 8)..............................................................            794,105        650,350
NOTES RECEIVABLE (Note 4)......................................................................              5,000         36,000
OTHER ASSETS (Note 6)..........................................................................            211,064         53,600

                                                                                                        ----------     ----------

          Total assets.........................................................................         $3,092,971     $3,419,734

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



                                                        LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current portion of long-term debt (Note 8)...................................................           $187,348       $195,727
  Accounts payable.............................................................................            134,287        160,114
  Accrued expenses and other current liabilities (Note 7)......................................            573,232        445,783

                                                                                                        ----------     ----------

          Total current liabilities............................................................            894,867        801,624

                                                                                                        ----------     ----------

LONG-TERM DEBT (Note 8)........................................................................            589,826        394,099

                                                                                                         ----------     ----------

DEFERRED INCOME TAXES (Note 10)................................................................             32,052         55,771

                                                                                                        ----------     ----------

COMMITMENTS AND CONTINGENCIES (Note 11)

STOCKHOLDERS' EQUITY (Note 12):
  Common stock.................................................................................              1,550          1,550
  Additional paid-in capital...................................................................            713,546        983,991
  Retained earnings............................................................................            861,130      1,182,699

                                                                                                        ----------     ----------

          Total stockholders' equity...........................................................          1,576,226      2,168,240

                                                                                                        ----------     ----------

          Total liabilities and stockholders' equity...........................................         $3,092,971     $3,419,734
                                                                                                        ==========     ==========
</TABLE>

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



<PAGE>




                 SILVER STAR EXPRESS, INC. AND RELATED COMPANIES
                          COMBINED STATEMENTS OF INCOME

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

                                                                                                                       For The Nine
                                                                                           For The Years Ended         Months Ended
                                                                                               December 31             September 30
                                                                                               -----------             ------------
                                                                                          1993            1994             1995
                                                                                        -----------     -----------      -----------

REVENUES (Notes 2 and 14).......................................................        $14,972,465     $15,139,278      $10,142,990
COST OF REVENUES................................................................         11,423,611      11,113,019        7,675,631

                                                                                        -----------     -----------      -----------

         Gross profit...........................................................          3,548,854       4,026,259        2,467,359
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 9)...........................          2,930,762       3,440,729        2,057,201

                                                                                        -----------     -----------      -----------

         Operating income.......................................................            618,092         585,530          410,158

                                                                                        -----------     -----------      -----------

OTHER INCOME AND EXPENSE:
  Other income (expense) (Note 4)...............................................             31,859         249,830          92,556
  Interest expense..............................................................            (69,830)        (73,682)        (42,046)

                                                                                        -----------     -----------      -----------

                                                                                            (37,971)        176,148          50,510

                                                                                         -----------     -----------      ----------

         Income before income taxes.............................................            580,121         761,678         460,668
PRO FORMA PROVISION FOR INCOME TAXES (Notes 2 and 10)...........................            234,297         310,609         184,267

                                                                                        -----------     -----------      -----------

         Net income.............................................................           $345,824        $451,069        $276,401
                                                                                        ===========     ===========      ===========
</TABLE>


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



<PAGE>

                 SILVER STAR EXPRESS, INC. AND RELATED COMPANIES
                   COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
               FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994 AND
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995

<TABLE>
<S>                                                       <C>       <C>         <C>            <C>           <C>         <C>
                                                            Common Stock      Additional                                  Total
                                                             (Note 12)         Paid-In        Retained     Treasury   Stockholders'
                                                          Shares   Amount      Capital        Earnings       Stock        Equity
                                                          ------   -------      --------       --------      --------    ----------
BALANCE AT DECEMBER 31, 1992........................       1,170    $1,800      $524,672       $692,743      $(20,912)   $1,198,303
  Distributions to stockholders.....................           0         0             0       (177,437)            0      (177,437)
  Capital contribution equal to the current income
    taxes of S corporation..........................           0         0       209,536              0             0       209,536
  Retirement of treasury stock......................         (25)     (250)      (20,662)             0        20,912             0
  Net income........................................           0         0             0        345,824             0       345,824

                                                          ------   -------      --------       --------      --------    ----------

BALANCE AT DECEMBER 31, 1993........................       1,145     1,550       713,546        861,130             0     1,576,226
  Distributions to stockholders.....................           0         0             0       (129,500)            0      (129,500)
  Capital contribution equal to the current income
    taxes of S corporation..........................           0         0       270,445              0             0       270,445
  Net income........................................           0         0             0        451,069             0       451,069

                                                          ------   -------      --------       --------      --------    ----------

BALANCE AT DECEMBER 31, 1994........................       1,145     1,550       983,991      1,182,699             0     2,168,240
  Distributions to stockholders.....................           0         0       (39,653)    (1,459,100)            0    (1,498,753)
  Capital contribution equal to the current income
    taxes of S corporation..........................           0         0       144,170              0             0       144,170
  Net income........................................           0         0             0        276,401             0       276,401
                                                          ------   -------      --------       --------      --------    ----------

BALANCE AT SEPTEMBER 30, 1995.......................       1,145    $1,550    $1,088,508             $0            $0    $1,090,058
                                                          ======   =======    ==========       ========      ========    ==========
</TABLE>

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



<PAGE>


                 SILVER STAR EXPRESS, INC. AND RELATED COMPANIES
                        COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<S>                                                                                            <C>         <C>           <C>

                                                                                                                        For The Nine
                                                                                               For The Years Ended      Months Ended
                                                                                                    December 31         September 30
                                                                                                 1993        1994           1995
                                                                                               --------   ---------         -------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income............................................................................       $345,824    $451,069        $276,401
  Adjustment to reconcile net income to net cash provided by operating activities-
  Loss on disposal of equipment.........................................................              0      40,369          17,176
  Depreciation and amortization.........................................................        138,240     186,990         182,070
  Gain on terminal sales................................................................              0    (163,585)              0
  Deferred income tax expense...........................................................         12,722      23,719          10,200
  Current income taxes of S Corporation.................................................        209,536     270,445         144,170
  Changes in operating assets and liabilities -
    (Increase) decrease in -
      Accounts receivable, net..........................................................       (348,115)    221,953         229,625
      Prepaid expenses and other current assets.........................................         29,792     (64,972)       (185,537)
      Other assets......................................................................         50,285     157,464          (8,700)
    Increase (decrease) in -
      Accounts payable and accrued liabilities..........................................        (65,310)   (101,622)         82,392

                                                                                               --------   ---------         -------

           Net cash provided by operating activities....................................        372,974   1,021,830         747,797

                                                                                               --------   ---------         -------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment...................................................       (428,549)    (85,019)        (83,792)
  Proceeds from terminal sales..........................................................              0      93,000               0
  (Advances to) repayments from stockholders............................................         12,862     (53,968)         35,753
  (Increase) decrease in notes receivable...............................................         48,000     (63,013)         43,351

                                                                                               --------   ---------         -------

           Net cash used in investing activities........................................       (367,687)   (109,000)         (4,688)

                                                                                               --------   ---------         -------

CASH FLOWS FROM FINANCING ACTIVITIES:......
  Principal payments on long-term debt..................................................       (397,974)   (187,348)       (170,657)
  Proceeds from long-term borrowings....................................................        326,928           0               0
  Distributions to stockholders.........................................................       (177,437)   (129,500)     (1,498,753)

                                                                                                --------   ---------         -------

           Net cash used in financing activities........................................       (248,483)   (316,848)     (1,669,410)

                                                                                               --------   ---------         -------

           Net increase (decrease) in cash and cash equivalents.........................       (243,196)    595,982        (926,301)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD........................................        976,284     733,088       1,329,070

                                                                                               --------   ---------         -------

CASH AND CASH EQUIVALENTS AT END OF PERIOD..............................................       $733,088  $1,329,070        $402,769

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


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid for interest................................................................        $69,829     $73,682         $45,363
                                                                                               ========   =========         =======
</TABLE>

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



<PAGE>




                 SILVER STAR EXPRESS, INC. AND RELATED COMPANIES
                     NOTES TO COMBINED FINANCIAL STATEMENTS



(1)       BUSINESS AND ORGANIZATION:

         The accompanying  combined financial statements include the accounts of
Silver Star Express,  Inc., Silver Star Express North,  Inc., All World Brokers,
Inc.,  and  Parcel  Delivery  Company  of  Florida,  Inc.   (collectively,   the
"Company").  The Company  provides  delivery  and  distribution  services in ten
states.

         The Company and its  stockholders  entered into a definitive  agreement
with  Consolidated  Delivery &  Logistics,  Inc.  ("CDL")  pursuant to which the
Company  merged with CDL (the  "Merger") on November 27, 1995.  All  outstanding
shares of the Company were  exchanged  for cash and shares of CDL's common stock
concurrent  with the  consummation  of the initial public offering of the Common
Stock of CDL.

(2)       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation -

         The companies  discussed in Note 1 were under the common control of two
stockholders.  All significant intercompany transactions have been eliminated in
combination.

Use of Estimates in the Preparation of the Financial Statements -

         The preparation of the combined 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 combined
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results could differ from those estimates.

 Equipment -

         Equipment  is recorded  at cost.  Depreciation  is  computed  using the
straight-line method over the estimated useful lives of the assets.

 Revenue Recognition -

         Revenue is  recognized  when the shipment is completed and expenses are
recognized as incurred.

 Income Taxes -

         The Company (except for Parcel Delivery  Company of Florida,  Inc., a C
Corporation) has elected to be treated for Federal and state income tax purposes
as an S  Corporation  and,  accordingly,  any  income  tax  liabilities  are the
responsibility of the stockholders.  For purposes of these financial statements,
Federal  and state  income  taxes have been  provided  for the Company as if the
Company had filed C Corporation  tax returns.  The current income tax expense is
reflected  as an  increase  to  additional  paid-in  capital.  The  Company's  S
Corporation status terminated with the effective date of the Merger discussed in
Note 1.

 Reclassifications-

         Certain  reclassifications  have  been made to prior  years'  financial
statements to conform to the current period presentation.

(3)       PREPAID EXPENSES AND OTHER CURRENT ASSETS:

         Prepaid expenses and other current assets consist of the following -
<TABLE>
<S>                                                                                          <C>          <C>
                                                                                                 December 31
                                                                                             1993          1994
                                                                                            --------      --------
Prepaid insurance.............................................................               $94,969      $108,179
Other receivables.............................................................                 7,696        52,430
Other.........................................................................                11,849        18,877

                                                                                            --------      --------

                                                                                            $114,514      $179,486
                                                                                            ========      ========
</TABLE>

(4)       NOTES RECEIVABLE:

         Notes receivable consist of the following -
<TABLE>
<S>                                                                                         <C>          <C>

                                                                                                December 31
                                                                                             1993         1994
                                                                                          --------      --------
Note receivable (a)............................................................                 $0       $72,000
Note receivable (b)............................................................             34,500             0
Note receivable (c)............................................................             35,000         5,000
Note receivable (d)............................................................                  0       100,000
Other note receivable..........................................................                  0        27,513

                                                                                          --------      --------

                                                                                            69,500       204,513
  Less -- Current portion......................................................             64,500       168,513

                                                                                          --------      --------

                                                                                            $5,000       $36,000
                                                                                          ========      ========
</TABLE>

(a) In 1994, the Company sold  distribution  routes,  customer lists and related
equipment  in  certain  terminals  in  Ashland,  Massachusetts  and  Bloomfield,
Connecticut.  In connection with this sale, the Company  received a non-interest
bearing  note  receivable  in the  amount  of  $72,000,  payable  in 24  monthly
installments of $3,000 commencing  February 1995. The Company recorded a gain on
the sale of  approximately  $164,000  which is included  in other  income in the
accompanying 1994 combined statement of income.

(b) In 1992, the Company sold  distribution  routes,  customer lists and related
equipment in certain terminals in Ames, Iowa; Bloomington,  Illinois; Davenport,
Iowa; and Omaha,  Nebraska. In connection with this sale, the Company received a
non-interest  bearing note receivable in the amount of $59,000,  payable $5,000,
three months from the closing date and thereafter in 36 monthly  installments of
$1,500  commencing  December 1992. As of December 31, 1994, the note was paid in
full.  In  connection  with this sale,  the  Company  entered  into a three year
noncompete agreement, as defined, with the purchaser.

(c) In 1992, the Company sold  distribution  routes,  customer lists and related
equipment in a terminal in Chicago,  Illinois. In connection with this sale, the
Company  received  a  non-interest  bearing  note  receivable  in the  amount of
$75,000, payable in 30 monthly installments of $2,500 commencing September 1992.
In connection  with this sale, the Company  entered into a three year noncompete
agreement, as defined, with the purchaser.

(d)      This note is receivable from an affiliate  through common ownership. 
Interest is payable  semiannually at 8% and the principal is due on demand.

(5)       EQUIPMENT:

         Equipment consists of the following -
<TABLE>
<S>                                                                             <C>          <C>               <C>
                                                                                Useful              December 31
                                                                                 Lives         1993             1994
                                                                                -------      ---------       ---------

Transportation equipment.................................                       5 years       $935,079        $973,299
Office equipment.........................................                       5 years         72,608          82,489
Other equipment..........................................                       5 years         57,045          18,005

                                                                                             ---------       ---------

                                                                                             1,064,732       1,073,793
Less --Accumulated depreciation..........................                                     (270,627)       (423,443)

                                                                                             ---------       ---------

                                                                                              $794,105        $650,350
                                                                                             =========       =========
</TABLE>


 (6)      OTHER ASSETS:

         Other assets consist of the following -
<TABLE>
<S>                                                                                     <C>           <C>

                                                                                            December 31
                                                                                         1993         1994
                                                                                       --------       -------
Security deposits..............................................................         $54,495       $53,600
Other..........................................................................         156,569             0

                                                                                       --------       -------

                                                                                       $211,064       $53,600
                                                                                       ========       =======
</TABLE>



(7)       ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

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

                                                                                            December 31
                                                                                         1993          1994
                                                                                       --------       -------
Payroll and payroll related costs.............................................         $391,977      $331,052
Other accrued liabilities.....................................................          181,255       114,731

                                                                                       --------       -------

                                                                                       $573,232      $445,783
                                                                                       ========      ========
</TABLE>

<PAGE>


(8)    LONG-TERM DEBT:

         Long-term debt consists of the following -
<TABLE>
<S>                                                                           <C>               <C>

                                                                                      December 31
                                                                                 1993             1994
                                                                                --------        --------
Note payable (a)......................................................           $75,000         $75,000
Note payable (a)......................................................           112,500          62,500
Equipment notes payable (b)...........................................           586,477         452,326
Other.................................................................             3,197               0

                                                                                --------        --------

                                                                                 777,174         589,826
Less -- Current maturities............................................          (187,348)       (195,727)

                                                                                --------        --------

                                                                                $589,826        $394,099
                                                                                ========        ========
</TABLE>

(a) In 1992, the Company purchased certain rights to distribute  products from a
significant  customer.  In connection  with this purchase,  the Company issued a
$75,000  promissory  note  ("Note  Payable 1") and  received a $250,000  working
capital loan ("Note Payable 2") from the customer.  Note Payable 1 is payable at
maturity, January 1997, and interest is payable annually at 8.5%. Note Payable 2
is payable in quarterly  installments  of $12,500,  bears  interest at 13.7% and
matures in February 1997.  Both notes are secured by the accounts  receivable of
the Company and there are no prepayment penalties.

(b) These notes were issued at various  dates to provide  vehicle and  equipment
financing  for the Company.  The notes  secured by the  vehicles  and  equipment
purchased are payable in monthly principal and interest installments aggregating
$14,818 in 1993 and 1994,  respectively,  and mature through  December 1997. The
notes bear interest at rates ranging from 8.24% to 8.50%.

         The aggregate amounts of annual principal maturities of long-term debt
are as follows -
<TABLE>
<S>                                                                                           <C>

                                                                                               December 31
                                                                                              ---------------
1995..................................................................................            $195,727
1996..................................................................................             170,802
1997..................................................................................             223,297
                                                                                              ---------------


        Total.........................................................................            $589,826
                                                                                              ===============
</TABLE>

(9)       EMPLOYEE BENEFIT PLANS:

         The  Company   maintains  a  401(k)   profit   sharing  plan   covering
substantially all full-time employees who have completed one year of service and
are age twenty-one or older. At its discretion, the Company can contribute up to
25%  of  participant  contributions  up  to a  maximum  of 6%  of  the  eligible
employee's salary. The Company recorded charges $22,855, $23,040 and $13,628 for
matching  contributions  to the plan for the years ended  December  31, 1993 and
1994 and for the nine months ended September 30, 1995, respectively.



<PAGE>


(10)      INCOME TAXES:

         The following  income tax  information is presented in accordance  with
Statement of Financial  Accounting  Standards  No. 109,  "Accounting  for Income
Taxes," as if the Company had been  subject to Federal  and state  income  taxes
throughout the periods presented.

         The components of the provision for income taxes are as follows -
<TABLE>
<S>                                                                       <C>            <C>            <C>
                                                                                                      For The Nine
                                                                           For The Years Ended       Months Ended
                                                                               December 31            September 30
                                                                               -----------            ------------
                                                                              1993         1994             1995
                                                                            --------      --------        --------

Federal -
  Current.........................................................          $168,779      $216,898        $132,607
  Deferred........................................................            12,722        23,719          10,200
State.............................................................            52,796        69,992          41,460

                                                                            --------      --------        --------

                                                                            $234,297      $310,609        $184,267
                                                                            ========      ========        ========
</TABLE>


         The  differences  in Federal  income  taxes  provided  and the  amounts
determined  by applying the  statutory  tax rate (34%) to income  before  income
taxes result from the following -
<TABLE>
<S>                                                                                 <C>           <C>          <C>
                                                                                                              For The Nine
                                                                                    For The Years Ended      Months Ended
                                                                                        December 31           September 30
                                                                                        -----------           ------------
                                                                                       1993         1994              1995
                                                                                     --------      --------         --------

Income tax at statutory rate...............................................          $197,241      $258,971         $156,627
Add -
  State income taxes, net of Federal benefit...............................            34,845        46,195           27,364
  Nondeductible expenses...................................................             2,211         5,443              276

                                                                                     --------      --------         --------

Income tax expense.........................................................          $234,297      $310,609         $184,267
                                                                                     ========      ========         ========
</TABLE>


         At December  31, 1993 and 1994,  the  Company had  deferred  income tax
liabilities  of $32,052  and  $55,771,  respectively.  The  deferred  income tax
liabilities  resulted  primarily from accelerated  depreciation for tax purposes
and accrued expenses being deductible for tax purposes in future periods.

(11)      COMMITMENTS AND CONTINGENCIES:

 Litigation -

         The Company is, from time to time, a party to litigation arising in the
normal course of business.  Management  believes that none of these actions will
have a  material  adverse  effect  on  the  financial  position  or  results  of
operations of the Company.



<PAGE>


Commitments-

         The Company leases office and warehouse  space under  operating  leases
with lease terms of greater than one year. For the years ended December 31, 1993
and 1994 and for the nine months ended September 30, 1995 rent expense  amounted
to $443,723, $491,256, and $317,606, respectively.

         The approximate minimum annual rental commitments of the Company, under
existing lease agreements, are as follows -
<TABLE>
<S>                                                                                              <C>

                                                                                                 December 31
                                                                                              ------------------
1995.....................................................................................           $218,534
1996.....................................................................................            147,600
1997.....................................................................................             56,400

                                                                                              ------------------

                                                                                                    $422,534
                                                                                              ==================
</TABLE>

         In addition to the operating  leases above, the Company leases delivery
equipment  under  operating  leases for which  lease terms are  committed  for a
period of one year from the inception of the lease and on a month-to-month basis
thereafter.  For the years  ended  December  31,  1993 and 1994 and for the nine
months ended  September 30, 1995,  rent expense related to these leases amounted
to $272,823, $281,284, and $158,416, respectively.

(12)      COMMON STOCK:

         Common stock of each of the combined entities at December 31, 1993 and
1994 is as follows -
<TABLE>
<S>                                                                <C>          <C>            <C>             <C>

                                                                                     Shares
                                                                   Par Value                    Issued and     Common
                                                                               Authorized       Outstanding      Stock
                                                                                 ------             -----        ------
Silver Star Express, Inc........................................      $10           100                20          $200

Silver Star Express North, Inc..................................        1         1,000               100           100

All World Brokers, Inc..........................................       10           100                25           250

Parcel Delivery Company of Florida, Inc.........................        1        10,000             1,000         1,000

                                                                                 ------             -----        ------

                                                                                 11,200             1,145        $1,550
                                                                                 ======             =====        ======
</TABLE>
<PAGE>


(13)      RELATED PARTY TRANSACTIONS:

Leasing Transactions -

         The Company leases various  facilities from affiliates  related through
common  ownership.  Rents paid to these  affiliates,  included in rent  expense,
amounted to $40,800, $100,900, and $89,500 for the years ended December 31, 1993
and 1994 and for the nine months ended September 30, 1995, respectively.

Stockholder Receivables -

         The Company has receivables from a stockholder and a family member 
which aggregated $113,466 and $167,434 at December 31, 1993 and 1994,
respectively.

(14)      SIGNIFICANT CUSTOMER:

         Included in revenues are amounts from two  customers  who accounted for
approximately  89%, 88%, and 81% of net sales for the years ended December 31,
1993, and 1994 and for the nine months ended  September 30, 1995,  respectively.
No other customer  individually  accounts for more than 10% of the Company's net
sales.




<PAGE>











                      REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To the Stockholders of

         Click Messenger Service, Inc. and Related Companies:


We have audited the  accompanying  combined  balance  sheets of Click  Messenger
Service,  Inc. (a New Jersey  corporation) and Related  Companies as of December
31,  1993  and  1994  and  the  related   combined   statements  of  operations,
stockholders'  deficit and cash flows for the years ended  December 31, 1993 and
1994  and  for the  nine  months  ended  September  30,  1995.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements 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 combined  financial  statements  referred to above  present
fairly,  in all material  respects,  the financial  position of Click  Messenger
Service,  Inc. and Related  Companies as of December 31, 1993 and 1994,  and the
results of their  operations  and their cash flows for the years ended  December
31,  1993  and 1994  and for the  nine  months  ended  September  30,  1995,  in
conformity with generally accepted accounting principles.


