<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
                                       OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934
For the transition period from .................... to ....................
                         Commission file number 0-26954
                                   CD&L, INC.
             (Exact name of registrant as specified in its charter)
                       Delaware                           22-3350958
            State or other jurisdiction of             (I.R.S. Employer
            incorporation or organization             Identification No.)

                   80 Wesley Street
             South Hackensack, New Jersey                   07606
       (Address of principal executive offices)           (Zip Code)
Registrant's telephone number, including area code (201) 487-7740

Securities registered pursuant to Section 12(b) of the Act:
          Title of each class          Name of each exchange on which registered
Common Stock, par value $.001 per share        American Stock Exchange

        Securities registered pursuant to section 12(g) of the Act: None

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. |_|

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934) Yes |_| No |X|

The aggregate market value of voting common equity of the registrant held by
non-affiliates (for this purpose, persons and entities other than executive
officers, directors, and 5% or more shareholders) of the registrant, as of the
last business day of the registrant's most recently completed second fiscal
quarter (June 30, 2003), was $3,343,185.

The number of shares of the registrant's Common Stock, $.001 par value,
outstanding was 7,658,660 and the aggregate market value of voting common equity
of the registrant held by non-affiliates of the registrant was $6,718,638 as of
April 7, 2004.

Documents Incorporated by Reference:  None


================================================================================
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                                   CD&L, INC.

                                    FORM 10-K

                      FOR THE YEAR ENDED DECEMBER 31, 2003

                                      INDEX


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PART I
    Item 1.       Business Description ...................................................................... 3
    Item 2.       Properties.................................................................................11
    Item 3.       Legal Proceedings..........................................................................12
    Item 4.       Submission of Matters to a Vote of Security Holders........................................12


PART II
    Item 5.       Market for Registrant's Common Equity and Related Stockholder Matters......................13
    Item 6.       Selected Financial Data....................................................................14
    Item 7.       Management's Discussion and Analysis of Financial
                     Condition and Results of Operations.....................................................15
    Item 7A.      Quantitative and Qualitative Disclosures About Market Risk.................................27
    Item 8.       Financial Statements and Supplementary Data................................................28
    Item 9.       Changes in and Disagreements with Accountants on
                     Accounting and Financial Disclosures....................................................59
    Item 9A.      Controls and Procedures....................................................................59

PART III
    Item 10.      Directors and Executive Officers of the Company............................................60
    Item 11.      Executive Compensation.....................................................................62
    Item 12.      Security Ownership of Certain Beneficial Owners and Management ............................65
    Item 13.      Certain Relationships and Related Transactions.............................................66
    Item 14.      Principal Accountant Fees and Services.....................................................66


PART IV
    Item 15.      Exhibits, Financial Statement Schedules and Reports on Form 8-K............................67

SIGNATURES           ........................................................................................71

CERTIFICATIONS       ........................................................................................72
</TABLE>

                                       2
<PAGE>

                                     PART I

         Statements and information presented within this Annual Report on Form
10-K for CD&L, Inc. (the "Company", "CD&L", or "we") include certain statements
that may be deemed to be "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 (the "Securities Act") and Section 21E
of the Exchange Act. These forward-looking statements include, but are not
limited to, statements about our plans, objectives, expectations and intentions
and other statements contained in this report that are not historical facts.
When used in this report, the words "expects," "anticipates," "intends,"
"plans," "believes," "seeks" and "estimates" and similar expressions are
generally intended to identify forward-looking statements. These statements are
based on certain assumptions and analyses made by the Company in light of its
experience and perception of historical trends, current conditions, expected
future developments and other factors it believes are appropriate in the
circumstances. Such statements are subject to a number of assumptions, risks and
uncertainties, including the risk factors (Item 1. Business Description - Risk
Factors) discussed below, general economic and business conditions, the business
opportunities (or lack thereof) that may be presented to and pursued by the
Company, changes in law or regulations and other factors, many of which are
beyond the control of the Company. Readers are cautioned that any such
statements are not guarantees of future performance and that actual results or
developments may differ materially from those projected in the forward-looking
statements. All subsequent written or oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified by these factors.

Item 1.  Business Description

Overview

         We are one of the leading national full-service providers of
customized, same-day, time-critical, delivery services to a wide range of
commercial, industrial and retail customers. Our services are provided
throughout the United States.

         We offer the following delivery services:

         o        rush delivery service, typically consisting of delivering
                  time-sensitive packages, such as critical parts, emergency
                  medical devices and legal and financial documents from
                  point-to-point on an as-needed basis;

         o        routed services, providing, on a recurring and often daily
                  basis, deliveries from pharmaceutical suppliers to pharmacies,
                  from manufacturers to retailers, and the inter-branch
                  distribution of financial documents in a commingled system;

         o        facilities management, including providing and supervising
                  mailroom personnel, mail and package sorting, internal
                  delivery and outside local messenger services; and

         o        dedicated contract logistics, providing a comprehensive
                  solution to major corporations that want the control,
                  flexibility and image of an in-house fleet with all the
                  economic benefits of outsourcing.

                                       3
<PAGE>
Our Industry

         The same-day delivery industry is serviced by a fragmented system of
thousands of companies that include only a small number of large regional or
national operators. The industry has been impacted by the following:

         o        Outsourcing and Vendor Consolidation. Commercial and
                  industrial businesses, which choose same-day delivery
                  services, sometimes prefer concentrating on their core
                  business by outsourcing non-core activities. These businesses
                  seek single-source solutions for their regional and national
                  same-day delivery needs rather than utilizing a number of
                  smaller, local delivery companies. At the same time, some
                  larger national and international companies are looking toward
                  decentralized distribution systems.

         o        Heightened Customer Expectations. Increasing customer demand
                  for specialized services such as customized billing, enhanced
                  tracking, storage, inventory management and just-in-time
                  delivery capabilities favor companies with greater resources
                  to devote to providing those services. The use of facsimile
                  technology and the Internet have increased the speed at which
                  the processing of information and transactions occur such that
                  the requirements for immediate delivery of a wide range of
                  critical items has become commonplace.

Our Services

         We provide our customers with a broad range of customized, same-day,
time-critical, delivery service options.

Rush. In providing rush delivery services, or services on demand, our messengers
and drivers respond to customer requests for the immediate pick-up and delivery
of time-sensitive packages. We generally offer one-, two- and four-hour service,
on a 7-days-a-week, 24-hours-a-day basis. Our typical customers for rush service
include commercial and industrial companies, health care providers and service
providers such as accountants, lawyers, advertising and travel agencies and
public relations firms.

Routed and Scheduled. Our scheduled delivery services are provided on a
recurring and often daily basis. We typically pick up or receive large shipments
of products, which are then scanned, sorted, routed and delivered. These
deliveries are made in accordance with a customer's predetermined schedule that
generally provides for deliveries to be made at specific times. Typical routes
may include deliveries from pharmaceutical suppliers to pharmacies, from
manufacturers to retailers, the inter-branch distribution of financial
documents, payroll data and other time-critical documents for banks, financial
institutions and insurance companies. We also provide these services to large
retailers for home delivery, including large cosmetic companies, door-to-door
retailers, catalog retailers, home health care distributors and other direct
sales companies.

Facilities Management. We provide complete mailroom management services, by
offering customized solutions that include performing the entire mailroom
function. This includes mail meter management, messenger delivery services, main
entrance personnel and management personnel.

Dedicated Contract Logistics. We offer efficient and cost-effective dedicated
delivery solutions, such as fleet replacement solutions, dedicated delivery
systems and transportation systems management services. These services provide
major health care providers, office product companies, retailers and financial
institutions with the control, flexibility and image of an in-house fleet and
with all of the economic benefits of outsourcing.

Our Internal Operations

         We operate from 67 leased facilities and 34 customer owned facilities
in 22 states and with various managed agents in all other states. The size of
each facility varies, but typically includes dedicated dispatch and order entry
functions as well as delivery personnel. We accomplish coordination and
deployment of our delivery personnel either through communications systems
linked to our computers, through pagers, mobile data units, or by radio or
telephone. A dispatcher coordinates shipments for delivery within a specific
time frame. We route a shipment according to its type and weight, the geographic
distance between its origin and destination and the time allotted for its
delivery. In the case of scheduled deliveries, we design routes to minimize the
unit costs of the deliveries and to enhance route density. We continue to deploy
new hardware and software systems designed to enhance the capture, routing,
tracking and reporting of deliveries throughout our network. To further improve
customer service, we offer customers the opportunity to access this information
via the Internet.
                                       4
<PAGE>

Sales and Marketing

         We believe that a direct sales force most effectively reaches customers
for same-day, time-critical delivery services and, accordingly, we do not
currently engage in mass media advertising. We market directly to individual
customers by designing and offering customized service packages after
determining their specific delivery and distribution requirements. We have
implemented a coordinated major account strategy by building on established
relationships with regional and national customers.

         Many of the services we provide, such as facilities management,
dedicated contract logistics and routed delivery services are determined on the
basis of competitive bids. However, we believe that quality and service
capabilities are also important competitive factors. We derive a substantial
portion of our revenues from customers with whom we have entered into contracts.

Competition

         The market for our delivery services is highly competitive. We believe
that the principal competitive factors in the markets in which we compete are
service performance, dedicated resources, technology and price. We compete on
all of those factors. Most of our competitors in the time-critical, same-day,
delivery market are privately held companies that operate in only one location
or within a limited service area. Our services are available 24-hours-a-day,
7-days-a-week.

Acquisitions and Sales of Businesses

         We were formed as a Delaware corporation in June 1994. As of December
31, 2003, we had acquired 26 same-day time-critical delivery businesses,
including the 11 companies that we acquired simultaneously with the commencement
of our operations in November 1995. We paid approximately $67,800,000
($29,600,000 in cash and 2,935,702 shares of our common stock) to acquire the 11
founding companies. In addition to the acquisition of those companies, we
acquired certain additional assets from two companies in transactions that we
accounted for as purchases. Those acquired assets were not material.

         In 1996, we acquired five additional businesses that had approximately
$15,600,000 in aggregate annual revenues. We paid approximately $3,300,000 to
acquire those companies using a combination of cash, seller-financed debt and
shares of our common stock. Subsequently, the aggregate purchase price paid for
those companies was reduced by approximately $616,000 because the actual
revenues of some of the acquired companies did not reach the revenues projected
by the sellers. We accounted for each of the 1996 acquisitions as purchases.

         In 1997, we did not make any acquisitions and instead focused on
internal growth. Consistent with our change of strategic focus, in January 1997
we sold our contract logistics subsidiary back to its founder in exchange for
137,239 shares of our common stock. In connection with that sale, we recorded a
gain of approximately $816,000 before the effect of Federal and state income
taxes.

         In December 1997, we sold our direct mail business for $850,000 in cash
and notes. In connection with that sale, we recorded a gain of approximately
$23,000 net of Federal and state income taxes of approximately $15,000.
Subsequently, in 1999 the company to which we sold our direct mail business went
out of business and defaulted on their note and the Company wrote off the
remaining balance of the note of $661,868.

         In 1998, we acquired four same-day, time-critical delivery businesses
that had aggregate annual revenues of approximately $25,100,000. We paid
approximately $14,500,000 for the businesses consisting of a combination of
cash, shares of our common stock and seller-financed debt. We accounted for each
of the 1998 acquisitions as purchases.

         In 1999, we acquired four same-day, time-critical delivery businesses
that had aggregate annual revenues of approximately $24,800,000. We paid
approximately $12,700,000 for the businesses consisting of a combination of
cash, shares of our common stock and seller-financed debt. The acquisitions were
accounted for as purchase transactions. Under the terms of the purchase
agreements, additional payments of approximately $600,000 were made in 2000 and
2001 upon the accomplishment of certain financial objectives.

                                       5
<PAGE>

         On December 1, 2000, we made a strategic decision to dispose of our air
delivery business. On March 30, 2001, we consummated a transaction providing for
the sale of certain assets and liabilities of Sureway Air Traffic Corporation,
Inc. ("Sureway"), our air delivery business. The selling price for the net
assets was approximately $14,150,000 and was comprised of $11,650,000 in cash, a
subordinated promissory note (the "Note Receivable") for $2,500,000 and
contingent cash payments based upon the ultimate development of certain
liabilities retained by us. The financial position, operating results and the
provision for loss on the disposition of the Company's air delivery business
have been segregated from continuing operations and classified as discontinued
operations in the accompanying consolidated financial statements.

         The Company reported a net loss on the disposition of the Company's air
delivery business of $465,000 (net of benefit for income taxes of $240,000)
accounted for as discontinued operations for the year ended December 31, 2001.

         In February 1999, the Company became obligated for seller-financed
acquisition debt of $1,650,000 related to the acquisition of Gold Wings (See
Note 4 of Notes to Consolidated Financial Statements). As of February 28, 2003,
the note had a remaining principal balance of $1,034,000 (the "CDL/Gold Note").
On February 28, 2003, the Company completed a series of related transactions
with GMV Express, Inc. ("GMV"), Richard Gold (a principal of GMV) ("Gold") and
his affiliates, and Global Delivery Systems LLC ("Global") and its subsidiary,
Sureway Worldwide LLC ("Sureway Worldwide"). The net effect of the transactions
with Global, Sureway Worldwide, GMV and Gold was that the Company assigned the
Note Receivable to GMV in exchange for a release on the CDL/Gold Note payable,
so that the Company was relieved of its $1,034,000 liability for the CDL/Gold
Note and the Company has no further rights to the Note Receivable. In addition,
the Company received payments from Sureway Worldwide and Global of approximately
$117,000 ($72,000 in settlement of disputed claims and $45,000 for other amounts
due) and provided Gold with a release covering claims of breach of certain
non-competition agreements. As a result of this transaction, the Company
recorded a gain of $1,034,000 during the year ended December 31, 2003, included
as a component of other (income) expense, net on the consolidated statement of
operations.

         On June 14, 2001, the Company consummated a transaction providing for
the sale of all the outstanding stock of National Express, Inc., the Company's
ground courier operations in the Mid-West, to First Choice Courier and
Distribution, Inc. ("First Choice"). The selling price was approximately
$2,530,000 and was comprised of $880,000 in cash and a subordinated promissory
note (the "Promissory Note") for $1,650,000.

         As of March 14, 2003, the Promissory Note was amended to defer the
interest and principal payments due on December 14, 2002 and March 14, 2003. The
new quarterly payment schedule commenced on June 14, 2003 with interest only
payments at a new interest rate at 9.0% per annum. Upon the earlier of June 14,
2004 or the maker of the Promissory Note meeting certain financial benchmarks,
principal payments shall resume and the interest rate will prospectively revert
back to 7.0% per annum. The final balloon payment of approximately $1,100,000
plus any remaining principal or unpaid interest remains due on June 14, 2006.

         Subsequently, on March 1, 2004, the Company consummated a transaction
providing for the repurchase of certain Indiana-based assets and liabilities
sold to First Choice in June 2001. The acquisition, including the release of
certain non-compete agreements, we believe will support and enhance our business
growth opportunities in Indiana. Consideration paid for the repurchase includes
cancellation of the Promissory Note owed by First Choice of approximately
$1,600,000 plus a three year contingent earn-out based on future net revenue
generated by the accounts repurchased.


Regulation

         Our delivery operations are subject to various state and local
regulations and, in many instances, we 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 by the U.S. Department of
Transportation ("DOT") and by state departments of transportation. If we fail to
comply with applicable regulations, we could face substantial fines or possible
revocation of one or more of our operating permits.

                                       6
<PAGE>

Safety

         We seek to ensure that all of our drivers meet safety standards
established by us and our insurance carriers as well as the U.S. DOT. In
addition, where required by the DOT, state or local authorities, we require that
our independent contractors meet certain specified safety standards. We review
prospective drivers in an effort to ensure that they meet applicable
requirements.

Employees and Independent Contractors

         As of December 31, 2003, we employed approximately 1,433 full-time and
part-time people, 188 as drivers, 547 as messengers, 520 in operations, 132 in
clerical and administrative positions, 21 in sales, 19 in information technology
and 6 in executive management. We are not a party to any collective bargaining
agreements. We also had agreements with approximately 2,450 independent
contractors as of December 31, 2003. We have not experienced any work stoppages
and believe that our relationship with our employees and independent contractors
is good.

Risk Factors

         You should carefully consider the following factors as well as the
other information in this report before deciding to invest in shares of our
common stock.

We have limited capital resources.

         We have an accumulated deficit of ($7,146,000) as of December 31, 2003.
Although we were in compliance with our Senior Notes debt covenants at December
31, 2003, we were anticipating non-compliance with certain covenants in 2004 and
beyond. Additionally, based on our cash flow projections, we would be unlikely
able to pay the $9,000,000 balloon payment on the Senior Notes due to be paid in
January 2006. Subsequently, on April 14, 2004, we restructured our senior debt
and related covenants. The restructuring includes an agreement among us, our
lenders and certain members of CD&L management and others which improves the
Company's short-term liquidity and reduces interest expense. See Liquidity and
Capital Resources section in Item 7. and Notes to Consolidated Financial
Statements Note 17 - Subsequent Events. There can be no assurances that our
lenders will agree to waive any future covenant violations, if any, continue to
renegotiate and modify the terms of our loans, or further extend the maturity
date, should it become necessary to do so. Further, there can be no assurances
that we will be able to meet our revenue, cost or income projections, upon which
the debt covenants are based.

Price competition could reduce the demand for our service.

         The market for our services has been extremely competitive and is
expected to be so for the foreseeable future. Price competition is often
intense, particularly in the market for basic delivery services where barriers
to entry are low.

Claims above our insurance limits, or significant increases in our insurance
premiums, may reduce our profitability.

         We currently employ 171 full-time and 17 part-time employee drivers.
From time to time some of those drivers are involved in automobile accidents. We
currently carry liability insurance of $1,000,000 for each employee driver
subject to applicable deductibles and carry umbrella coverage up to $5,000,000
in the aggregate. However, claims against us may exceed the amounts of available
insurance coverage. We also contract with approximately 2,450 independent
contractor drivers. In accordance with Company policy, all independent
contractor drivers are required to maintain liability coverage as well as
workers' compensation or occupational accident insurance. If we were to
experience a material increase in the frequency or severity of accidents,
liability claims or workers' compensation claims, or unfavorable resolutions of
claims, our operating results could be materially affected. With regards to
independent contractors, the Company carries umbrella coverage of $5,000,000
($2,000,000 before March 1, 2004) in the aggregate.

                                       7
<PAGE>

As a same-day delivery company, our ability to service our clients effectively
is often dependent upon factors beyond our control.

         Our revenues and earnings are especially sensitive to events that are
beyond our control that affect the same-day delivery services industry,
including:

         o        extreme weather conditions;

         o        economic factors affecting our significant customers;

         o        mergers and consolidations of existing customers;

         o        U.S. business activity; and

         o        the levels of unemployment.

Our reputation will be harmed, and we could lose customers, if the information
and telecommunications technologies on which we rely fail to adequately perform.

         Our business depends upon a number of different information and
telecommunication technologies as well as the ability to develop and implement
new technology enabling us to manage and process a high volume of transactions
accurately and timely. Any impairment of our ability to process transactions in
this way could result in the loss of customers and diminish our reputation.

Governmental regulation of the transportation industry, particularly with
respect to our independent contractors, may substantially increase our operating
expenses.

         From time to time, federal and state authorities have sought to assert
that independent contractors in the transportation industry, including those
utilized by us, are employees rather than independent contractors. We believe
that the independent contractors that we utilize are not employees under
existing interpretations of federal and state laws. However, federal and state
authorities have and may continue to challenge this position. Further, laws and
regulations, including tax laws, and the interpretations of those laws and
regulations, may change. If, as a result of changes in laws, regulations,
interpretations or enforcement by federal or state authorities, we become
required to pay for and administer added benefits to independent contractors,
our operating costs could substantially increase.

Shareholders will experience dilution when we issue the additional shares of
common stock that we are permitted or required to issue under convertible notes,
options and warrants.

         We are permitted, and in some cases obligated, to issue shares of
common stock in addition to the common stock that is currently outstanding. If
and when we issue these shares, the percentage of the common stock currently
issued and outstanding will be diluted. The following is a summary of additional
shares of common stock that we have currently reserved for issuance as of
December 31, 2003:

         o        506,250 shares are issuable upon the exercise of outstanding
                  warrants at an exercise price of $.001 per share.

         o        4,000,000 shares are issuable upon the exercise of options or
                  other benefits under our employee stock option plan,
                  consisting of:

                  o        outstanding options to purchase 1,757,697 shares at a
                           weighted average exercise price of $3.04 per share,
                           of which options covering 1,756,031 shares were
                           exercisable as of December 31, 2003; and

                  o        2,242,303 shares available for future awards after
                           December 31, 2003.

                                       8
<PAGE>

         o        200,000 shares are issuable upon the exercise of options or
                  other benefits under our independent director stock option
                  plan, consisting of:

                  o        outstanding options to purchase 157,500 shares at a
                           weighted average exercise price of $1.61 per share,
                           of which options covering 127,500 shares were
                           exercisable as of December 31, 2003; and

                  o        42,500 shares available for future awards after
                           December 31, 2003.

         o        430,518 shares are issuable upon the exercise of outstanding
                  convertible notes at a weighted average exercise price of
                  $6.46 per share.

Subsequent to the financial restructuring on April 14, 2004 (See Liquidity and
Capital Resources section in Item 7. and Notes to Consolidated Financial
Statements Note 17 - Subsequent Events):

         o        3,937,008 shares are issuable upon the conversion of the new
                  convertible investor notes at a weighted average exercise
                  price of $1.016 per share.

         o        1,968,504 shares are issuable upon the conversion of the
                  Amended Paribas Convertible Subordinated Notes at a weighted
                  average exercise price of $2.032 per share.

         o        3,937,010 shares are issuable upon the conversion of the
                  Series A Preferred Stock at a weighted average exercise price
                  of $1.016 per share.


Our success is dependent on the continued service of our key management
personnel.

         Our future success depends, in part, on the continued service of our
key management personnel. If certain employees were unable or unwilling to
continue in their present positions, our business, financial condition,
operating results and future prospects could be materially adversely affected.

If we fail to maintain our governmental permits and licenses, we may be subject
to substantial fines and possible revocation of our authority to operate our
business in certain jurisdictions.

         Our delivery operations are subject to various state, local and federal
regulations that in many instances require permits and licenses. If we fail to
maintain required permits or licenses, or to comply with applicable regulations,
we could be subject to substantial fines or our authority to operate our
business in certain jurisdictions could be revoked.

Our certificate of incorporation, by-laws, shareholder rights plan and Delaware
law contain provisions that could discourage a takeover that current
shareholders may consider favorable.

         Provisions of our certificate of incorporation, by-laws and our
shareholder rights plan, as well as Delaware law, may discourage, delay or
prevent a merger or acquisition that you may consider favorable. These
provisions of our certificate of incorporation and by-laws:

         o        establish a classified board of directors in which only a
                  portion of the total number of directors will be elected at
                  each annual meeting;

         o        authorize the Board of Directors to issue preferred stock;

         o        prohibit cumulative voting in the election of directors;

         o        limit the persons who may call special meetings of
                  stockholders;

         o        prohibit stockholder action by written consent; and

         o        establish advance notice requirements for nominations for the
                  election of the board of directors or for proposing matters
                  that can be acted on by stockholders at stockholder meetings.

                                       9
<PAGE>

           In addition, we have adopted a Stockholder Protection Rights Plan in
order to protect against offers to acquire us that our Board of Directors
believes to be inadequate or not otherwise in our best interests. There are,
however, certain possible disadvantages to having the Plan in place, which might
adversely impact us. The existence of the Plan may limit our flexibility in
dealing with potential acquirers in certain circumstances and may deter
potential acquirers from approaching us. Further, as a result of the April 14,
2004 restructuring, on a fully diluted basis, the executive officers and
directors of the Company will own 61.7% of the Company's common stock on a fully
diluted basis (excluding out-of-the-money stock options) and Paribas and Exeter
collectively will own 45.6% of the Company's common stock on a fully diluted
basis (excluding out-of-the-money stock options). (Note: The sum of individual
beneficial ownership percentages can exceed 100% due to the nature of the
calculation which assumes total outstanding shares and the exercise of all
convertible instruments for any individual shareholder without regard to
exercise of similar instruments by any other shareholder.) Such concentration of
ownership may also deter potential acquirers from approaching us.




                                       10
<PAGE>

Item 2.  Properties

         As of December 31, 2003, the Company operated from 67 leased facilities
(not including 34 customer-owned facilities). 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 leased facilities.

State                                                Number of Leased Facilities
-----                                                ---------------------------
New York..........................................                19
Florida...........................................                 8
California........................................                 7
New Jersey........................................                 6
Maine.............................................                 3
North Carolina....................................                 3
Louisiana.........................................                 2
Ohio..............................................                 2
Oklahoma..........................................                 2
Pennsylvania......................................                 2
Tennessee.........................................                 2
Indiana...........................................                 1
Massachusetts.....................................                 1
South Carolina....................................                 1
Washington........................................                 1
Arkansas..........................................                 1
Connecticut.......................................                 1
Georgia...........................................                 1
Maryland..........................................                 1
New Hampshire.....................................                 1
Texas.............................................                 1
Vermont...........................................                 1
                                                            ---------------
      Total                                                        67

         The Company's corporate headquarters is located at 80 Wesley Street,
South Hackensack, 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, 2003, the Company owned or leased approximately 170
vehicles of various types, which are operated by drivers employed by the
Company. The Company also utilizes independent contractors who provide their own
vehicles and are required to carry at least the minimum amount of insurance
required by law.

         The Company's aggregate rental expense, primarily for facilities, was
approximately $6,973,000, for the year ended December 31, 2003. See Note 12 to
the Company's Consolidated Financial Statements.

                                       11
<PAGE>

Item 3.  Legal Proceedings

         In February 1996, Liberty Mutual Insurance Company ("Liberty Mutual")
filed an action against Securities Courier Corporation ("Securities"), a
subsidiary of the Company, Mr. Vincent Brana, an employee of the Company, and
certain other parties in the United States District Court for the Southern
District of New York. Under the terms of its acquisition of Securities, the
Company had certain rights to indemnification from Mr. Brana. In connection with
the indemnification, Mr. Brana has entered into a settlement agreement and
executed a promissory note (the "Brana Note") in such amount as may be due for
any defense costs or award arising out of this suit. Mr. Brana had agreed to
repay the Company on December 1, 2003, together with interest calculated at a
rate per annum equal to the rate charged the Company by its senior lender. Mr.
Brana delivered 357,301 shares of CD&L common stock to the Company as collateral
for the Brana Note. On September 8, 2000 the parties entered into a settlement
agreement in which Securities and Mr. Brana agreed to pay Liberty Mutual
$1,300,000. An initial payment of $650,000 was made by Securities on October 16,
2000, $325,000 plus interest at a rate of 10.5% per annum was paid in monthly
installments ending July 1, 2001 and the balance of $325,000 plus interest at a
rate of 12.0% per annum was paid in monthly installments ending July 1, 2002.

         At December 31, 2002, the Company had a receivable due from Mr. Brana
totaling $2,800,000. As of December 31, 2002, considering the market value of
the collateral and Mr. Brana's failure to provide satisfactory evidence to
support his ability to pay the Brana Note, the Company maintained a $2,800,000
reserve against the receivable.

         In an effort to resolve all outstanding disputes between Mr. Brana and
the Company, a settlement agreement was executed in December 2003. Pursuant to
the agreement, the Company has returned to Mr. Brana the 357,301 shares of CD&L
common stock previously held by the Company as collateral for the Brana Note. In
addition, the agreement provided for an exchange of releases between the
parties. In connection with this agreement, the Brana Note was written off as of
December 31, 2003. Mr. Brana's employment with the Company terminated on
September 1, 2002 and he has served as a paid consultant since that time.

         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 uninsured
personal injury and property damage incurred in connection with its same-day
delivery operations. In connection therewith, the Company has recorded reserves
of $885,000 and $325,000 as of December 31, 2003 and 2002, respectively.

         Also from time to time, federal and state authorities have sought to
assert that independent contractors in the transportation industry, including
those utilized by us, are employees rather than independent contractors. We
believe that the independent contractors that we utilize are not employees under
existing interpretations of federal and state laws. However, federal and state
authorities have and may continue to challenge this position. Further, laws and
regulations, including tax laws, and the interpretations of those laws and
regulations, may change.

         Management believes that none of these actions, including the actions
described above, will have a material adverse effect on the consolidated
financial position or results of operations of the Company.

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

         Not applicable.

                                       12
<PAGE>

                                     PART II

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

         The Company's Common Stock has been trading on the American Stock
Exchange under the symbol "CDV" since February 23, 1999. The following table
sets forth the high and low closing sales prices for the Common Stock for 2002
and 2003.

         2002                             Low                High
         ----                             ---                ----
         First Quarter                   $0.38              $0.61
         Second Quarter                  $0.44              $0.70
         Third Quarter                   $0.40              $0.58
         Fourth Quarter                  $0.46              $0.62


         2003                             Low                High
         ----                             ---                ----
         First Quarter                   $0.48              $0.59
         Second Quarter                  $0.34              $0.55
         Third Quarter                   $0.44              $0.94
         Fourth Quarter                  $0.65              $1.06

         On April 7, 2004, the last reported sale price of the Common Stock was
$0.99 per share. As of April 7, 2004, there were approximately 272 shareholders
of record of 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. The Company's ability to pay cash dividends on the
Common Stock is also limited by the terms of its revolving credit facility and
the new Senior Subordinated Convertible Notes. See Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources.

                                       13
<PAGE>

Item 6.  Selected Financial Data

         The selected consolidated financial data set forth below as of and for
the years ended December 31, 2002 and 2003 is derived from our audited
consolidated financial statements, which are included elsewhere herein. The
selected consolidated financial data set forth below for the year ended December
31, 2001, which are included herein, and for the years ended December 31, 1999
and 2000 and as of December 31, 1999, 2000, and 2001, which are not included
herein, are derived from our consolidated financial statements audited by Arthur
Andersen LLP, independent public accountants who have ceased operations. The
selected consolidated financial data set forth below should be read in
conjunction with the consolidated financial statements and related notes thereto
and with Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations included elsewhere in this report.


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

Statement of Operations Data:

<TABLE>
<CAPTION>
                                                                  CD&L, Inc. and Subsidiaries (1)
                                      -----------------------------------------------------------------------------------------
                                                                   For The Year Ended December 31,
                                      -----------------------------------------------------------------------------------------
                                         1999               2000               2001              2002                2003
                                      ------------      -------------      -------------     --------------     ---------------
<S>                                   <C>               <C>                <C>               <C>                <C>
Revenue                                $158,380          $170,079           $160,544          $157,232           $166,083
Gross profit                             35,175            34,463             32,704            30,080             32,735
Selling, general and
  administrative expenses                27,123            33,978             26,881            25,492             28,136
Goodwill impairment                           -                 -              3,349                 -                  -
Depreciation and amortization             3,672             3,355              2,476             1,173                756
Other expense (income), net                  80             2,438              4,685               206             (1,496)
Interest expense                          2,731             3,060              2,897             2,734              2,534
Income (loss) from
  continuing operations                     950            (6,229)            (5,804)              285              1,683
Discontinued operations:
  Income from discontinued
    operations, net of income
    taxes                                 1,961             1,388                  -                 -                  -
  Provision for loss on
    disposal of assets, net
    of income taxes                           -            (2,807)              (465)                -                  -
Net income (loss)                        $2,911           ($7,648)           ($6,269)             $285             $1,683
Basic income (loss) per
  share:
  -Continuing operations                   $.13             ($.84)             ($.76)             $.04               $.22
  -Discontinued operations                  .27              (.19)              (.06)                -                  -
                                      ------------      -------------      -------------     --------------     ---------------
  -Net income (loss)                       $.40            ($1.03)             ($.82)             $.04               $.22
                                      ============      =============      =============     ==============     ===============
Diluted income (loss) per share:
  -Continuing operations                   $.12             ($.84)             ($.76)             $.03               $.21
  -Discontinued operations                  .25              (.19)              (.06)             -                  -
                                      ------------      -------------      -------------     --------------     ---------------
  -Net income (loss)                       $.37            ($1.03)             ($.82)             $.03               $.21
                                      ============      =============      =============     ==============     ===============
Basic weighted average shares
 outstanding                              7,214             7,430              7,659             7,659              7,659
Diluted weighted average
 shares outstanding                       7,868             7,430              7,659             8,167              8,174

Balance Sheet Data:                                               CD&L, Inc. and Subsidiaries (1)
                                      -----------------------------------------------------------------------------------------
                                                                            December 31,
                                      -----------------------------------------------------------------------------------------
                                         1999               2000               2001               2002               2003
                                      ------------      --------------     -------------      -------------     ---------------

Working capital (deficit)                $5,989           ($3,430)            $4,923            $2,869             $1,807
Equipment and leasehold
   improvements, net                      4,321             2,841              1,961             1,233              1,446
Goodwill and other intangible
   assets, net                           22,375            20,666             12,252            12,192             11,968
Total assets                             62,513            57,785             35,481            33,821             40,352
Total debt                               32,353            34,686             20,595            17,483             20,137
Stockholders' equity                    $17,369            $9,884             $3,615            $3,900             $5,583

</TABLE>

(1)  During 2000, the Company discontinued its air operations and subsequently
     disposed of them in 2001. Accordingly, the operating results and loss on
     disposition of the air delivery business have been classified as
     discontinued operations for the periods presented.

                                       14
<PAGE>


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

Disclosure Regarding Forward-Looking Statements.

         The Company is provided a "safe harbor" for forward-looking statements
contained in this report by the Private Securities Litigation Reform Act of
1995. The Company may discuss forward-looking information in this Report such as
its expectations for future performance, growth and acquisition strategies,
liquidity and capital needs and its future prospects. Actual results may not
necessarily develop as the Company anticipates due to many factors including,
but not limited to the timing of certain transactions, unexpected expenses
encountered, the effect of economic and market conditions, the impact of
competition and the factors listed in Item 1. Business Description - Risk
Factors. Because of these and other reasons, the Company's actual results may
vary materially from management's current expectations.

Overview

         The consolidated financial statements of the Company including all
related notes, which appear elsewhere in this report, should be read in
conjunction with this discussion of the Company's results of operations and its
liquidity and capital resources.

2004 Restructuring of Senior Notes Debt

At December 31, 2003, the Company was indebted to Paribas and Exeter
(collectively "Paribas") in the sum of approximately $11,000,000 pursuant to a
subordinated note bearing interest at 12% per annum (see Senior Notes in Note
9). On April 14, 2004, an agreement was reached among the Company, Paribas and
certain members of CD&L management and others ("Investors") as to the financial
restructuring of the Senior Notes. Paribas agreed to convert a portion of its
existing debt due from CD&L into equity and to modify the terms of its
subordinated note if the Investors purchase a portion of the note and accept
similar modifications. The nature of the restructuring is as follows:

         (a)      Paribas exchanged notes in the aggregate principal amount of
                  $4.0 million for shares of the Series A Convertible Redeemable
                  Preferred Stock of the Company, par value $.001 per share
                  ("Preferred Stock") with a liquidation preference of $4.0
                  million. The Preferred Stock is convertible into an aggregate
                  of 4,000,000 shares of Common Stock, does not pay dividends
                  (unless dividends are declared and paid on the Common Stock),
                  and is redeemable by the Company for the liquidation value.
                  Holders of the Preferred Stock will have the right to elect
                  two directors.

         (b)      Paribas and the Company amended the terms of the $7.0 million
                  balance of the Notes, and then exchanged the original notes
                  for the amended and restated notes, which consist of two
                  series of convertible notes, the Series A Convertible
                  Subordinated Notes (the "Series A Converible Notes") in the
                  principal amount of $3.0 million and the Series B Convertible
                  Subordinated Notes ("Series B Convertible Notes") in the
                  principal amount of $4.0 million (collectively, the
                  "Convertible Notes"). The Loan Agreement was amended and
                  restated to reflect the terms of the substituted Series A
                  Convertible Notes and the Series B Convertible Notes,
                  including the elimination of most financial covenants.
                  Principal is due in a balloon payment at the maturity date of
                  April 14, 2011. The Convertible Notes bear interest at a rate
                  of 9% for the first two years of the term, 10.5% for the next
                  two years, and 12% for the final three years of the term. The
                  terms of the two series of Convertible Notes are identical
                  except for the conversion price ($1.016 for the Series A
                  Convertible Notes, the average closing price for the Company's
                  shares for the 5 days prior to the closing, and $2.032 for the
                  Series B Convertible Notes).

         (c)      The Investors purchased the Series A Convertible Notes from
                  Paribas for a purchase price of $3.0 million.

         (d)      The Company issued an additional $1.0 million of Series A
                  Convertible Notes to the Investors for an additional payment
                  of $1.0 million, the proceeds of which were used to reduce
                  short-term debt.

                                       15
<PAGE>

         (e)      The Investors, Paribas and the Company entered into a
                  Registration Rights Agreement pursuant to which the shares of
                  the Company's common stock issuable upon conversion of the
                  Preferred Stock and the Convertible Notes will be registered
                  for resale with the Securities and Exchange Commission.

In addition, the Company has agreed to commence a rights offering to its common
stockholders as soon as practical, and in any event prior to January 14, 2005,
whereby the common shareholders of the Company shall have the right to acquire
at least $2 million of additional shares of common stock of the Company in the
aggregate at a price equal to the conversion price of the Series A Convertible
Notes.

The following summarized unaudited pro forma financial information was prepared
assuming that the restructuring of the Senior Notes debt occurred on December
31, 2003 (in thousands):

<TABLE>
<CAPTION>
                                                                  As Reported           Adjustment             Pro Forma
                                                             -----------------------  ---------------       ----------------
<S>                                                          <C>                      <C>                   <C>
Total assets                                                     $40,234                       $-               $40,234
                                                             =======================  ===============       =================

Liabilities
   Current liabilities
      Short-term borrowings                                        5,767                   (1,000)   (a)          4,767
      Current maturities of long-term debt                         2,585                   (1,000)   (a)          1,585
      Accounts payable and accrued liabilities                    14,201                     (151)   (b)         14,050
                                                             -----------------------  ---------------       -----------------
      Total current liabilities                                   22,553                   (2,151)               20,402
                                                             -----------------------  ---------------       -----------------
   Long-term liabilities
      Long-term debt                                              11,785                   (1,624)   (a)(b)      10,161
      Other long-term liabilities                                    313                        -                   313
                                                             -----------------------  ---------------       -----------------
   Total liabilities                                              34,651                   (3,775)               30,876
                                                             -----------------------  ---------------       -----------------

Stockholders' equity
   Preferred stock                                                     -                    4,000    (a)          4,000
   Common stock                                                        8                        -                     8
   Additional paid-in capital                                     12,883                        -                12,883
   Treasury stock                                                   (162)                       -                  (162)
   Accumulated deficit                                            (7,146)                    (225)   (b)         (7,371)
                                                             -----------------------  ---------------       -----------------
   Total stockholders' equity                                      5,583                    3,775                 9,358
                                                             -----------------------  ---------------       -----------------

Total liabilities and stockholders' equity                       $40,234                       $-               $40,234
                                                             =======================  ===============       =================
</TABLE>

(a)      Represents the initial entry to record the restructuring: (i) the
         conversion of $4,000,000 of long-term debt into Preferred Stock, (ii)
         the issuance of $4,000,000 of long-term debt to Investors, and (iii)
         the repayment of $1,000,000 of current maturities of long-term debt and
         $2,000,000 of long-term debt related to the original Paribas Senior
         Notes.