                                                      ARTHUR ANDERSEN LLP


Roseland, New Jersey
March 19, 1996



<PAGE>




               CLICK MESSENGER SERVICE, INC. AND RELATED COMPANIES
                             COMBINED BALANCE SHEETS



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

                                                                                                           December 31
                                                                                                       1993           1994
                                                                                                       ----           ----
CURRENT ASSETS:
  Cash and cash equivalents..................................................................           $12,118        $50,095
  Accounts receivable, less allowance of $44,946 and $74,946 for doubtful accounts in 1993 and
  1994, respectively.........................................................................           782,048        897,735
  Prepaid expenses and other current assets..................................................            16,772          3,755
  Deferred tax asset (Notes 2 and 8).........................................................            18,063         42,176

                                                                                                  --------------   ------------

         Total current assets................................................................           829,001        993,761
EQUIPMENT, net (Notes 2 and 3)...............................................................            95,480         71,125
OTHER ASSETS (Note 5)........................................................................            78,340        100,028

                                                                                                  --------------   ------------

         Total assets........................................................................        $1,002,821     $1,164,914
                                                                                                  ==============   ============



                                       LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
  Current portion of long-term debt and capital lease obligations (Note 7)...................          $444,999       $376,952
  Accounts payable...........................................................................           387,026        567,149
  Accrued expenses and other current liabilities (Note 6)....................................           215,309        287,341
  Income taxes payable (Notes 2 and 8).......................................................             1,605              0
  Deferred revenue (Note 2)..................................................................                 0         26,084

                                                                                                  --------------   ------------

         Total current liabilities...........................................................         1,048,939      1,257,526

                                                                                                  --------------   ------------

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (Note 7)........................................            75,205         79,512

                                                                                                  --------------   ------------

OTHER LIABILITIES............................................................................            13,387          4,999

                                                                                                  --------------   ------------

COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS' DEFICIT:
  Common stock, no par value, 3,300 shares authorized, 410 shares issued
    and outstanding..........................................................................            19,843         19,843
  Additional paid-in capital.................................................................            93,626         60,932
  Accumulated deficit........................................................................          (248,179)      (257,898)

                                                                                                  --------------   ------------

         Total stockholders' deficit.........................................................          (134,710)      (177,123)

                                                                                                  --------------   ------------

         Total liabilities and stockholders' deficit.........................................        $1,002,821     $1,164,914
                                                                                                  ==============   ============
</TABLE>

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



<PAGE>




               CLICK MESSENGER SERVICE, INC. AND RELATED COMPANIES
                        COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<S>                                                                                <C>          <C>           <C>

                                                                                                                For The Nine
                                                                                     For The Years Ended        Months Ended
                                                                                         December 31            September 30
                                                                                         -----------            ------------
                                                                                     1993           1994            1995
                                                                                     ----           ----            ----

REVENUES (Note 2)..........................................................         $7,647,163    $8,860,598     $9,267,422
COST OF REVENUES...........................................................          5,901,294     6,880,151      6,796,319

                                                                                 ------------- -------------- -----------------

         Gross profit......................................................          1,745,869     1,980,447      2,471,103
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
  (Note 11)................................................................      ------------- -------------- -----------------
                                                                                     1,698,775     1,935,091      1,890,323

                                                                                 ------------- -------------- -----------------

         Operating income .................................................             47,094        45,356        580,780

                                                                                 ------------- -------------- -----------------

OTHER INCOME AND EXPENSE:
  Other income (expense)...................................................             64,340         7,355        (37,098)
  Interest expense (Note 7)................................................            (69,165)      (62,595)       (41,120)

                                                                                 ------------- -------------- -----------------

                                                                                        (4,825)      (55,240)       (78,218)

                                                                                 ------------- -------------- -----------------

         Income (loss) before income taxes.................................             42,269        (9,884)       502,562

PRO FORMA PROVISION FOR (BENEFIT FROM) INCOME TAXES (Notes 2 and 8)........
                                                                                 ------------- -------------- -----------------
                                                                                        17,561          (165)       202,928

                                                                                 ------------- -------------- -----------------

         Net income (loss).................................................            $24,708       $(9,719)      $299,634
                                                                                 ============= ============== =================
</TABLE>

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



<PAGE>




               CLICK MESSENGER SERVICE, INC. AND RELATED COMPANIES
              COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                FOR THE YEAR ENDED DECEMBER 31, 1993 AND 1994 AND
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
<TABLE>
<S>                                                                  <C>        <C>        <C>            <C>            <C>
                                                                                                          Retained        Total
                                                                                           Additional     Earnings    Stockholders'
                                                                                            Paid-In     (Accumulated      Equity
                                                                     Shares     Amount      Capital       Deficit)      (Deficit)
                                                                    ---------   --------    --------       ---------      ---------

BALANCE AT DECEMBER 31, 1992..................................         410       $19,843     $93,626       $(272,887)     $(159,418)
  Net income..................................................           0             0           0          24,708         24,708

                                                                    ---------   --------    --------       ---------      ---------

BALANCE AT DECEMBER 31, 1993..................................         410        19,843      93,626        (248,179)      (134,710)
  Distributions to stockholders...............................           0             0     (32,694)              0        (32,694)
  Net loss....................................................           0             0           0          (9,719)        (9,719)

                                                                    ---------   --------    --------       ---------      ---------

BALANCE AT DECEMBER 31, 1994..................................         410        19,843      60,932        (257,898)      (177,123)
  Distributions to stockholders...............................           0             0     (28,321)              0        (28,321)
  Net income..................................................           0             0           0         299,634        299,634

                                                                    ---------   --------    --------       ---------      ---------

BALANCE AT SEPTEMBER 30, 1995.................................         410       $19,843     $32,611         $41,736        $94,190
                                                                    =========   ========    ========       =========      =========
</TABLE>

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



<PAGE>




               CLICK MESSENGER SERVICE, INC. AND RELATED COMPANIES
                        COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<S>                                                                                         <C>        <C>            <C>


                                                                                                                     For The Nine
                                                                                           For The Years Ended       Months Ended
                                                                                                December 31          September 30
                                                                                                -----------          ------------
                                                                                            1993         1994            1995
                                                                                            ----         ----            ----

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss).................................................................        $24,708     $(9,719)         $299,634
  Adjustment to reconcile net income (loss) to net cash provided by operating
  activities -
     Depreciation and amortization..................................................         31,238      23,619            25,554
     Deferred income taxes..........................................................        (18,063)    (24,113)           (4,999)
     Loss on sale of equipment......................................................              0       5,789                 0
     (Increase) decrease in accounts receivable, net................................        (37,808)   (115,687)         (565,016)
     (Increase) decrease in prepaid expenses and other current assets...............         (6,988)     12,248           (12,173)
     (Increase) decrease in other assets............................................         59,948     (11,072)          (15,149)
     Increase (decrease) in accounts payable........................................         (2,384)    180,123           607,296
     Increase (decrease) in accrued expenses and other current liabilities
             and income taxes payable...............................................          1,686      70,427           (84,414)
     Increase in deferred revenue...................................................              0      26,084                 0
     Increase (decrease) in other liabilities.......................................         13,388      (8,389)            6,001

                                                                                         -----------   --------        ----------

         Net cash provided by operating activities..................................         65,725     149,310           256,734

                                                                                         -----------   --------        ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of equipment............................................................        (37,206)     (7,174)          (43,142)

                                                                                         -----------   --------        ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Distributions to stockholders.....................................................              0     (32,694)          (28,321)
  Proceeds from long-term debt......................................................              0     136,988            58,230
  Principal payments under long-term debt and capital lease obligations.............        (43,930)   (208,453)          (85,006)

                                                                                         -----------   --------        ----------

         Net cash used in financing activities......................................        (43,930)   (104,159)          (55,097)

                                                                                         -----------   --------        ----------

         Net increase (decrease) in cash and cash equivalents                               (15,411)     37,977           158,495

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD....................................         27,529      12,118            50,095


                                                                                         -----------   --------        ----------


CASH AND CASH EQUIVALENTS AT END OF PERIOD..........................................        $12,118     $50,095          $208,590

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



SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

  Cash paid for interest............................................................        $50,903     $46,397           $41,366

  Cash paid for income taxes........................................................         35,164       3,867                 0

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




NONCASH TRANSACTION:
  Capital lease obligations incurred................................................         $5,906      $7,725                $0
                                                                                        =========== ===========       ===========
</TABLE>

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


<PAGE>




               CLICK MESSENGER SERVICE, INC. AND RELATED COMPANIES
                     NOTES TO COMBINED FINANCIAL STATEMENTS




(1)       BUSINESS AND ORGANIZATION:

         Click Messenger  Service, Inc.  and Related Companies (the "Company") 
provide courier services  primarily to firms in New Jersey and New York.

         The accompanying  financial statements include Click Messenger Service,
Inc.,  as well as Click  Messenger  Service  of  N.Y.,  Inc.,  Meteor  Messenger
Service,  Inc.,  DMK  Services,  Ltd.,  Cassidy,  Ltd. and Group 4  Distribution
Network,  Inc. The companies are under common  ownership and are being accounted
for as part of one economic entity.  All significant  intercompany  accounts and
transactions have been eliminated.

         The Company and its  stockholders  entered into a definitive  agreement
with  Consolidated  Delivery &  Logistics,  Inc.  ("CDL")  pursuant to which the
Company  merged with CDL (the  "Merger") on November 27, 1995.  All  outstanding
shares of the Company were  exchanged  for cash and shares of CDL's common stock
concurrent  with the  consummation  of the initial public offering of the common
stock of CDL.

(2)       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Use of Estimates in the Preparation of the Financial Statements -

         The preparation of the combined 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 combined
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results could differ from those estimates.

Equipment -

         Equipment  is recorded  at cost.  Depreciation  is  computed  using the
straight-line method over the estimated useful lives of the assets.

 Revenue Recognition -

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



<PAGE>


 Income Taxes -

         The Company  has  elected to be treated  for certain  Federal and state
income tax  purposes as an S  Corporation  and,  accordingly,  those  income tax
liabilities are the  responsibility of the  stockholders.  For purposes of these
financial statements,  Federal and state income taxes have been provided for the
Company as if the  Company  had filed C  Corporation  tax  returns.  The current
income tax provision  (benefit) for the years ended  December 31, 1993 and 1994,
and for the nine months ended  September  30, 1995 is reflected as an adjustment
to additional  paid-in capital.  The Company's S Corporation  status  terminated
upon the effective date of the Merger discussed in Note 1.

         Deferred  income taxes are provided for  differences in the recognition
of revenue and  expense  for tax and  financial  reporting  purposes.  Temporary
differences result primarily from accelerated  depreciation and amortization for
tax purposes and various  accruals and  reserves  which are  deductible  for tax
purposes in future periods.

Reclassifications -

         Certain  reclassifications  have been made to the prior year' financial
statements to conform to the current period presentation.

(3)       EQUIPMENT:

         Equipment consists of the following -
<TABLE>
<S>                                                             <C>            <C>                 <C>
                                                                                    December 31
                                                               Useful Lives        1993            1994
                                                               ------------        ----            ----
Office equipment...........................................      5-7 years       $334,783         $350,542
Transportation equipment...................................      3-7 years        110,982           87,860
Other equipment............................................      5-7 years         25,036           24,144

                                                                             ----------------  -----------

                                                                                  470,801          462,546
Less - Accumulated depreciation and amortization...........                      (375,321)        (391,421)

                                                                             ----------------  -----------

                                                                                  $95,480          $71,125
                                                                             ================  ===========
</TABLE>

         Leased  office  and  transportation   equipment  under  capital  leases
included in equipment above consists of the following -
<TABLE>
<S>                                                                                 <C>            <C>

                                                                                         December 31
                                                                                     1993           1994
                                                                                     ----           ----
Equipment.................................................................          $66,966       $66,966
Less - Accumulated amortization...........................................          (44,241)      (52,909)

                                                                                 -------------  -----------

                                                                                    $22,725       $14,057
                                                                                 =============  ===========
</TABLE>

<PAGE>


(4)       INTANGIBLE ASSETS:

         The  Company  has  purchased  messenger  service  customer  lists.  The
purchase prices were allocated to certain  intangible assets that were acquired.
Intangible assets consist of the following -
<TABLE>
<S>                                                                      <C>          <C>          <C>

                                                                          Useful           December 31
                                                                           Lives       1993          1994
                                                                           -----       ----          ----
Covenant not-to-compete...........................................        4 years      $44,725      $59,900
Customer list.....................................................        5 years       18,000       36,829

                                                                                    -----------   ---------

                                                                                        62,725       96,729
Less - Accumulated amortization...................................                      (2,250)     (26,408)

                                                                                    -----------   ---------

                                                                                       $60,475      $70,321
                                                                                    ===========   =========
</TABLE>

(5)       OTHER ASSETS:

         Other assets consist of the following -
<TABLE>
<S>                                                                                    <C>          <C>

                                                                                            December 31
                                                                                        1993         1994
Security deposits..............................................................        $17,865      $29,707
Intangible assets (Note 4).....................................................         60,475       70,321

                                                                                     -----------   ---------

                                                                                       $78,340     $100,028
                                                                                     ===========   =========
</TABLE>

(6)       ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

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

                                                                                            December 31
                                                                                         1993          1994
                                                                                         ----          ----
Payroll and related benefits....................................................        $104,416      $248,555
Other accrued liabilities.......................................................         110,893        38,786

                                                                                     -------------    --------

                                                                                        $215,309      $287,341
                                                                                     =============    ========
</TABLE>


(7)       LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS:

         Long-term debt consists of the following -
<TABLE>
<S>                                                                             <C>              <C> 

                                                                                        December 31
                                                                                   1993             1994
                                                                                   ----             ----
Notes payable to principal stockholder (a)..............................          $381,428        $349,346
Equipment loans (b).....................................................            79,677          52,248
Note payable (c)........................................................            33,592          32,250
Capital lease obligations (d)...........................................            25,507          22,620

                                                                              ---------------     --------

                                                                                   520,204         456,464
Less - Current maturities...............................................          (444,999)       (376,952)

                                                                              ---------------     --------

                                                                                   $75,205         $79,512
                                                                              ===============     ========
</TABLE>

(a)      Notes payable to principal stockholder, due on demand, interest rates
ranging from 6% to prime (8.5% at December 31, 1994) plus 1%.

(b)      Loans for office and communication equipment, maturing in 1996 and
1998,  interest  ranging  from 6% to 14.9%, collateralized by the related 
equipment.

(c) Liability for nonpayment of unemployment taxes for certain employees payable
to the State of New Jersey, monthly payments of $1,000, final payment due August
15, 1997.

(d) Various lease obligations for office and transportation equipment,  maturing
in 1995, 1996 and 1997,  interest  ranging from 8% to 24%,  secured by equipment
under these lease obligations.

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

                                                                                                 December 31,
                                                                                                    --------
1995..................................................................................              $364,779
1996..................................................................................                53,430
1997..................................................................................                15,024
1998..................................................................................                   611

                                                                                                    --------

         Total........................................................................              $433,844
                                                                                                    ========
</TABLE>


         The Company leases certain office and  transportation  equipment  under
capital lease agreements which expire at various dates.  Minimum annual payments
under capital leases are as follows -
<TABLE>
<S>                                                                                                 <C>

                                                                                                    December 31,
                                                                                                  -----------------
1995........................................................................................             $12,173
1996........................................................................................              14,028
1997........................................................................................                 587

                                                                                                  -----------------

         Total minimum payments.............................................................              26,788
Less - Amounts representing interest........................................................              (4,168)

                                                                                                  -----------------

         Net minimum payments...............................................................              22,620
Less - Current portion of obligations under capital leases..................................             (12,173)

                                                                                                  -----------------

Long-term portion of obligations under capital leases.......................................             $10,447
                                                                                                  =================
</TABLE>

<PAGE>


(8)       INCOME TAXES:

         The following  income tax  information is presented in accordance  with
Statement of Financial  Accounting  Standards No. 109 as if the Company had been
subject to Federal and state income taxes throughout the periods presented.

         The components of the provision for (benefit from) income taxes are as
 follows -
<TABLE>
<S>                                                                 <C>            <C>          <C> 

                                                                                                For The Nine
                                                                     For The Years Ended       Months Ended
                                                                          December 31           September 30
                                                                          -----------           ------------
                                                                       1993         1994            1995
                                                                       ----         ----            ----

Federal.......................................................         $9,250      $(5,752)       $157,697
State.........................................................          8,311        5,587          45,231

                                                                   ------------    -------        --------

                                                                      $17,561        $(165)       $202,928
                                                                   ============    =======        ========
</TABLE>


         The  differences  in Federal  income  taxes  provided  and the  amounts
determined  by applying the  statutory  tax rate (34%) to income  before  income
taxes result from the following -
<TABLE>
<S>                                                                            <C>         <C>          <C>

                                                                                                        For The Nine
                                                                              For The Years Ended       Months Ended
                                                                                   December 31          September 30
                                                                                   -----------          ------------
                                                                               1993         1994            1995
                                                                               ----         ----            ----

Income tax (benefit) at statutory rate.....................................    $14,371     $(3,361)        $170,871
Add (deduct) -
  State income taxes, net of Federal benefit...............................      5,485       3,687           29,852
  Nondeductible expenses and other.........................................     (2,295)       (491)           2,205

                                                                            -----------    -------         --------

                                                                               $17,561       $(165)        $202,928
                                                                            ===========    =======         ========
</TABLE>

(9)       COMMITMENTS AND CONTINGENCIES:

 Litigation -

         The Company is, from time to time, a party to litigation arising in the
normal course of business.  Management  believes that none of these actions will
have a  material  adverse  effect  on  the  financial  position  or  results  of
operations of the Company.



<PAGE>


Commitments -

         The Company  leases,  under operating  leases,  office space with lease
terms of greater than one year. Rent expense related to these leases amounted to
$104,201, $109,932, and $160,406 for the years ended December 31, 1993 and 1994,
and for the nine months ended September 30, 1995, respectively.

         The approximate minimum annual rental commitments of the Company, under
existing lease agreements, over the next five years, are as follows -
<TABLE>
<S>                                                                                       <C>

                                                                                            December 31,
                                                                                         ------------------
1995..................................................................................         $187,076
1996..................................................................................          208,333
1997..................................................................................          106,174
1998..................................................................................           31,277
1999..................................................................................           15,007

                                                                                         ------------------

                                                                                               $547,867
                                                                                         ==================
</TABLE>
(10)      EMPLOYEE BENEFIT PLANS:

         The  Company   maintains  a  401(k)   profit   sharing  plan   covering
substantially  all  full-time  employees  of the  Company  who  have one year of
service and are age twenty-one or older. At its discretion, the Company may make
contributions on behalf of the eligible employees.  For the years ended December
31, 1993 and 1994 and for the nine months ended  September 30, 1995, the Company
did not make any contributions to the plan.

(11)      RELATED PARTY TRANSACTIONS:

Rental Transactions -

         The Company  rents office space in a building  owned by a  stockholder.
Rent expense related to these  transactions was approximately  $24,000,  $24,000
and  $18,000  for the years  ended  December  31, 1993 and 1994 and for the nine
months ended September 30, 1995, respectively.

(12)      ACQUISITION:

         In August 1995,  the Company  entered into  agreements  to purchase the
assets of a company for $50,000 at closing, employ the previous sole shareholder
of the  acquired  company for three  years at $40,000  each year and engage this
sole  shareholder as a consultant for a three year period.  Renumeration for the
consulting  services  is 5%, 4.5% and 4% of "gross  sales," as defined,  for the
years ended September 30, 1995, 1996 and 1997, respectively.




<PAGE>











                        REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To the Stockholders of

         Crown Courier Systems, Inc. and
           Bestway Distribution Services, Inc.:

We have  audited  the  accompanying  combined  balance  sheets of Crown  Courier
Systems, Inc. and Bestway Distribution Services,  Inc. (Florida corporations) as
of  December  31,  1993  and  1994,  and  the  related  combined  statements  of
operations, stockholders' equity and cash flows for the years ended December 31,
1993 and 1994 and for the nine months ended September 30, 1995.  These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements 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 combined  financial  statements  referred to above  present
fairly,  in all  material  respects,  the combined  financial  position of Crown
Courier Systems, Inc. and Bestway Distribution Services, Inc. as of December 31,
1993 and 1994, and the results of their  operations and their cash flows for the
years ended  December 31, 1993 and 1994 and for the nine months ended  September
30, 1995, in conformity with generally accepted accounting principles.