(b)      Represents the write-off of the unamortized debt discount balance of
         $376,000 as of December 31, 2003 related to the original Senior Notes
         and the related tax effect.

The Company has reviewed SFAS 150 with respect to this transaction and has
determined that the Preferred Shares issued are properly treated as equity, as
the shares are not mandatorily redeemable at any time. As the interest on the
Investor Notes and the new Paribas note increase over the term of the notes, the
Company will record the associated interest expense on a straight-line basis,
which will give rise to accrued interest over the early term of the notes.

                                       16
<PAGE>

Discontinued Operations

         On December 1, 2000, we made a strategic decision to dispose of our air
delivery business and accordingly have restated the accompanying balance sheets,
statements of operations and statements of cash flows to reflect such as
discontinued operations. On March 30, 2001, we consummated a transaction
providing for the sale of certain assets and liabilities of Sureway Air Traffic
Corporation, Inc. ("Sureway"), our air delivery business. The selling price for
the net assets was approximately $14,150,000 and was comprised of $11,650,000 in
cash, a subordinated promissory note (the "Sureway Note Receivable") for
$2,500,000 and contingent cash payments based upon the ultimate development of
certain liabilities retained by us. The Sureway Note Receivable originally bore
interest at the rate of 10.0% per annum, with interest only payable in monthly
installments. The entire balance of principal, plus all accrued interest, was
due and payable on March 30, 2006. As of December 31, 2001 collection of the
Sureway Note Receivable, interest accrued thereon and certain other related
receivables was in doubt. Accordingly, the Company recorded a pre-tax charge of
$2,500,000 (included in other (income) expense, net) in the fourth quarter of
2001 to write-off the Sureway Note Receivable. Additionally, the Company
recorded a pre-tax charge of $705,000 (included in Discontinued Operations) in
the fourth quarter of 2001 to write-off certain other direct expenses incurred
on behalf of Sureway subsequent to March 30, 2001 for which collection was in
doubt and to true-up certain accruals that were estimated in 2000 relative to
the disposition of Sureway.

         The Company reported a net loss on the disposition of the Company's air
delivery business of $465,000 (net of benefit for income taxes of $240,000)
accounted for as discontinued operations for the year ended December 31, 2001.

         In February 1999, the Company became obligated for seller-financed
acquisition debt of $1,650,000 related to the acquisition of Gold Wings (See
Note 4 of Notes to Consolidated Financial Statements). As of February 28, 2003,
the note had a remaining principal balance of $1,034,000 (the "CDL/Gold Note").
On February 28, 2003, the Company completed a series of related transactions
with GMV Express, Inc. ("GMV"), Richard Gold (a principal of GMV) ("Gold") and
his affiliates, and Global Delivery Systems LLC ("Global") and its subsidiary,
Sureway Worldwide LLC ("Sureway Worldwide"). The net effect of the transactions
with Global, Sureway Worldwide, GMV and Gold was that the Company assigned the
Sureway Note Receivable to GMV in exchange for a release on the CDL/Gold Note
payable, so that the Company was relieved of its $1,034,000 liability for the
CDL/Gold Note and the Company has no further rights to the Sureway Note
Receivable. In addition, the Company received payments from Sureway Worldwide
and Global of approximately $117,000 ($72,000 in settlement of disputed claims
and $45,000 for other amounts due) and provided Gold with a release covering
claims of breach of certain non-competition agreements. As a result of this
transaction, the Company recorded a gain of $1,034,000 during the year ended
December 31, 2003.

Critical Accounting Policies and Estimates

         The Company's discussion and analysis of financial condition and
results of operations are based upon the Company's consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these
financial statements requires the Company to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities. On an ongoing basis,
the Company evaluates its estimates, including those related to accounts and
notes receivable, intangible assets, insurance reserves, income taxes and
contingencies. The Company bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.

         The Company believes the following critical accounting policies reflect
more significant judgments and estimates used in the preparation of its
consolidated financial statements.

         Allowance for Doubtful Accounts
         The Company maintains allowances for doubtful accounts and notes
receivable for estimated losses resulting from the inability of its customers
and debtors to make payments when due or within a reasonable period of time
thereafter. The Company estimates allowances for doubtful accounts and notes
receivable by evaluating past due aging trends, analyzing customer payment
histories and assessing market conditions relating to its customers operations
and financial condition. Such allowances are developed principally for specific
customers. As of December 31, 2003, the Company has estimated that an allowance
for doubtful accounts of $872,000 is needed to cover the current receivable
base. As a result of this estimate, the Company recorded $629,000 of expense in
2003 related to the provision for doubtful accounts. If the financial condition
of the Company's customers and debtors were to deteriorate, resulting in an
impairment of their ability to make required payments, additional allowances may
be required.

         Revenue Recognition
         Revenue is recognized when pervasive evidence of an arrangement exists,
the price to the customer is fixed or determinable and collectibility is
reasonably assured. The Company interprets the timing of revenue recognition to
be when services are rendered to customers, and expenses are recognized as
incurred. This policy applies to all of the Company's same-day, time-critical
delivery service options, including Rush, Scheduled, Facilities Management and
Dedicated Contract Logistics. Certain customers pay in advance, giving rise to
deferred revenue. This policy is consistent with prior years and as such, the
increase in revenue from 2002 relates solely to additional sales volume.

                                       17
<PAGE>

         Goodwill
         The value of the Company's goodwill is significant relative to total
assets and stockholders' equity. The Company reviews goodwill for impairment on
at least an annual basis using several fair-value based tests, which include, a
discounted cash flow and terminal value computation, market capitalization and
peer group equity transactions. The discounted cash flow and terminal value
computation is based on management's estimates of future operations. During
2003, an annual impairment test was performed and the Company determined that
there was no impairment of goodwill. As such, there was no impact on the 2003
statement of operation related to goodwill. Changes in business conditions could
materially impact management's estimates of future operations and this could
result in an impairment of goodwill. Such impairment, if any, could have a
significant impact on the Company's operations and financial condition. Examples
of changes in business conditions include, but are not limited to, bankruptcy or
loss of a significant customer, a significant adverse change in regulatory
factors, a loss of key personnel, increased levels of competition from companies
with greater financial resources than the Company and margin erosion caused by
our inability to increase prices to our customers at the same rate that our
costs increase.

         Insurance Reserves
         The Company insures certain of its risks through insurance policies,
but retains risk as a result of its deductibles related to such insurance
policies. The Company's deductible for workers' compensation is $500,000 per
loss ($350,000 prior to May 1, 2003). The deductible for employee health medical
costs is $150,000 per loss ($125,000 prior to March 1, 2002). Effective July 1,
2003, automobile liability coverage is maintained for covered vehicles through a
fully-insured indemnity program with no deductible ($350,000 deductible prior to
July 1, 2003). The Company reserves the estimated amounts of uninsured claims
and deductibles related to such insurance retentions for claims that have
occurred in the normal course of business. These reserves are established by
management based upon the recommendations of third-party administrators who
perform a specific review of open claims, which include fully developed
estimates of both reported claims and incurred but not reported claims, as of
the balance sheet date. Actual claim settlements may differ materially from
these estimated reserve amounts. The Company's estimated cumulative reported
losses for workers' compensation and automobile liability claims for the period
January 1, 1999 through December 31, 2003 amounted to $13,844,000 for losses and
$7,363,000 for administrative and reinsurance costs, all of which has been
funded to the Company's insurance carrier. Additionally, as of December 31,
2003, the Company has accrued approximately $2 million for estimated losses
incurred but not reported. The Company has also accrued $372,000 for incurred
but unpaid employee health medical costs as of December 31, 2003.

         Income Taxes
         The Company files income tax returns in every jurisdiction in which it
has reason to believe it is subject to tax. Historically, the Company has been
subject to examination by various taxing jurisdictions. To date, none of these
examinations has resulted in any material additional tax. Nonetheless, any tax
jurisdiction may contend that a filing position claimed by the Company regarding
one or more of its transactions is contrary to that jurisdiction's laws or
regulations. The Company utilizes a tax rate of 40% in all years presented in
the statements of operations.

                                       18
<PAGE>

Results of Operations 2003 Compared with 2002

The following discussion compares the year ended December 31, 2003 and the year
ended December 31, 2002.

Income and Expense as a Percentage of Revenue

                                                   For the Years Ended
                                                       December 31,
                                               -----------------------------
                                                  2003             2002
                                               ------------     ------------

         Revenue                                  100.0%           100.0%

         Gross profit                              19.7%            19.1%

         Selling, general and
            administrative expenses                16.9%            16.2%
         Depreciation and amortization              0.5%             0.7%
         Other (income) expense, net               (0.9%)            0.1%
         Interest expense                           1.5%             1.7%

         Net income                                 1.0%             0.2%

Revenue
Revenue for the year ended December 31, 2003 increased by $8,851,000, or 5.6%,
to $166,083,000 from $157,232,000 for the year ended December 31, 2002. An
increase in volume from new and existing customers contributes to such revenue
increase, partially offset by certain price reductions granted to extend
customer contracts. The revenue growth reflects the launch of our nationwide
business development program and our ability to expand into new markets with our
existing customer base.

Cost of Revenue
Cost of revenue consists primarily of employee and independent contractor
delivery costs, other direct pick-up and delivery costs and the costs of
dispatching drivers and messengers. These costs increased by $6,196,000, or
4.9%, from $127,152,000 for 2002 to $133,348,000 in 2003. Stated as a percentage
of revenue, these costs decreased to 80.3% for 2003 compared to 80.9% for 2002.
The decrease in cost of revenue stated as a percentage of revenue is due
primarily to increased utilization of independent contractors. While the cost of
this labor is more expensive (delivery costs increased by 2.6% as a percentage
of revenue), workers compensation insurance costs and company delivery vehicle
expenses have decreased by 2.3% and 1.1% as a percentage of revenue,
respectively. The decrease in insurance costs is partially attributable to the
change in auto liability coverage to a fully-insured indemnity program in July
2003. This net reduction in cost of sales as a percentage of revenue is
partially offset by additional cargo claims of approximately $800,000.

Selling, General and Administrative Expense ("SG&A")
SG&A includes costs to support the Company's marketing and sales effort and the
expense of maintaining information systems, human resources, financial, legal
and other corporate administrative functions. SG&A increased by $2,644,000, or
10.4%, from $25,492,000 in 2002 to $28,136,000 in 2003. As a percentage of
revenue, SG&A increased to 16.9% in 2003 compared to 16.2% of revenue in 2002.
The increase in SG&A is due primarily to the following factors:

         o        A $794,000 increase in the provision for doubtful accounts.
                  Refer to the "Liquidity and Capital Resources" section of Item
                  7. of this Annual Report for discussion of the increased
                  accounts receivable balance at December 31, 2003.

         o        A $672,000 increase in professional fees, primarily related to
                  an increase in the legal accrual related to certain unresolved
                  claims.

         o        A $516,000 increase in premises rent due to the addition of 13
                  leased facilities during 2003.

         o        Additional increases in SG&A are primarily attributable to an
                  increase in property and corporate umbrella insurance costs,
                  office maintenance and expenses, data communications, computer
                  costs and other indirect expenses.

                                       19
<PAGE>

         o        The above factors are partially offset by a $861,000 reduction
                  in compensation expense which includes reduced staffing, lower
                  incentive compensation and the reversal of previously recorded
                  severance benefits.

Depreciation and Amortization
Depreciation and amortization decreased by $417,000, or 35.5%, from $1,173,000
for 2002 to $756,000 for 2003. Factors driving such reduction include the full
depreciation of certain computer equipment and vehicles, coupled with reduced
capital expenditures in 2001 and 2002.

Other (Income) Expense, Net
Other (income) expense, net had a net change of $1,702,000, to $1,496,000 of
income in 2003 from $206,000 of expense in 2002. The Company recorded a gain
included in other (income) expense, net of $1,034,000 during the year ended
December 31, 2003 as a result of the exchange of the Sureway Note Receivable
discussed elsewhere herein. Also included in other income for 2003 is a $220,000
World Trade Center Recovery Grant received by one of the Company's New York City
facilities and $149,000 of interest income on the Mid-West note receivable
discussed in Note 4. The expense in 2002 related to a $300,000 increase in the
allowance for the shareholder note receivable.

Interest Expense
Interest expense decreased by $200,000 from $2,734,000 in 2002 to $2,534,000 in
2003. This decrease was primarily due to the extinguishment of the CDL/Gold Note
in the first quarter of 2003 and the reduction of interest rates on certain
seller-financed debt which was renegotiated in April 2002.


Results of Operations 2002 Compared with 2001

The following discussion compares the year ended December 31, 2002 and the year
ended December 31, 2001, for continuing operations.

Income and Expense as a Percentage of Revenue

                                                      For the Years Ended
                                                          December 31,
                                                  -----------------------------
                                                     2002             2001
                                                  ------------     ------------

         Revenue                                    100.0%           100.0%

         Gross profit                                19.1%            20.4%

         Selling, general and
            administrative expenses                  16.2%            16.7%
         Goodwill Impairment                          0.0%             2.1%
         Depreciation and amortization                0.7%             1.5%
         Other expense, net                           0.1%             2.9%
         Interest expense                             1.7%             1.8%

         Income (loss) from continuing
           operations                                 0.2%           (3.6)%

Revenue
Revenue for the year ended December 31, 2002 decreased $3,312,000, or 2.1%, to
$157,232,000 from $160,544,000 for the year ended December 31, 2001. The
decrease included approximately $4,500,000 in lost revenue due to the sale of
the Company's Mid-West operations on June 14, 2001. All other revenue increased
by $1,188,000, or 0.8%.

Cost of Revenue
Cost of revenue consists primarily of employee and independent contractor
delivery costs, other direct pick-up and delivery costs and the costs of
dispatching drivers and messengers. These costs decreased $688,000, or 0.5%,
from $127,840,000 for 2001 to $127,152,000 in 2002. Stated as a percentage of
revenue, these costs increased to 80.9% for 2002 compared to 79.6% for 2001.
Excluding the $3,592,000 reduction due to the sale of the Company's Mid-West
operations, cost of revenue increased $2,904,000 or 2.3%. This reflects
increased direct messenger and driver costs of $6,352,000 and higher workers'
compensation and vehicle insurance of $442,000. These cost increases were
partially offset by the favorable impact on vehicle lease and operating costs of
$3,433,000 due to a reduction in Company owned vehicles and decreased uninsured
product-related claims and other costs of $457,000.

                                       20
<PAGE>

Selling, General and Administrative Expense ("SG&A")
SG&A includes costs to support the Company's marketing and sales effort and the
expense of maintaining information systems, human resources, financial, legal
and other corporate administrative functions. SG&A decreased by $1,389,000, or
5.2%, from $26,881,000 in 2001 to $25,492,000 in 2002. As a percentage of
revenue SG&A decreased to 16.2% in 2002 compared to 16.7% of revenue in 2001.
Excluding the $690,000 decrease due to the sale of the Company's Mid-West
operations, SG&A decreased $699,000 or 2.7%. SG&A expense was favorably impacted
by reduced staffing costs of $637,000, lower facility and communication costs of
$451,000, lower bad debt expense of $286,000 and $183,000 in grants received
related to the events of September 11, 2001. These were partially offset by
increased general insurance expenses of $464,000 and net increases of $394,000
of other expense.

Goodwill Impairment
There was no goodwill impairment for 2002 compared to $3,349,000 for 2001. The
charge taken in 2001 was the result of a comprehensive review of the Company's
intangible assets under the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of" ("SFAS 121"). In 2001, as a result of
recording significant losses on the dispositions of Sureway and the Mid-West
operations and as a result of inadequate cash flows from certain acquired
businesses due to the loss of customers, the Company determined that the
carrying amount of certain assets might not be fully recoverable. The
measurement of impairment losses recognized in 2001 is based on the difference
between the fair values, which were calculated based upon the present value of
projected future cash flows, and the carrying amounts of the assets.

Depreciation and Amortization
Depreciation and amortization decreased by $1,303,000, or 52.6%, from $2,476,000
for 2001 to $1,173,000 for 2002. The decrease was primarily attributable to the
adoption of SFAS 142, as discussed below. In addition, other factors driving
such reduction were the full depreciation of certain vehicles held under a
capital lease that ended during 2001 and reduced capital expenditures in 2000,
2001 and 2002. On June 30, 2001, SFAS No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142") was issued. SFAS 142 eliminates goodwill amortization over
its estimated useful life. However, goodwill is subject to at least an annual
assessment for impairment by applying a fair-value based test. Additionally,
acquired intangible assets must be separately recognized if the benefit of the
intangible asset is obtained through contractual or other legal rights, or if
the intangible asset can be sold, transferred, licensed, rented or exchanged,
regardless of the acquirer's intent to do so. Intangible assets with definitive
lives are amortized over their useful lives. The statement requires that by June
30, 2002, a company must establish its fair value benchmarks in order to test
for impairment. The Company adopted SFAS 142 effective January 1, 2002. For
purposes of performing the fair-value based test of goodwill, the Company has
determined that it has one reporting unit. This reporting unit is consistent
with its single operating segment, which management determined is appropriate
under the provisions of SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). During 2002, a transitional
goodwill impairment test was performed and the Company determined that there was
no impairment of goodwill. Further, as required by SFAS 142, an annual
impairment test was completed at the end of fiscal 2002 and the Company
determined that there was no impairment. Fair value was determined by two
methods:

         1. Present value of future estimated cash flows, including a
determination of a terminal value.


         2. Market capitalization utilizing quoted market prices of the
Company's common stock.


The adoption of SFAS 142 did not result in an impairment of goodwill. However,
changes in business conditions could result in an impairment in the future. Such
impairment, if any, could have a significant impact on the Company's operations
and financial condition. Examples of changes in business conditions include, but
are not limited to, bankruptcy or loss of a significant customer, a significant
adverse change in regulatory factors, a loss of key personnel, increased levels
of competition from companies with greater financial resources than the Company
and margin erosion caused by our inability to increase prices to our customers
at the same rate that our costs increase. Adoption of SFAS 142 increased pretax
earnings by approximately $738,000 for the year ended December 31, 2002 due to
the cessation of goodwill amortization.

                                       21
<PAGE>

Other Expense
Other expense decreased by $4,479,000, to $206,000 in 2002 from $4,685,000 in
2001. The 2002 expense includes a $300,000 increase in the allowance for the
shareholder note receivable. The 2001 expense is primarily due to two
transactions. As of December 31, 2001, the Company wrote-off the Sureway Note
Receivable received on March 30, 2001 amounting to $2,500,000 in the transaction
to dispose of certain assets and liabilities of Sureway, as collection of the
Sureway Note Receivable, interest accrued thereon and certain other related
receivables was in doubt. The Company also recorded a $2,283,000 loss on the
sale of all of the outstanding stock in National Express, Inc. (the Company's
ground courier operation in the Mid-West) to First Choice Courier and
Distribution, Inc. ("First Choice") on June 14, 2001. The selling price of the
stock was approximately $2,530,000 and was comprised of $880,000 in cash and a
subordinated promissory note (the "Promissory Note") for $1,650,000. The
Promissory Note originally bore interest at the rate of 7.0% per annum. The
Promissory Note, as amended on March 14, 2003, allows for the deferral of the
interest and principal payments due on December 14, 2002 and March 14, 2003. A
new quarterly payment schedule commenced on June 14, 2003 with interest only
payments at a new interest rate at 9.0% per annum. The final balloon payment of
approximately $1,100,000 plus any remaining principal or unpaid interest was to
be due on June 14, 2006. On March 1, 2004, the Promissory Note was cancelled in
connection with the repurchase of certain assets and liabilities of First
Choice. See Note 17 - Subsequent Events.

Interest Expense
Interest expense decreased by $163,000 from $2,897,000 in 2001 to $2,734,000 in
2002. The decrease is primarily attributable to decreased debt. Total debt was
$3,112,000 lower at December 31, 2002 compared to December 31, 2001. Principal
payments of $1,750,000 and $1,040,000 on the senior subordinated notes and
seller-financed debt, respectively, comprised the majority of the debt
reduction.


Liquidity and Capital Resources

2004 Restructuring of Senior Notes Debt

At December 31, 2003, the Company was indebted to Paribas and Exeter
(collectively "Paribas") in the sum of approximately $11,000,000 pursuant to a
subordinated note bearing interest at 12% per annum (see Senior Notes in Note
9). On April 14, 2004, an agreement was reached among the Company, Paribas and
certain members of CD&L management and others ("Investors") as to the financial
restructuring of the Senior Notes. Paribas agreed to convert a portion of its
existing debt due from CD&L into equity and to modify the terms of its
subordinated note if the Investors purchase a portion of the note and accept
similar modifications. See Notes to Consolidated Financial Statements Note 17 -
Subsequent Events for further discussion of the restructuring arrangement.

The following tables summarize our contractual and commercial obligations as of
December 31, 2003:


<TABLE>
<CAPTION>
                                                                          Payments Due By Period
                                               --------------------------------------------------------------------------------
 Contractual Obligations                                                                                 2008-
(in thousands)                                  2004           2005          2006         2007        Thereafter         Total
                                                ----           ----          ----         ----        ----------         -----
<S>                                            <C>           <C>         <C>           <C>            <C>            <C>
Long-term debt                                 $2,514        $1,760      $9,439(a)        $580             $-           $14,293

Capital leases                                    $72            $2          $2             $1             $-               $77

Operating leases (Primarily for                $3,615        $3,031      $2,280         $1,228           $660           $10,814
   facilities)

</TABLE>

(a) This information is as of December 31, 2003 and does not take into account
the April 14, 2004 financial restructuring.

                                       22
<PAGE>

Other Contractual Obligations:

The Company has entered into employment agreements with its key executives which
under certain change in control circumstances could result in a total cash
payments of as much as approximately $4 million. See Item 11. Employment
Agreements; Covenants-Not-To-Compete.


<TABLE>
<CAPTION>

                                                                    Amount of Commitment Expiration Per Period
                                            -----------------------------------------------------------------------------------
Other Commercial Commitments                                                                            2008-
(in thousands)                                  2004           2005          2006         2007        Thereafter      Total
                                                ----           ----          ----         ----        ----------      -----
<S>                                           <C>          <C>            <C>          <C>            <C>           <C>
Working Capital Facility                           $-       $15,000            $-           $-            $-        $15,000
(Including Standby Letters of Credit)

Standby Letter of Credit                       $6,515           (A)           (A)          (A)           (A)            (A)

</TABLE>

(A) The Company is required to provide a standby letter of credit per the terms
of its current captive insurance program. The values of future standby letters
of credit will vary depending on future insurance premiums.

         The Company's working capital decreased by $1,062,000 from $2,869,000
as of December 31, 2002 to $1,807,000 as of December 31, 2003. The decrease is
primarily the result of a $4,536,000 increase in short-term borrowings on the
Company's line of credit and additional accrued liabilities of $2,218,000 at
December 31, 2003. These factors are partially offset by a $3,977,000 increase
in accounts receivable, net and a $857,000 decrease in current maturities of
long-term debt.

         Cash and cash equivalents increased by $245,000 during 2003. Cash of
$2,396,000 was used in operating activities, primarily due to the prepayment of
$3,236,000 in insurance premiums during 2003 (see Insurance Financing
Arrangements below). Additional cash flow was used to support business growth
late in the year. Cash of $866,000 was used in investing activities, the
majority of which relates to the purchase and implementation of the Company's
new Peoplesoft financial system. Cash of $3,507,000 was provided by financing
activities as a result of the increased utilization of the Company's line of
credit.

         Capital expenditures amounted to $968,000, $522,000 and $333,000 for
the years ended December 31, 2003, 2002 and 2001, respectively. These
expenditures relate primarily to enhanced and expanded information systems
capability and upgraded Company facilities in the ordinary course of business.
In December 2003, $349,000 was expended in connection with the purchase and
implementation of the Company's new PeopleSoft financial system which went live
January 1, 2004. Capital expenditures of approximately $1,000,000 are
anticipated for the year ending December 31, 2004.

Short-term borrowings -

         At December 31, 2003, short-term borrowings totaled $5,767,000
consisting of a line of credit balance of $4,536,000 and $1,231,000 of
outstanding borrowings related to the insurance financing arrangements discussed
below. There were no short-term borrowings outstanding as of December 31, 2002.

                                       23
<PAGE>

         As of June 27, 2002 CD&L and Summit Business Capital Corporation, doing
business as Fleet Capital - Business Finance Division, entered into an agreement
establishing a revolving credit facility (the "Fleet Facility") of $15,000,000.
The Fleet Facility replaced a revolving credit facility with First Union
Commercial Corporation established in July 1997. The Company's short-term
borrowings on its line of credit are as follows for the years ended December 31
(in thousands) -

<TABLE>
<CAPTION>
                                                                          2003                2002                2001
                                                                          ----                ----                ----
<S>                                                                      <C>                 <C>                <C>
     Maximum amount outstanding during the year                          $5,618              $1,800             $11,500
     End of year balance                                                  4,536                -                   -
     Average balance outstanding during the year                          1,600                 300               2,700
     Weighted average borrowing cost during the year                      11.0%               11.0%               11.0%
     Standby letters of credit, end of year balance                       6,515               7,000               7,081
</TABLE>

         The Fleet Facility expires on June 27, 2005 and provides CD&L with
standby letters of credit, prime rate based loans at the bank's prime rate, as
defined, plus 25 basis points (4.25% at December 31, 2003) and LIBOR based loans
at the bank's LIBOR, as defined, plus 225 basis points (3.37% at December 31,
2003). Credit availability is based on eligible amounts of accounts receivable,
as defined, and is secured by substantially all of the assets, including certain
cash balances, accounts receivable, equipment, leasehold improvements and
general intangibles of the Company and its subsidiaries. During the year ended
December 31, 2003, the maximum borrowings outstanding under the Fleet Facility
were approximately $5,618,000 and the outstanding borrowings as of December 31,
2003 were approximately $4,536,000. As of December 31, 2003, the Company had
total cash on hand and borrowing availability of $2,697,000 under the Fleet
Facility, after adjusting for restrictions related to outstanding standby
letters of credit of $6,515,000 and minimum availability requirements.

         Under the terms of the Fleet Facility, the Company is required to
maintain certain financial ratios and comply with other financial conditions.
The Fleet Facility also prohibits the Company from incurring certain additional
indebtedness, limits certain investments, advances or loans and restricts
substantial asset sales, capital expenditures and cash dividends. The Company
was in compliance with its Fleet debt covenants as of December 31, 2003.

Insurance Financing Agreements -

         In connection with the renewal of certain of the Company's insurance
policies, CD&L entered into four agreements to arrange for the financing of
annual insurance premiums. A total of $3,236,000 was financed through these
arrangements. Monthly payments, including interest, amount to $328,000. The
interest rates range from 3.50% to 4.75% and the notes mature in March and April
2004. The related annual insurance premiums were paid to the various insurance
companies at the beginning of each policy year. Outstanding debt amounts at
December 31, 2003 of $1,231,000 are included in short-term borrowings. The
corresponding prepaid insurance has been recorded in prepaid expenses and other
current assets.

 Long-Term Debt -

         On January 29, 1999, the Company completed a $15,000,000 private
placement of senior subordinated notes and warrants (the "Senior Notes") with
three financial institutions. The Senior Notes originally bore interest at 12.0%
per annum and are subordinate to all senior debt including the Company's Fleet
Facility. Under the terms of the Senior Notes, as amended, the Company is
required to maintain certain financial ratios and comply with other financial
conditions contained in the Senior Notes agreement. Although we were in
compliance with our Senior Notes debt covenants at December 31, 2003, we were
anticipating non-compliance with certain covenants in 2004 and beyond.
Additionally, based on our cash flow projections, we would be unlikely able to
pay the $9,000,000 balloon payment on the Senior Notes due to be paid in January
2006. Subsequently, on April 14, 2004, we restructured our senior debt and
related covenants. The restructuring includes an agreement among us, our lenders
and certain members of CD&L management and others which improves the Company's
short-term liquidity and reduces interest expense. See Note 17 - Subsequent
Events for pro forma financial information.

                                       24
<PAGE>

Long-term debt consists of the following (in thousands)   -

<TABLE>
<CAPTION>
                                                                                              December 31,
                                                                                   --------------------------------------
                                                                                          2003                2002
                                                                                   -------------------  ------------------
<S>                                                                                <C>                  <C>
  Senior Subordinated Notes, net of unamortized discount of $377 and $557,
      respectively.                                                                           $10,623             $11,443
  Capital lease obligations due through October 2004 with interest at rates
      ranging from 6.5% to 11.5% and secured by the related property.                              76                 303
  Seller-financed debt on acquisitions, payable in monthly installments through
      June 2007. Interest is payable at rates ranging between 7.0% and 11.0%.
      (a)                                                                                       3,671               5,737
                                                                                   -------------------  ------------------

                                                                                               14,370              17,483
  Less - Current maturities                                                                    (2,585)             (3,442)
                                                                                   -------------------  ------------------

                                                                                              $11,785             $14,041
                                                                                   ===================  ==================
</TABLE>

(a)      In April 2002, the Company renegotiated the repayment terms of certain
         seller-financed debt. Effective with the July 2002 payments, the
         individual notes convert into five year term loans with principal and
         interest payments due monthly. The interest rate on seller-financed
         debt, as amended in 2002, is generally a floating interest rate with a
         floor of 7% and a ceiling of 9%. The one note not renegotiated in 2002
         has a balance of $761,000 at December 31, 2003 and bears interest at a
         rate of 11.0%.

         The aggregate annual principal maturities of debt (excluding capital
lease obligations) as of December 31, 2003 are as follows (in thousands) -

            2004                                   $2,514
            2005                                    1,760
            2006                                    9,439
            2007                                      580
            2008                                        -
                                             -------------------

              Total                               $14,293
                                             ===================

         The Company leases certain transportation and warehouse equipment under
capital lease agreements that expire at various dates. At December 31, 2003,
minimum annual payments under capital leases, including interest, are as follows
(in thousands) -

2004                                                                 $72
2005                                                                   2
2006                                                                   2
2007                                                                   1
2008                                                                   -

                                                                   ----------
  Total minimum payments                                              77
Less - Amounts representing interest                                  (1)
                                                                   ----------

  Net minimum payments                                                76
Less - Current portion of obligations under capital leases           (71)
                                                                   ----------

  Long-term portion of obligations under capital leases               $5
                                                                   ==========


         The Company has an accumulated deficit of ($7,146,000) as of December
31, 2003. There can be no assurances that the Company's lenders will agree to
waive any future covenant violations, if any, continue to renegotiate and modify
the terms of their loans, or further extend the maturity date, should it become
necessary to do so. Further, there can be no assurances that the Company will be
able to meet its revenue, cost or income projections, upon which the debt
covenants are based.

         Management believes that cash flows from operations and its borrowing
capacity, after the debt restructuring referred to above, are sufficient to
support the Company's operations and general business and capital requirements
for at least the next twelve months. Such conclusions are predicated upon
sufficient cash flow from operations and the continued availability of a
revolving credit facility. The risks associated with cash flow from operations
are mitigated by the Company's low gross profit margin. Unless extraordinary,
decreases in revenue should be accompanied by corresponding decreases in costs,
resulting in minimal impact to liquidity. The risks associated with the
revolving credit facility are as discussed above.

                                       25
<PAGE>

New Accounting Standards and Pronouncements

         In June 2002, SFAS No. 146, "Accounting for Costs Associated with Exit
or Disposal Activities" ("SFAS 146") was issued. This Statement addresses
financial accounting and reporting for costs associated with exit or disposal
activities. SFAS No. 146 requires that a liability for a cost associated with an
exit or disposal activity be recognized when the liability is incurred. This
Statement also establishes that fair value is the objective for initial
measurement of the liability. The provisions of SFAS 146 are effective for exit
or disposal activities that are initiated after December 31, 2002. The adoption
of SFAS 146 is not expected to have a material impact on the financial position
or results of operations of the Company.

         In November 2002, Interpretation No. 45 of the Financial Accounting
Standards Board ("FASB"), "Guarantor's Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN
45") was issued. FIN 45 requires certain guarantees to be recorded at fair value
and requires a guarantor to make significant new disclosures, even when the
likelihood of making any payments under the guarantee is remote. Generally, FIN
45 applies to certain types of financial guarantees that contingently require
the guarantor to make payments to the guaranteed party based on changes in an
underlying agreement that is related to an asset, liability, or an equity
security of the guaranteed party; performance guarantees involving contracts
which require the guarantor to make payments to the guaranteed party based on
another entity's failure to perform under an obligating agreement;
indemnification agreements that contingently require the guarantor to make
payments to an indemnified party based on changes in an underlying agreement
that is related to an asset, liability, or an equity security of the indemnified
party; or indirect guarantees of the indebtedness of others. The initial
recognition and initial measurement provisions of FIN 45 are applicable on a
prospective basis to guarantees issued or modified after December 31, 2002.
Disclosure requirements under FIN 45 are effective for financial statements
ending after December 15, 2002 and are applicable to all guarantees issued by
the guarantor subject to FIN 45's scope, including guarantees issued prior to
FIN 45. The Company has evaluated the accounting provisions of the
interpretations and there was no material impact on its financial condition,
results of operations or cash flows for the period ended December 31, 2002.

         In January 2003, Interpretation No. 46 of the FASB, "Consolidation of
Variable Interest Entities" ("FIN 46") was issued. The Company does not believe
that it has any relationships with variable interest entities that are subject
to the requirements of FIN 46.

         In April 2003, SFAS No, 149, "Amendment of Statement 133 on Derivative
Instruments and Hedging Activities" ("SFAS 149") was issued. This Statement
amends and clarifies financial accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts and for hedging activities under FASB Statement No. 133 "Accounting
for Derivative Instruments and Hedging Activities". The Company does not have
any derivative instruments or hedging activities that are subject to the
requirements of SFAS 149.

         In May 2003, SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity" ("SFAS 150")
was issued. This Statement establishes standards for how an issuer classifies
and measures certain financial instruments with characteristics of both
liabilities and equity. It requires that an issuer classify a financial
instrument that is within its scope as a liability (or an asset in some
circumstances). As of December 31, 2003, the Company did not have any financial
instruments with characteristics of both liabilities and equity. The provisions
of SFAS 150 were followed in determining the equity classification of preferred
shares issued in relation to the debt restructuring as disclosed in the pro
forma financial information in Note 17 - Subsequent Events.

         In December 2003, FASB Interpretation No. 46 (revised December 2003),
"Consolidation of Variable Interest Entities" ("Revised FIN 46") was issued. The
Company does not believe that it has any relationships with variable interest
entities that will be subject to the requirements of the Revised FIN 46.

         In December 2003, SFAS No. 132 (revised 2003), "Employers' Disclosures
about Pensions and Other Postretirement Benefits" ("Revised SFAS 132") was
issued. This Statement revises employers' disclosures about pension plans and
other postretirement benefit plans. The provisions of the Revised SFAS 132 is
effective for financial statements with fiscal years ending after December 15,
2003. The adoption of the Revised SFAS 132 is not expected to have a material
impact on the financial position or results of operations of the Company.

                                       26
<PAGE>

Inflation

         While inflation has not had a material impact on the Company's results
of operations for the last three years, recent fluctuations in fuel prices can
and do affect the Company's operating costs.


Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

         The Company is exposed to the effect of changing interest rates. At
December 31, 2003, the Company's debt consisted of approximately $13,069,000
(excluding unamortized discount of $377,000) of fixed rate debt with a weighted
average interest rate of 12.53% and $7,446,000 of variable rate debt with a
weighted average interest rate of 5.32%. The variable rate debt consists of six
seller-financed notes with an interest rate of prime plus 200 basis points with
a minimum rate of 7.0% and maximum rate of 9.0% and $4,536,000 of borrowings of
revolving line of credit debt. If interest rates on variable rate debt were to
increase by 53 basis points (one-tenth of the weighted average interest rate at
December 31, 2003), the net impact to the Company's results of operations and
cash flows for the year ended December 31, 2003 would be a decrease of
approximately $40,000. Maximum borrowings of revolving line of credit debt
during the year ended December 31, 2003 were $5,618,000.

                                       27
<PAGE>

Item 8.  Financial Statements and Supplementary Data


                          INDEX TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>

                                                                                                              Page
                                                                                                              ----
<S>                                                                                                           <C>

Independent Auditors' Report....................................................................................29

Previously issued Report of Independent Public Accountants......................................................31

Consolidated Balance Sheets as of December 31, 2003 and 2002....................................................32

Consolidated Statements of Operations For The Years Ended December 31, 2003, 2002 and

    2001........................................................................................................33

Consolidated Statements of Changes in Stockholders' Equity For The Years Ended December 31,
    2003, 2002 and 2001.........................................................................................34

Consolidated Statements of Cash Flows For The Years Ended December 31, 2003, 2002 and

    2001........................................................................................................35

Notes to Consolidated Financial Statements......................................................................36

</TABLE>

                                       28
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders of CD&L, Inc.:


We have audited the accompanying consolidated balance sheets of CD&L, Inc. and
subsidiaries (the "Company") as of December 31, 2003 and 2002 and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the years then ended. Our audit also included the financial statement
schedule for the years ended December 31, 2003 and 2002, listed in the Index at
Item 15. These consolidated financial statements and the financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial statements and
financial statement schedule based on our audits. The Company's consolidated
financial statements and financial statement schedule for the year ended
December 31, 2001, before the restatement discussed in Note 19 and the inclusion
of the disclosures discussed in Note 2 with respect to Statement of Financial
Accounting Standards ("SFAS") No. 148, Accounting for Stock-Based Compensation-
Transition and Disclosure and in Note 7 with respect to SFAS No.
142, Goodwill and Other Intangible Assets to the consolidated financial
statements were audited by other auditors who have ceased operations. Those
auditors expressed an unqualified opinion on those consolidated financial
statements and stated that such 2001 financial statement schedules, when
considered in relation to the 2001 basic consolidated financial statements taken
as a whole, presented fairly, in all material respects, the information set
forth therein, in their report dated February 26, 2002 (except with respect to
the matters discussed in Note 9, as to which the date is April 15, 2002).

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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, such consolidated financial statements present fairly, in all
material respects, the financial position of CD&L, Inc. and subsidiaries as of
December 31, 2003 and 2002, and the results of their operations and their cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America. Also in our opinion, such
financial statement schedule for the years ended December 31, 2003 and 2002,
when considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly, in all material respects, the information set forth
therein.

As discussed in Note 7 to the consolidated financial statements, in 2002 the
Company changed its method of accounting for goodwill and other intangible
assets to conform with SFAS No. 142.