                                                    ARTHUR ANDERSEN LLP


Roseland, New Jersey
March 19, 1996



<PAGE>




                         CROWN COURIER SYSTEMS, INC. AND
                       BESTWAY DISTRIBUTION SERVICES, INC.
                             COMBINED BALANCE SHEETS


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

                                     ASSETS
                                                                                                            December 31
                                                                                                       1993             1994
                                                                                                  ---------------    ----------
CURRENT ASSETS:
  Cash and cash equivalents (Note 8)........................................................           $278,261        $525,054
  Accounts receivable, less allowance for doubtful accounts of $78,723 and
     $115,106 at December 31, 1993 and 1994, respectively (Note 7)..........................            583,637         759,418
  Prepaid expenses and other current assets (Note 3).........................................            41,748          55,970

                                                                                                  ---------------    ----------

         Total current assets...............................................................            903,646       1,340,442
LEASEHOLD IMPROVEMENTS AND EQUIPMENT, net (Notes 2 and 4)...................................            155,808         175,208
OTHER ASSETS (Note 5)........................................................................            82,635          82,607

                                                                                                  ---------------    ----------

         Total assets........................................................................        $1,142,089      $1,598,257

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



                                                       LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Note payable to stockholders (Note 7).....................................................           $280,000        $210,000
  Accounts payable...........................................................................           114,851         246,675
  Accrued expenses and other current liabilities (Notes 6 and 8)............................            170,381         169,983
  Deferred revenue (Note 2)..................................................................            53,431          64,677
  Deferred income taxes (Notes 2 and 9)......................................................            48,493          46,005

                                                                                                  ---------------    ----------

         Total current liabilities...........................................................           667,156         737,340

                                                                                                  ---------------    ----------

COMMITMENTS AND CONTINGENCIES (Note 10) STOCKHOLDERS' EQUITY (Notes 1 and 11):
  Common stock...............................................................................             1,300           1,300
  Additional paid-in capital.................................................................            57,578         242,454
  Retained earnings..........................................................................           416,155         617,263
  Less - Treasury stock......................................................................              (100)           (100)

                                                                                                  ---------------    ----------

         Total stockholders' equity..........................................................           474,933         860,917

                                                                                                  ---------------    ----------

         Total liabilities and stockholders' equity..........................................        $1,142,089      $1,598,257
                                                                                                  ===============    ==========
</TABLE>

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



<PAGE>




                         CROWN COURIER SYSTEMS, INC. AND
                       BESTWAY DISTRIBUTION SERVICES, INC.
                        COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<S>                                                                               <C>                <C>            <C>

                                                                                                                   For The Nine
                                                                                 For The Years Ended December 31   Months Ended
                                                                                                                   September 30
                                                                                      1993            1994             1995
                                                                                      ----            ----             ----

REVENUES (Notes 2 and 13).................................................           $6,685,959      $9,603,142      $8,205,613
COST OF SALES.............................................................            3,724,598       5,868,599       5,305,085

                                                                                 ---------------     ----------      ----------

         Gross profit......................................................           2,961,361       3,734,543       2,900,528
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES...............................           3,170,289       3,390,486       2,755,920

                                                                                 ---------------     ----------      ----------

         Operating income (loss)...........................................            (208,928)        344,057         144,608

                                                                                 ---------------     ----------      ----------

OTHER INCOME AND EXPENSE:
  Other income............................................................              237,585         113,602         111,920
  Interest expense........................................................              (15,158)        (14,163)        (12,070)

                                                                                 ---------------     ----------      ----------

                                                                                        222,427          99,439          99,850

                                                                                 ---------------     ----------      ----------

         Income before income taxes........................................              13,499         443,496         244,458
PRO FORMA PROVISION FOR INCOME TAXES (Notes 2 and 9).......................               6,083         182,388          97,784

                                                                                 ---------------     ----------      ----------

         Net income .......................................................              $7,416        $261,108        $146,674
                                                                                 ===============     ==========      ==========
</TABLE>


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


<PAGE>



                         CROWN COURIER SYSTEMS, INC. AND
                       BESTWAY DISTRIBUTION SERVICES, INC.
                   COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
                AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995

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

                                                         Common Stock       Additional                                     Total
                                                          (Note 11)           Paid-in        Retained       Treasury   Stockholders'
                                                       Shares    Amount       Capital        Earnings        Stock         Equity


BALANCE AT DECEMBER 31, 1992...................          400       $1,300           $0        $408,739        $(100)       $409,939
  Capital contribution equal to the current
     income taxes of S Corporations............            0            0       57,578               0            0          57,578
  Net income...................................            0            0            0           7,416            0           7,416
  Net retirement of common stock in
     connection with the merger of Bestway 
     Cartage Corporation and Bestway
     Distribution Services, Inc. (Note 1)......         (100)           0            0               0            0               0

                                                     ---------- --------- --------------- --------------- ------------ -------------

BALANCE AT DECEMBER 31, 1993...................          300        1,300       57,578         416,155         (100)        474,933
  Distributions to stockholders................            0            0            0         (60,000)           0         (60,000)
  Capital contribution equal to the current
     income taxes of S Corporations............            0            0      184,876               0            0         184,876
  Net income...................................            0            0            0         261,108            0         261,108

                                                     ---------- --------- --------------- --------------- ------------ -------------

BALANCE AT DECEMBER 31, 1994...................          300        1,300      242,454         617,263         (100)        860,917
  Distribution to stockholders.................            0            0            0        (320,000)           0        (320,000)
  Capital contribution equal to the current
     income taxes of S Corporation.............            0            0       71,676               0            0          71,676
  Net income...................................            0            0            0         146,674            0         146,674

                                                     ---------- --------- --------------- --------------- ------------ -------------

BALANCE AT SEPTEMBER 30, 1995..................          300       $1,300     $314,130        $443,937        $(100)       $759,267
                                                     ========== ========= =============== =============== ============ =============
</TABLE>

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



<PAGE>

                         CROWN COURIER SYSTEMS, INC. AND
                       BESTWAY DISTRIBUTION SERVICES, INC.
                        COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<S>                                                                                        <C>           <C>          <C>
                                                                                                                     For The Nine
                                                                                           For The Years Ended       Months Ended
                                                                                                December 31          September 30
                                                                                                -----------          ------------
                                                                                             1993         1994           1995
                                                                                             ----         ----           ----
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income........................................................................          $7,416     $261,108         $146,674
   Adjustments to reconcile net income to net cash provided by
     operating activities -
       Loss on disposal of leasehold improvements and equipment.....................           2,376            0            4,385
       Depreciation and amortization................................................          48,968       66,113           54,739
       Current tax for S Corporation................................................          57,578      184,876           71,676
       (Increase) decrease in -
         Accounts receivable, net...................................................          59,955     (175,781)        (191,348)
         Prepaid expenses and other current assets..................................           2,690      (14,222)         (50,495)
         Other assets...............................................................         (23,233)          28         (113,986)
       Increase in -
         Accounts payable, accrued liabilities and other current liabilities........          49,419      140,184          189,918

                                                                                         ------------     -------          -------

            Net cash provided by operating activities..............................          205,169      462,306          111,563

                                                                                         ------------     -------          -------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to leasehold improvements and equipment.................................         (83,376)     (85,513)        (148,381)

                                                                                          ------------     -------          -------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on note payable to stockholders, net...........................         (18,000)     (70,000)               0
  Proceeds from long-term borrowings................................................               0            0           32,643
  Principal payments on long-term debt..............................................         (10,684)           0          (66,875)
  Distributions to stockholders.....................................................               0      (60,000)        (320,000)

                                                                                         ------------     -------          -------

            Net cash used in financing activities...................................         (28,684)    (130,000)        (354,232)

                                                                                         ------------     -------          -------

            Net increase (decrease) in cash and cash equivalents....................          93,109      246,793         (391,050)
CASH AND CASH EQUIVALENTS, beginning of period......................................         185,152      278,261          525,054

                                                                                         ------------     -------          -------

CASH AND CASH EQUIVALENTS, end of period............................................        $278,261     $525,054         $134,004

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



SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest............................................................         $15,158      $14,163           $9,300
  Cash paid for income taxes .......................................................               0            0          138,963
                                                                                         ============    ========         ========
</TABLE>

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



<PAGE>




                         CROWN COURIER SYSTEMS, INC. AND
                       BESTWAY DISTRIBUTION SERVICES, INC.
                     NOTES TO COMBINED FINANCIAL STATEMENTS




(1)       BUSINESS AND ORGANIZATION:

         The accompanying  combined financial  statements include the accounts
of Crown Courier  Systems, Inc.  and Bestway  Distribution  Services, Inc.
(collectively,  the  "Company").  The Company  provides  courier,  delivery,
warehouse and distribution services throughout South Florida.

         On June 30, 1993, Bestway Distribution Services, Inc. issued 100 shares
of its common stock for all of the  outstanding  common stock of Bestway Cartage
Corporation ("Cartage"). The business combination was accounted for as a pooling
of interest.  Cartage was owned by the same stockholders as Bestway Distribution
Services and provided  similar  services.  The accompanying  combined  financial
statements  include the  operations of Cartage from January 1, 1993 through June
30, 1993.

         The Company and its  stockholders  entered into a definitive  agreement
with  Consolidated  Delivery &  Logistics,  Inc.  ("CDL")  pursuant to which the
Company  merged with CDL (the  "Merger") on November 27, 1995.  All  outstanding
shares of the Company were  exchanged  for cash and shares of CDL's common stock
concurrent  with the  consummation  of the initial public offering of the Common
Stock of CDL.

(2)       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

 Basis of Presentation -

         The Company,  as  discussed in Note 1, was under the common  control of
two stockholders. All significant intercompany transactions have been eliminated
in combination.

Use of Estimates in the Preparation of the Financial Statements -

         The preparation of the combined 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 combined
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results could differ from those estimates.

 Leasehold Improvements and Equipment -

         Leasehold improvements and equipment are recorded at cost. Depreciation
is computed using the  straight-line  method over the estimated  useful lives of
the assets or the life of the lease, whichever is shorter.

 Revenue Recognition -

         Revenue is recognized when the shipment is completed or, in the case of
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 elected to be treated for Federal and state  income tax
purposes as an S Corporation  and,  accordingly,  any income tax liabilities are
the  responsibility  of  the  stockholders.  For  purposes  of  these  financial
statements, Federal and state income taxes have been provided for the Company as
if the Company  had filed C  Corporation  tax  returns.  The current  income tax
expense is reflected as an increase to additional paid-in capital. The Company's
S Corporation  status terminated with the effective date of the Merger discussed
in Note 1.

Reclassifications-

         Certain  reclassifications  have  been made to prior  years'  financial
statements to conform to the current period presentation.

(3)       PREPAID EXPENSES AND OTHER CURRENT ASSETS:

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

                                                                                               December 31
                                                                                             1993        1994
                                                                                         ------------  ----------
Prepaid insurance...................................................................        $31,914      $40,352
Other................................................................................         9,834       15,618

                                                                                         ------------  ----------

                                                                                            $41,748      $55,970
                                                                                         ============  ==========
</TABLE>

(4)       LEASEHOLD IMPROVEMENTS AND EQUIPMENT:

         Leasehold improvements and equipment consists of the following -
<TABLE>
<S>                                                             <C>                <C>              <C>

                                                                                        December 31
                                                                Useful Lives       1993             1994
                                                                ------------       ----             ----
Office equipment.........................................        5-7 years        $160,616        $191,264
Communication equipment..................................        5-7 years          99,381         110,549
Warehouse equipment......................................        5-7 years         104,808         102,835
Leasehold improvements...................................        2-5 years          37,083          40,849

                                                                              ---------------  -----------

                                                                                   401,888         445,497
Less - Accumulated depreciation and amortization.........                         (246,080)       (270,289)

                                                                              ---------------  -----------

                                                                                  $155,808        $175,208
                                                                              ===============  ===========
</TABLE>

<PAGE>


(5)       OTHER ASSETS:

         Other assets consist of the following -
<TABLE>
<S>                                                                                      <C>            <C>

                                                                                               December 31
                                                                                             1993        1994
                                                                                         ------------  ---------
Security and other deposits......................................................           $45,292      $45,421
Other............................................................................            37,343       37,186

                                                                                         ------------  ---------

                                                                                            $82,635      $82,607
                                                                                         ============  =========
</TABLE>


(6)       ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

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

                                                                                                 December 31
                                                                                             1993          1994
                                                                                             ----          ----
Accrued expenses..............................................................               $67,386       $33,171
Accrued independent contractor fees...........................................                     0        43,000
Due to independent contractors (Note 8).......................................               102,995        93,812

                                                                                         -------------   ---------

                                                                                            $170,381      $169,983
                                                                                         =============   =========
</TABLE>

(7)       NOTE PAYABLE TO STOCKHOLDERS:

         The  stockholders  of the Company  and their wives  obtained a $500,000
bank line of credit which is used to provide working capital for the Company and
another entity owned by the  stockholders  (the  "Affiliate").  The line,  which
expires in July,  1996 bears  interest at prime (8.5% at December 31, 1994) plus
1/2%,  is  guaranteed  by the  Company  and  the  Affiliate  and is  limited  to
percentages of accounts receivable of the Company and the Affiliate, as defined.
The trade receivables of the Company and the Affiliate are pledged as collateral
for the line. The average borrowings by the Company were approximately $259,000,
$245,000 and $120,255 with corresponding average interest rates of 7.25%, 8.25%,
and 9.36% for the years ended December 31, 1993 and 1994 and for the nine months
ended September 30, 1995, respectively.

(8)       DUE TO INDEPENDENT CONTRACTORS:

         The Company withholds 5% of contract drivers' compensation up to $5,000
per driver to pay for any claims against that driver. The funds are deposited in
an  escrow  account  held by the  Company  and are  included  in cash  and  cash
equivalents on the accompanying  balance sheets. Any unexpended funds are due to
drivers.  At December  31,  1993 and 1994,  there were no claims  exceeding  the
amounts withheld from drivers.



<PAGE>


(9)       INCOME TAXES:

         The following  income tax  information is presented in accordance  with
Statement of Financial  Accounting  Standards  No. 109,  "Accounting  for Income
Taxes," as if the Company had been  subject to Federal  and state  income  taxes
throughout the periods presented.

         The components of the provision for income taxes are as follows-
<TABLE>
<S>                                                                       <C>             <C>            <C>

                                                                                                       For The Nine
                                                                           For The Years Ended        Months Ended
                                                                                December 31            September 30
                                                                                -----------            ------------
                                                                             1993          1994            1995
                                                                             ----          ----            ----

Federal............................................................           $4,712       $140,889        $75,783
State..............................................................            1,371         41,099         22,001

                                                                        --------------   -----------    ----------

                                                                              $6,083       $182,388        $97,784
                                                                        ==============   ===========    ==========
</TABLE>

         The  differences  in Federal  income  taxes  provided  and the  amounts
determined  by applying the  statutory  tax rate (34%) to income  before  income
taxes result from the following -
<TABLE>
<S>                                                                              <C>           <C>            <C>

                                                                                                            For The Nine
                                                                                  For The Years Ended      Months Ended
                                                                                       December 31          September 30
                                                                                       -----------          ------------
                                                                                   1993        1994             1995
                                                                                   ----        ----             ----

Tax at statutory rate......................................................        $4,590      $150,789        $83,116
Add (deduct) - State income taxes, net of Federal benefit..................           905        27,125         14,521
Nondeductible expenses.....................................................           588         4,474            147

                                                                                 ---------    ---------       --------

Income tax expense.........................................................        $6,083      $182,388        $97,784
                                                                                 =========    =========       ========
</TABLE>

         At December 31, 1993 and 1994, the Company had net deferred  income tax
liabilities of $48,493 and $46,005,  respectively.  The net deferred  income tax
liabilities  resulted  from  differences  in the  amount  of the  provision  for
doubtful  accounts and the  deduction  allowed under tax law and accrual to cash
differences.

(10)      COMMITMENTS AND CONTINGENCIES:

Litigation -

         The Company is, from time to time, a party to litigation arising in the
normal course of business.  Management  believes that none of these actions will
have a  material  adverse  effect  on  the  financial  position  or  results  of
operations of the Company.

Commitments -

         The Company leases office and transportation  equipment under operating
leases with lease terms of greater than one year.  For the years ended  December
31,  1993  and  1994  and  for  the  nine  months  ended   September  30,  1995,
respectively,   rent  expense  amounted  to  $338,852,  $439,775  and  $348,393,
respectively.

         The approximate minimum annual rental commitments of the Company, under
existing lease agreements, are as follows -
<TABLE>
<S>                                                                                                       <C>
                                                                                                 December 31
                                                                                              ------------------
1995.....................................................................................            $308,462
1996.....................................................................................             305,123
1997.....................................................................................             260,667
1998.....................................................................................             137,529

                                                                                              ------------------

                                                                                                   $1,011,781
                                                                                              ==================
</TABLE>

(11)      COMMON STOCK:

         Common stock of each of the combined entities at December 31, 1993 and
1994 is as follows -
<TABLE>
<S>                                                                <C>          <C>             <C>             <C>

                                                                                     Shares
                                                                   Par Value                    Issued and      Common
                                                                               Authorized       Outstanding      Stock
                                                                             ---------------   ---------      ---------
Crown Courier Systems, Inc......................................      $10           100              100         $1,000

Bestway Distributions Services, Inc.............................        1         1,000              200            300

                                                                             ---------------   ---------      ---------

                                                                                  1,100              300         $1,300
                                                                             ===============   =========      =========
</TABLE>

(12)      RELATED PARTY TRANSACTIONS:

 Leasing Transactions -

         The Company rents one of its  facilities on a month to month basis from
an affiliate  related  through  common  ownership.  Rents paid to the affiliate,
included in rent  expense,  amounted to $226,100,  $160,200 and $120,200 and for
the  years  ended  December  31,  1993 and 1994  and for the nine  months  ended
September 30, 1995, respectively.

 Administrative Fee and Affiliated Sales -

         The  Company  charged  an  affiliate,   through  common  ownership,  an
administrative  fee,  included in other income,  for management and  bookkeeping
services which amounted to approximately  $119,000,  $34,000 and $34,000 for the
years ended  December 31, 1993 and 1994 and for the nine months ended  September
30, 1995, respectively.  In addition, revenues from this affiliate were $14,300,
$48,600 and $21,000 for the years ended  December  31, 1993 and 1994 and for the
nine months ended September 30, 1995, respectively.

(13)      SIGNIFICANT CUSTOMERS:

         Included in revenues are two customers for the year ended  December 31,
1993, one customer for the year ended December 31, 1994, and one customers for
the nine months ended  September 30, 1995 who accounted for  approximately  28%,
21%,  and 25% of revenues  for the  respective  periods  then ended.  No other
customer individually accounts for more than 10% of the Company's revenue.

(14)      ACQUISITIONS:

Asset Purchase -

         Effective January 30, 1995, the Company purchased  substantially all of
the  assets,  including  the  assignment  of customer  contracts,  of a delivery
service in Florida.  The  purchase  price is a maximum of  $132,000  but limited
based on the  measurement  of  income  over a 180-day  period,  as  defined.  In
connection with the acquisition, which is being accounted for as a purchase, the
principals  of  the  purchased  company  entered  into  a  five-year  noncompete
agreement with the Company.  Additionally, the Company entered into a three-year
employment agreement with one of the principles.

 Purchase of Customer List -

         On April  28,  1995,  the  Company  purchased  a  customer  list from a
delivery  service in Florida.  The purchase  price will be equal to 10% of gross
revenue received over a two-year period, as defined.



<PAGE>











                           REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Stockholders of

         Court Courier Systems, Inc.:


We have audited the  accompanying  consolidated  balance sheets of Court Courier
Systems, Inc. (a New Jersey corporation) and subsidiary as of March 31, 1994 and
1995  and the  related  consolidated  statements  of  operations,  stockholders'
deficit  and cash flows for the years  ended March 31, 1994 and 1995 and for the
nine months  ended  September  30,  1995.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements 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 financial  statements  referred to above present fairly, in
all material respects, the financial position of Court Courier Systems, Inc. and
subsidiary  as of March 31, 1994 and 1995,  and the results of their  operations
and their cash  flows for the years  ended  March 31,  1994 and 1995 and for the
nine months ended  September  30, 1995, in conformity  with  generally  accepted
accounting principles.


                                                      ARTHUR ANDERSEN LLP


Roseland, New Jersey
March 19, 1996



<PAGE>




                   COURT COURIER SYSTEMS, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS


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

                                     ASSETS
                                                                                                                March 31
                                                                                                          1994           1995
                                                                                                          ----           ----
CURRENT ASSETS:
  Cash and cash equivalents.....................................................................         $26,391          $23,068
  Accounts receivable, less allowances for doubtful accounts of $115,215 and
     $284,606 at March 31, 1994 and 1995, respectively (Note 3).................................         461,710          585,321
  Prepaid expenses and other current assets (Note 4)............................................          56,446           82,705

                                                                                                      -------------   -----------

         Total current assets...................................................................         544,547          691,094
EQUIPMENT, net  (Notes 2 and 5).................................................................         374,296          380,332
OTHER ASSETS (Note 6)...........................................................................          42,659           41,413

                                                                                                      -------------   -----------

         Total assets...........................................................................        $961,502       $1,112,839

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



                                                       LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
  Short-term borrowings (Note 8)................................................................              $0         $298,430
  Current maturities of long-term debt (Note 9).................................................          45,421           38,485
  Current portion of obligations under capital leases (Note 10).................................          33,521           13,648
  Due to factor (Note 3)........................................................................          72,378                0
  Accounts payable..............................................................................         193,662          383,470
  Accrued expenses and other current liabilities (Note 7).......................................         426,133          324,890
  Income taxes payable..........................................................................          55,255           57,569

                                                                                                      -------------   -----------

         Total current liabilities..............................................................         826,370        1,116,492

                                                                                                      -------------   -----------

LONG-TERM DEBT (Note 9).........................................................................          13,289           67,523

                                                                                                      -------------   -----------

CAPITAL LEASE OBLIGATIONS (Note 10).............................................................          39,416           31,868

                                                                                                      -------------   -----------

OTHER LIABILITY (Note 11).......................................................................          96,000           75,200

                                                                                                      -------------   -----------

COMMITMENTS AND CONTINGENCIES (Note 13).........................................................
STOCKHOLDERS' DEFICIT:
  Common stock, $.001 per share, authorized 10,000,000 shares;
     issued and outstanding 1,000,000 shares....................................................           1,000            1,000
  Additional paid-in capital....................................................................         165,491          165,491
  Accumulated deficit...........................................................................        (180,064)        (344,735)

                                                                                                      -------------   -----------
 
         Total stockholders' deficit............................................................         (13,573)        (178,244)

                                                                                                      -------------   -----------

         Total liabilities and stockholders' deficit............................................        $961,502       $1,112,839
                                                                                                      =============   ===========
</TABLE>


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


<PAGE>




                   COURT COURIER SYSTEMS, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<S>                                                                                <C>               <C>             <C>
                                                                                                                    For The Nine
                                                                                  For The Years Ended March 31     Months Ended
                                                                                                                    September 30
                                                                                      1994            1995              1995
                                                                                      ----            ----              ----

REVENUES (Notes 2 and 15)...................................................        $6,929,421      $8,768,122        $7,394,824
COST OF REVENUES............................................................         5,586,194       7,092,724         5,977,389

                                                                                 ---------------   -----------      ------------

         Gross profit.......................................................         1,343,227       1,675,398         1,417,435
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES................................         1,210,795       1,498,493         1,274,130

                                                                                 ---------------   -----------      ------------

         Operating income...................................................           132,432         176,905           143,305

                                                                                 ---------------   -----------      ------------

OTHER INCOME (EXPENSE):
  Interest Income...........................................................             1,238               0                 0
  Interest Expense..........................................................          (121,096)       (298,121)         (174,341)
  Other Income (Expense)....................................................             5,513         (42,455)          (25,340)

                                                                                 ---------------   -----------      ------------

                                                                                      (114,345)       (340,576)         (199,681)

                                                                                 ---------------   -----------      ------------

         Income (loss) before income taxes..................................            18,087        (163,671)          (56,376)

PROVISION FOR INCOME TAXES (Notes 2 and 12).................................            27,031           1,000             1,000

                                                                                 ---------------   -----------      ------------

         Net loss...........................................................           $(8,944)      $(164,671)         $(57,376)
                                                                                 ===============   ===========      ============
</TABLE>

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

<PAGE>


                   COURT COURIER SYSTEMS, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                 FOR THE YEARS ENDED MARCH 31, 1994 AND 1995 AND
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
<TABLE>
<S>                                                   <C>             <C>         <C>            <C>                <C>


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


BALANCE AT MARCH 31, 1993.........................       1,000,000     $1,000        $2,000        $(171,120)         $(168,120)
  Capital contributions...........................               0          0       163,491                0            163,491
  Net loss........................................               0          0             0           (8,944)            (8,944)

                                                     --------------   -------     ---------      -----------         ----------

BALANCE AT MARCH 31, 1994.........................       1,000,000      1,000       165,491         (180,064)           (13,573)
  Net loss........................................               0          0             0         (164,671)          (164,671)

                                                     --------------   -------     ---------      -----------         ----------

BALANCE AT MARCH 31, 1995.........................       1,000,000      1,000       165,491         (344,735)          (178,244)
  Net loss........................................               0          0             0          (57,376)           (57,376)
  Adjustments to conform fiscal year-end..........               0          0             0          114,633            114,633

                                                     --------------   -------     ---------      -----------         ----------

BALANCE AT SEPTEMBER 30, 1995.....................       1,000,000     $1,000      $165,491        $(287,478)         $(120,987)
</TABLE>

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

<PAGE>

                   COURT COURIER SYSTEMS, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<S>                                                                                      <C>         <C>              <C>
                                                                                                                   For The Nine
                                                                                     For The Years Ended March     Months Ended
                                                                                                 31                September 30
                                                                                         1994          1995            1995
                                                                                         ----          ----            ----

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss.....................................................................           $(8,944)   $(164,671)        $(57,376)
  Adjustments to reconcile net loss to net cash provided
     by (used in) operating activities -
       Net loss for the three months ended March 31 in
         order to conform to the nine month presentation.......................                 0            0          114,633
       Loss on disposal of equipment...........................................                 0       90,661                0
       Depreciation and amortization...........................................            62,780      100,288           46,335
       Changes in operating assets and liabilities-
       Increase in accounts receivable, net....................................          (188,850)    (123,611)        (247,993)
       (Increase) decrease in prepaid expenses and other current assets........            13,142      (26,259)          22,035
       (Increase) decrease in other assets.....................................            15,144        1,246          (20,406)
       Increase in accounts payable and accrued liabilities....................           117,107       88,565           56,513
       Increase (decrease) in income taxes payable.............................            50,692        2,314           (1,968)
       Decrease in other liability.............................................           (16,000)     (20,800)          (8,000)

                                                                                     ------------ -------------- ----------------

         Net cash provided by (used in) operating activities...................            45,071      (52,267)         (96,227)

                                                                                     ------------ -------------- ----------------

CASH FLOWS FROM INVESTING ACTIVITIES -- Purchases of equipment.................
                                                                                     ------------ -------------- ----------------
                                                                                         (140,048)    (196,985)         (81,508)

                                                                                     ------------ -------------- ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds on short-term and long-term debt....................................           169,557      388,537          221,314
  Payments on debt and capital lease obligations...............................          (229,293)    (142,608)         (46,819)
  Capital contributions........................................................           163,491            0                0

                                                                                     ------------ -------------- ----------------

         Net cash provided by financing activities.............................           103,755      245,929          174,495

                                                                                     ------------ -------------- ----------------

         Net increase (decrease) in cash and cash equivalents..................             8,778       (3,323)          (3,240)


CASH AND CASH EQUIVALENTS, beginning of period.................................            17,613       26,391           23,068

                                                                                     ------------ -------------- ----------------

CASH AND CASH EQUIVALENTS, end of period.......................................           $26,391      $23,068          $19,828

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

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid for interest.......................................................          $120,467     $297,138         $125,346
  Cash paid for taxes..........................................................             5,234            0            1,000

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

NONCASH TRANSACTIONS:
  Capital lease obligations incurred...........................................           $54,365           $0          $58,131
                                                                                     ============ ============== ================
</TABLE>

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


<PAGE>


                   COURT COURIER SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





(1)       BUSINESS AND ORGANIZATION:

         Court  Courier  Systems,   Inc.  and  subsidiary  (the  "Company")  are
primarily engaged in the transportation industry serving financial institutions,
state  government  and  private  industry  in  New  Jersey,   New  York,  Maine,
Connecticut and Massachusetts.