As discussed above, the consolidated financial statements of the Company for the
year ended December 31, 2001, were audited by other auditors who have ceased
operations. As described in Note 19, these consolidated financial statements
have been restated to change the classification of the write-off of a $2,500,000
note from discontinued operations to continuing operations. We audited the
adjustment that was applied to the restated amounts reflected in the 2001
financial statements. Our procedures included (1) agreeing the previously
reported line items and disclosure amounts included in the 2001 consolidated
financial statements to a Company analysis obtained from management (2)
comparing restated amounts in the analysis to supporting documentation and (3)
testing the mathematical accuracy of the analysis. In our opinion, such
adjustment has been properly applied.

In addition, as described in Notes 2 and 7, the consolidated financial
statements of the Company for the year ended December 31, 2001 have been revised
to include the disclosures required by SFAS No. 148 and SFAS No. 142,
respectively. Our audit procedures with respect to the disclosures included in
Notes 2 and 7 with respect to 2001 included (1) comparing the amount of
stock-based compensation expense to the Company's underlying analysis obtained
from management, (2) comparing the previously reported net loss to the
previously issued financial statements and the adjustments to reported net loss
representing stock based compensation and amortization expense related to
goodwill (including any related tax effects) recognized in those periods, to the
Company's underlying analysis obtained from management, and (3) testing the
mathematical accuracy of the reconciliation of adjusted net loss to reported net
loss and the related loss-per-share amounts. In our opinion, the disclosures for
2001 in Notes 2 and 7 are appropriate.

                                       29
<PAGE>

However we were not engaged to audit, review or apply any procedures to the 2001
consolidated financial statements of the Company other than with respect to the
restatement adjustment and transitional disclosures and, accordingly, we do not
express an opinion or any other form of assurance on the 2001 consolidated
financial statements taken as a whole.

DELOITTE & TOUCHE LLP


New York, New York
March 26, 2004 (except with respect to the matters discussed in Notes 15 and 17,
as to which the date is April 14, 2004)



                                       30
<PAGE>

This audit report of Arthur Andersen LLP, our former independent public
accountants, is a copy of the original report dated February 26, 2002 rendered
by Arthur Andersen LLP on our consolidated financial statements included in our
Form 10-K filed on April 16, 2002, and has not been reissued by Arthur Andersen
LLP since that date. Arthur Andersen reported on the 2001 consolidated financial
statements prior to the restatement discussed in Note 19 and the transitional
disclosures discussed in Notes 2 and 7. We are including this copy of the Arthur
Andersen LLP audit report pursuant to Rule 2-02(e) of Regulation S-X under the
Securities Act of 1933.


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To CD&L, Inc.:


We have audited the accompanying consolidated balance sheets of CD&L, Inc. (a
Delaware corporation) and subsidiaries as of December 31, 2001 and 2000, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for each of the three years in the period ended December 31,
2001. These consolidated financial statements and the schedule referred to below
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and schedule based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 CD&L, Inc. and
subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.

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

ARTHUR ANDERSEN LLP


Roseland, New Jersey
February 26, 2002
(except with respect to the matters discussed in
Note 9, as to which the date is April 15, 2002)

                                       31
<PAGE>

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


<TABLE>
<CAPTION>
                                     ASSETS
                                                                                               December 31,
                                                                                   -------------------------------------
                                                                                         2003               2002
                                                                                   -----------------  ------------------
<S>                                                                                <C>                <C>
CURRENT ASSETS:
  Cash and cash equivalents (Note 2)                                                       $1,697              $1,452
  Accounts receivable, less allowance for doubtful accounts of $872
     and $492 in 2003 and 2002, respectively (Note 9)                                      18,786              14,909
  Deferred income taxes (Notes 2 and 11)                                                    1,542               1,535
  Prepaid expenses and other current assets (Note 5)                                        2,526                 584
                                                                                   -----------------  ------------------

     Total current assets                                                                  24,551              18,480

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net (Notes 2 and 6)                                   1,446               1,233
GOODWILL, net (Notes 2, 4 and 7)                                                           11,531              11,531
DEFERRED FINANCING COSTS, net (Notes 2, 4 and 7)                                              437                 661
NOTE RECEIVABLE FROM STOCKHOLDER, less allowance of $2,800 in 2002 (Notes 12 and
  16)                                                                                           -                   -
NOTE RECEIVABLE AND SECURITY DEPOSITS (Note 4)                                              2,235               1,878
DEFERRED INCOME TAXES (Notes 2 and 11)                                                        152                  38
                                                                                   -----------------  ------------------

           Total assets                                                                   $40,352             $33,821
                                                                                   =================  ==================


                                                LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Short-term borrowings (Note 9)                                                            $5,767       $          -
  Current maturities of long-term debt (Notes 2 and 9)                                       2,585              3,442
  Accounts payable and bank overdrafts (bank overdrafts totaled $2,649 and $1,632
  in 2003 and 2002, respectively)                                                            2,649              2,644
  Accrued expenses and other current liabilities (Note 8)                                   11,743              9,525
                                                                                   -----------------  ------------------

     Total current liabilities                                                              22,744             15,611

LONG-TERM DEBT, net of current maturities (Notes 2 and 9)                                   11,785             14,041
OTHER LONG-TERM LIABILITIES                                                                    240                269
                                                                                   -----------------  ------------------
           Total liabilities                                                                34,769             29,921
                                                                                   -----------------  ------------------

COMMITMENTS AND CONTINGENCIES (Notes 12 and 13)

STOCKHOLDERS' EQUITY (Notes 13, 14 and 15):
  Preferred stock, $.001 par value; 2,000,000 shares authorized; no
     shares issued and outstanding                                                               -                  -
  Common stock, $.001 par value; 30,000,000 shares authorized,
     7,688,027 shares issued in 2003 and 2002                                                    8                  8
  Additional paid-in capital                                                                12,883             12,883
  Treasury stock, 29,367 shares at cost                                                       (162)              (162)
  Accumulated deficit                                                                       (7,146)            (8,829)
                                                                                   -----------------  ------------------
      Total stockholders' equity                                                             5,583              3,900
                                                                                   -----------------  ------------------
            Total liabilities and stockholders' equity                                     $40,352            $33,821
                                                                                   =================  ==================
</TABLE>


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

                                       32
<PAGE>

                           CD&L, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                          For the Years Ended December 31,
                                                           ------------------------------------------------------------
                                                                  2003                 2002                2001
                                                           -------------------   -----------------   ------------------
<S>                                                        <C>                   <C>                 <C>
      Revenue (Note 2)                                            $166,083               $157,232           $160,544
      Cost of revenue (exclusive of depreciation and
        amortization)                                              133,348                127,152            127,840
                                                           -------------------    ----------------   -------------------
        Gross profit                                                32,735                 30,080             32,704
                                                           -------------------    ----------------   -------------------

      Selling, general and administrative expenses                  28,136                 25,492             26,881
      Goodwill impairment                                                -                  -                  3,349
      Depreciation and amortization                                    756                  1,173              2,476
      Other (income) expense, net (Notes 3, 4, 12 and
        16)                                                         (1,496)                   206              4,685
      Interest expense                                               2,534                  2,734              2,897
                                                           -------------------    ----------------   -------------------
                                                                    29,930                 29,605             40,288
                                                           -------------------    ----------------   -------------------

      Income (loss) from continuing operations before
        provision (benefit) for income taxes                         2,805                    475             (7,584)
      Provision (benefit) for income taxes
        (Notes 2 and 11)                                             1,122                    190             (1,780)
                                                           -------------------    ----------------   -------------------
      Income (loss) from continuing operations                      $1,683                    285             (5,804)
                                                           -------------------    ----------------   -------------------

      Discontinued operations (Note 3)
        Provision for loss on disposal of assets,
        net of benefit for income taxes of $0, $0 and
        $240, respectively                                               -                      -               (465)
                                                           -------------------    ----------------   -------------------
      Loss from discontinued operations                                  -                      -               (465)
                                                           -------------------    ----------------   -------------------
         Net income (loss)                                          $1,683                   $285            ($6,269)
                                                           ===================    ================   ===================
      Basic income (loss) per share (Note 2):
        Continuing operations                                         $.22                  $.04               ($.76)
        Discontinued operations                                        .00                   .00                (.06)
                                                           -------------------    ----------------   -------------------
        Net income (loss) per share                                   $.22                  $.04               ($.82)
                                                           ===================    ================   ===================
      Diluted income (loss) per share (Note 2):
        Continuing operations                                         $.21                  $.03               ($.76)
        Discontinued operations                                        .00                   .00                (.06)
                                                           -------------------    ----------------   -------------------
        Net income (loss) per share                                   $.21                  $.03               ($.82)
                                                           ===================    ================   ===================
      Basic weighted average common
        shares outstanding                                           7,659                 7,659               7,659
                                                           ===================    ================   ===================
      Diluted weighted average common
        shares outstanding                                           8,174                 8,167               7,659
                                                           ===================    ================   ===================
</TABLE>

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

                                       33
<PAGE>

                           CD&L, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                              Retained
                                             Common Stock         Additional                   Earnings           Total
                                      ---------------------------   Paid-in     Treasury     (Accumulated     Stockholders'
                                         Shares        Amount       Capital       Stock        Deficit)           Equity
                                      ----------------------------------------------------------------------------------------
<S>                                   <C>              <C>        <C>           <C>          <C>              <C>
BALANCE AT
        DECEMBER 31, 2000                 7,658,660           $8       $12,883      ($162)          ($2,845)           $9,884
Net loss                                          -            -             -          -            (6,269)           (6,269)
                                      ----------------------------------------------------------------------------------------
BALANCE AT
        DECEMBER 31, 2001                 7,658,660            8        12,883       (162)           (9,114)            3,615
Net income                                        -            -             -          -               285               285
                                      ----------------------------------------------------------------------------------------
BALANCE AT
        DECEMBER 31, 2002                 7,658,660            8        12,883       (162)           (8,829)            3,900
Net income                                        -            -             -           -            1,683             1,683
                                      ----------------------------------------------------------------------------------------
BALANCE AT
        DECEMBER 31, 2003                 7,658,660           $8       $12,883      ($162)          ($7,146)           $5,583
                                      ========================================================================================
</TABLE>


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

                                       34
<PAGE>

                           CD&L, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                        For The Years Ended December 31,
                                                                                -------------------------------------------------
                                                                                     2003              2002            2001
                                                                                ----------------  ---------------  --------------
                                                                                                                     (Note 19)
<S>                                                                             <C>               <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                                                  $1,683              $285          ($6,269)
  Adjustments to reconcile net income (loss) to net cash provided by
     operating activities of continuing operations -
   Non-cash extinguishment of debt                                                   (1,034)                -                -
  Gain on disposal of equipment and leasehold improvements                              (96)             (119)             (26)
  Loss on sale of subsidiary                                                              -                 -            2,283
  Loss on disposal of assets of discontinued operations                                   -                 -              465
  Goodwill impairment                                                                     -                 -            3,349
  Depreciation, amortization and deferred financing amortization                      1,154             1,358            2,476
  Write-off of note receivable                                                            -                 -            2,500
  Provision for doubtful note receivable                                                  -               300                -
  Provision for doubtful accounts                                                       629              (165)             (69)
  Deferred income tax benefit                                                          (121)             (737)            (626)
  Changes in operating assets and liabilities
      (Increase) decrease in -
           Accounts receivable                                                       (4,506)              333            1,381
           Prepaid expenses and other current assets                                 (1,942)            1,378           (1,195)
           Note receivable from stockholder, security deposits and other assets        (357)               65              159
      Increase (decrease) in -
       Accounts payable, bank overdrafts, accrued expenses and other current
           liabilities                                                                2,223             1,029             (493)
           Other long-term liabilities                                                  (29)              138                7
                                                                                ----------------  ---------------  --------------
           Net cash (used in) provided by operating activities of
             continuing operations                                                   (2,396)            3,865            3,942
                                                                                ----------------  ---------------  --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to equipment and leasehold improvements                                    (968)             (522)            (333)
   Proceeds from sales of equipment and leasehold improvements                          102               214              222
   Proceeds from sales of businesses, net                                                 -                 -           12,531
                                                                                ----------------  ---------------  --------------
           Net cash (used in) provided by investing activities of
             continuing operations                                                     (866)             (308)          12,420
                                                                                ----------------  ---------------  --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Short-term borrowings (repayments), net                                             5,767                 -          (11,169)
   Repayments of long-term debt                                                      (2,260)           (3,120)          (3,008)
   Deferred financing costs                                                               -              (150)               -
                                                                                ----------------  ---------------  --------------
           Net cash provided by (used in) financing activities of continuing
             operations                                                               3,507            (3,270)         (14,177)
                                                                                ----------------  ---------------  --------------

CASH USED IN DISCONTINUED OPERATIONS                                                      -                 -           (1,339)
                                                                                ----------------  ---------------  --------------

           Net increase in cash and cash equivalents                                    245               287              846
CASH AND CASH EQUIVALENTS, beginning of year                                          1,452             1,165              319
                                                                                ----------------  ---------------  --------------
CASH AND CASH EQUIVALENTS, end of year                                               $1,697            $1,452           $1,165
                                                                                ================  ===============  ==============
</TABLE>

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

                                       35
<PAGE>

                           CD&L, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)      ORGANIZATION, BASIS OF PRESENTATION AND BUSINESS:

CD&L, Inc. (the "Company" or "CD&L") was founded in June 1994. The Company
provides an extensive network of same-day delivery services to a wide range of
commercial, industrial and retail customers. The Company's operations are
currently concentrated on the East Coast, with a strategic presence on the West
Coast.

The Company has an accumulated deficit of ($7,146,000) as of December 31, 2003.
As discussed in Note 9, the Company has had numerous occasions where waivers
have been required as a result of covenant violations or projected covenant
violations or that it has been necessary to amend the terms of such facilities
for other reasons. Although we were in compliance with our Senior Notes debt
covenants at December 31, 2003, we were anticipating non-compliance with certain
covenants in 2004 and beyond. Subsequently, on April 14, 2004, we restructured
our senior debt and related covenants. The restructuring includes an agreement
among us, our lenders and certain members of CD&L management and others which
improves the Company's short-term liquidity and reduces interest expense. See
Note 17 - Subsequent Events.

(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation -

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

Use of Estimates in Preparation of the Financial Statements -

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

Cash and Cash Equivalents -

CD&L considers all highly liquid investments with maturities of three months or
less when purchased to be cash equivalents. Cash equivalents are carried at
cost, which approximates market value.

Equipment and Leasehold Improvements -

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

Vehicle Maintenance and Repair-

Vehicle maintenance and repair expense are expensed as incurred. Vehicle
maintenance and repair expense was $331,000, $528,000 and $677,000 for the years
ended 2003, 2002 and 2001, respectively. This expense is included as a component
of Cost of Revenue on the Statement of Operations. Due to the nature of the
Company's operations, the bulk of its vehicles are vans, pick-ups and passenger
cars. As such, the Company does not incur significant overhaul expenses that
require capitalization.

                                       36
<PAGE>

Goodwill -

On January 1, 2002, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142").
This Statement required that goodwill no longer be amortized over its estimated
useful life but tested for impairment on an annual basis. As required by SFAS
142, annual impairment tests were completed at the end of fiscal 2003 and 2002
and the Company determined that there was no impairment.

The value of the Company's goodwill is significant relative to total assets and
stockholders' equity. The Company reviews goodwill for impairment on at least an
annual basis using several fair-value based tests, which include, among others,
a discounted cash flow and terminal value computation as well as comparing the
Company's market capitalization to the book value of the Company. The discounted
cash flow and terminal value computation is based on management's estimates of
future operations. Changes in business conditions or interest rates could
materially impact management's estimates of future operations and consequently
the Company's evaluation of fair value, and this could result in an impairment
of goodwill. Such impairment, if any, could have a significant impact on the
Company's reported results from future operations and financial condition.

Deferred Financing Costs -

The costs incurred to obtain financing, including all related fees, are included
in intangible assets and deferred financing costs in the accompanying
consolidated balance sheets and are amortized as interest expense over the life
of the related financing, from 3 - 7 years. Such costs are amortized over the
term of the related debt agreements using the straight line method, which
approximates that of the effective interest method.

Insurance -

         The Company insures certain of its risks through insurance policies,
but retains risk as a result of its deductibles related to such insurance
policies. The Company's deductible for workers' compensation is $500,000 per
loss ($350,000 prior to May 1, 2003). The deductible for employee health medical
costs is $150,000 per loss ($125,000 prior to March 1, 2002). Effective July 1,
2003, automobile liability coverage is maintained for covered vehicles through a
fully-insured indemnity program with no deductible ($350,000 deductible prior to
July 1, 2003). The Company reserves the estimated amounts of uninsured claims
and deductibles related to such insurance retentions for claims that have
occurred in the normal course of business. These reserves are established by
management based upon the recommendations of third-party administrators who
perform a specific review of open claims, which include fully developed
estimates of both reported claims and incurred but not reported claims, as of
the balance sheet date. Actual claim settlements may differ materially from
these estimated reserve amounts. The Company's estimated cumulative reported
losses for workers' compensation and automobile liability claims for the period
January 1, 1999 through December 31, 2003 amounted to $13,844,000 for losses and
$7,363,000 for administrative and reinsurance costs, all of which has been
funded to the Company's insurance carrier. Additionally, as of December 31,
2003, the Company has accrued approximately $2 million for estimated losses
incurred but not reported. The Company has also accrued $372,000 for incurred
but unpaid employee health medical costs as of December 31, 2003.

A portion of the premium payments made by CD&L to its shared captive insurance
company (the "Captive") includes allocated amounts to fund the losses that are
in a risk-sharing layer of the Captive. If losses for a member of the Captive
exhaust the funds that the member is required to pay to the Captive for a given
policy year, the excess losses are shared between all other members of the
Captive on a proportional basis based on member premiums.

The Company also requires its independent contractors to maintain auto insurance
coverage as well as workers' compensation or occupational accident insurance.

Significant Customers -

For the years ended December 31, 2003, 2002 and 2001, two customers accounted
for 14.7%, 14.7% and 11.8%, respectively, of revenue. These customers accounted
for 11.4% and 11.1% of gross accounts receivable as of December 31, 2003 and
2002, respectively.

                                       37
<PAGE>

Revenue Recognition -

Revenue is recognized when pervasive evidence of an arrangement exists, the
price to the customer is fixed or determinable and collectibility is reasonably
assured. The Company interprets the timing of revenue recognition to be when
services are rendered to customers, and expenses are recognized as incurred.
This policy applies to all of the Company's same-day, time-critical delivery
service options, including Rush, Scheduled, Facilities Management and Dedicated
Contract Logistics. Certain customers pay in advance, giving rise to deferred
revenue.

Income Taxes -

CD&L accounts for income taxes utilizing the asset and liability approach.
Deferred income taxes are provided for differences in the recognition of assets
and liabilities for tax and financial reporting purposes. Temporary differences
result primarily from accelerated depreciation and amortization for tax purposes
and various accruals and reserves being deductible for tax purposes in future
periods.

Long-Lived Assets -

SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets"
("SFAS 144"), which became effective for the Company in 2002, addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. This Statement extends the reporting requirements to include reporting
separately as discontinued operations, components of an entity that have either
been disposed of or classified as held-for-sale. The Company shall recognize an
impairment loss only if the carrying amount of a long-lived asset is not
recoverable and exceeds its fair value. That assessment shall be based on the
carrying amount of the asset at the date it is tested for recoverability,
whether in use or under development. An impairment loss shall be measured as the
amount by which the carrying amount of the long-lived asset exceeds its fair
value. The adoption of SFAS No. 144 did not have a material impact on the
financial position or results of operations of the Company.

Fair Value of Financial Instruments -

Due to the short maturities of the Company's cash, receivables and payables, the
carrying value of these financial instruments approximates their fair values.
The fair value of the Company's debt is estimated based on the current rates
offered to the Company for debt with similar remaining maturities. The Company
believes that the carrying value of its debt estimates the fair value of such
debt instruments.

Stock Based Compensation -

In December 2002, Statement of Financial Accounting Standards ("SFAS") No. 148,
"Accounting for Stock-Based Compensation-Transition and Disclosure" ("SFAS 148")
was issued and became effective in 2002. This Statement amends SFAS No. 123
"Accounting for Stock-Based Compensation," ("SFAS 123") to provide alternative
methods of transition for an entity that voluntarily changes to the fair value
method of accounting for stock-based compensation. The Company has elected to
continue to recognize stock-based compensation using the intrinsic value method
and has incorporated the additional disclosure requirements of SFAS 148.

The Company has adopted the disclosure provisions of SFAS 148. As a result,
under the provisions of SFAS 123, the Company applies Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and
related interpretations in accounting for its stock option plans. Accordingly,
no compensation expense has been recognized for its stock-based compensation
plans. Pro forma information regarding net income and earnings per share is
required, and has been determined as if the Company had accounted for its stock
options under the fair value method. The fair value for these options was
estimated at the date of grant using the Black-Scholes option-pricing model with
the following assumptions for 2003, 2002 and 2001- .

                                                  2003        2002        2001
                                             ----------  ----------  ----------
Weighted average fair value                      $0.51       $0.44       $0.53
Risk-free interest rate                          4.15%       4.30%       4.80%
Volatility factor                                  97%        101%        141%
Expected life                                  7 years     7 years     7 years
Dividend yield                                    None        None        None
                                             ----------  ----------  ----------

                                       38
<PAGE>

The pro forma information regarding net income (loss) and income (loss) per
share is as follows (in thousands, except per share data)-

<TABLE>
<CAPTION>
                                                                  2003               2002              2001
                                                             ----------------   ---------------  ------------------
<S>                                                          <C>                <C>              <C>
Income (loss) from continuing operations - as
reported                                                           $1,683               $285          ($5,804)
Net loss from discontinued operations - as reported
                                                                        -                  -             (465)
                                                             ----------------   ---------------  ------------------
Net income (loss) - as reported                                     1,683                285           (6,269)
                                                             ----------------   ---------------  ------------------

Stock-based employee compensation expense determined
   under fair value based method for all awards, net
   of related tax effects                                              (5)               (74)            (124)
                                                             ----------------   ---------------  ------------------

Income (loss) from continuing operations - pro
forma                                                               1,678                211           (5,928)
Net loss from discontinued operations - pro forma
                                                                        -                  -             (465)
                                                             ----------------   ---------------  ------------------
Net income (loss) - pro forma                                      $1,678               $211          ($6,393)
                                                             ================   ===============  ==================

Basic income (loss) per share:
    Continuing operations - as reported                              $.22               $.04            ($.76)
    Discontinued operations - as reported                             .00                .00            ( .06)
                                                             ----------------   ---------------  ------------------
   Net income (loss) per share - as reported                         $.22               $.04            ($.82)
                                                             ================   ===============  ==================
    Continuing operations - pro forma                                $.22               $.03            ($.77)
    Discontinued operations - pro forma                               .00                .00            ( .06)
                                                             ----------------   ---------------  ------------------
   Net income (loss) per share - pro forma                           $.22               $.03            ($.83)
                                                             ================   ===============  ==================

Diluted income (loss) per share:
    Continuing operations - as reported                              $.21               $.03            ($.76)
    Discontinued operations - as reported                             .00                .00            ( .06)
                                                             ----------------   ---------------  ------------------
   Net income (loss) per share - as reported                         $.21               $.03            ($.82)
                                                             ================   ===============  ==================
    Continuing operations - pro forma                                $.21               $.03            ($.77)
    Discontinued operations - pro forma                               .00                .00            ( .06)
                                                             ----------------   ---------------  ------------------
   Net income (loss) per share - pro forma                           $.21               $.03            ($.83)
                                                             ================   ===============  ==================
</TABLE>


Income (Loss) Per Share -

Basic earnings per share represents net income (loss) divided by the weighted
average shares outstanding. Diluted earnings per share represents net income
(loss) divided by the weighted average shares outstanding adjusted for the
incremental dilution of potentially dilutive common shares. Because of the
Company's net loss for the year ended December 31, 2001, the inclusion of shares
represented by 1,842 Stock Options and 505,351 Warrants for which the exercise
or conversion price was less than the average market price of common shares,
would be anti-dilutive and therefore they are not included in the loss per share
calculations for the year ended December 31, 2001.

                                       39
<PAGE>

A reconciliation of weighted average common shares outstanding to weighted
average common shares outstanding assuming dilution follows:

<TABLE>
<CAPTION>
                                                            2003                2002                 2001
                                                       ----------------    ----------------     ---------------
<S>                                                    <C>                 <C>                  <C>
Basic weighted average common
  Shares outstanding                                        7,658,660           7,658,660           7,658,660
Effect of dilutive securities:
  Stock options and warrants                                  515,419             508,751                   -
                                                       ----------------    ----------------     ---------------
Diluted weighted average common
  Shares outstanding                                        8,174,079           8,167,411           7,658,660
                                                       ================    ================     ===============
</TABLE>


The following potentially dilutive common shares were excluded from the
computation of diluted Earnings Per Share because the exercise or conversion
price was greater than the average market price of common shares -

<TABLE>
<CAPTION>
                                                           2003                2002                 2001
                                                       --------------      -------------        -------------
<S>                                                    <C>                 <C>                  <C>
Stock options                                              1,863,668          1,889,434            1,917,202
Subordinated convertible debentures                                -                  -                9,863
Seller-financed convertible notes                            352,905            458,083              524,961

</TABLE>

New Accounting Standards and Pronouncements

In June 2002, SFAS No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities" ("SFAS 146") was issued. This Statement addresses financial
accounting and reporting for costs associated with exit or disposal activities.
SFAS No. 146 requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred. This Statement
also establishes that fair value is the objective for initial measurement of the
liability. The provisions of SFAS 146 are effective for exit or disposal
activities that are initiated after December 31, 2002. The adoption of SFAS 146
is not expected to have a material impact on the financial position or results
of operations of the Company.

In November 2002, Interpretation No. 45 of the Financial Accounting Standards
Board ("FASB"), "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45")
was issued. FIN 45 requires certain guarantees to be recorded at fair value and
requires a guarantor to make significant new disclosures, even when the
likelihood of making any payments under the guarantee is remote. Generally, FIN
45 applies to certain types of financial guarantees that contingently require
the guarantor to make payments to the guaranteed party based on changes in an
underlying agreement that is related to an asset, liability, or an equity
security of the guaranteed party; performance guarantees involving contracts
which require the guarantor to make payments to the guaranteed party based on
another entity's failure to perform under an obligating agreement;
indemnification agreements that contingently require the guarantor to make
payments to an indemnified party based on changes in an underlying agreement
that is related to an asset, liability, or an equity security of the indemnified
party; or indirect guarantees of the indebtedness of others. The initial
recognition and initial measurement provisions of FIN 45 are applicable on a
prospective basis to guarantees issued or modified after December 31, 2002.
Disclosure requirements under FIN 45 are effective for financial statements
ending after December 15, 2002 and are applicable to all guarantees issued by
the guarantor subject to FIN 45's scope, including guarantees issued prior to
FIN 45. The Company has evaluated the accounting provisions of the
interpretations and there was no material impact on its financial condition,
results of operations or cash flows for the period ended December 31, 2002.

In January 2003, Interpretation No. 46 of the FASB, "Consolidation of Variable
Interest Entities" ("FIN 46") was issued. The Company does not believe that it
has any relationships with variable interest entities that are subject to the
requirements of FIN 46.

In April 2003, SFAS No, 149, "Amendment of Statement 133 on Derivative
Instruments and Hedging Activities" ("SFAS 149") was issued. This Statement
amends and clarifies financial accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts and for hedging activities under FASB Statement No. 133 "Accounting
for Derivative Instruments and Hedging Activities". The Company does not have
any derivative instruments or hedging activities that are subject to the
requirements of SFAS 149.

                                       40
<PAGE>

In May 2003, SFAS No. 150, "Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity" ("SFAS 150") was issued. This
Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). As of
December 31, 2003, the Company did not have any financial instruments with
characteristics of both liabilities and equity. The provisions of SFAS 150 were
followed in determining the equity classification of preferred shares issued in
relation to the debt restructuring as disclosed in the pro forma financial
information in Note 17 - Subsequent Events.

In December 2003, FASB Interpretation No. 46 (revised December 2003),
"Consolidation of Variable Interest Entities" ("Revised FIN 46") was issued. The
Company does not believe that it has any relationships with variable interest
entities that will be subject to the requirements of the Revised FIN 46.

In December 2003, SFAS No, 132 (revised 2003), "Employers' Disclosures about
Pensions and Other Postretirement Benefits" ("Revised SFAS 132") was issued.
This Statement revises employers' disclosures about pension plans and other
postretirement benefit plans. The provisions of the Revised SFAS 132 is
effective for financial statements with fiscal years ending after December 15,
2003. The adoption of the Revised SFAS 132 is not expected to have a material
impact on the financial position or results of operations of the Company.


(3)      DISCONTINUED OPERATIONS:

On December 1, 2000, the Company made a strategic decision to dispose of its air
delivery business. Subsequently, on March 30, 2001, the Company consummated a
transaction providing for the sale of certain assets and liabilities of Sureway
Air Traffic Corporation, Inc. ("Sureway"), its air delivery business. The
selling price for the net assets was approximately $14,150,000 and was comprised
of $11,650,000 in cash, a subordinated promissory note (the "Note Receivable")
for $2,500,000 and contingent cash payments based upon the ultimate development
of certain liabilities retained by the Company. The Note Receivable originally
bore interest at the rate of 10.0% per annum, with interest only payable in
monthly installments. The entire balance of principal, plus all accrued
interest, was due and payable on March 30, 2006.

The Company reported a net loss on the disposition of the Company's air delivery
business of $465,000 (net of benefit for income taxes of $240,000) accounted for
as discontinued operations for the year ended December 31, 2001.

Accordingly, the operating results and the provision for loss on the disposition
of the Company's air delivery business have been segregated from continuing
operations and classified as discontinued operations in the accompanying
consolidated statements of operations.

As of December 31, 2001 collection of the Note Receivable, interest accrued
thereon and certain other related receivables was in doubt. Accordingly, the
Company recorded a pre-tax charge of $2,500,000 (included in Other (Income)
Expense, net) in the fourth quarter of 2001 to write-off the Note Receivable.
Additionally, the Company recorded a pre-tax charge of $705,000 (included in
Discontinued Operations) in the fourth quarter of 2001 to write-off certain
other direct expenses incurred on behalf of Sureway subsequent to March 30, 2001
for which collection was in doubt and to true-up certain accruals that were
estimated in 2000 relative to the disposition of Sureway.

In February 1999, the Company became obligated for seller-financed acquisition
debt of $1,650,000 related to the acquisition of Gold Wings (See Note 4). As of
February 28, 2003, the note had a remaining principal balance of $1,034,000 (the
"CDL/Gold Note"). On February 28, 2003, the Company completed a series of
related transactions with GMV Express, Inc. ("GMV"), Richard Gold (a principal
of GMV) ("Gold") and his affiliates, and Global Delivery Systems LLC ("Global")
and its subsidiary, Sureway Worldwide LLC ("Sureway Worldwide"). The net effect
of the transactions with Global, Sureway Worldwide, GMV and Gold is that the
Company assigned the Note Receivable to GMV in exchange for a release on the
CDL/Gold Note payable, so that the Company is now relieved of its $1,034,000
liability for the CDL/Gold Note and the Company has no further rights to the
Note Receivable. In addition, the Company received payments from Sureway
Worldwide and Global of approximately $117,000 ($72,000 in settlement of
disputed claims and $45,000 for other amounts due) and provided Gold with a
release covering claims of breach of certain non-competition agreements. As a
result of this transaction, the Company recorded a gain of $1,034,000 during the
year ended December 31, 2003, included within Other (Income) Expense, net.

                                       41
<PAGE>

Operations from the discontinued air delivery business were as follows (in
thousands) -

                                                            For the Year
                                                               Ended
                                                            December 31,
                                                                2001
                                                          ---------------

Provision  for loss on disposal of assets,  net
   of benefit for income taxes of $240                         ($465)
                                                          ===============

As a result of the sale of its air delivery business, the Company now operates
in only one reportable business segment.

(4)      BUSINESS COMBINATIONS AND DIVESTITURES:

On February 16, 1999, the Company and its subsidiary, Sureway, entered into and
consummated an asset and stock purchase agreement with Victory Messenger
Service, Inc., Richard Gold, Darobin Freight Forwarding Co., Inc., ("Darobin")
and The Trust Created Under Paragraph Third of the Last Will and Testament of
Charles Gold (the "Trust"), (collectively "Gold Wings"), whereby Sureway
purchased all of the outstanding shares of the capital stock of Darobin and
certain of the assets and liabilities of the other sellers. The purchase price
was comprised of approximately $3,000,000 in cash, including estimated direct
acquisition costs, $1,650,000 in a 7% subordinated note (the "CDL/Gold Note")
and 200,000 shares of CD&L common stock at $3.875 per share. The CDL/Gold Note
was due April 16, 2001, with interest payable quarterly commencing April 1,
1999. In 2001 the CDL/Gold Note was renegotiated to include monthly principal
and interest payments through April 2004 at an increased interest rate of 9%.
The CDL/Gold Note is subordinate to all existing or future senior debt of CD&L.
In addition, a contingent earn out in the aggregate amount of up to $520,000 was
payable based on the achievement of certain financial goals during the two year
period following the closing. The earn out was payable 55% in cash and 45% in
CD&L common stock. The net assets acquired in this transaction were sold as part
of the disposition of Sureway. The obligations under the CDL/Gold Note and earn
out, however, remain with CD&L following the sale of the air delivery business.
During 2000, approximately $250,000 of the earn out was paid in cash and the
remaining obligation under the earn out was reduced by approximately $100,000.
In 2001, approximately $150,000 was paid to Gold Wings in full settlement of the
earn out. In 2002 the CDL/Gold Note was renegotiated to include monthly
principal and interest payments through June 2007 and the interest rate was
changed to a floating rate with a floor of 7% and a ceiling of 9%. The CDL/Gold
Note was subsequently extinguished in February 2003. See Note 3.

On April 30, 1999, CD&L entered into and consummated an asset purchase agreement
with its subsidiary, Silver Star Express, Inc. ("Silver Star") and Metro Parcel
Service, Inc., Nathan Spaulding and Kelly M. Spaulding, (collectively, "Metro
Parcel"), whereby Silver Star purchased certain of the assets and liabilities of
Metro Parcel. The purchase price was comprised of approximately $710,000 in
cash, $202,734 in a 7% subordinated note (the "Metro Parcel Note") and 40,000
shares of CD&L's common stock at $3.25 per share. The Metro Parcel Note was due
April 30, 2001 with interest payable quarterly commencing August 1, 1999 and is
subordinate to all existing or future senior debt of CD&L. In 2001 the Metro
Parcel Note was renegotiated to include monthly principal and interest payments
through April 2004 at an increased interest rate of 9%. In 2002 the Metro Parcel
Note was renegotiated to include monthly principal and interest payments through
June 2007 and the interest rate was changed to a floating rate with a floor of
7% and a ceiling of 9%.

                                       42
<PAGE>

On April 30, 1999, CD&L entered into and consummated an asset purchase agreement
with its subsidiary, Clayton/National Courier Systems, Inc. ("Clayton/National")
and Westwind Express, Inc., Logistics Delivery Systems, Inc., Fastrak Delivery
Systems, Inc., Sierra Delivery Services, Inc., and Steven S. Keihner
(collectively, "Westwind"), whereby Clayton/National purchased certain of the
assets and liabilities of Westwind. The purchase price was comprised of
approximately $2,650,000 in cash, $1,680,000 in various 7% subordinated notes
(the "Westwind Notes") and 149,533 shares of CD&L's common stock at $3.21 per
share. The Westwind Notes are comprised of two-year notes due April 30, 2001
with a total principal amount of $1,200,000 and three-year notes due April 30,
2002 with a total principal amount of $480,000. Interest on the Westwind Notes
was payable quarterly commencing July 31, 1999. The Westwind Notes are
subordinate to all existing or future senior debt of CD&L. In addition, a
contingent earn out in the aggregate amount of up to $700,000 was payable based
on the achievement of certain financial goals during the two year period
following the closing. The earn out was payable 60% in cash and 40% in one year
promissory notes bearing interest at a rate of 7% per annum having similar terms
as the Westwind Notes referred to above. During 2000, the earn out was settled
for $100,000 payable in twelve monthly cash installments commencing November 1,
2000. In 2001 the Westwind Notes due April 30, 2001 were consolidated and
renegotiated to include monthly principal and interest payments through April
2004 at an increased interest rate of 9%. In 2002 the Westwind Notes due April
30, 2002 were consolidated and renegotiated to include monthly principal and
interest payments through April 2007 and the interest rate was changed to a
floating rate with a floor of 7% and a ceiling of 9%. In addition, the Westwind
Notes amended in 2001 were renegotiated and amended to include monthly principal
and interest payments through June 2007 and the interest rate was changed to a
floating rate with a floor of 7% and a ceiling of 9%.

On May 10, 1999, CD&L entered into and consummated an asset purchase agreement
(the "Skycab Purchase Agreement") with its subsidiary, Sureway and Skycab, Inc.
and Martin Shulman (collectively, "Skycab"), whereby Sureway purchased certain
assets of Skycab. The purchase price was comprised of approximately $78,100 in
cash and a contingent earn out payable for sixteen quarters following the
closing date. The net assets acquired in this transaction were sold as part of
the disposition of Sureway, who also assumed the liability for the remaining
contingent earn out payments.

CD&L financed each of the above acquisitions using proceeds from its revolving
credit facility. All of the above transactions have been accounted for under the
purchase method of accounting. Accordingly, the allocations of the cost of the
acquired assets and liabilities have been made on the basis of their estimated
fair value. The aggregate amount of goodwill recorded for the Gold Wings and
Skycab acquisitions was originally $5,200,000 and was being amortized over 25
years up to the date of disposition. The goodwill recorded for the Metro Parcel
acquisition was approximately $1,100,000 and was being amortized over 25 years.
The goodwill for the Westwind acquisition was approximately $5,200,000 and was
being amortized over 40 years. Under the provisions of SFAS 142 the Company
ceased amortization of goodwill in 2002 and began annually testing such goodwill
for impairment (Note 7). The consolidated financial statements include the
operating results of Gold Wings, Metro Parcel, Westwind, and Skycab from their
respective acquisition dates until the sale date as applicable.

On June 14, 2001, the Company consummated a transaction providing for the sale
of all the outstanding stock of National Express, Inc., the Company's ground
courier operation in the Mid-West, to First Choice Courier and Distribution,
Inc. ("First Choice"). The selling price was approximately $2,530,000 and was
comprised of $880,000 in cash and a subordinated promissory note (the
"Promissory Note") for $1,650,000. The Promissory Note originally bore interest
at the rate of 7.0% per annum. The Promissory Note, as amended on March 14,
2003, allows for the deferral of the interest and principal payments due on
December 14, 2002 and March 14, 2003. A new quarterly payment schedule will
commence on June 14, 2003 with interest only payments at a new interest rate at
9.0% per annum. Upon the earlier of June 14, 2004 or the maker of the Promissory
Note meeting certain financial benchmarks, principal payments shall resume and
the interest rate will prospectively revert back to 7.0% per annum. The final
balloon payment of approximately $1,100,000 plus any remaining principal or
unpaid interest remains due on June 14, 2006. The Promissory Note is included in
Note Receivable and Security Deposits in the accompanying balance sheets. As a
result of the transaction, the Company recorded a $2,283,000 loss on the sale
with no related net tax benefit, which is included in other (income) expense,
net in the accompanying statement of operations for the year ended December 31,
2001. Revenues for the Mid-West operations amounted to $0, $0 and $4,500,000 for
the years ending December 31, 2003, 2002 and 2001, respectively.