         The accompanying financial statements  include Court  Courier  Systems,
Inc.  and  its  wholly-owned subsidiary  Court Courier -  Revex of Connecticut.
All significant  intercompany  accounts and  transactions  have been eliminated.

         The Company and its  stockholders  entered into a definitive  agreement
with  Consolidated  Delivery &  Logistics,  Inc.  ("CDL")  pursuant to which the
Company  merged with CDL (the  "Merger") on November 27, 1995.  All  outstanding
shares of the Company were  exchanged  for cash and shares of CDL's Common Stock
concurrent  with the  consummation  of the initial public offering of the common
stock of CDL.

(2)       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Use of Estimates in the Preparation of the Financial Statements -

         The preparation of the consolidated  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.

Equipment -

         Equipment  is recorded  at cost.  Depreciation  is  computed  using the
straight-line method over the estimated useful lives of the assets.

 Revenue Recognition -

         Revenue is  recognized  when the shipment is completed and expenses are
recognized as incurred.



<PAGE>


 Income Taxes -

         The  Company  records  Federal  and state  income  tax based on taxable
income  at  the  applicable  rate.   Deferred  income  taxes  are  provided  for
differences  in the  recognition  of revenue and expenses for tax and  financial
reporting  purposes.  Temporary  differences  result  primarily from accelerated
depreciation and amortization for tax purposes and various accruals and reserves
which are deductible for tax purposes in future periods.

 Basis of Presentation -

         The Company has historically used a March 31 fiscal year-end;  however,
to be  consistent  with  CDL and in  connection  with the  merger,  consolidated
financial  statements for the nine months ended  September 30 1995 are presented
herein.  The duplication of the results of operations for the three months ended
March 31, 1995 have been reflected as adjustments to accumulated deficit.

 Reclassifications-

         Certain  reclassifications  have  been made to prior  years'  financial
statements to conform to the current period presentation.

(3)       ACCOUNTS RECEIVABLE:

         The Company  entered into a factoring  agreement with Platinum  Funding
Corp. in October 1993,  under which certain trade  receivables were sold without
recourse.  The  factoring  charge  amounted  to a  maximum  fee  of  15%  of the
receivables  assigned and the Company was permitted to receive advances of up to
70% of the  receivables  assigned.  The  factoring  agreement had a term of nine
months and was terminated in August 1994.

         In August 1994,  the Company  entered into a factoring  agreement  with
Dimmitt & Owen Financial,  Inc. under which certain trade  receivables were sold
without  recourse.  The factoring  charge amounted to a maximum fee of 5% of the
receivables  assigned and the Company was permitted to receive advances of up to
80% of the  receivables  assigned.  For accounts which remained  unpaid after 90
days, the Company was required to repurchase these receivables at the discretion
of Dimmitt & Owen Financial, Inc. This agreement was terminated in October 1994.

         As of March 31, 1994,  $222,536 of accounts  receivable were sold under
the  agreement  with  Platinum  Funding Corp.  and,  accordingly,  excluded from
accounts receivable in the accompanying  consolidated  financial statements.  At
March 31, 1994,  the Company had a liability  due to the factor of $72,378 which
represented  monies  collected  by the Company on  receivables  sold and special
advances received from the factor. The Company incurred interest expense related
to the  factoring  agreements of $100,230 and $105,535 for the years ended March
31, 1993 and 1994, respectively.



<PAGE>


(4)       PREPAID EXPENSES AND OTHER CURRENT ASSETS:

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

                                                                                                     March 31
                                                                                                 1994        1995
                                                                                              -----------  ---------
Prepaid insurance.......................................................................         $49,753     $59,701
Loan exchange...........................................................................               0      11,729
Due from affiliate......................................................................           6,693       6,693
Other...................................................................................               0       4,582

                                                                                              -----------  ---------

                                                                                                 $56,446     $82,705
                                                                                              ===========  =========
</TABLE>

(5)       EQUIPMENT:

         Equipment consists of the following -
<TABLE>
<S>                                                                <C>            <C>             <C>
                                                                   Useful                 March 31
                                                                   Lives           1994             1995
                                                                   -----           ----             ----
Transportation equipment..................................        5 years         $446,576        $440,107
Computer equipment........................................       5-7 years         237,352         252,685
Office equipment..........................................        7 years           56,006          61,650
Warehouse equipment.......................................        7 years           50,680          50,680
Other equipment...........................................        7 years           18,261          18,261

                                                                              ---------------   ----------

                                                                                   808,875         823,383
Less -- Accumulated depreciation..........................                        (434,579)       (443,051)

                                                                              ---------------  -----------

                                                                                  $374,296        $380,332
                                                                              ===============  ===========
</TABLE>

         Leased equipment under capital leases included in equipment above
consists of the following -
<TABLE>
<S>                                                                                    <C>             <C>
                                                                                              March 31
                                                                                         1994          1995
                                                                                     -------------    --------
Transportation equipment.......................................................         $111,112       $54,365
Office and other equipment.....................................................                0             0

                                                                                     -------------    --------

                                                                                         111,112        54,365
Less -- Accumulated amortization...............................................          (59,730)      (20,208)

                                                                                     -------------    --------

                                                                                         $51,382       $34,157
                                                                                     =============    ========
</TABLE>

(6)       OTHER ASSETS:

         Other assets consist of the following -
<TABLE>
<S>                                                                                     <C>          <C>
                                                                                            March 31
                                                                                        1994        1995
                                                                                     -----------    -------
Security deposits................................................................       $38,414     $41,413
Deferred financing costs.........................................................         4,245           0

                                                                                     -----------    -------

                                                                                        $42,659     $41,413
                                                                                     ===========    =======
</TABLE>

(7)       ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

         Accrued expenses and other current liabilities consist of the 
following -
<TABLE>
<S>                                                                                    <C>            <C>
                                                                                              March 31
                                                                                         1994          1995
Accrued payroll and payroll related...........................................          $245,898      $255,872
Other accrued expenses........................................................           180,235        69,018

                                                                                     -------------    --------

                                                                                        $426,133      $324,890
                                                                                     =============    ========
</TABLE>


(8)       SHORT-TERM BORROWINGS:

         The  Company  entered  into a line of  credit  agreement  with  Riviera
Finance in October 1994. At March 31, 1995  $298,430 was  outstanding  under the
agreement.  The  agreement  allows for maximum  borrowings of $500,000 and has a
term of six months with automatic six month renewals unless terminated by either
party with no less than 30 days prior notice.  Borrowings  outstanding under the
agreement bear interest at 33.6% per annum.

         The line of credit  agreement  is secured by the assets of the  Company
including  all  accounts  receivable,   contracts,   franchise  agreements,  and
equipment and is personally guaranteed by the officers of the Company.

         Borrowings under the line of credit averaged  $181,795 and $366,980 for
the year ended March 31,  1995 and the nine months  ended  September  30,  1995,
respectively.  Maximum  borrowings were $351,716 and $733,636 for the year ended
March 31, 1995 and for the nine months ended September 30, 1995, respectively.



<PAGE>


(9)       LONG-TERM DEBT:

         Long-term debt consists of the following -
<TABLE>
<S>                                                                              <C>             <C>
                                                                                           March 31
                                                                                      1994          1995
                                                                                 --------------     -------
Installment loans (a)......................................................          $52,296        $99,921
Other......................................................................            6,414          6,087

                                                                                 --------------     -------

                                                                                      58,710        106,008
Less -- Current maturities.................................................          (45,421)       (38,485)

                                                                                 --------------     -------

                                                                                     $13,289        $67,523
                                                                                 ==============     =======
</TABLE>

         (a)  Collateralized  installment  loans maturing  through January 2000,
payable monthly with interest rates ranging from 9.25% to 14.99% per annum.

         The aggregate amounts of annual principal maturities of long-term debt
are as follows -
<TABLE>
<S>                                                                                  <C>
                                                                               March 31
                                                                            --------------
1996..................................................................          $38,485
1997..................................................................           25,893
1998..................................................................           21,460
1999..................................................................           10,499
2000..................................................................            9,671

                                                                            --------------

                                                                               $106,008
                                                                            ==============
</TABLE>


(10)      CAPITAL LEASE OBLIGATIONS:

         The Company leases  certain  equipment  under capital lease  agreements
which expire at various dates,  minimum annual payments under capital leases are
as follows -
<TABLE>
<S>                                                                                                   <C>
                                                                                                March 31
                                                                                             --------------
1996.....................................................................................         $16,632
1997.....................................................................................          16,632
1998.....................................................................................          17,184

                                                                                             --------------

          Total minimum payments.........................................................          50,448
Less - Amounts representing interest.....................................................          (4,932)

                                                                                             --------------

          Net minimum payments...........................................................          45,516
Less -Current portion of obligations under capital leases................................         (13,648)

                                                                                             --------------

Long-term portion of obligations under capital leases....................................         $31,868
                                                                                             ==============
</TABLE>

<PAGE>


(11)      FRANCHISE AGREEMENT:

         In March 1990,  the Company sold a management  franchise in New Jersey.
Under the terms of the franchise agreement, the managing franchisee is entitled,
for  a 10  year  period,  to  the  greater  of  15%  of  the  assigned  revenues
attributable to the managing franchisee's zone or a guaranteed minimum income of
$16,000 per year, paid in monthly installments. In connection with the franchise
agreement,  the Company  recorded a liability for the guaranteed  minimum income
payments  required  under  the  agreement.  At March  31,  1994 and  1995,  such
liability  totaled $96,000 and $75,200,  respectively,  and is included in other
liability in the accompanying  consolidated balance sheets. The Company has made
guaranteed  minimum income payments of $16,000 for each of the years ended March
31, 1994, and 1995 and $12,000 for the nine months ended September 30, 1995.

(12)      INCOME TAXES:

         The following  income tax  information is presented in accordance  with
Statement of Financial  Accounting  Standards No. 109. The income tax provisions
of  $20,881,  $1,000 and $1,000 for the years  ended March 31, 1994 and 1995 and
for the nine months ended September 30, 1995, respectively, include penalties of
$27,031,  $1,000 and $1,000 for the years  ended March 31, 1994 and 1995 and for
the nine months ended September 30, 1995, respectively.

         The  differences  in Federal  income  taxes  provided  and the  amounts
determined  by applying the  statutory  tax rate (34%) to income  before  income
taxes result from the following -
<TABLE>
<S>                                                                      <C>             <C>              <C>
                                                                                                         For The Nine
                                                                        For The Years Ended March 31    Months Ended
                                                                        ---------------------------      September 30
                                                                             1994           1995             1995
                                                                             ----           ----             ----


Tax benefit at statutory rate.....................................           $6,150       $(55,648)         $(19,168)
Add -
  Net operating losses not recognized.............................                0         55,648            19,168
  Penalties and other.............................................           20,881          1,000             1,000

                                                                        --------------   ---------         ---------

                                                                            $27,031         $1,000            $1,000
                                                                        ==============   =========         =========
</TABLE>
<PAGE>


(13)      COMMITMENTS AND CONTINGENCIES:

Litigation -

         The Company is, from time-to-time, a party to litigation arising in the
normal course of business.  Management  believes that none of these actions will
have a  material  adverse  effect  on  the  financial  position  or  results  of
operations of the Company.

 Commitments -

         The Company  leases,  under operating  leases,  office space and office
equipment  with lease terms of greater than one year.  For the years ended March
31, 1994 and 1995 and for the nine months ended September 30, 1995, rent expense
amounted to $120,618, $186,021, and $131,738, respectively.

         The approximate minimum annual rental commitments of the Company, under
existing lease agreements, are as follows -
<TABLE>
<S>                                                                              <C>
                                                                           March 31
                                                                        --------------
1996...............................................................        $167,597
1997...............................................................         141,854
1998...............................................................          51,402

                                                                        --------------

                                                                           $360,853
                                                                        ==============
</TABLE>
(14)      SIGNIFICANT CUSTOMERS:

         Two  customers  accounted  for  approximately  55%,  56% and  57%  of
revenues  for the years  ended  March 31,  1994 and 1995 and for the nine months
ended September 30, 1995, respectively.



<PAGE>












                            REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To the Stockholders of

         Orbit/Lightspeed Courier Systems, Inc.:


We have audited the  accompanying  combined  balance sheets of  Orbit/Lightspeed
Courier  Systems,  Inc. (a New York  corporation)  and Related  Companies  as of
December 31, 1993 and 1994, and the related  combined  statements of operations,
stockholders'  equity and cash flows for the years ended  December  31, 1993 and
1994  and  for the  nine  months  ended  September  30,  1995.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements 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 combined  financial  statements  referred to above  present
fairly, in all material  respects,  the financial  position of  Orbit/Lightspeed
Courier Systems, Inc. and Related Companies as of December 31, 1993 and 1994 and
the  results  of their  operations  and their  cash  flows  for the years  ended
December 31, 1993 and 1994 and for the nine months ended  September 30, 1995, in
conformity with generally accepted accounting principles.


                                                     ARTHUR ANDERSEN LLP


Roseland, New Jersey
March 19, 1996



<PAGE>



          ORBIT/LIGHTSPEED COURIER SYSTEMS, INC. AND RELATED COMPANIES
                             COMBINED BALANCE SHEETS


                                                      ASSETS
<TABLE>
<S>                                                                                                <C>              <C>
                                                                                                           December 31
                                                                                                       1993           1994
                                                                                                       ----           ----
CURRENT ASSETS:
  Cash and cash equivalents...................................................................          $30,481        $71,293
  Accounts receivable, less allowance for doubtful accounts of $50,200 and
     $44,999 in 1993 and 1994, respectively (Note 8)..........................................        1,002,862      1,043,402
  Due from stockholder........................................................................            4,300              0
  Prepaid expenses and other current assets (Note 3)..........................................          121,408         48,512

                                                                                                  --------------     ---------

         Total current assets.................................................................        1,159,051      1,163,207
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net (Notes 2 and 4).....................................          230,400        173,793
OTHER ASSETS (Notes 5 and 6)..................................................................           73,817         66,490

                                                                                                  --------------     ---------

         Total assets.........................................................................       $1,463,268     $1,403,490

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



                              LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Revolving line of credit (Note 8)...........................................................               $0       $100,000
  Notes payable (Note 8)......................................................................           69,365         68,112
  Due to stockholders (Note 13)...............................................................           77,600         76,600
  Accounts payable............................................................................           11,959         16,576
  Accrued expenses and other current liabilities (Note 7).....................................          351,812        220,235
  Deferred income taxes payable (Note 9)......................................................          407,000        407,000

                                                                                                  --------------     ---------

         Total current liabilities............................................................          917,736        888,523

                                                                                                   --------------     ---------

LONG-TERM DEBT (Note 8).......................................................................           68,112              0

                                                                                                  --------------     ---------

COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS' EQUITY (Note 11):
  Preferred stock ............................................................................                0              0
  Common stock................................................................................           31,559         32,559
  Additional paid-in capital..................................................................           11,000         16,000
  Retained earnings...........................................................................          434,861        466,408

                                                                                                  --------------     ---------

         Total stockholders' equity...........................................................          477,420        514,967

                                                                                                  --------------     ---------

         Total liabilities and stockholders' equity...........................................       $1,463,268     $1,403,490
                                                                                                  ==============    ==========
</TABLE>
                The accompanying notes to combined  financial  statements are an
integral part of these balance sheets.


<PAGE>




          ORBIT/LIGHTSPEED COURIER SYSTEMS, INC. AND RELATED COMPANIES
                        COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<S>                                                                               <C>             <C>            <C>
                                                                                                                  For The Nine
                                                                                      For The Years Ended         Months Ended
                                                                                          December 31             September 30
                                                                                          -----------             ------------
                                                                                      1993           1994             1995
                                                                                      ----           ----             ----


REVENUES (Note 2)..........................................................         $7,776,549     $8,019,515        $6,441,949
COST OF REVENUES...........................................................          5,531,631      5,814,805         4,615,262

                                                                                 --------------   -------------   ---------------

         Gross profit......................................................          2,244,918      2,204,710         1,826,687
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
                                                                                     2,191,387      2,165,543         1,450,276

                                                                                 --------------   -------------   ---------------

         Operating income..................................................             53,531         39,167           376,411

                                                                                 --------------   -------------   ---------------

OTHER INCOME AND EXPENSE:
  Other income ............................................................             23,888         20,452             5,453
  Interest expense.........................................................            (10,682)       (11,704)          (10,743)

                                                                                 --------------   -------------   ---------------

                                                                                        13,206          8,748            (5,290)

                                                                                 --------------   -------------   ---------------

         Income before income taxes........................................             66,737         47,915           371,121
PRO FORMA PROVISION INCOME TAXES (Notes 2 and 9)...........................             18,889         16,368           148,448

                                                                                 --------------   -------------   ---------------

         Net income........................................................            $47,848        $31,547          $222,673
                                                                                 ==============   =============   ===============
</TABLE>
                  The accompanying notes to combined financial statements are an
integral part of these statements.



<PAGE>

          ORBIT/LIGHTSPEED COURIER SYSTEMS, INC. AND RELATED COMPANIES
                   COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
                FOR THE YEAR ENDED DECEMBER 31, 1993 AND 1994 AND
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995

<TABLE>
<S>                                                                   <C>         <C>          <C>          <C>           <C>
                                                                          Common Stock       Additional                    Total
                                                                            (Note 11)         Paid-in      Retained    Stockholders'
                                                                       Shares     Amount      Capital      Earnings       Equity

BALANCE AT DECEMBER 31, 1992.....................................           460     $31,559           $0     $387,013      $418,572
  Capital contribution equal to the current income taxes of
     S corporations..............................................             0           0       11,000            0        11,000
  Net income.....................................................             0           0            0       47,848        47,848

                                                                      ---------    ---------   ---------    ---------     ---------

BALANCE AT DECEMBER 31, 1993.....................................           460      31,559       11,000      434,861       477,420
  Initial capitalization of NWC Trucking Corporation.............         1,000       1,000            0            0         1,000
  Capital contribution equal to the current income taxes of
     S corporations..............................................             0           0        5,000            0         5,000
  Net income.....................................................             0           0            0       31,547        31,547

                                                                      ---------    ---------   ---------    ---------     ---------

BALANCE AT DECEMBER 31, 1994.....................................         1,460      32,559       16,000      466,408       514,967
  Capital contribution equal to the current income taxes of
     S corporations..............................................             0           0      148,448            0       148,448
  Distributions to Stockholders..................................             0           0            0     (310,000)     (310,000)
  Net income.....................................................             0           0            0      222,673       222,673

                                                                      ---------    ---------   ---------    ---------     ---------

BALANCE AT SEPTEMBER 30, 1995....................................         1,460     $32,559     $164,448     $379,081      $576,088
                                                                      =========    =========   =========    =========     =========
</TABLE>
                   The accompanying notes to combined  financial  statements are
an integral part of this statement.