Subsequently, on March 1, 2004, the Company consummated a transaction providing
for the repurchase of certain Indiana-based assets and liabilities sold to First
Choice in June 2001. The acquisition included the release of certain non-compete
agreements. Consideration for the repurchase includes cancellation of the
Promissory Note owed by First Choice of approximately $1,600,000 plus a three
year contingent earn-out based on future net revenue generated by the accounts
repurchased.

                                       43
<PAGE>

(5)      PREPAID EXPENSES AND OTHER CURRENT ASSETS:

Prepaid expenses and other current assets consist of the following (in
thousands) -

<TABLE>
<CAPTION>
                                                                                        December 31,
                                                                        ---------------------------------------------
                                                                               2003                      2002
                                                                        --------------------      -------------------
<S>                                                                     <C>                       <C>
  Prepaid insurance                                                           $2,092                      $170
  Other receivables                                                              150                       210
  Prepaid income taxes                                                           136                        89
  Other                                                                          148                       115
                                                                        --------------------      -------------------

                                                                              $2,526                      $584
                                                                        ====================      ===================
</TABLE>

(6)      EQUIPMENT AND LEASEHOLD IMPROVEMENTS:

Equipment and leasehold improvements consist of the following (in thousands) -

<TABLE>
<CAPTION>
                                                                                              December 31,
                                                                                    ---------------------------------
                                                                   Useful Lives          2003              2002
                                                                   ------------     ----------------  ---------------
<S>                                                                <C>              <C>               <C>
Transportation and warehouse equipment                              3-7 years             $1,800            $3,361
Office equipment                                                    3-7 years              1,362             1,918
Other equipment                                                     5-7 years                140               218
Leasehold improvements                                             Lease period              720               710
                                                                                    ----------------  ---------------
                                                                                           4,022             6,207
Less - accumulated depreciation and amortization                                          (2,576)           (4,974)
                                                                                    ----------------  ---------------

                                                                                          $1,446            $1,233
                                                                                    ================  ===============
</TABLE>

Depreciation and amortization expense for equipment and leasehold improvements
for the years ended December 31, 2003, 2002 and 2001 was approximately $756,000,
$1,148,000 and $1,532,000, respectively.

Leased equipment under capitalized leases (included above) consists of the
following (in thousands) -

<TABLE>
<CAPTION>
                                                                                             December 31,
                                                                                    -------------------------------
                                                                                         2003            2002
                                                                                    ---------------  --------------
<S>                                                                                 <C>              <C>
Equipment                                                                                   $674             $674
Less - accumulated depreciation                                                             (583)            (399)
                                                                                    ---------------  --------------

                                                                                             $91             $275
                                                                                    ===============  ==============
</TABLE>

The Company incurred capital lease obligations of $0 and $8,000 in 2003 and 2002
for warehouse equipment and vehicles, respectively.

                                       44
<PAGE>

(7)      GOODWILL, INTANGIBLE ASSETS AND DEFERRED FINANCING COSTS:

Goodwill consists of the following (in thousands) -
<TABLE>
<CAPTION>
                                                                                                December 31,
                                                                                       -------------------------------
                                                             Useful Lives                   2003            2002
                                                             ------------              ---------------  --------------
<S>                                                          <C>                       <C>              <C>
Goodwill                                                      Indefinite                    $17,176          $17,176
Less - accumulated amortization and impairment                                               (5,645)          (5,645)
                                                                                       ---------------  --------------

                                                                                            $11,531          $11,531
                                                                                       ===============  ==============
</TABLE>

Intangible assets and deferred financing costs consist of the following (in
thousands) -
<TABLE>
<CAPTION>
                                                                                                December 31,
                                                                                       -------------------------------
                                                             Useful Lives                   2003            2002
                                                             ------------              ---------------  --------------
<S>                                                          <C>                       <C>              <C>
Non-compete agreements                                       3 - 5 years                         $-             $250
Deferred financing costs and other                           3 - 7 years                      1,338            1,396
                                                                                       ---------------  --------------
                                                                                              1,338            1,646
Less - accumulated amortization                                                                (901)            (985)
                                                                                       ---------------  --------------

                                                                                               $437             $661
                                                                                       ===============  ==============
</TABLE>

Deferred financing costs totaled $437,000 as of December 31, 2003 (net of
accumulated amortization of $901,000). Amortization of deferred financing costs
for the years ended December 31, 2003, 2002 and 2001 was approximately $224,000,
$210,000 and $210,000, respectively. Amortization of deferred financing costs
has been recorded as interest expense.

Estimated amortization of deferred financing costs for the years ended December
31 (in thousands)-


                  2004                           $224
                  2005                            199
                  2006                             14
                  2007                              -

As a result of adopting SFAS 142 on January 1, 2002, the Company discontinued
amortization of goodwill. A reconciliation of previously reported income (loss)
from continuing operations and earnings (loss) per share from continuing
operations to the amounts adjusted for the exclusion of goodwill amortization,
net of the related income tax effect is as follows (in thousands, except per
share amounts):

<TABLE>
<CAPTION>
                                                                            Year Ended December 31,
                                                             -------------------------------------------------------
                                                                   2003              2002               2001
                                                             -------------------------------------------------------
<S>                                                          <C>                <C>               <C>
              Reported income (loss) from continuing
                 operations                                        $1,683              $285           ($5,804)
              Goodwill amortization, net of tax                         -                 -               543
                                                             -------------------------------------------------------
              Adjusted income (loss) from continuing
                 operations                                        $1,683              $285           ($5,261)
                                                             =======================================================

              Reported loss from discontinued operations
                                                                       $-                $-             ($465)
              Goodwill amortization, net of tax                         -                 -                 -
                                                             -------------------------------------------------------
              Adjusted loss from discontinued operations
                                                                       $-                $-             ($465)
                                                            =======================================================

              Reported net income (loss)                           $1,683              $285           ($6,269)
              Goodwill amortization, net of tax                         -                 -               543
                                                             -------------------------------------------------------
              Adjusted net income (loss)                           $1,683              $285           ($5,726)
                                                             =======================================================

              Adjusted income (loss) from continuing
                 operations per share - basic                           $.22              $.04             ($.69)
                                                             =======================================================
</TABLE>

                                       45
<PAGE>

<TABLE>
<CAPTION>
<S>                                                          <C>                <C>               <C>
              Adjusted income (loss) from continuing
                 operations per share - diluted                         $.21              $.03             ($.69)
                                                             =======================================================

              Adjusted loss from discontinued operations
                 per share - basic                                      $.00              $.00             ($.06)
                                                             =======================================================
              Adjusted loss from discontinued operations
                 per share - diluted                                    $.00              $.00             ($.06)
                                                             =======================================================

              Adjusted net income (loss) per share - basic              $.22              $.04             ($.75)
                                                             =======================================================

              Adjusted net income (loss) per share - diluted            $.21              $.03             ($.75)
                                                             =======================================================
</TABLE>

During 2001 the Company recorded a goodwill impairment charge of $3,349,000. The
charge was the result of a comprehensive review of the Company's intangible
assets and such charge was calculated in accordance with the provisions of SFAS
121. The measurement of impairment losses recognized in 2001 is based on the
difference between the estimated fair value and the carrying amounts of such
assets.

(8)      ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

Accrued expenses and other current liabilities consist of the following (in
thousands) -
<TABLE>
<CAPTION>
                                                                                               December 31,
                                                                                       ------------------------------
                                                                                           2003             2002
                                                                                       --------------   -------------
<S>                                                                                    <C>              <C>
Payroll and related expenses                                                                 $2,766           $2,552
Third party delivery costs                                                                    2,796            2,105
Insurance                                                                                     2,135            2,434
Professional fees                                                                               284              291
Interest                                                                                        176               78
Uninsured personal injury and property damage claims
    (Note 12)                                                                                   885              325
Other                                                                                         2,701            1,740
                                                                                       --------------   -------------
                                                                                            $11,743           $9,525
                                                                                       ==============   =============
</TABLE>

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

Short-term borrowings -

At December 31, 2003, short-term borrowings totaled $5,767,000 consisting of a
line of credit balance of $4,536,000 and $1,231,000 of outstanding borrowings
related to the insurance financing arrangements discussed below. There were no
short-term borrowings outstanding as of December 31, 2002.

As of June 27, 2002 CD&L and Summit Business Capital Corporation, doing business
as Fleet Capital - Business Finance Division, entered into an agreement
establishing a revolving credit facility (the "Fleet Facility") of $15,000,000.
The Fleet Facility replaced a revolving credit facility with First Union
Commercial Corporation established in July 1997. The Company's short-term
borrowings on its line of credit are as follows for the years ended December 31
(in thousands) -

<TABLE>
<CAPTION>
                                                                          2003         2002        2001
                                                                          ----         ----        ----
<S>                                                                     <C>         <C>         <C>
     Maximum amount outstanding during the year                         $5,618       $1,800     $11,500
     End of year balance                                                 4,536            -           -
     Average balance outstanding during the year                         1,600          300       2,700
     Weighted average borrowing cost during the year                     11.0%        11.0%       11.0%
     Standby letters of credit, end of year balance                     $6,515       $7,000      $7,081

</TABLE>
                                       46
<PAGE>

The Fleet Facility expires on June 27, 2005 and provides CD&L with standby
letters of credit, prime rate based loans at the bank's prime rate, as defined,
plus 25 basis points (4.25% at December 31, 2003) and LIBOR based loans at the
bank's LIBOR, as defined, plus 225 basis points (3.37% at December 31, 2003).
Credit availability is based on eligible amounts of accounts receivable, as
defined, and is secured by substantially all of the assets, including certain
cash balances, accounts receivable, equipment, leasehold improvements and
general intangibles of the Company and its subsidiaries. During the year ended
December 31, 2003, the maximum borrowings outstanding under the Fleet Facility
were approximately $5,618,000 and the outstanding borrowings as of December 31,
2003 were approximately $4,536,000. As of December 31, 2003, the Company had
borrowing availability of $1,000,000 under the Fleet Facility, after adjusting
for restrictions related to outstanding standby letters of credit of $6,515,000
and minimum availability requirements.

Under the terms of the Fleet Facility, the Company is required to maintain
certain financial ratios and comply with other financial conditions. The Fleet
Facility also prohibits the Company from incurring certain additional
indebtedness, limits certain investments, advances or loans and restricts
substantial asset sales, capital expenditures and cash dividends. The Company
was in compliance with its Fleet debt covenants as of December 31, 2003.

Insurance Financing Agreements -

In connection with the renewal of certain of the Company's insurance policies,
CD&L entered into four agreements to arrange for the financing of annual
insurance premiums. A total of $3,236,000 was financed through these
arrangements. Monthly payments, including interest, amount to $328,000. The
interest rates range from 3.50% to 4.75% and the notes mature in March and April
2004. The related annual insurance premiums were paid to the various insurance
companies at the beginning of each policy year. Outstanding debt amounts at
December 31, 2003 of $1,231,000 are included in short-term borrowings. The
corresponding prepaid insurance has been recorded in prepaid expenses and other
current assets.

Long-Term Debt -

On January 29, 1999, the Company completed a $15,000,000 private placement of
senior subordinated notes and warrants (the "Senior Notes") with three financial
institutions. The Senior Notes originally bore interest at 12.0% per annum and
are subordinate to all senior debt including the Company's Fleet Facility. Under
the terms of the Senior Notes, as amended, the Company is required to maintain
certain financial ratios and comply with other financial conditions contained in
the Senior Notes agreement. As of August 17, 2000, November 21, 2000, March 30,
2001, May 30, 2001, August 20, 2001, November 19, 2001, April 12, 2002, June 28,
2002, April 23, 2003 and November 13, 2003, the Company and the note holders
modified the Senior Subordinated Loan Agreement (the "Senior Note Agreement")
entered into on January 29, 1999. Although we were in compliance with our Senior
Notes debt covenants at December 31, 2003, we were anticipating non-compliance
with certain covenants in 2004 and beyond. Subsequently, on April 14, 2004, we
restructured our senior debt and related covenants. The restructuring includes
an agreement among us, our lenders and certain members of CD&L management and
others which improves the Company's short-term liquidity and reduces interest
expense. See Note 17 - Subsequent Events.


                                       47
<PAGE>

Long-term debt consists of the following (in thousands) -

<TABLE>
<CAPTION>
                                                                                              December 31,
                                                                                  --------------------------------------
                                                                                          2003                2002
                                                                                  ------------------  ------------------
<S>                                                                               <C>                 <C>

  Senior Subordinated Notes, net of unamortized discount of $377 and $557,
      respectively.                                                                          $10,623             $11,443
  Capital lease obligations due through October 2004 with interest at rates
      ranging from 6.5% to 11.5% and secured by the related property.                             76                 303
  Seller-financed debt on acquisitions, payable in monthly installments through
      June 2007. Interest is payable at rates ranging between 7.0% and 11.0%.
      (a)                                                                                      3,671               5,737
                                                                                   -----------------  ------------------
                                                                                              14,370              17,483
  Less - Current maturities                                                                   (2,585)             (3,442)
                                                                                   -------------------  ----------------
                                                                                             $11,785             $14,041
                                                                                   ===================  ================
</TABLE>

     (a)   In April 2002, the Company renegotiated the repayment terms of
           certain seller-financed debt. Effective with the July 2002 payments,
           the individual notes convert into five year term loans with principal
           and interest payments due monthly. The interest rate on
           seller-financed debt, as amended in 2002, is generally a floating
           interest rate with a floor of 7% and a ceiling of 9%. The one note
           not renegotiated in 2002 has a balance of $761,000 at December 31,
           2003 and bears interest at a rate of 11.0%.

The aggregate annual principal maturities of debt (excluding capital lease
obligations) as of December 31, 2003 are as follows (in thousands) -

              2004                        $2,514
              2005                         1,760
              2006                         9,439
              2007                           580
              2008                             -
                                       -----------

                Total                    $14,293
                                       ===========


The Company leases certain transportation and warehouse equipment under capital
lease agreements that expire at various dates. At December 31, 2003, minimum
annual payments under capital leases, including interest, are as follows (in
thousands) -

2004                                                                 $72
2005                                                                   2
2006                                                                   2
2007                                                                   1
2008                                                                   -
                                                                  ---------
Total minimum payments                                                77
Less - Amounts representing interest                                  (1)
                                                                  ---------

  Net minimum payments                                                76
Less - Current portion of obligations under capital leases           (71)
                                                                  ---------

  Long-term portion of obligations under capital leases               $5
                                                                  =========

(10)     EMPLOYEE BENEFIT PLANS:

The Company adopted a 401(k) retirement plan during 1996. Substantially all
employees are eligible to participate in the plan and are permitted to
contribute an unlimited percentage of their annual salary, subject to Internal
Revenue Service discrimination testing limitations. The Company has the right to
make discretionary contributions that will be allocated to each eligible
participant. The Company did not make discretionary contributions for the years
ended December 31, 2003, 2002 and 2001.

                                       48
<PAGE>

(11)     INCOME TAXES:

Federal and state income tax provision (benefit) for continuing operations for
the years ended December 31, 2003, 2002 and 2001 are as follows (in thousands) -

                                      2003             2002             2001
                             --------------   --------------   --------------
            Federal-
              Current                $  903            $ 673          ($1,061)
              Deferred                   43             (513)            (535)
              State                     176               30             (184)

                             --------------   --------------   --------------
                                     $1,122             $190          ($1,780)
                             ==============   ==============   ==============


The components of deferred income tax assets and liabilities are as follows (in
thousands) -

                                                                  December 31,
                                                               -----------------
                                                                 2003      2002
                                                               --------  -------
   Deferred income tax assets -
     Current -
        Allowance for doubtful accounts                          $349      $197
        Allowance for doubtful notes                                -       869
        Insurance reserves                                        118       906
        Net operating loss carryforward                           384         -
        Reserves and other, net                                   691       563
                                                               --------  -------
            Total current deferred income tax assets            1,542     2,535
     Non-current -
        Accumulated depreciation and amortization                 152        38
        Capital loss carryforward                                 776       776
                                                               --------  -------
            Total non-current deferred income tax assets          928       814
                                                               --------  -------
   Valuation Allowance                                           (776)   (1,776)
                                                               --------  -------
            Net deferred income tax assets                     $1,694    $1,573
                                                               ========  =======

             Net deferred tax assets                           $1,694    $1,573
                                                               ========  =======

                                       49
<PAGE>

The differences in Federal income taxes provided and the amounts determined by
applying the Federal statutory tax rate (34%) to income (loss) from continuing
operations before income taxes for the years ended December 31, 2003, 2002 and
2001, result from the following (in thousands) -

                                                      2003    2002       2001
                                                    ------   ------   --------

Tax at statutory rate                                 $954    $161    ($2,578)
Add (deduct) the effect of-
   State income taxes, net of Federal benefit          116      20       (129)
   Reserve on deferred tax asset                         -    (190)       190
   Capital loss on sale of subsidiary                    -       -        776
   Nondeductible expenses and other, net                52     199        (39)
                                                    ------   ------   --------
  Provision (benefit) for income taxes              $1,122    $190    ($1,780)
                                                    ======   ======   ========

In 2001, as a result of the loss on the sale of National Express, Inc. (See Note
4), the Company has a capital loss carryforward of approximately $2,300,000
which expires in 2006. Such loss is available to offset future capital gains, if
any. Management has concluded that it is more likely than not that such loss
will not be utilized prior to its expiration. Accordingly, a full valuation
allowance has been provided for this item.

(12)     COMMITMENTS AND CONTINGENCIES:

Operating Leases -

The Company leases its office and warehouse facilities under non-cancelable
operating leases, which expire at various dates through April 2013. The
approximate minimum rental commitments of the Company, under existing agreements
as of December 31, 2003, are as follows (in thousands) -

          2004                                $3,615
          2005                                 3,031
          2006                                 2,280
          2007                                 1,228
          2008                                   460
          Thereafter                             200

Rent expense, primarily for facilities, amounted to approximately $6,973,000,
$6,747,000 and $8,409,000 for the years ended December 31, 2003, 2002 and 2001,
respectively.

Litigation -

In February 1996, Liberty Mutual Insurance Company ("Liberty Mutual") filed an
action against Securities Courier Corporation ("Securities"), a subsidiary of
the Company, Mr. Vincent Brana, an employee of the Company, and certain other
parties in the United States District Court for the Southern District of New
York. Under the terms of its acquisition of Securities, the Company had certain
rights to indemnification from Mr. Brana. In connection with the
indemnification, Mr. Brana has entered into a settlement agreement and executed
a promissory note (the "Brana Note") in such amount as may be due for any
defense costs or award arising out of this suit. Mr. Brana has agreed to repay
the Company on December 1, 2003, together with interest calculated at a rate per
annum equal to the rate charged the Company by its senior lender. Mr. Brana
delivered 357,301 shares of CD&L common stock to the Company as collateral for
the Brana Note. On September 8, 2000 the parties entered into a settlement
agreement in which Securities and Mr. Brana agreed to pay Liberty Mutual
$1,300,000. An initial payment of $650,000 was made by Securities on October 16,
2000, $325,000 plus interest at a rate of 10.5% per annum was paid in monthly
installments ending July 1, 2001 and the balance of $325,000 plus interest at a
rate of 12.0% per annum was paid in monthly installments ending July 1, 2002.