<PAGE>


          ORBIT/LIGHTSPEED COURIER SYSTEMS, INC. AND RELATED COMPANIES
                        COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<S>                                                                                      <C>            <C>           <C>
                                                                                                                    For The Nine
                                                                                           For The Years Ended     Months Ended
                                                                                               December 31          September 30
                                                                                               -----------          ------------
                                                                                            1993         1994           1995
                                                                                            ----         ----           ----

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income........................................................................       $47,848        $31,547       $222,673
  Adjustment to reconcile net income to net cash provided by operating activities -
     Depreciation and amortization..................................................        61,400         59,359         37,254
     Loss on disposal of equipment..................................................             0         23,115          8,702
     Deferred taxes.................................................................        (5,000)        10,210              0
     Capital contributions equal to current provision for income taxes..............        11,000          5,000        148,448
      Changes in operating assets and liabilities -
       (Increase) decrease in -
       Accounts receivable, net.....................................................       (89,078)       (40,540)      (112,848)
       Prepaid expenses and other current assets....................................       (37,943)        72,896         (8,564)
       Other assets.................................................................         5,003         16,286        (22,259)
       (Increase) decrease in -
       Accounts payable, accrued expenses and other current liabilities.............        52,266       (126,961)       137,533

                                                                                         -----------     ---------      ---------

         Net cash provided by operating activities..................................        45,496         50,912        410,939

                                                                                         -----------     ---------      ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to equipment and leasehold improvements.................................       (87,482)       (25,867)       (59,230)

                                                                                         -----------     ---------      ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on long-term debt..............................................        (4,025)       (69,365)       (95,383)
  Principal (payments) proceeds on revolving line of credit.........................       (20,000)       100,000         77,998
  (Payments to) proceeds from stockholders, net.....................................        (4,300)         3,300              0
  Issuance of common stock..........................................................             0          1,000              0
  Proceeds from issuance of long-term debt..........................................             0              0        120,000
  Distribution to stockholders......................................................             0        (19,168)      (310,000)

                                                                                         -----------     ---------      ---------

         Net cash provided  by (used in) financing activities.......................       (28,325)        15,767       (207,385)

                                                                                         -----------     ---------      ---------

         Net increase (decrease) in cash and cash equivalents.......................       (70,311)        40,812        144,324
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD....................................       100,792         30,481         71,293

                                                                                         -----------     ---------      ---------

CASH AND CASH EQUIVALENTS AT END OF PERIOD..........................................       $30,481        $71,293       $215,617

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



SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest............................................................       $10,682        $11,704         $8,941
  Cash paid for income taxes........................................................        19,490         14,125         12,851
                                                                                         ===========     =========      =========
</TABLE>
                  The accompanying notes to combined financial statements are an
integral part of these statements.


<PAGE>


          ORBIT/LIGHTSPEED COURIER SYSTEMS, INC. AND RELATED COMPANIES
                     NOTES TO COMBINED FINANCIAL STATEMENTS


(1)       BUSINESS AND ORGANIZATION:

         The accompanying combined financial  tatements  include  the  accounts
of  Orbit/Lightspeed   Courier Systems, Inc.  (a New York corporation),  O/L
Warehousing, Inc. (a New York corporation), BMBA, Inc. (a New York corporation
and NWC Trucking Corporation (a Delaware corporation) (collectively, the
"Company").

         The Company and its  stockholders  entered into a definitive  agreement
with  Consolidated  Delivery &  Logistics,  Inc.  ("CDL")  pursuant to which the
Company  merged with CDL (the  "Merger") on November 27, 1995.  All  outstanding
shares of the Company were  exchanged  for cash and shares of CDL's common stock
concurrent  with the  consummation  of the initial public offering of the common
stock of CDL.

(2)       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

 Basis of Presentation -

         The  companies  listed in Note 1 are under the common  control of eight
individuals.  All significant intercompany  transactions have been eliminated in
combination.

Use of Estimates in the Preparation of the Financial Statements -

         The preparation of the combined 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 combined
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results could differ from those estimates.

Equipment and Leasehold Improvements -

         Equipment is recorded at cost.  Leasehold  improvements  are  amortized
over the  lives  of the  respective  leases  or the  lives of the  improvements,
whichever  is  shorter.  Depreciation  and  amortization  is  computed  using  a
straight-line method over the estimated useful lives of the assets.

 Revenue Recognition -

         Revenue is  recognized  when the shipment is completed and expenses are
recognized as incurred.



<PAGE>


 Income Taxes -

         The Company (except for NWC Trucking  Corporation,  prior to January 1,
1995) has elected to be treated for Federal and state  income tax purposes as an
S  Corporation   and,   accordingly,   any  income  tax   liabilities   are  the
responsibility  of  the  stockholders.  New  York  City  does  not  recognize  S
Corporation status and therefore,  New York City taxes have been provided for in
the  accompanying   financial  statements.   For  purposes  of  these  financial
statements, Federal and state income taxes have been provided for the Company as
if the Company  had filed C  Corporation  tax  returns.  The current  income tax
expense is  reflected  as an  adjustment  to  additional  paid-in  capital.  The
Company's S Corporation  status terminated with the effective date of the Merger
discussed in Note 1.

 Reclassifications-

         Certain  reclassifications  have  been made to prior  years'  financial
statements to conform to the current period presentation.

(3)       PREPAID EXPENSES AND OTHER CURRENT ASSETS:

         Prepaid expenses and other current assets consist of the following at -
<TABLE>
<S>                                                                                       <C>            <C>
                                                                                                December 31
                                                                                             1993         1994
                                                                                         -------------  ----------
Prepaid insurance....................................................................      $102,508       $32,988
Prepaid rent.........................................................................        18,900        15,524

                                                                                         -------------  ----------

                                                                                           $121,408       $48,512
                                                                                         =============  ==========
</TABLE>
 (4)      EQUIPMENT AND LEASEHOLD IMPROVEMENTS:

         Equipment and leasehold improvements consist of the following at -
<TABLE>
<S>                                                                                      <C>             <C>
                                                                                                 December 31
                                                                                             1993          1994
                                                                                         -------------  ----------
Office equipment....................................................................        $395,312      $403,779
Warehouse and transportation equipment..............................................          90,794        74,794
Leasehold improvements..............................................................          62,845        62,845

                                                                                         -------------  ----------

                                                                                             548,951       541,418
Less - Accumulated depreciation and amortization....................................         318,551       367,625

                                                                                         -------------  ----------

                                                                                            $230,400      $173,793
                                                                                         =============  ==========
</TABLE>
<PAGE>


(5)       OTHER ASSETS:

         Other assets consist of the following at -
<TABLE>
<S>                                                                                       <C>           <C>
                                                                                               December 31
                                                                                             1993        1994
                                                                                         -----------  -----------
Security deposits...................................................................        $30,105      $30,105
Intangible assets (Note 6)..........................................................         43,712       26,175
Deferred tax asset (Note 9).........................................................              0       10,210

                                                                                         -----------  -----------

                                                                                            $73,817      $66,490
</TABLE>
(6)       INTANGIBLE ASSETS:

         During  1989 and  1993,  the  Company  purchased  the  business  of two
messenger  services.  The purchase  prices were allocated to certain  intangible
assets that were acquired. Intangible assets consist of the following at -
<TABLE>
<S>                                                                   <C>             <C>              <C>
                                                                      Amortization            December 31
                                                                        Periods           1993          1994
                                                                        -------           ----          ----

Covenant not-to-compete.......................................         3-5 years          $66,260       $66,260
Customer list.................................................         3-5 years           49,750        49,750
Goodwill......................................................          40 years           18,750        18,750
Organizational costs..........................................          5 years                 0         1,631

                                                                                      -------------     -------

                                                                                          134,760       136,391
Less - Accumulated amortization...............................                             91,048       110,216

                                                                                      -------------     -------

                                                                                          $43,712       $26,175
                                                                                      =============     =======
</TABLE>
 (7)      ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

         Accrued expenses and other current liabilities consist of the 
following at -
<TABLE>
<S>                                                                                   <C>            <C>
                                                                                            December 31
                                                                                         1993          1994
                                                                                     -------------     ---------
Accrued payroll and payroll related expenses..................................            $312,872     $197,183
Deposits held.................................................................              11,175       11,175
Other accrued liabilities.....................................................              27,765       11,877

                                                                                     -------------    ----------

                                                                                          $351,812     $220,235
                                                                                     =============    ==========
</TABLE>
<PAGE>


(8)       REVOLVING LINE OF CREDIT AND NOTES PAYABLE:

         At  December  31,  1994,  the  Company  had a  $250,000  line of credit
facility with a bank which is due on demand. Borrowings under the revolving line
of credit were secured by the  Company's  accounts  receivable  and the personal
guarantee of the owners.  At December 31, 1994,  $100,000 was outstanding  under
this line of credit.

         Long-term debt consists of the following-
<TABLE>
<S>                                                                                   <C>             <C>
                                                                                             December 31,
                                                                                          1993           1994
                                                                                     --------------      -------
Note payable due to a bank payable in monthly installments of $5,417 plus interest
  at prime (8.5% at December 31, 1994) plus 1.5%................................         $130,000        $65,000
Other...........................................................................            7,477          3,112

                                                                                     --------------      -------

                                                                                          137,477         68,112
Less - current maturities.......................................................          (69,365)       (68,112)

                                                                                     --------------      -------

                                                                                          $68,112             $0
                                                                                     ==============      =======
</TABLE>
 (9)      INCOME TAXES:

         The following  income tax  information is presented in accordance  with
Statement of Financial  Accounting  Standards No. 109 as if the Company had been
subject to Federal and state income taxes throughout the periods presented.  The
provision for income taxes consists of -
<TABLE>
<S>                                                                      <C>          <C>           <C>
                                                                                                  For The Nine
                                                                         For The Years Ended      Months Ended
                                                                              December 31         September 30
                                                                           1993        1994           1995
                                                                           ----        ----           ----

Federal............................................                          $5,217        $0        $115,047
State and local....................................                          13,672    16,368          33,401

                                                                        -----------  --------        --------

                                                                            $18,889   $16,368        $148,448
                                                                        ===========   =======        ========
</TABLE>

         The  differences  in federal  income  taxes  provided  and the  amounts
determined  by applying the  statutory  tax rate (34%) to income  before  income
taxes result from the following -
<TABLE>
<S>                                                                        <C>               <C>          <C>
                                                                                                          For The Nine
                                                                          For The Years Ended December    Months Ended
                                                                                       31                 September 30
                                                                           ---------------------------    ------------
                                                                               1993           1994            1995
                                                                               ----           ----            ----

Income tax at statutory rate........................................           $22,691        $16,291       $126,181
Add (deduct) -
  State and local income taxes, net of Federal benefit..............             9,024         10,802         22,045
  Nondeductible expenses............................................            14,057         23,959            222
  Targeted jobs credit..............................................           (26,883)       (34,684)             0

                                                                          --------------      --------      --------

                                                                               $18,889        $16,368       $148,448
                                                                          ==============      ========      ========
</TABLE>
         The Company files their Federal, state and New York City tax returns on
the cash basis of accounting.  Reflected in the accompanying balance sheets is a
current liability of $407,000, which represents the tax effect of differences in
the recognition of revenue and expenses between the cash basis and accrual basis
of accounting.

(10)      COMMITMENTS AND CONTINGENCIES:

 Litigation -

         The Company is, from time to time,  party to litigation  arising in the
normal course of business.  Management  believes that none of these actions will
have a  material  adverse  effect  on  the  financial  position  or  results  of
operations of the Company.

 Commitments -

         The Company leases office and warehouse  space under  operating  leases
with terms of greater than one year.  For the years ended  December 31, 1993 and
1994 and for the nine months ended September 30, 1995, rent expense  amounted to
$271,002, $263,209, and $232,469, respectively.

         At December 31, 1994 the approximate  minimum annual rental commitments
of the Company, under existing lease agreements are as follows -
<TABLE>
<S>                                                                                         <C>
                                                                                   December 31,
1995...........................................................................        $268,746
1996...........................................................................         276,360
1997...........................................................................         281,268
1998...........................................................................         291,600
1999...........................................................................         296,808
Thereafter.....................................................................       1,696,985
                                                                                     ----------
                                                                                     $3,111,767
                                                                                     ==========
</TABLE>

(11)      COMMON STOCK:

         Common stock of each of the combined entities at December 31, 1994 is
as follows -
<TABLE>
<S>                                                              <C>          <C>             <C>             <C>
                                                                  Par          Shares         Issued and       Common
                                                                   Value      Authorized      Outstanding       Stock
                                                                 -------      ----------      -----------      --------
Orbit/Lightspeed Courier Systems, Inc..........................       $0           200               60         $31,159
O/L Warehousing, Inc...........................................        0           200              200             200
BMBA, Inc......................................................        0           200              200             200
NWC Trucking Corporation.......................................        0         1,000            1,000           1,000
</TABLE>

         During 1994, the Company  capitalized NWC Trucking through the issuance
of 1,000 shares of common stock.

         Preferred stock of Orbit/Lightspeed Courier Systems, Inc. at
December 31, 1994 is as follows -
<TABLE>
<S>                                                            <C>          <C>             <C>             <C>
                                                               Par          Shares          Issued and      Preferred
                                                                Value      Authorized       Outstanding        Stock
                                                               -------      ----------      -----------      --------
Orbit/Lightspeed Courier Systems, Inc.......................     $250         400                0               $0
</TABLE>

(12)      RELATED PARTY TRANSACTIONS:

         For the years ended  December 31, 1993 and 1994 and for the nine months
ended  September  30, 1995,  the Company paid  $236,000,  $238,000 and $102,000,
respectively, in consulting fees to a corporation owned by a twenty-five percent
stockholder.

         The Company  also leases one of its three  offices  from a  twenty-five
percent  stockholder.  The rent  paid to the  stockholder  for the  years  ended
December  31, 1993 and 1994 and the nine  months  ended  September  30, 1995 was
approximately $98,000, $76,000, and $35,000, respectively.

(13)      DUE TO STOCKHOLDER:

         The  amounts  due to  stockholders  are  payable  upon  demand  and are
noninterest bearing.



<PAGE>











                                  REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To the Stockholder of

         Distribution Solutions International, Inc.:


We have  audited  the  accompanying  balance  sheets of  Distribution  Solutions
International,  Inc. (a Michigan  corporation) as of December 31, 1993 and 1994,
and the related  statements of operations,  stockholder's  equity  (deficit) and
cash  flows  for the years  ended  December  31,  1993 and 1994 and for the nine
months  ended   September  30,  1995.   These   financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements 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 financial  statements  referred to above present fairly, in
all  material  respects,   the  financial  position  of  Distribution  Solutions
International,  Inc.  as of December  31, 1993 and 1994,  and the results of its
operations and its cash flows for the years ended December 31, 1993 and 1994 and
for the nine months  ended  September  30,  1995 in  conformity  with  generally
accepted accounting principles.


                                                       ARTHUR ANDERSEN LLP


Roseland, New Jersey
March 19, 1996



<PAGE>




                   DISTRIBUTION SOLUTIONS INTERNATIONAL, INC.
                                 BALANCE SHEETS





                                     ASSETS

<TABLE>
<S>                                                                                                    <C>          <C>
                                                                                                           December 31
                                                                                                       1993           1994
                                                                                                       ----           ----

CURRENT ASSETS:
  Cash and cash equivalents..................................................................            $1,365         $1,775
  Accounts receivable, less allowance for doubtful accounts of $12,000 as of
     December 31, 1994.......................................................................         1,725,259        353,197
  Prepaid expenses and other current assets (Note 3).........................................            40,723         32,087
  Prepaid taxes (Notes 2 and 8)..............................................................                 0          2,367

                                                                                                  --------------  ------------

         Total current assets................................................................         1,767,347        389,426
EQUIPMENT, net (Note 4)......................................................................           202,414        251,424
STOCKHOLDER RECEIVABLE (Note 12).............................................................                 0         29,278
OTHER ASSETS (Note 5)........................................................................             4,148          3,419

                                                                                                  --------------  ------------
 
         Total assets........................................................................        $1,973,909       $673,547

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



                                                    LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITIES:
  Line of credit (Note 9)....................................................................          $150,000       $178,000
  Current portion of long-term debt and capital lease obligations (Note 7)...................            60,376         47,664
  Accounts payable...........................................................................           928,986        565,867
  Accrued expenses and other current liabilities (Note 6)....................................            78,420         84,555
  Michigan single business tax liability.....................................................                 0         32,600
  Deferred revenue (Note 2)..................................................................           461,842         51,167

                                                                                                  --------------  ------------

         Total current liabilities...........................................................         1,679,624        959,853

                                                                                                  --------------  ------------

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (Note 7)........................................           141,495        102,237

                                                                                                  --------------  ------------

COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDER'S EQUITY (DEFICIT):
  Common stock, $1 par value, 50,000 shares authorized, 1,000 shares
     issued and outstanding..................................................................             1,000          1,000
  Additional paid-in capital.................................................................            89,808         89,808
  Retained earnings (accumulated deficit)....................................................            61,982       (479,351)

                                                                                                  --------------  ------------

         Total stockholder's equity (deficit)................................................           152,790       (388,543)

                                                                                                  --------------  ------------

         Total liabilities and stockholder's equity (deficit)................................        $1,973,909       $673,547
                                                                                                  ==============  ============
</TABLE>

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


<PAGE>



                   DISTRIBUTION SOLUTIONS INTERNATIONAL, INC.
                            STATEMENTS OF OPERATIONS
<TABLE>
<S>                                                                                   <C>              <C>            <C>
                                                                                                                     For The Nine
                                                                                     For The Years Ended December   Months Ended
                                                                                                  31                 September 30
                                                                                                  --                 ------------
                                                                                          1993           1994            1995
                                                                                          ----           ----            ----


REVENUES (Notes 2 and 13).......................................................        $6,796,334     $6,861,941      $6,216,520
COST OF REVENUES................................................................         4,993,480      5,382,037       5,252,158

                                                                                     --------------  ------------    ------------

         Gross profit...........................................................         1,802,854      1,479,904         964,362
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
  (Note 12).....................................................................     --------------  ------------    ------------
                                                                                         1,458,646      2,010,971         930,577

                                                                                     --------------  ------------    ------------

         Operating (loss) income................................................           344,208       (531,067)         33,785

                                                                                     --------------  ------------    ------------

OTHER INCOME AND EXPENSE:
  Other income (expense), net...................................................               349         10,281          (6,823)
  Interest expense (Note 7).....................................................           (32,029)       (20,547)        (17,401)

                                                                                     --------------  ------------    ------------

                                                                                           (31,680)       (10,266)        (24,224)

                                                                                     --------------  ------------    ------------

  Income (loss) before income taxes.............................................           312,528       (541,333)          9,561
  Pro forma provision for income taxes (Notes 2 and 8)..........................           107,232              0           3,824

                                                                                     --------------  ------------    ------------

         Net income (loss)......................................................          $205,296      $(541,333)         $5,737
                                                                                     ==============  ============    ============
</TABLE>
                      The  accompanying  notes to  financial  statements  are an
integral part of these statements.



<PAGE>

                   DISTRIBUTION SOLUTIONS INTERNATIONAL, INC.
                  STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
               FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994 AND
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995

<TABLE>
<S>                                                                <C>          <C>         <C>          <C>             <C>
                                                                                                                           Total
                                                                                           Additional                  Stockholder's
                                                                       Common Stock         Paid-In      Accumulated       Equity
                                                                     Shares     Amount      Capital        Deficit       (Deficit)
                                                                   ----------  ---------  ---------      ---------        ---------
BALANCE AT DECEMBER 31, 1992....................................       1,000     $1,000          $0      $(143,314)       $(142,314)
  Capital contribution equal to the current income taxes
     of S Corporation...........................................           0          0      89,808              0           89,808
  Net income....................................................           0          0           0        205,296          205,296

                                                                   ----------  ---------  ---------      ---------        ---------

BALANCE AT DECEMBER 31, 1993....................................       1,000      1,000      89,808         61,982          152,790
  Net loss......................................................           0          0           0       (541,333)        (541,333)

                                                                   ----------  ---------  ---------      ---------        ---------

BALANCE AT DECEMBER 31, 1994....................................       1,000      1,000      89,808       (479,351)        (388,543)
  Net income....................................................           0          0           0          5,737            5,737

                                                                   ----------  ---------  ---------      ---------        ---------

BALANCE AT SEPTEMBER 30, 1995...................................       1,000     $1,000     $89,808      $(473,614)       $(382,806)
                                                                   ==========  =========  =========      =========        =========

</TABLE>
                      The  accompanying  notes to  financial  statements  are an
integral part of these statements.



<PAGE>


                   DISTRIBUTION SOLUTIONS INTERNATIONAL, INC.
                            STATEMENTS OF CASH FLOWS

<TABLE>
<S>                                                                                       <C>           <C>          <C>
                                                                                                                     For The Nine
                                                                                         For The Years Ended        Months Ended
                                                                                              December 31            September 30
                                                                                              -----------            ------------
                                                                                          1993           1994            1995
                                                                                          ----           ----            ----

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss).............................................................          $205,296      $(541,333)          $5,737
  Adjustments to reconcile net income (loss) to net cash provided by operating activities-
       Loss on disposal of equipment............................................                 0         51,877                0
       Depreciation and amortization of equipment...............................            87,615        102,454           72,484
       Capital contribution equal to current income taxes of S Corporation......            89,808              0                0
       Changes in operating assets and liabilities-
         (Increase) decrease in accounts receivable, net........................          (872,903)     1,372,062         (773,611)
         (Increase) decrease in prepaid expenses and other current assets.......            (1,908)         6,269           (2,170)
         Decrease in other assets...............................................            29,241            729           29,665
         Increase (decrease) in accounts payable................................           224,458       (363,119)         326,923
         Increase in accrued expenses and other current liabilities.............            23,847          6,135          207,548
         Increase (decrease) in Michigan single business tax liability..........                 0         32,600          (32,600)
         Increase (decrease) in deferred revenue................................           461,842       (410,675)         554,237

                                                                                     --------------   ------------     ------------

         Net cash provided by operating activities..............................           247,296        256,999          388,213

                                                                                     --------------   ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of equipment........................................................           (61,261)      (203,341)         (96,951)
  Increase in stockholder receivable............................................                 0        (29,278)         (86,535)

                                                                                     --------------   ------------     ------------

         Net cash used in investing activities..................................           (61,261)      (232,619)        (183,486)

                                                                                     --------------   ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Borrowings (repayments) from line of credit, net............................          (140,000)        28,000         (178,000)
    Proceeds from long-term debt................................................            17,000         43,339           33,159
    Principal payments on long-term debt........................................           (72,833)       (95,309)         (53,927)

                                                                                     --------------   ------------     ------------

         Net cash used in financing activities..................................          (195,833)       (23,970)        (198,768)

                                                                                     --------------   ------------     ------------

         Net increase (decrease) in cash and cash equivalents...................            (9,798)           410            5,959
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD................................            11,163          1,365            1,775

                                                                                     --------------   ------------     ------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD......................................            $1,365         $1,775           $7,734

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


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid for interest......................................................           $32,029        $18,527          $18,463
                                                                                     ==============   ============     ============
</TABLE>
                      The  accompanying  notes to  financial  statements  are an
integral part of these statements.


<PAGE>




                   DISTRIBUTION SOLUTIONS INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS




(1)       BUSINESS AND ORGANIZATION:

         Distributions Solutions International, Inc. (the  "Company") is a third
party  logistics  management company.  The Company's primary  services  include
logistics management, consulting/benchmarking, resource procurement and freight
billing processing.

         The Company and its  stockholder  entered into a  definitive  agreement
with  Consolidated  Delivery &  Logistics,  Inc.  ("CDL")  pursuant to which the
Company  merged with CDL (the  "Merger") on November 27, 1995.  All  outstanding
shares of the Company were  exchanged  for cash and shares of CDL's common stock
concurrent  with the  consummation  of the initial public offering of the Common
Stock of CDL.

(2)       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Use of Estimates in the Preparation of the Financial Statements -

         The  preparation  of  the  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 financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

 Equipment -

         Equipment  is recorded  at cost.  Depreciation  is  computed  using the
straight-line method over the estimated useful lives of the assets. Amortization
of capital leases is included in depreciation expense.

 Revenue Recognition -

         Revenue is  recognized  when  services are  rendered to  customers  and
expenses are recognized as incurred.  Certain  customers pay in advance,  giving
rise to deferred revenue.



<PAGE>


 Income Taxes -

         The Company has elected to be treated for Federal  income tax  purposes
as an S  Corporation  and,  accordingly,  any  income  tax  liabilities  are the
responsibility of the stockholder.  For purposes of these financial  statements,
Federal  income taxes  benefits have been  recognized  for the Company as if the
Company had filed C Corporation  tax returns.  The tax benefits have been offset
by a valuation  allowance.  The income tax expense for 1993 is  reflected  as an
increase to additional  paid-in  capital.  The  Company's S  Corporation  status
terminated with the effective date of the Merger as discussed in Note 1.

 Reclassifications-

         Certain  reclassifications  have  been made to prior  years'  financial
statements to conform to the current period presentation.

(3)       PREPAID EXPENSES AND OTHER CURRENT ASSETS:

         Prepaid expenses and other current assets consist of the following -
<TABLE>
<S>                                                                                   <C>           <C>
                                                                                           December 31
                                                                                        1993        1994
                                                                                     -----------  ----------
Prepaid insurance................................................................         $8,634      $9,221
Prepaid rent.....................................................................         11,155      17,487
Employee receivables.............................................................          7,767       3,597
Other............................................................................         13,167       1,782

                                                                                     -----------  ----------

                                                                                         $40,723     $32,087
                                                                                     ===========  ==========
</TABLE>
(4)       EQUIPMENT:

         Equipment consists of the following -
<TABLE>
<S>                                                                    <C>         <C>             <C>
                                                                       Useful             December 31
                                                                       Lives          1993          1994
                                                                       -----          ----          ----

Furniture, fixtures and equipment.............................          5-7 years    $135,094      $151,383
Computer equipment............................................          3-5 years     259,097       390,237
Vehicles......................................................            5 years      41,344        24,306
Leasehold improvements........................................            7 years       7,615         9,696

                                                                                  -------------  ----------

                                                                                      443,150       575,622
Less -Accumulated depreciation and amortization...............                       (240,736)     (324,198)

                                                                                  -------------  ----------

                                                                                     $202,414      $251,424
                                                                                  =============  ==========
</TABLE>
<PAGE>
         Leased equipment under capital leases included in equipment above 
consists of the following -
<TABLE>
<S>                                                                    <C>        <C>              <C>
                                                                       Useful             December 31
                                                                       Lives          1993          1994
                                                                       -----          ----          ----

Leased equipment..............................................            5 years       $8,998       $30,379
Leased computer equipment.....................................          3-5 years       84,155       106,955

                                                                                       ----------    -------

                                                                                        93,153       137,334
Less - Accumulated amortization...............................                         (67,734)      (95,212)

                                                                                       ----------    -------

                                                                                       $25,419       $42,122
                                                                                       ==========    =======
</TABLE>
(5)       OTHER ASSETS:

         Other assets consist of the following -
<TABLE>
<S>                                                                                      <C>           <C>
                                                                                              December 31
                                                                                            1993       1994
                                                                                         ----------    ------
Deferred financing costs...........................................................         $2,278     $1,822
Other..............................................................................          1,870      1,597

                                                                                         ----------    ------

                                                                                            $4,148     $3,419
                                                                                         ==========    ======
</TABLE>
(6)       ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

         Accrued expenses and other current liabilities consist of the 
following -
<TABLE>
<S>                                                                                   <C>           <C>
                                                                                           December 31
                                                                                        1993        1994

Payroll and payroll withholdings.................................................       $40,799     $41,814
Rent accrual.....................................................................        36,127      36,127
Other............................................................................         1,494       6,614

                                                                                     -----------    --------

                                                                                        $78,420     $84,555
                                                                                     ===========    ========
</TABLE>
<PAGE>


(7)       LONG-TERM OBLIGATIONS:

         Long-term obligations consist of the following -
<TABLE>
<S>                                                                                   <C>             <C>
                                                                                             December 31
                                                                                         1993          1994
                                                                                         ----          ----

Small Business Administration loan (a).........................................         $114,060       $94,722
Vehicle loans from banks and financing
  companies (b)................................................................           27,901        15,897
Capital lease obligations (c)..................................................           55,035        39,282
Note payable to bank...........................................................            4,875             0

                                                                                     -------------    --------

                                                                                         201,871       149,901
Less - Current maturities......................................................          (60,376)      (47,664)

                                                                                     -------------    --------

                                                                                        $141,495      $102,237
                                                                                     =============    ========
</TABLE>

         (a) Monthly principal and interest payments of $2,380; interest rate is
at prime plus 1%, secured by all assets of the Company and a personal  guarantee
of the stockholder with a final payment due in December 1998.

         (b)      Loans for vehicles with monthly  payments  aggregating  $933,
payments due through May 1999 with interest rates ranging from 7% to 9.45%.

         (c)  Various  lease  obligations  for  office  and  computer  equipment
maturing  through 1998,  with interest  rates ranging from 10% to 23% secured by
the office and computer equipment.

         The aggregate amounts of annual principal  maturities of long-term debt
(excluding capital lease obligations) are as follows -
<TABLE>
<S>                                                                                                         <C>
                                                                                                   December 31
1995........................................................................................            $25,222
1996........................................................................................             27,596
1997........................................................................................             30,197
1998........................................................................................             27,604

                                                                                                  --------------

         Total..............................................................................           $110,619
                                                                                                  ==============
</TABLE>
<PAGE>


         The Company leases certain office and computer  equipment under capital
lease  agreements  which expire at various dates.  Minimum annual payments under
capital leases are as follows -
<TABLE>
<S>                                                                                                         <C>
                                                                                                   December 31
1995........................................................................................           $25,998
1996........................................................................................             9,500
1997........................................................................................             8,421
1998........................................................................................               702

                                                                                                  --------------

         Total minimum payments.............................................................            44,621
Less - amounts representing interest........................................................            (5,339)

                                                                                                  --------------

         Net minimum payments...............................................................            39,282
Less - current portion of obligations under capital leases..................................           (22,442)

                                                                                                  --------------

Long-term portion of obligations under capital leases.......................................           $16,840
                                                                                                  ==============
</TABLE>
(8)       INCOME TAXES:

         The following  income tax  information is presented in accordance  with
Statement of Financial  Accounting  Standards  No. 109,  "Accounting  for Income
Taxes," as if the Company had been  subject to Federal  and state  income  taxes
throughout the periods presented.

         The components of the provision for income taxes are as follows -
<TABLE>
<S>                                                                      <C>          <C>        <C>
                                                                                                 For The Nine
                                                                         For The Years Ended    Months Ended
                                                                             December 31         September 30
                                                                         -------------------    -------------
                                                                             1993      1994          1995
                                                                             ----      ----          ----

Federal............................................................         $107,232    $0           $3,824
                                                                            ========   ====          ======
</TABLE>

         The  differences  in Federal  income  taxes  provided  and the  amounts
determined  by applying the  statutory  tax rate (34%) to income  before  income
taxes result from the following -
<TABLE>
<S>                                                            <C>               <C>            <C>
                                                                                                For The Nine
                                                               For The Years Ended December    Months Ended
                                                                            31,                  September 30
                                                               ----------------------------    -------------
                                                                   1993           1994              1995
                                                                   ----           ----              ----


Tax at statutory rate.....................................        $106,260       $(184,053)          $3,251
Add (deduct) -
Nondeductible expenses....................................             972         (14,169)             573
Allowance against benefit due to realization
  concerns................................................               0         198,222                0

                                                               ------------- --------------- ------------------

Income tax expense........................................        $107,232              $0           $3,824
                                                               ============= =============== ==================
</TABLE>

<PAGE>


(9)       LINE OF CREDIT:

         Borrowings  outstanding  under a line of credit from a bank,  which are
secured by all the assets of the Company,  assignment of a life insurance policy
on the stockholder and a personal guarantee of the stockholder, bear interest at
prime  (8.5% and 6.0% at  December  31,  1993 and 1994)  plus 2% and were due on
April 20, 1995. The available line of credit for that period was $250,000.  This
line was  subsequently  renewed on April 20, 1995 through June 30, 1995 and then
on July 1, 1995 through September 30, 1995. The total available credit under the
renewed line is $200,000.

(10)      COMMITMENTS AND CONTINGENCIES:

 Litigation -

         The Company is, from time to time, a party to litigation arising in the
normal course of business.  Management  believes that none of these actions will
have a  material  adverse  effect  on  the  financial  position  or  results  of
operations of the Company.

 Commitments -

         The Company leases,  under operating leases,  office and transportation
equipment  with lease terms of greater than one year.  Rent  expense  related to
these  leases  amounted to $87,727,  $154,716,  and $144,087 for the years ended
December  31, 1993 and 1994 and for the nine months  ended  September  30, 1995,
respectively.

         The approximate minimum annual rental commitments of the Company, under
existing lease agreements, over the next five years, are as follows-
<TABLE>
<S>                                                                                                      <C>
                                                                                                December 31

1995...................................................................................            $192,050
1996...................................................................................             192,050
1997...................................................................................             192,050
1998...................................................................................             159,918
1999...................................................................................             111,089

                                                                                              ----------------

                                                                                                   $847,157
                                                                                              ================
</TABLE>

(11)      EMPLOYEE BENEFIT PLANS:

         The  Company   maintains  a  401(k)   profit   sharing  plan   covering
substantially  all  full-time  employees  of the  Company  who  have one year of
service and are age eighteen or older. At its discretion,  the Company may match
contributions on behalf of the eligible employees.  For the years ended December
31, 1993 and 1994 and for the nine months ended  September 30, 1995, the Company
did not make any contributions to the plan.



<PAGE>


(12)      RELATED PARTY TRANSACTIONS:

 Related Party Expenses -

         The  Company  paid  salary and  medical  benefits  for an employee of a
company  which is owned  by the  stockholder  of the  Company.  Payroll  related
expenses  for the  employee  amounted to $75,200,  $81,800,  and $86,800 for the
years ended  December 31, 1993 and 1994 and for the nine months ended  September
30, 1995, respectively.

 Related Party Receivables -

         At  December  31,  1994,  the Company had a  noninterest  bearing  loan
receivable from its stockholder of $29,278.

(13)      SIGNIFICANT CUSTOMERS:

         Four  customers  accounted  for  approximately  94%,  98%, and 93% of
revenues for the years ended  December 31, 1993 and 1994 and for the nine months
ended September 30, 1995, respectively.


<PAGE>











                               REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To the Stockholders of

         Olympic Courier Systems, Inc. and Related Company:


We have audited the  accompanying  combined  balance  sheets of Olympic  Courier
Systems,  Inc. (a New York  corporation)  and Related Company as of December 31,
1993 and 1994,  and the related  combined  statements  of income,  stockholders'
equity and cash flows for the years ended December 31, 1993 and 1994 and for the
nine months  ended  September  30,  1995.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements 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 combined  financial  statements  referred to above  present
fairly,  in all material  respects,  the financial  position of Olympic  Courier
Systems,  Inc.  and Related  Company as of December  31, 1993 and 1994,  and the
results of their  operations  and their cash flows for the years ended  December
31,  1993  and 1994  and for the  nine  months  ended  September  30,  1995,  in
conformity with generally accepted accounting principles.


                                                      ARTHUR ANDERSEN LLP


Roseland, New Jersey
March 19, 1996



<PAGE>




                          OLYMPIC COURIER SYSTEMS, INC.
                               AND RELATED COMPANY
                             COMBINED BALANCE SHEETS





                                                      ASSETS
<TABLE>
<S>                                                                                                <C>              <C>
                                                                                                           December 31
                                                                                                       1993           1994
                                                                                                     ----------      --------
CURRENT ASSETS:
  Cash and cash equivalents..................................................................           $14,046            $0
  Accounts receivable, less allowance for doubtful accounts of $170,000 and
     $187,000 in 1993 and 1994, respectively.................................................           763,338       755,272
  Prepaid expenses and other current assets (Note 3).........................................             2,661        14,860

                                                                                                     ----------      --------

         Total current assets................................................................           780,045       770,132
EQUIPMENT, net (Notes 2 and 4)...............................................................           166,955       140,612
OTHER ASSETS (Note 5)........................................................................            54,366        36,354

                                                                                                     ----------      --------

         Total assets........................................................................        $1,001,366      $947,098

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



                                                    LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Revolving line of credit (Note 8)..........................................................          $300,000      $250,000
  Capital leases (Note 8)....................................................................            36,204        13,335
  Accounts payable...........................................................................            72,480        86,875
  Accrued expenses and other current liabilities (Note 7)....................................           143,606       113,129
  Income taxes payable (Notes 2 and 9).......................................................           250,000       248,000

                                                                                                     ----------      --------

         Total current liabilities...........................................................           802,290       711,339

                                                                                                     ----------      --------

CAPITAL LEASE OBLIGATIONS (Note 8)...........................................................            14,266             0
COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS' EQUITY:
  Common stock...............................................................................                 0             0
  Additional paid-in capital.................................................................            18,000        40,000
  Retained earnings..........................................................................           166,810       195,759

                                                                                                     ----------      --------

         Total stockholders' equity..........................................................           184,810       235,759

                                                                                                     ----------      --------

         Total liabilities and stockholders' equity..........................................        $1,001,366      $947,098
                                                                                                     ==========      ========
</TABLE>
                The accompanying notes to combined  financial  statements are an
integral part of these balance sheets.


<PAGE>




                OLYMPIC COURIER SYSTEMS, INC. AND RELATED COMPANY
                          COMBINED STATEMENTS OF INCOME



<TABLE>
<S>                                                                               <C>              <C>              <C>
                                                                                                                   For The Nine
                                                                                      For The Years Ended          Months Ended
                                                                                           December 31             September 30
                                                                                           -----------             ------------
                                                                                      1993            1994             1995
                                                                                      ----            ----             ----


REVENUES (Note 2)..........................................................         $6,180,628      $5,765,889      $4,218,845
COST OF REVENUES...........................................................          3,143,946       3,140,139       2,293,569

                                                                                    ----------      ----------      ----------

         Gross profit......................................................          3,036,682       2,625,750       1,925,276
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES...............................          2,915,911       2,609,594       1,905,013

                                                                                    ----------      ----------      ----------

         Operating income..................................................            120,771          16,156          20,263

                                                                                    ----------      ----------      ----------

OTHER INCOME AND (EXPENSE):................................................
  Other income.............................................................            110,377          68,444             401
  Interest expense (Note 8)................................................            (38,759)        (31,843)        (19,573)

                                                                                    ----------      ----------      ----------

                                                                                        71,618          36,601         (19,172)

                                                                                    ----------      ----------      ----------

         Income before income taxes........................................            192,389          52,757           1,091
PRO FORMA PROVISION FOR INCOME TAXES
  (Notes 2 and 9)..........................................................             81,353          23,808               0

                                                                                    ----------      ----------      ----------

         Net income........................................................           $111,036         $28,949          $1,091
                                                                                    ==========      ==========      ==========
</TABLE>
                  The accompanying notes to combined financial statements are an
integral part of these statements.



<PAGE>




                          OLYMPIC COURIER SYSTEMS, INC.
                               AND RELATED COMPANY
                   COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1994
                AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995

<TABLE>
<S>                                                                <C>         <C>           <C>           <C>             <C>
                                                                                           Additional                      Total
                                                                       Common Stock         Paid-In        Retained    Stockholders'
                                                                     Shares     Amount      Capital        Earnings        Equity
                                                                   ----------  --------      --------      ----------     ----------
BALANCE AT DECEMBER 31, 1992..................................         140        $0          $1,000        $135,774       $136,774
  Distribution to stockholders................................           0         0               0         (80,000)       (80,000)
  Capital contribution equal to current income
     taxes of S Corporation...................................           0         0          17,000               0         17,000
  Net income..................................................           0         0               0         111,036        111,036

                                                                   ----------  --------      --------      ----------     ----------

BALANCE AT DECEMBER 31, 1993..................................         140         0          18,000         166,810        184,810
  Capital contribution equal to current income
     taxes of S Corporation...................................           0         0          22,000               0         22,000
  Net income..................................................           0         0               0          28,949         28,949

                                                                   ----------  --------      --------      ----------     ----------

BALANCE AT DECEMBER 31, 1994..................................         140         0          40,000         195,759        235,759
  Net income..................................................           0         0               0           1,091          1,091
                                                                              
                                                                   ----------  --------      --------      ----------     ----------

BALANCE AT SEPTEMBER  30, 1995................................         140        $0         $40,000        $196,850       $236,850
                                                                   ==========  ========      ========      ==========     ==========
</TABLE>
                  The accompanying notes to combined financial statements are an
integral part of these statements.
<PAGE>


                          OLYMPIC COURIER SYSTEMS, INC.
                               AND RELATED COMPANY
                        COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<S>                                                                                      <C>          <C>              <C>
                                                                                                                    For The Nine
                                                                                          For The Years Ended       Months Ended
                                                                                              December 31           September 30
                                                                                              -----------           ------------
                                                                                           1993         1994            1995
                                                                                           ----         ----            ----

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income.......................................................................       $111,036      $28,949            $1,091
  Adjustments to reconcile net income to net cash provided by operating activities -
     Depreciation and amortization.................................................         65,533       62,427            31,483
     Capital contribution for taxes of S Corporation...............................         17,000       22,000                 0
     Changes in operating assets and liabilities-
     (Increase) decrease in accounts receivable, net...............................       (180,725)       8,066           (19,309)
     (Increase) decrease in prepaid expenses and other current assets..............         11,109      (12,199)          (17,616)
     Decrease in other assets......................................................         15,391       13,942             4,020
     Increase (decrease) in accounts payable.......................................         67,221       14,395            (1,714)
     Increase (decrease) in accrued expenses and other current liabilities.........        (72,220)     (30,477)           31,137
     Increase (decrease) in income taxes payable...................................         55,000       (2,000)                0

                                                                                       ------------   ----------        ----------

         Net cash provided by operating activities.................................         89,345      105,103            29,092

                                                                                       ------------   ----------        ----------

CASH FLOWS FROM INVESTING ACTIVITIES --
  Purchases of equipment...........................................................        (34,113)     (32,014)           (6,827)

                                                                                       ------------   ----------        ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds (payments) under revolving line of credit...............................         50,000      (50,000)                0
  Payments under capital lease obligations.........................................        (43,044)     (37,135)          (13,335)
  Distribution to stockholders.....................................................        (80,000)           0                 0

                                                                                       ------------   ----------        ----------

         Net cash used in financing activities.....................................        (73,044)     (87,135)          (13,335)

                                                                                       ------------   ----------        ----------

         Net increase (decrease) in cash and cash equivalents......................        (17,812)     (14,046)            8,930
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD...................................         31,858       14,046                 0

                                                                                       ------------   ----------        ----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD.........................................        $14,046           $0            $8,930

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


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest...........................................................        $38,759      $31,843           $19,573
  Cash paid for income taxes.......................................................          1,314        6,175             5,104

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

NONCASH TRANSACTIONS:
  Capital lease obligations incurred...............................................        $44,151           $0                $0
                                                                                       ============   ==========        ==========
</TABLE>
                  The accompanying notes to combined financial statements are an
integral part of these statements.


<PAGE>




                OLYMPIC COURIER SYSTEMS, INC. AND RELATED COMPANY
                     NOTES TO COMBINED FINANCIAL STATEMENTS




(1)       BUSINESS AND ORGANIZATION:

         The accompanying  combined financial statements include the accounts of
Olympic Courier Systems,  Inc. and Qualco Courier Systems, Inc. (collectively,
the Company).

         The Company and its  stockholders  entered into a definitive  agreement
with  Consolidated  Delivery &  Logistics,  Inc.  ("CDL")  pursuant to which the
Company  merged with CDL (the  "Merger") on November 27, 1995.  All  outstanding
shares of the Company were  exchanged  for cash and shares of CDL's Common Stock
concurrent  with the  consummation  of the initial public offering of the common
stock of CDL.

(2)       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

 Basis of Presentation -

         The companies listed in Note 1 were related through  stockholders  with
common ownership in each company. All significant intercompany transactions have
been eliminated in combination.

Use of Estimates in the Preparation of the Financial Statements -

         The preparation of the combined 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 combined
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results could differ from those estimates.

Equipment -

         Equipment  is recorded  at cost.  Depreciation  is  computed  using the
straight-line  method over the  estimated  useful  lives of the  assets.  Assets
subject to capital leases are amortized over the terms of the leases.

 Revenue Recognition -

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



<PAGE>


 Income Taxes -

         The Company has elected to be treated for federal  income tax  purposes
as an S  Corporation  and,  accordingly,  any  income  tax  liabilities  are the
responsibility  of  the  stockholders.  New  York  City  does  not  recognize  S
Corporation status and therefore,  New York City taxes have been provided for in
the  accompanying   financial  statements.   For  purposes  of  these  financial
statements, federal and state income taxes have been provided for the Company as
if the Company  had filed C  Corporation  tax  returns.  The current  income tax
expense is reflected as an increase to additional paid-in capital. The Company's
S Corporation  status terminated with the effective date of the Merger discussed
in Note 1.

 Reclassifications-

         Certain  reclassifications  have  been made to prior  years'  financial
statements to conform to the current period presentation.

(3)       PREPAID EXPENSES AND OTHER CURRENT ASSETS:

         Prepaid expenses and other current assets consist of the following -
<TABLE>
<S>                                                                                      <C>            <C>
                                                                                               December 31
                                                                                             1993        1994
                                                                                            ------      -------
Prepaid insurance...................................................................            $0       $1,089
Other...............................................................................         2,661       13,771

                                                                                            ------      -------

                                                                                            $2,661      $14,860
                                                                                            ======      =======
</TABLE>
(4)       EQUIPMENT:

         Equipment consists of the following -
<TABLE>
<S>                                                                 <C>                <C>           <C>
                                                                                            December 31
                                                                    Useful Lives        1993            1994
                                                                    ------------        ----            ----

Furniture, fixtures and equipment.............................       3-5 years         $404,954         $437,508
Less - accumulated depreciation and amortization..............                         (237,999)        (296,896)

                                                                                       ---------        --------

                                                                                       $166,955         $140,612
                                                                                       =========        ========
</TABLE>

(5)       OTHER ASSETS:

         Other assets consist of the following -
<TABLE>
<S>                                                                                       <C>           <C>
                                                                                               December 31
                                                                                             1993        1994

Security deposits...................................................................        $40,745      $32,284
Intangible assets (Note 6)..........................................................          8,140        4,070
Other...............................................................................          5,481            0

                                                                                          ---------     --------

                                                                                            $54,366      $36,354
                                                                                          =========     ========
</TABLE>

(6)       INTANGIBLE ASSETS:

         In 1991, Qualco Courier Systems, Inc. purchased a customer list. The 
purchase price was capitalized as an intangible asset and is included in other 
assets.  The  customer  list is being  amortized  over a five-year period. 
Intangible assets consist of the following -
<TABLE>
<S>                                                                                       <C>           <C>
                                                                                               December 31
                                                                                             1993        1994

Customer list.......................................................................        $20,350      $20,350
Less - accumulated amortization.....................................................        (12,210)     (16,280)

                                                                                         ------------    -------

                                                                                             $8,140       $4,070
                                                                                         ============    =======
</TABLE>
(7)       ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

         Accrued expenses and other current liabilities consist of the 
following  -
<TABLE>
<S>                                                                                        <C>         <C>
                                                                                               December 31
                                                                                            1993         1994
                                                                                            ----         ----

Payroll and related benefits....................................................           $51,280      $73,165
Other accrued liabilities.......................................................            92,326       39,964

                                                                                         ============    =======
</TABLE>

                                        

(8)       REVOLVING LINE OF CREDIT AND CAPITAL LEASES:

         The Company has a $350,000 time note agreement with a bank. At December
31, 1993 and 1994,  the amounts  outstanding  under the time note agreement were
$300,000 and $250,000,  respectively. The time note is rolled over every 90 days
and is paid in full once a year.  Borrowings  under the time note are secured by
the  Company's  assets and the personal  guarantee of the owners.  The term note
requires monthly interest payments at a rate equal to 1.5% above the banks prime
rate (6.0% and 8.5% at December 31, 1993 and 1994, respectively).

         The  Company  leased  certain  equipment  under   noncancellable  lease
agreements  which  expired in May 1995.  At December  31, 1994,  minimum  annual
rental commitments under noncancellable leases were as follows -
<TABLE>
<C>                                                                                                        <C>    
1995.............................................................................................          $13,818
Less - amounts representing interest.............................................................              483

                                                                                                      ------------

         Net minimum lease payments..............................................................          $13,335
                                                                                                      ============
</TABLE>

(9)       INCOME TAXES:

         The following  income tax  information is presented in accordance  with
Statement of Financial  Accounting  Standards No. 109 as if the Company had been
subject to Federal and state income taxes throughout the periods presented.

         The components of the provision for income taxes are as follows -
<TABLE>
<S>                                                                          <C>            <C>        <C>
                                                                                                       For The Nine
                                                                              For The Years Ended     Months Ended
                                                                                  December 31          September 30
                                                                                  -----------          ------------
                                                                               1993         1994           1995
                                                                               ----         ----           ----

Federal................................................................         $58,666      $13,633             $0
State..................................................................          22,687       10,175              0

                                                                            -----------      -------          -----

                                                                                $81,353      $23,808             $0
                                                                            ===========      =======          =====
</TABLE>
         The  differences  in federal  income  taxes  provided  and the  amounts
determined  by applying the  statutory  tax rate (34%) to income  before  income
taxes result from the following -
<TABLE>
<S>                                                                          <C>          <C>          <C>
                                                                                                       For The Nine
                                                                              For The Years Ended     Months Ended
                                                                                  December 31          September 30
                                                                                  -----------          ------------
                                                                               1993         1994           1995
                                                                               ----         ----           ----

Income tax at statutory rate...........................................       $65,412     $17,937         $371
Add -..................................................................
  State income taxes net of Federal benefit............................        14,973       6,716            0
  Other................................................................           968        (845)        (371)

                                                                            -----------   -------         -----

                                                                              $81,353     $23,808           $0
                                                                            ===========   =======         =====
</TABLE>

         The  Company  files its  Federal,  state and New York City  income  tax
returns on the cash basis of accounting.  Reflected in the accompanying  balance
sheets is a current liability of approximately $250,000 and $248,000 at December
31, 1993 and 1994, respectively,  which represents the tax effect of differences
in the  recognition  of  revenues  and  expenses  between the cash basis and the
accrual basis of accounting.

(10)      COMMITMENTS AND CONTINGENCIES:

 Litigation -

         The Company is, from time to time, a party to litigation arising in the
normal course of business.  Management  believes that none of these actions will
have a  material  adverse  effect  on  the  financial  position  or  results  of
operations of the Company.

 Commitments -

         The Company leases its operating facilities under operating leases with
lease  terms of greater  than one year.  Rent  expense  related to these  leases
amounted to $195,182,  $197,469  and  $143,716 for the years ended  December 31,
1993 and 1994 and for the nine months ended September 30, 1995, respectively.



<PAGE>


         The approximate minimum annual rental commitments of the Company, under
existing lease agreements, over the next five years, are as follows -
<TABLE>
<S>                                                                                                         <C>
                                                                                                   December 31,

1995........................................................................................          $163,944
1996........................................................................................           160,576
1997........................................................................................           158,977
1998........................................................................................           122,556
1999........................................................................................           125,665
Thereafter..................................................................................           174,206

                                                                                                 -----------------

                                                                                                      $905,924
                                                                                                 =================
</TABLE>
<PAGE>



                              REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Stockholders of

         American Courier Express, Inc.:


We have audited the  accompanying  balance sheets of American  Courier  Express,
Inc. (a New Jersey corporation) as of January 31, 1994 and 1995, and the related
statements  of  operations,  stockholders'  equity  and cash flows for the years
ended  January  31, 1994 and 1995 and for the nine months  ended  September  30,
1995.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements 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 financial  statements  referred to above present fairly, in
all material respects,  the financial position of American Courier Express, Inc.
as of January 31, 1994 and 1995,  and the results of its operations and its cash
flows for the years  ended  January  31,  1994 and 1995 and for the nine  months
ended  September 30, 1995,  in conformity  with  generally  accepted  accounting
principles.


                                                     ARTHUR ANDERSEN LLP


Roseland, New Jersey
March 19, 1996



<PAGE>




                         AMERICAN COURIER EXPRESS, INC.
                                 BALANCE SHEETS


                                                      ASSETS
<TABLE>
<S>                                                                                                    <C>            <C>
                                                                                                              January 31
                                                                                                          1994          1995
                                                                                                          ----          ----

CURRENT ASSETS:
  Cash and cash equivalents.......................................................................        $92,832       $13,567
  Accounts receivable, less allowance for doubtful accounts of $30,000 as of
     January 31, 1994 and $31,000 as of January 31, 1995 .........................................        366,156       502,929
  Prepaid expenses and other current assets (Note 4)..............................................         57,268       123,204
  Stockholder receivables (Note 10)...............................................................          3,500             0

                                                                                                          -------       -------

         Total current assets.....................................................................        519,756       639,700
EQUIPMENT, net (Note 3)...........................................................................        112,996       123,786
LONG-TERM STOCKHOLDERS RECEIVABLES (Note 10)......................................................              0        37,885
OTHER ASSETS......................................................................................          8,957         8,582

                                                                                                          -------       -------

         Total assets.............................................................................       $641,709      $809,953

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



                                                     LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current portion of long-term debt and capital lease obligations (Note 7)........................        $32,737       $27,263
  Accounts payable................................................................................         41,463       114,537
  Accrued expenses and other current liabilities (Note 5).........................................        149,686       310,436
  Federal and state income taxes payable..........................................................        167,368       189,640

                                                                                                          -------       -------

         Total current liabilities................................................................        391,254       641,876

                                                                                                          -------       -------



  LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (Note 7)...........................................         80,960        62,801

                                                                                                          -------       -------

  DEFERRED INCOME TAXES...........................................................................         17,051        14,985

                                                                                                          -------       -------

  COMMITMENTS AND CONTINGENCIES (Note 9)
  STOCKHOLDERS' EQUITY:
  Common stock; no par value; 2,500 shares authorized; 958 shares outstanding.....................          6,240         6,240
  Additional paid-in capital......................................................................         16,170        16,170
  Retained earnings...............................................................................        152,260        90,107
  Less- Treasury stock............................................................................        (22,226)      (22,226)

                                                                                                          -------       -------

         Total stockholders' equity...............................................................        152,444        90,291

                                                                                                          -------       -------

         Total liabilities and stockholders' equity...............................................       $641,709      $809,953
                                                                                                         ========      ========
</TABLE>
                    The  accompanying  notes  to  financial  statements  are  an
integral part of these balance sheets.


<PAGE>



                         AMERICAN COURIER EXPRESS, INC.
                            STATEMENTS OF OPERATIONS

<TABLE>
<S>                                                                                   <C>             <C>             <C>
                                                                                                                     For The Nine
                                                                                         For The Years Ended        Months Ended
                                                                                              January 31             September 30
                                                                                              ----------             ------------
                                                                                          1994           1995            1995
                                                                                          ----           ----            ----


REVENUES (Note 2)...............................................................        $2,532,797     $4,146,242      $3,149,405
COST OF REVENUES................................................................         1,529,859      2,803,495       2,398,960

                                                                                        ----------     ----------      ----------

         Gross profit...........................................................         1,002,938      1,342,747         750,445
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES....................................           828,592      1,421,552         598,240

                                                                                        ----------     ----------      ----------

         Operating income (loss)................................................           174,346        (78,805)        152,205

                                                                                        ----------     ----------      ----------

OTHER INCOME (EXPENSE)
  Other income (expense)........................................................               273            696          (3,422)
  Interest expense..............................................................           (18,307)       (11,949)         (8,885)

                                                                                        ----------     ----------      ----------

                                                                                           (18,034)       (11,253)        (12,037)

                                                                                        ----------     ----------      ----------

         Income (loss) before income taxes......................................           156,312        (90,058)        139,898
PRO FORMA PROVISION FOR (BENEFIT FROM) INCOME TAXES (Notes 2 and 8).............
                                                                                            66,694        (27,905)         56,389

                                                                                        ----------     ----------      ----------

         Net income (loss)......................................................           $89,618       $(62,153)        $83,509
                                                                                        ==========     ==========      ==========
</TABLE>
                      The  accompanying  notes to  financial  statements  are an
integral part of these statements.



<PAGE>


                         AMERICAN COURIER EXPRESS, INC.
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                  FOR THE YEARS ENDED JANUARY 31, 1994 AND 1995
                  AND THE NINE MONTHS ENDED SEPTEMBER 30, 1995

<TABLE>
<S>                                                     <C>           <C>         <C>           <C>          <C>            <C>
                                                                               Additional                                   Total
                                                          Shares     Amount     Paid-In       Retained      Treasury   Stockholders'
                                                            Common Stock         Capital      Earnings        Stock        Equity
                                                        ----------  --------     --------      --------      --------      --------
BALANCE AT JANUARY 31, 1993.........................        958       $6,240      $16,170       $62,642      $(12,491)     $72,561
  Purchase of treasury stock........................          0            0            0             0        (9,735)      (9,735)
  Net income........................................          0            0            0        89,618             0       89,618

                                                        ----------  --------     --------      --------      --------      -------

BALANCE AT JANUARY 31, 1994.........................        958        6,240       16,170       152,260       (22,226)     152,444
  Net loss..........................................          0            0            0       (62,153)            0      (62,153)

                                                        ----------  --------     --------      --------      --------      -------

BALANCE AT  JANUARY 31, 1995........................        958        6,240       16,170        90,107       (22,226)      90,291
  Net income........................................          0            0            0        83,509             0       83,509
  Adjustment to conform fiscal year-end.............          0            0            0         4,449             0        4,449

                                                        ----------  --------     --------      --------      --------      -------

BALANCE AT SEPTEMBER 30, 1995.......................        958       $6,240      $16,170      $178,065      ($22,226)    $178,249
                                                        ==========  ========     ========      ========      ========     ========
</TABLE>
                       The  accompanying  notes to financial  statements  are an
integral part of this statement.



<PAGE>


                         AMERICAN COURIER EXPRESS, INC.
                            STATEMENTS OF CASH FLOWS
<TABLE>
<S>                                                                                        <C>           <C>             <C>
                                                                                                                     For The Nine
                                                                                           For The Years Ended       Months Ended
                                                                                                January 31           September 30
                                                                                                ----------           ------------
                                                                                           1994           1995           1995
                                                                                           ----           ----           ----

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss).............................................................             $89,618      $(62,153)       $83,509
  Adjustments to reconcile net income (loss) to net
     cash provided by (used in) operating activities -
       Net (income) loss for the one month ended
         January 31 in order to conform to the
         nine-month presentation................................................                   0             0          4,449
       Depreciation and amortization............................................              20,134        34,994         29,775
  Changes in operating assets and liabilities-
    Increase in accounts receivable.............................................            (168,784)     (136,773)      (140,865)
     Increase in prepaid expenses and other
       current assets...........................................................             (38,482)      (62,436)       (70,980)
     (Increase) decrease in stockholders receivables............................               4,571       (37,885)             0
     (Increase) decrease in other assets........................................              (2,699)          375         (3,801)
     Increase in accounts payable...............................................              18,550        73,074            148
     Increase (decrease) in accrued expenses and other current
       liabilities..............................................................             103,314       160,751        (13,052)
     Increase in Federal and state income taxes
       payable..................................................................              92,408        22,272         48,496
     Increase (decrease) in deferred income taxes...............................               8,235        (2,067)             0

                                                                                       ------------- -------------- ---------------

       Net cash provided by (used in) operating
         activities.............................................................             126,865        (9,848)       (62,321)

                                                                                       ------------- -------------- ---------------

CASH FLOWS FROM INVESTING ACTIVITIES --
     Purchases of equipment.....................................................             (57,696)      (45,784)       (16,526)

                                                                                       ------------- -------------- ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Short-term borrowings......................................................                   0             0        100,000
     Principal payments under long-term debt and capital leases.................             (29,079)      (23,633)       (24,760)
     Purchase of treasury stock.................................................              (9,735)            0              0

                                                                                       ------------- -------------- ---------------

         Net cash provided by (used in) financing activities....................             (38,814)      (23,633)        75,240

                                                                                       ------------- -------------- ---------------

         Net increase (decrease) in cash and cash equivalents...................              30,355       (79,265)        (3,607)


CASH AND CASH EQUIVALENTS AT BEGINNING  OF PERIOD                                             62,477        92,832         13,567

                                                                                       ------------- -------------- ---------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD......................................             $92,832       $13,567         $9,960

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


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid for interest.....................................................             $18,307       $11,949         $8,885
     Cash paid for income taxes.................................................              14,880             0              0

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


NONCASH TRANSACTION:
  Capital lease obligations incurred............................................                  $0            $0        $19,494
                                                                                       ============= ============== ===============
</TABLE>
                       The  accompanying  notes to financial  statements  are an
integral part of this statement.


<PAGE>



                         AMERICAN COURIER EXPRESS, INC.
                          NOTES TO FINANCIAL STATEMENTS




(1)       BUSINESS AND ORGANIZATION:

         American  Courier  Express, Inc.(the "Company") is a courier/messenger
service  offering  envelope and small parcel deliveries primarily within the New
York City Metropolitan area.

         The Company and its  stockholders  entered into a definitive  agreement
with  Consolidated  Delivery &  Logistics,  Inc.  ("CDL")  pursuant to which the
Company  merged with CDL (the  "Merger") on November 27, 1995.  All  outstanding
shares of the Company were  exchanged  for cash and shares of CDL's Common Stock
concurrent  with the  consummation  of the initial public offering of the common
stock of CDL.

(2)       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Use of Estimates in the Preparation of the Financial Statements -

         The preparation of the combined 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 combined
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results could differ from those estimates.

Equipment -

         Equipment  is recorded  at cost.  Depreciation  is  computed  using the
straight-line  method over the  estimated  useful  lives of the  assets.  Assets
subject to capital leases are amortized over the terms of the leases.

 Revenue Recognition -

         Revenue is  recognized  when the shipment is completed and expenses are
recognized as incurred.

 Income Taxes -

         Deferred  income taxes are provided for  differences in the recognition
of revenue and  expense  for tax and  financial  reporting  purposes.  Temporary
differences result primarily from accelerated  depreciation and amortization for
tax purposes and various  accruals and  reserves  which are  deductible  for tax
purposes in future periods.



<PAGE>


 Basis of Presentation -

         The  Company  has  historically  used a  January  31  fiscal  year-end;
however, to be consistent with CDL and in connection with the merger,  financial
statements  for the nine months ended  September 30 are  presented  herein.  The
duplication  of the results of  operations  for the one month ended  January 31,
1995 has been reflected as adjustments to retained earnings.

 Reclassifications-

         Certain  reclassifications  have  been made to prior  years'  financial
statements to conform to current period presentation.

(3)       EQUIPMENT:

         Equipment consists of the following -
<TABLE>
<S>                                                                      <C>            <C>            <C>
                                                                                               January 31
                                                                         Useful Lives      1994         1995
                                                                         ------------     --------     --------
Transportation equipment..........................................         5 years        $101,438     $110,187
Other equipment...................................................        5-7 years         67,550       91,880

                                                                                          --------     --------

                                                                                           168,988      202,067
Less - Accumulated depreciation and amortization..................                         (55,992)     (78,281)

                                                                                          --------     --------

                                                                                          $112,996     $123,786
                                                                                          ========     ========
</TABLE>

         Leased equipment under capital leases included in equipment above 
consists of the following-
<TABLE>
<S>                                                                                      <C>         <C>
                                                                                             January 31
                                                                                         1994          1995
                                                                                         ----          ----

Transportation equipment......................................................          $101,438      $110,187
Less- Accumulated amortization................................................           (35,643)      (43,914)

                                                                                        ---------     --------

                                                                                         $65,795       $66,273
                                                                                        =========     ========
</TABLE>

(4)       PREPAID EXPENSES AND OTHER CURRENT ASSETS:

         Prepaid expenses and other current assets consist of the following -
<TABLE>
<S>                                                                                    <C>          <C>
                                                                                            January 31
                                                                                        1994         1995
                                                                                      ---------   --------
Prepaid insurance..............................................................             $0     $10,082
Deferred tax asset.............................................................         57,268     111,923
Other..........................................................................              0       1,199

                                                                                      ---------   --------

                                                                                       $57,268    $123,204
                                                                                      ========    ========
</TABLE>
<PAGE>


(5)       ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

         Accrued expenses and other current liabilities consist of the 
following -
<TABLE>
<S>                                                                                     <C>          <C>
                                                                                             January 31
                                                                                         1994          1995
                                                                                         ----          ----

Insurance.....................................................................          $112,500      $247,500
Independent contractors.......................................................                 0        30,745
Payroll and payroll related...................................................            37,186        30,749
Other.........................................................................                 0         1,442

                                                                                     -----------      --------

                                                                                        $149,686      $310,436
                                                                                     ===========      ========
</TABLE>
(6)       SHORT-TERM BORROWINGS:

         During  February  1995,  the Company  entered  into a $100,000  line of
credit  agreement  payable to a bank, which bears interest at prime plus 1%. The
line of  credit is  collateralized  by the  Company's  accounts  receivable  and
equipment.

         Borrowings under the line of credit averaged  $78,261,  with an average
interest  rate of 9.86% for the nine months ended  September  30, 1995.  Maximum
borrowings were $100,000 for the nine months ended September 30, 1995.

(7)       LONG-TERM DEBT:

         Long-term debt consists of the following -
<TABLE>
<S>                                                                                    <C>           <C>
                                                                                             January 31
                                                                                        1994          1995
                                                                                        ----          ----

Capital lease obligations......................................................         $66,874      $48,657
Related party loan - note payable due to the parents of a stockholder, payable in
  equal monthly installments of $835 including interest at 10.375%, through 2001
  (Note 10)....................................................................          46,823       41,407

                                                                                     -----------     -------

                                                                                        113,697       90,064
Less - Current maturities......................................................         (32,737)     (27,263)

                                                                                     -----------     -------

                                                                                        $80,960      $62,801
                                                                                     ===========     =======
</TABLE>
<PAGE>


         The aggregate amounts of annual principal  maturities of long-term debt
(excluding capital lease obligations) are as follows -
<TABLE>
<S>                                                                                                         <C>
                                                                                                    January 31
                                                                                                  ---------------
1996.........................................................................................           $6,007
1997.........................................................................................            6,661
1998.........................................................................................            7,386
1999.........................................................................................            8,190
2000.........................................................................................            9,081
Thereafter...................................................................................            4,082

                                                                                                  ---------------

         Total...............................................................................          $41,407
                                                                                                  ===============
</TABLE>

         The Company leases certain transportation equipment under capital lease
agreements which expire at various dates.  Minimum annual payments under capital
leases are as follows -
<TABLE>
<S>                                                                                                         <C>
                                                                                                    January 31
                                                                                                  ---------------
1996.........................................................................................          $24,411
1997.........................................................................................           19,301
1998.........................................................................................            9,548

                                                                                                  ---------------

         Total minimum payments..............................................................           53,260
Less - Amounts representing interest.........................................................           (4,603)

                                                                                                  ---------------

          Net minimum payments...............................................................           48,657
Less - Current portion of obligations under capital leases...................................          (21,256)

                                                                                                  ---------------

Long-term portion of obligations under capital leases........................................          $27,401
                                                                                                  ===============
</TABLE>

(8)       INCOME TAXES:

         The  stockholders  of the  Company  elected C  corporation  status  for
Federal and state income tax purposes.  The following  income tax information is
presented in accordance  with  Statement of Financial  Accounting  Standards No.
109.  Income  tax  provision  (benefit)  and  deferred  income  tax  assets  and
liabilities have been determined in accordance with such statement.
<TABLE>
<S>                                                                      <C>             <C>               <C>
                                                                                                         For The Nine
                                                                             For The Years Ended        Months Ended
                                                                                 January 31              September 30
                                                                                 ----------              ------------
                                                                             1994           1995             1995
                                                                             ----           ----             ----


Federal...........................................................          $51,136       $(21,396)        $43,798
State.............................................................           15,558         (6,509)         12,591

                                                                        --------------     --------        -------

                                                                            $66,694       ($27,905)        $56,389
                                                                        ==============     ========        =======
</TABLE>
<PAGE>


         The  differences  in Federal  income  taxes  provided  and the  amounts
determined  by applying the  statutory  tax rate (34%) to income  (loss)  before
income taxes result from the following -
<TABLE>
<S>                                                                          <C>            <C>            <C>
                                                                                                        For The Nine
                                                                             For The Years Ended       Months Ended
                                                                                 January 31             September 30
                                                                                 ----------             ------------
                                                                             1994           1995            1995
                                                                             ----           ----            ----


Tax statutory rate................................................           $53,146       ($30,620)         $47,565
Add (deduct) -
  State income taxes (net)........................................            10,269         (4,296)           8,310
  Nondeductible expenses..........................................             3,279          7,011              514

                                                                        --------------     --------          -------

                                                                             $66,694       ($27,905)         $56,389
                                                                        ==============     ========          =======
</TABLE>
         The Company files their Federal and state tax returns on the cash basis
of  accounting.  Reflected  in  the  accompanying  balance  sheets  are  current
liabilities  of  $167,368  and  $189,640  at January  31,  1994 and 1995,  which
represent  the tax effect of  differences  in the  recognition  of  revenue  and
expenses between the cash basis and accrual basis of accounting.

(9)       COMMITMENTS AND CONTINGENCIES:

Litigation -

         The Company is, from time to time, a party to litigation arising in the
normal course of business.  Management  believes that none of these actions will
have a  material  adverse  effect  on  the  financial  position  or  results  of
operations of the Company.

 Commitments -

         The Company leases,  under operating leases,  office and transportation
equipment  with lease terms of greater than one year.  Rent  expense  related to
these  leases  amounted  to  $42,030,  $78,234,  and $60,315 for the years ended
January 31, 1994 and 1995 and for the nine months ended September 30, 1995.

         The approximate minimum annual rental commitments of the Company, under
existing lease agreements, are as follows -
<TABLE>
<S>                                                                                                         <C>
                                                                                                    January 31
                                                                                                  ---------------
1996.....................................................................................               $74,304
1997.....................................................................................                71,180
1998.....................................................................................                63,372
1999.....................................................................................                36,967

                                                                                                  ---------------

                                                                                                       $245,823
                                                                                                  ===============
</TABLE>
<PAGE>


(10)      RELATED PARTY TRANSACTIONS:

 Affiliate -

         The Company is affiliated through common ownership with another courier
company,  Medexpress Systems, Inc.  ("Medexpress").  The officers of the Company
have a 50%  interest  in  Medexpress.  At January  31,  1995,  the Company had a
receivable due from  Medexpress  totaling  $525,  which are included in accounts
receivable in the accompanying  balance sheets.  At January 31, 1994, there were
no amounts due from Medexpress to the Company.

 Related Party Receivables -

         At January 31, 1994 and 1995, the Company had noninterest bearing loans
receivable from  stockholders of $3,500 and $37,885.

 Related Party Loan -

         At January  31, 1994 and 1995,  the  Company had a loan  payable to the
parents of a  stockholder  of $46,823  and  $41,407,  respectively.  The loan is
payable in equal monthly  installments of $835,  including  interest at 10.375%,
through 2001 (see Note 7).


<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 1996 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 1, 1996
concerning each of the Company's executive officers:



                   Name                  Age                      Position

   John Mattei              67   Chairman of the Board and Chief Executive
                                    Officer
   William T. Brannan       47   President, Chief Operating Officer and Director
   Joseph G. Wojak          58   Executive Vice President, Chief Financial
                                    Officer, Secretary and Director
   William T. Beaury        43   Vice Chairman - Strategic Planning and Director
   Norton F. Hight          62   Vice President - Corporate Development
   Filbert A. DiNardo       52   Vice President - Human Resources


 .........John Mattei has served as the Chairman of the Board and Chief Executive
Officer of the Company since June 1994.  From 1988 to June 1994, Mr. Mattei 
founded and served as  President  of J.K.M. Associates, Inc., a consulting  firm
which  provides  financial  advisory  services  with an emphasis on mergers and
acquisitions and financial restructuring.

 .........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.

     .........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 and SureWay Logistics
Inc., since 1984 and October 1993,  respectively.  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.

     .........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.  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.)  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 currently serves on
the  Board of  Directors.  Mr.  Hight  has also  been a  member  of the  Florida
Messenger Association since 1988 where he also serves on the Board of Directors.

 .........Filbert A. DiNardo has been the Vice President - Human Resources of the
Company since July 1995.  Prior  thereto,  from September 1990 to July 1995, Mr.
DiNardo  served as Vice  President,  Human  Resources,  TNT  Express  Worldwide,
Americas  Region  - US  Operations,  a major  European-based  overnight  express
delivery  company,  where his major  responsibilities  included  development  of
policies and procedures,  executive  recruitment,  development and management of
health and benefits plans, and management development.  Mr. DiNardo has resigned
his position with the Company, effective April 12, 1996.

Item 11.  Executive Compensation

       The Company hereby  incorporates by reference the applicable  information
from its definitive proxy statement for its 1996 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 1996 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 1996 Annual Meeting of Stockholders.



<PAGE>



IV-9


                                                      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:
       Report of Independent Public Accountants..............................................................S-1
       Schedule II - Consolidated Valuation and Qualifying Accounts - Period from inception
           through December 31, 1994 and for the year ended December 31, 1995................................S-2

COMBINED FOUNDING COMPANIES:
       Report of Independent Public Accountants..............................................................S-3
       Schedule II - Combined Valuation and Qualifying Accounts - For the years ended
           December 31, 1993 and 1994, the six months ended June 30, 1995 and the nine
           months ended September 30, 1995...................................................................S-4
</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

        Exhibit                                                 Description
         Number
          2.1            Agreement  and  Plan of  Reorganization,  dated  as of
                         September 8, 1995, by and  among Consolidated  Delivery
                         & Logistics, Inc., American Courier  Acquisition Corp.,
                         American Courier Express, Inc. and the Stockholders
                         named therein (filed as Exhibit 2.1 to the Company's 
                         Registration Statement on Form S-1 (File No. 33-97008)
                         and incorporated herein by reference)

          2.2            Agreement  and  Plan  of  Reorganization,  dated  as of
                         September 8, 1995, by and among Consolidated Delivery &
                         Logistics,   Inc.,  Bestway  Distribution   Acquisition
                         Corp.,  Bestway  Distribution  Services,   Inc.,  Crown
                         Courier  Systems,   Inc.  and  the  Stockholders  named
                         therein   (filed  as  Exhibit  2.2  to  the   Company's
                         Registration Statement on Form S-1 (File
                         No. 33-97008) and incorporated herein by reference).

          2.3            Agreement  and  Plan  of  Reorganization,  dated  as of
                         September 8, 1995, by and among Consolidated Delivery &
                         Logistics,  Inc.,  Click Messenger  Acquisition  Corp.,
                         Click Messenger Service,  Inc., Click Messenger Service
                         of N.Y.,  Inc.,  Meteor  Messenger  Service,  Inc. (t/a
                         Prime time), Cassidy, Ltd., DMK Services,  Ltd. and the
                         Stockholders named therein (filed as Exhibit 2.3 to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

          2.4            Agreement  and  Plan  of  Reorganization,  dated  as of
                         September 8, 1995, by and among Consolidated Delivery &
                         Logistics, Inc., Court Courier Acquisition Corp., Court
                         Courier  Systems,   Inc.,  Court  Courier  -  Revex  of
                         Connecticut,  Inc. and the  Stockholders  named therein
                         (filed as  Exhibit  2.4 to the  Company's  Registration
                         Statement on Form S-1 (File
                         No. 33-97008) and incorporated herein by reference).

          2.5            Agreement  and  Plan  of  Reorganization,  dated  as of
                         September 8, 1995, by and among Consolidated Delivery &
                         Logistics,  Inc.,  Distribution  Solutions  Acquisition
                         Corp.,  Distribution Solutions International,  Inc. and
                         the Stockholder  named therein (filed as Exhibit 2.5 to
                         the Company's  Registration Statement on Form S-1 (File
                         No. 33-97008) and incorporated herein by reference).

          2.6            Agreement  and  Plan  of  Reorganization,  dated  as of
                         September 8, 1995, by and among Consolidated Delivery &
                         Logistics,  Inc.,  Clayton/National  Acquisition Corp.,
                         Clayton/National   Courier  Systems,   Inc.,   National
                         Express  Company,   Inc.  and  the  Stockholders  named
                         therein   (filed  as  Exhibit  2.6  to  the   Company's
                         Registration  Statement on Form S-1 (File No. 33-97008)
                         and incorporated herein by reference).

          2.7            Agreement  and  Plan of  Reorganization,  dated  as of
                         September 8, 1995, by and among Consolidated Delivery &
                         Logistics, Inc., Olympic  Courier Acquisition  Corp.,
                         Olympic Courier Systems, Inc.,  Qualco Courier Systems,
                         Inc. and the Stockholders  named therein (filed  as
                         Exhibit  2.7 to the  Company's  Registration  Statement
                         on Form S-1 (File No. 33-97008) and incorporated herein
                         by reference).

          2.8            Agreement  and  Plan  of  Reorganization,  dated  as of
                         September 8, 1995, by and among Consolidated Delivery &
                         Logistics,  Inc.,  Orbit/Lightspeed  Acquisition Corp.,
                         Orbit/Lightspeed  Courier  Systems,  Inc., NWC Trucking
                         Corp.,  BMBA,  Inc.,  O/L  Warehousing,  Inc.  and  the
                         Stockholders named therein (filed as Exhibit 2.8 to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

          2.9            Agreement  and  Plan  of  Reorganization,  dated  as of
                         September 8, 1995, by and among Consolidated Delivery &
                         Logistics,  Inc., Securities Courier Acquisition Corp.,
                         Securities  Courier  Corporation  and  the  Stockholder
                         named  therein  (filed as Exhibit 2.9 to the  Company's
                         Registration  Statement on Form S-1 (File No. 33-97008)
                         and incorporated herein
                         by reference).

          2.10           Agreement  and  Plan  of  Reorganization,  dated  as of
                         September 8, 1995, by and among Consolidated Delivery &
                         Logistics,  Inc., Silver Star Acquisition Corp., Silver
                         Star Express,  Inc.,  All World Brokers,  Inc.,  Parcel
                         Delivery Company of Florida,  Inc., Silver Star Express
                         North,  Inc. and the Stockholders  named therein (filed
                         as Exhibit 2.10 to the Company's Registration Statement
                         on Form S-1 (File No. 33-97008) and incorporated herein
                         by reference).

          2.11           Agreement  and  Plan  of  Reorganization,  dated  as of
                         September 8, 1995, by and among Consolidated Delivery &
                         Logistics, Inc., SureWay Air Acquisition Corp., SureWay
                         Air  Traffic  Corporation  and the  Stockholders  named
                         therein   (filed  as  Exhibit  2.11  to  the  Company's
                         Registration  Statement on Form S-1 (File No. 33-97008)
                         and incorporated herein
                         by reference).

          2.12           Amendment,  dated as of November 7, 1995,  to Agreement
                         and Plan of  Reorganization,  dated as of  September 8,
                         1995, by and among  Consolidated  Delivery & Logistics,
                         Inc.,   Click  Messenger   Acquisition   Corp.,   Click
                         Messenger  Service,  Inc.,  Click Messenger  Service of
                         N.Y., Inc., Meteor Messenger  Service,  Inc. (t/a Prime
                         time),  Cassidy,  Ltd.,  DMK  Services,  Ltd.  and  the
                         Stockholders  named  therein  (filed as Exhibit 2.12 to
                         the Company's  Registration Statement on Form S-1 (File
                         No. 33-97008) and incorporated herein by reference).

          2.13           Amendment,  dated as of November 7, 1995,  to Agreement
                         and Plan of  Reorganization,  dated as of  September 8,
                         1995, by and among  Consolidated  Delivery & Logistics,
                         Inc.,      Clayton/National      Acquisition     Corp.,
                         Clayton/National   Courier  Systems,   Inc.,   National
                         Express  Company,   Inc.  and  the  Stockholders  named
                         therein   (filed  as  Exhibit  2.13  to  the  Company's
                         Registration  Statement on Form S-1 (File No. 33-97008)
                         and incorporated herein
                         by reference).

          2.14           Amendment,  dated as of November 7, 1995,  to Agreement
                         and Plan of  Reorganization,  dated as of  September 8,
                         1995, by and among  Consolidated  Delivery & Logistics,
                         Inc.,      Orbit/Lightspeed      Acquisition     Corp.,
                         Orbit/Lightspeed  Courier  Systems,  Inc., NWC Trucking
                         Corp.,  BMBA,  Inc.,  O/L  Warehousing,  Inc.  and  the
                         Stockholders  named  therein  (filed as Exhibit 2.14 to
                         the Company's  Registration Statement on Form S-1 (File
                         No. 33-97008) and incorporated herein by reference).

          2.15           Amendment,  dated as of October 10, 1995,  to Agreement
                         and Plan of  Reorganization,  dated as of  September 8,
                         1995, by and among  Consolidated  Delivery & Logistics,
                         Inc., Securities Courier Acquisition Corp.,  Securities
                         Courier  Corporation and the Stockholder  named therein
                         (filed as Exhibit  2.15 to the  Company's  Registration
                         Statement   on  Form  S-1  (File  No.   33-97008)   and
                         incorporated herein by reference).

          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           Management Team Agreement dated November 8, 1995, among
                         Consolidated  Delivery  &  Logistics,   Inc.  and  John
                         Mattei,  Joseph  Wojak and  William  Brannan  (filed as
                         Exhibit 10.3 to the Company's Registration Statement on
                         Form S-1 (File No. 33-97008) and incorporated herein by
                         reference).
          10.4           Employment  Agreement,  dated as of  September 8, 1995,
                         with  Filbert  DiNardo  (filed as  Exhibit  10.4 to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

          10.5           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).

          10.6           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  John  Bailey   (filed  as  Exhibit  10.8  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  William  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).

         10.10           Employment  Agreement,  dated as of September 15, 1995,
                         with  Michael  Berry  (filed  as  Exhibit  10.10 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  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).

         10.12           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).

         10.13           Employment  Agreement,  dated as of September 15, 1995,
                         with  Juan  Camandona  (filed as  Exhibit  10.13 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  Joseph  Caruvana  (filed as Exhibit  10.14 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  Randall  Catlin  (filed as  Exhibit  10.15 to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

         10.16           Employment  Agreement,  dated as of September 15, 1995,
                         with  Martin  Galinsky  (filed as Exhibit  10.16 to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

         10.17           Employment  Agreement,  dated as of September 15, 1995,
                         with  Curtis  Hight  (filed  as  Exhibit  10.17  to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

         10.18           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).

         10.19           Employment  Agreement,  dated as of September 15, 1995,
                         with Rick Katz (filed as Exhibit 10.19 to the Company's
                         Registration  Statement on Form S-1 (File No. 33-97008)
                         and incorporated herein by reference).

         10.20           Employment  Agreement,  dated as of September 15, 1995,
                         with  David  Kronick  (filed  as  Exhibit  10.20 to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

         10.21           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).

         10.22           Employment  Agreement,  dated as of September 15, 1995,
                         with  Howard  Kronick  (filed as  Exhibit  10.22 to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

         10.23           Employment  Agreement,  dated as of September 15, 1995,
                         with Irwin  Leibowitz  (filed as  Exhibit  10.23 to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

         10.24           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).

         10.25           Employment  Agreement,  dated as of September 15, 1995,
                         with  John  LoPresti  (filed  as  Exhibit  10.25 to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

         10.26           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).

         10.27           Employment  Agreement,  dated as of September 15, 1995,
                         with  David  Mathia  (filed  as  Exhibit  10.27  to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

         10.28           Employment  Agreement,  dated as of September 15, 1995,
                         with  Jack  McCorkell  (filed as  Exhibit  10.28 to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

         10.29           
                         Employment  Agreement,  dated as of September 15, 1995,
                         with  Philip  Panasci  (filed as  Exhibit  10.29 to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

         10.30           Employment  Agreement,  dated as of September 15, 1995,
                         with  Peter  Silver  (filed  as  Exhibit  10.30  to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

         10.31           Employment  Agreement,  dated as of September 15, 1995,
                         with  Philip  Snyder  (filed  as  Exhibit  10.31 to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

         10.32           Employment  Agreement,  dated as of September 15, 1995,
                         with  William  Starace  (filed as Exhibit  10.32 to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

         10.33           Employment  Agreement,  dated as of September 15, 1995,
                         with Kenneth  Tunnell,  Jr.  (filed as Exhibit 10.33 to
                         the Company's  Registration Statement on Form S-1 (File
                         No. 33-97008) and incorporated herein by reference).

         10.34           Employment  Agreement,  dated as of September 15, 1995,
                         with Jeremy  Weinstein  (filed as Exhibit  10.34 to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

         10.35           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).

         10.36           Employment  Agreement,  dated as of September 15, 1995,
                         with Stephen J. Zrowka  (filed as Exhibit  10.36 to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

         10.37           Termination  Agreement,  dated August 14, 1995,  by and
                         between  Consolidated  Delivery &  Logistics,  Inc. and
                         David Lardier  (filed as Exhibit 10.37 to the Company's
                         Registration  Statement on Form S-1 (File No. 33-97008)
                         and incorporated herein by reference).

         10.38           Share  Acquisition  Agreement  and Release  with Victor
                         Samara   (filed  as  Exhibit  10.38  to  the  Company's
                         Registration  Statement on Form S-1 (File No. 33-97008)
                         and incorporated herein by reference).

         10.39           Share Acquisition Agreement and Release with the Estate
                         of  William  Samara  (filed  as  Exhibit  10.39  to the
                         Company's  Registration Statement on Form S-1 (File No.
                         33-97008) and incorporated herein by reference).

          11.1           Statement Regarding Computation of Net Loss Per Share.

          11.2           Statement Regarding Computation of Pro Forma Net Income
                         Per Share.


          21.1           List  of  subsidiaries   of  Consolidated   Delivery  &
                         Logistics, Inc. (filed as Exhibit 21.1 to the Company's
                         Registration  Statement on Form S-1 (File No. 33-97008)
                         and incorporated herein by reference).


<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 August , 1996.

                                        CONSOLIDATED DELIVERY & LOGISTICS, INC.



                                            By: ___________________________
                       John Mattei, 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 August , 1996.


      Signature                                                     Capacity


__________________________ Chairman of the Board, Chief Executive Officer
       John Mattei         (Principal Executive Officer) and Director


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


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


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


__________________________ Director
       Vincent Brana


__________________________ Director
      Michael Brooks


__________________________ Director
      Juan Camandona


__________________________ Director
       Curtis Hight


__________________________ Director
    Howard E. Kronick


__________________________ Director
      Labe Leibowitz


__________________________ Director
      Thomas LoPresti


__________________________ Director
       David Mathia


__________________________ Director
      Philip Snyder


__________________________ Director
       Robert Wyatt


__________________________ Director
    Stephen J. Zrowka


__________________________ Director
   William M. Kearns, Jr.


__________________________ Director
    Kenneth W. Tunnell


__________________________ Director
 Albert W. Van Ness, Jr.


<PAGE>


                                    S-4







                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To Consolidated Delivery & Logistics, Inc.:

We have audited in accordance with generally  accepted auditing  standards,  the
financial statements of Consolidated Delivery & Logistics, Inc. and subsidiaries
included  in this Form 10-K and have issued our report  thereon  dated March 19,
1996.  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 audit 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
March 19, 1996


<PAGE>


                                                                   Schedule II

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

<TABLE>
<S>                                     <C>               <C>             <C>               <C>              <C>
                                          Balance          Charged                                             Balance
                                             at            to Costs                                             at End
                                          Beginning          and           Write-offs          Other              of
           Description                    of Period        Expenses           (b)               (a)             Period
-----------------------------------
                                        =============     ===========     =============     ============     =============
Forthe  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
                                        =============     ===========     =============     ============     =============
</TABLE>


(a)     Represents the addition of the Founding Companies on September 30, 1995.
(b)     Represents write-offs net of recoveries.

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


<PAGE>









                                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To Combined Founding Companies:

We have audited in accordance with generally  accepted auditing  standards,  the
financial  statements of Combined Founding  Companies included in this Form 10-K
and have issued our report  thereon  dated March 19, 1996.  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 audit 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
March 19, 1996




<PAGE>


                                                                    Schedule II

                          COMBINED FOUNDING COMPANIES
                        VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)
<TABLE>
<S>                                        <C>               <C>                <C>               <C>
                                              Balance           Charged                             Balance
                                                at             to Costs                              at End
                                             Beginning            and            Write-offs            of
             Description                     of Period         Expenses              (a)             Period
--------------------------------------
                                           ==============    ==============     ==============    =============
For the year ended
   December 31, 1993 -
   Allowance for doubtful accounts             $591              $638              ($407)             $822
                                           ==============    ==============     ==============    =============

For the year ended
   December 31, 1994 -
   Allowance for doubtful accounts             $822              $545              ($275)            $1,092
                                           ==============    ==============     ==============    =============

For the nine months ended
   September 30, 1995 -
   Allowance for doubtful accounts            $1,092             $335              ($298)            $1,129
                                           ==============    ==============     ==============    =============
</TABLE>




(a)      Represents write-offs net of recoveries.

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



<PAGE>


3

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

    Exhibits                                                                                              Page

      11.1     Statement Regarding Computation of Net Loss Per Share                                      2

      11.2     Statement Regarding Computation of Pro Forma Net Income Per Share.                         3

</TABLE>


<PAGE>

<TABLE>
<S>                                                                                           <C> 
                                                                                     EXHIBIT 11.1

                         CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES

                                            NET LOSS PER SHARE

                                   FOR THE YEAR ENDED DECEMBER 31, 1995

                                 (In Thousands Except Share Information)

SHARES CONSIDERED:

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

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

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

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

         Total common shares considered                                                 2,059,894
                                                                                   ==================

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

NET LOSS PER SHARE (a)                                                                         ($.10)
                                                                                   ==================
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(a)      The conversion of the Company's debentures and stock options are
excluded from the computation as the effect would be antidilutive.







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<S>                                                                                                 <C> 
                                                                                            EXHIBIT 11.2

                         CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES

                                      PRO FORMA NET INCOME PER SHARE

                                   FOR THE YEAR ENDED DECEMBER 31, 1995

                                 (In Thousands Except Share Information)


SHARES CONSIDERED:

Common shares issued prior to acquisition of the Founding Companies and the Initial
Public Offering                                                                                  493,869

Common shares issued to the stockholders of the Founding Companies                             2,935,700

Common shares sold in the Initial Public Offering                                              3,200,000

Debentures (a)                                                                                   180,995
                                                                                          ------------------

         Total common shares considered                                                        6,810,564
                                                                                          ------------------

NET INCOME                                                                                        $1,987
                                                                                          ==================

NET INCOME PER SHARE (b)                                                                               $.29
                                                                                          ==================

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(a)     Dilution attributable to the conversion of the Company's 8% Subordinated
Convertible Debentures.
(b)     The conversion of the Company's stock options are excluded from the
computation as the effect would be antidilutive.