At December 31, 2002, the Company had a receivable due from Mr. Brana totaling
$2,800,000. As of December 31, 2002, considering the market value of the
collateral and Mr. Brana's failure to provide satisfactory evidence to support
his ability to pay the Brana Note, the Company maintained a $2,800,000 reserve
against the receivable.

                                       50
<PAGE>

In an effort to resolve all outstanding disputes between Mr. Brana and the
Company, a settlement agreement was executed in December 2003. Pursuant to the
agreement, the Company has returned to Mr. Brana the 357,301 shares of CD&L
common stock previously held by the Company as collateral for the Brana Note. In
addition, the agreement provided for an exchange of releases between the
parties. In connection with this agreement, the Brana Note was written off as of
December 31, 2003. Mr. Brana's employment with the Company terminated on
September 1, 2002 and he has served as a paid consultant since that time.

The Company is, from time to time, a party to litigation arising in the normal
course of its business, including claims for uninsured personal injury and
property damage incurred in connection with its same-day delivery operations. In
connection therewith, the Company has recorded reserves of $885,000 and $325,000
as of December 31, 2003 and 2002, respectively.

Also from time to time, federal and state authorities have sought to assert that
independent contractors in the transportation industry, including those utilized
by CD&L, are employees rather than independent contractors. The Company believes
that the independent contractors that it utilizes are not employees under
existing interpretations of federal and state laws. However, federal and state
authorities have and may continue to challenge this position. Further, laws and
regulations, including tax laws, and the interpretations of those laws and
regulations, may change.

Management believes that none of these actions, including the actions described
above, will have a material adverse effect on the consolidated financial
position or results of operations of the Company.

(13)     STOCK OPTION PLANS:

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

Employee Stock Compensation Program -

In September 1995, the Board of Directors adopted, and the stockholders of the
Company approved the Company's Employee Stock Compensation Program (the
"Employee Stock Compensation Program"). The Employee Stock Compensation Program
authorizes the granting of incentive stock options, non-qualified supplementary
options, stock appreciation rights, performance shares and stock bonus awards to
key employees of the Company, including those employees serving as officers or
directors of the Company. The Company initially reserved 1,400,000 shares of
Common Stock for issuance in connection with the Employee Stock Compensation
Program. In June 1998 the Board of Directors adopted and the stockholders of the
Company approved an additional 500,000 shares for issuance under the Employee
Stock Compensation Program. In June 2000 the Board of Directors adopted and the
stockholders of the Company approved the Year 2000 Employee Stock Compensation
Program, which provided an additional 1,350,000 shares for issuance to key
employees of the Company. In June 2001 the Board of Directors adopted and the
stockholders of the Company approved an amendment to the Year 2000 Employee
Stock Compensation Program, which provided an additional 375,000 shares for
issuance to key employees of the Company. In October 2002, the Board of
Directors adopted and the stockholders of the Company approved a second
amendment to the Year 2000 Employee Stock Compensation Program, which provided
an additional 375,000 shares for issuance to key employees of the Company. The
Employee Stock Compensation Programs are 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 Programs 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.

Stock Option Plans 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. In October 2002 the Board of Directors adopted and the
stockholders of the Company approved the 2002 Stock Option Plan for Independent
Directors, which provided an additional 100,000 shares for issuance to
non-employee directors of the Company. 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 provided 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. In June 1998 the stockholders of the Company
approved amendments to the Director Plan. The amendments replaced the annual
stock option grants of the original plan with quarterly grants of 1,250 shares
of stock options on the first trading day of each fiscal quarter commencing on
October 1, 1997. In August of 1998 and February of 1999, the Committee approved
further amendments to the Director Plan. These amendments replaced the time
period to exercise vested options after a participating director has served as a
director for a period of three consecutive years or more. The Director Plan was
amended to provide that in the event any holder, who has served as a director
for three or more consecutive years, shall cease to be a director for any
reason, including removal with or without cause or death or disability, all
options (to the extent exercisable at the termination of the director's service)
shall remain exercisable by the holder or his lawful heirs, executors or
administrators until the expiration of the ten-year period following the date
such options were granted.

                                       51
<PAGE>

Information regarding the Company's stock option plans is summarized below:

                                                                   Weighted
                                                  Number           Average
                                                    of             Exercise
                                                  Shares            Price
                                              ------------      ----------------
   Shares under option:
     Outstanding at December 31, 2000           2,423,685             $3.77

       Granted                                     55,000             $0.56
       Exercised                                        -                 -
       Canceled                                  (534,969)            $4.79
                                              ------------

     Outstanding at December 31, 2001           1,943,716             $3.25

       Granted                                     75,000             $ .52
       Exercised                                        -                 -
       Canceled                                   (85,063)            $6.40
                                              ------------

     Outstanding at December 31, 2002           1,933,653             $3.01

       Granted                                     30,000              $.60
       Exercised                                        -                 -
       Canceled                                   (48,456)            $4.90
                                              ------------

     Outstanding at December 31, 2003           1,915,197             $2.93
                                              ============
   Options exercisable at:
     December 31, 2001                          1,685,372             $3.41
                                              ============      ================
     December 31, 2002                          1,898,487             $3.02
                                              ============      ================
     December 31, 2003                          1,883,531             $2.96
                                              ============      ================

At December 31, 2003, options available for grant under the Employee Stock
Compensation Plans and the Director Plans total 2,242,303 and 42,500 shares,
respectively.

                                       52
<PAGE>

The following summarizes information about option groups outstanding and
exercisable at December 31, 2003:

<TABLE>
<CAPTION>
                                       Outstanding Options                                Exercisable Options
                      -------------------------------------------------------     ------------------------------------
                           Number                                                      Number
                         Outstanding           Weighted           Weighted           Exercisable           Weighted
    Range of                as of               Average           Average               as of              Average
    Exercise            December 31,           Remaining          Exercise          December 31,           Exercise
     Prices                 2003                 Life              Price                2003                Price
------------------    ------------------    ----------------    -------------     ------------------     -------------
<S>                   <C>                   <C>                 <C>               <C>                    <C>
    $0.350 -
        $1.438                160,000              7.94               $0.59             128,334               $0.60
    $1.813 -
       $1.813                 650,000              6.45               $1.81             650,000               $1.81
    $2.000 -
       $2.625                 540,085              4.71               $2.35             540,085               $2.35
    $2.688 -
       $4.875                 392,638              4.54               $3.62             392,638               $3.62
    $6.000 -
       $13.000                172,474              2.80               $9.49             172,474               $9.49
                      ------------------                                          ------------------
     Totals                 1,915,197              5.36               $2.93           1,883,531               $2.96
                      ==================                                          ==================
</TABLE>

(14)     EMPLOYEE STOCK PURCHASE PLAN

Effective April 1, 1998, CD&L adopted an Employee Stock Purchase Plan (the
"Employee Purchase Plan") which was amended in 1999. The Employee Purchase Plan
permitted eligible employees to purchase CD&L common stock at 85% of the closing
market price on the last day prior to the commencement or the end of the
purchase period. The Employee Purchase Plan provided for the purchase of up to
500,000 shares of common stock. No shares were issued under the Employee
Purchase Plan during 2003, 2002 or 2001.

(15)     SHAREHOLDER PROTECTION RIGHTS AGREEMENT

On December 27, 1999, the Board of Directors of the Company announced the
declaration of a dividend of one right (a "Right") for each outstanding share of
Common Stock of the Company held of record at the close of business on January
6, 2000, or issued thereafter and prior to the time at which they separate from
the Common Stock and thereafter pursuant to options and convertible securities
outstanding at the time they separate from the Common Stock. The Rights were
issued pursuant to a Stockholder Protection Rights Agreement, dated as of
December 27, 1999, between the Company and American Stock Transfer & Trust
Company, as Rights Agent. Each Right entitles its registered holder to purchase
from the Company, after the Separation Time, one one-hundredth of a share of
Participating Preferred Stock, par value $0.01 per share, for $27.00 (the
"Exercise Price"), subject to adjustment. The holders of Rights will, solely by
reason of their ownership of Rights, have no rights as stockholders of the
Company, including, without limitation, the right to vote or to receive
dividends.

The Rights will separate from the Common Stock if any person or group (subject
to certain exceptions including the April 14, 2004 financial restructuring)
becomes the beneficial owner of fifteen percent or more of the Common Stock or
any person or group (subject to certain exceptions) makes a tender or exchange
offer that would result in that person or group beneficially owning fifteen
percent or more of the Common Stock. In April 2004, the Company amended the Plan
to exclude persons participating in the April 14, 2004 financial restructuring
so long as their ownership was less than 30%. Upon separation of the Rights from
the Common Stock, each Right (other than Rights beneficially owned by the
acquiring person or group, which Rights shall become void) will constitute the
right to purchase from the Company that number of shares of Common Stock of the
Company having a market price equal to twice the Exercise Price for an amount
equal to the Exercise Price. In addition, if a person or group who has acquired
beneficial ownership of fifteen percent or more of the Common Stock controls the
Board of Directors of the Company and the Company engages in certain business
combinations or asset sales, then the holders of the Rights (other than the
acquiring person or group) will have the right to purchase common stock of the
acquiring company having a market value equal to two times the Exercise Price.

In certain circumstances, the Board of Directors may elect to exchange all of
the then outstanding Rights (other than Rights beneficially owned by the
acquiring person or group, which Rights become void) for shares of Common Stock
at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect certain changes in the capital stock of the Company. In
addition, the Board of Directors may, prior to separation from the Common Stock,
redeem all (but not less than all) the then outstanding Rights at a price of
$.01 per Right. Unless redeemed, exchanged or amended on an earlier date, the
Rights will expire on the tenth anniversary of the record date.

                                       53
<PAGE>

At December 31, 2003 and 2002, no Rights have been exchanged.

(16)     RELATED PARTY TRANSACTIONS:

Leasing Transactions -

Effective as of February 1, 2003, the Company has leased its former vehicle
repair facility to a company whose principal is a shareholder and former
executive of the Company. During the year ended December 31, 2003, the Company
made payments for vehicle maintenance and repairs of approximately $226,000.
During 2003, the Company sold 68 vehicles for approximately $45,000 to this
company. Additionally, the Company has recorded rental income from this company
of approximately $33,000 during the year ended December 31, 2003.

Certain subsidiaries of the Company paid approximately $303,000, $356,000 and
$425,000 for the years ended December 31, 2003, 2002 and 2001, respectively, in
rent to certain directors, stockholders or companies owned and controlled by
directors or stockholders of the Company (other than the transaction noted
above). Rent is paid for office, warehouse facilities and transportation
equipment. At December 31, 2003 and 2002, $12,000 and $8,000, respectively, are
owed to related parties in connection with these transactions.


Note Receivable from Stockholder -

In connection with his indemnification to the Company under the terms of the
Company's acquisition of Securities, Mr. Vincent Brana, an employee of the
Company, has entered into a settlement agreement and executed a promissory note
(the "Brana Note") in the amount of $500,000 or such greater amount as may be
due under the settlement agreement. The Company has agreed to advance certain
legal fees and expenses related to certain litigation involving Securities, for
which Mr. Brana has indemnified the Company. At December 31, 2003 and 2002, the
Company had a receivable due from Mr. Brana totaling $2,800,000. Mr. Brana has
agreed to repay the Company on December 1, 2003, together with interest
calculated at a rate per annum equal to the rate charged the Company by its
senior lender. Mr. Brana delivered 357,301 shares of CD&L common stock to the
Company as collateral for the Brana Note. On September 8, 2000 the parties
entered into a settlement agreement in which Securities and Mr. Brana agreed to
pay Liberty Mutual $1,300,000. An initial payment of $650,000 was made by
Securities on October 16, 2000, $325,000 plus interest at a rate of 10.5% per
annum was paid in monthly installments ending July 1, 2001 and the balance of
$325,000 plus interest at a rate of 12.0% per annum was paid in monthly
installments ending July 1, 2002.

At December 31, 2002, the Company had a receivable due from Mr. Brana totaling
$2,800,000. As of December 31, 2002, considering the market value of the
collateral and Mr. Brana's failure to provide satisfactory evidence to support
his ability to pay the Brana Note, the Company maintained a $2,800,000 reserve
against the receivable.

In an effort to resolve all outstanding disputes between Mr. Brana and the
Company, a settlement agreement was executed in December 2003. Pursuant to the
agreement, the Company has returned to Mr. Brana the 357,301 shares of CD&L
common stock previously held by the Company as collateral for the Brana Note. In
addition, the agreement provided for an exchange of releases between the
parties. In connection with this agreement, the Brana Note was written off as of
December 31, 2003. As the note was fully reserved, there was no net income
statement impact. Mr. Brana's employment with the Company terminated on
September 1, 2002 and he has served as a paid consultant since that time.

(17)     SUBSEQUENT EVENTS:

2004 Acquisition -

On March 1, 2004, the Company consummated a transaction providing for the
repurchase of certain Indiana-based assets and liabilities sold to First Choice
in June 2001 (See Note 4). The acquisition, which includes the release of
certain non-compete agreements, we believe will support and enhance our business
growth opportunities in Indiana. Consideration for the repurchase includes
cancellation of a certain note receivable owed by First Choice of approximately
$1,600,000 plus a three year contingent earn-out based on future net revenue
generated by the accounts repurchased.

                                       54
<PAGE>

2004 Restructuring of Senior Notes Debt

At December 31, 2003, the Company was indebted to Paribas and Exeter
(collectively "Paribas") in the sum of approximately $11,000,000 pursuant to a
subordinated note bearing interest at 12% per annum (see Senior Notes in Note
9). On April 14, 2004, an agreement was reached among the Company, Paribas and
certain members of CD&L management and others ("Investors") as to the financial
restructuring of the Senior Notes. Paribas agreed to convert a portion of its
existing debt due from CD&L into equity and to modify the terms of its
subordinated note if the Investors purchase a portion of the note and accept
similar modifications. The nature of the restructuring is as follows:

         (a)      Paribas exchanged notes in the aggregate principal amount of
                  $4.0 million for shares of the Series A Convertible Redeemable
                  Preferred Stock of the Company, par value $.001 per share
                  ("Preferred Stock") with a liquidation preference of $4.0
                  million. The Preferred Stock is convertible into an aggregate
                  of 4,000,000 shares of Common Stock, does not pay dividends
                  (unless dividends are declared and paid on the Common Stock),
                  and is redeemable by the Company for the liquidation value.
                  Holders of the Preferred Stock will have the right to elect
                  two directors.

         (b)      Paribas and the Company amended the terms of the $7.0 million
                  balance of the Notes, and then exchanged the original notes
                  for the amended and restated notes, which consist of two
                  series of convertible notes, the Series A Convertible
                  Subordinated Notes (the "Series A Convertible Notes") in the
                  principal amount of $3.0 million and the Series B Convertible
                  Subordinated Notes ("Series B Convertible Notes") in the
                  principal amount of $4.0 million (collectively, the
                  "Convertible Notes"). The Loan Agreement was amended and
                  restated to reflect the terms of the substituted Series A
                  Convertible Notes and the Series B Convertible Notes,
                  including the elimination of most financial covenants.
                  Principal is due in a balloon payment at the maturity date of
                  April 14, 2011. The Convertible Notes bear interest at a rate
                  of 9% for the first two years of the term, 10.5% for the next
                  two years, and 12% for the final three years of the term. The
                  terms of the two series of Convertible Notes are identical
                  except for the conversion price ($1.016 for the Series A
                  Convertible Notes, the average closing price for the Company's
                  shares for the 5 days prior to the closing, and $2.032 for the
                  Series B Convertible Notes).

         (c)      The Investors purchased the Series A Convertible Notes from
                  Paribas for a purchase price of $3.0 million.

         (d)      The Company issued an additional $1.0 million of Series A
                  Convertible Notes to the Investors for an additional payment
                  of $1.0 million, the proceeds of which were used to reduce
                  short-term debt.

         (e)      The Investors, Paribas and the Company entered into a
                  Registration Rights Agreement pursuant to which the shares of
                  the Company's common stock issuable upon conversion of the
                  Preferred Stock and the Convertible Notes will be registered
                  for resale with the Securities and Exchange Commission.

In addition, the Company has agreed to commence a rights offering to its common
stockholders as soon as practical, and in any event prior to January 14, 2005,
whereby the common shareholders of the Company shall have the right to acquire
at least $2 million of additional shares of common stock of the Company in the
aggregate at a price equal to the conversion price of the Series A Convertible
Notes.

                                       55
<PAGE>

The following summarized unaudited pro forma financial information was prepared
assuming that the restructuring of the Senior Notes debt occurred on December
31, 2003 (in thousands):

<TABLE>
<CAPTION>
                                                                  As Reported           Adjustment             Pro Forma
                                                            ------------------------  ---------------       ----------------
<S>                                                         <C>                       <C>                   <C>

Total assets                                                     $40,352                       $-               $40,352
                                                             =======================  ===============       =================

Liabilities
   Current liabilities
      Short-term borrowings                                        5,767                   (1,000)   (a)          4,767
      Current maturities of long-term debt                         2,585                   (1,000)   (a)          1,585
      Accounts payable and accrued liabilities                    14,392                     (151)   (b)         14,241
                                                             -----------------------  ---------------       -----------------
      Total current liabilities                                   22,744                   (2,151)               20,593
                                                             -----------------------  ---------------       -----------------
   Long-term liabilities
      Long-term debt                                              11,785                   (1,624)   (a)(b)      10,161
      Other long-term liabilities                                    240                        -                   240
                                                             -----------------------  ---------------       -----------------
   Total liabilities                                              34,769                   (3,775)               30,994
                                                             -----------------------  ---------------       -----------------

Stockholders' equity
   Preferred stock                                                     -                    4,000    (a)          4,000
   Common stock                                                        8                        -                     8
   Additional paid-in capital                                     12,883                        -                12,883
   Treasury stock                                                   (162)                       -                  (162)
   Accumulated deficit                                            (7,146)                    (225)   (b)         (7,371)
                                                             -----------------------  ---------------       -----------------
   Total stockholders' equity                                      5,583                    3,775                 9,358
                                                             -----------------------  ---------------       -----------------

Total liabilities and stockholders' equity                       $40,352                       $-               $40,352
                                                             =======================  ===============       =================
</TABLE>

(a)      Represents the initial entry to record the restructuring: (i) the
         conversion of $4,000,000 of long-term debt into Preferred Stock, (ii)
         the issuance of $4,000,000 of long-term debt to Investors, and (iii)
         the repayment of $1,000,000 of current maturities of long-term debt and
         $2,000,000 of long-term debt related to the original Paribas Senior
         Notes.

(b)      Represents the write-off of the unamortized debt discount balance of
         $376,000 as of December 31, 2003 related to the original Senior Notes
         and the related tax effect.

The Company has reviewed SFAS 150 with respect to this transaction and has
determined that the Preferred Shares issued are properly treated as equity, as
the shares are not mandatorily redeemable at any time. As the interest on the
Investor Notes and the new Paribas note increase over the term of the notes, the
Company will record the associated interest expense on a straight-line basis,
which will give rise to accrued interest over the early term of the notes.

(18)     SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for interest and income taxes (net of refunds received) for the years
ended December 31, 2003, 2002 and 2001 was as follows (in thousands) -

                                            2003          2002          2001
                                        ------------  ------------  ------------
  Interest                                 $1,739        $2,507        $3,171
  Income taxes                               $899         ($281)      ($1,132)

Supplemental schedule of non-cash financing activities for the years ended
December 31, 2003, 2002 and 2001 was as follows (in thousands) -

                                                     2003      2002      2001
                                                   --------  --------  ---------
  Capital lease obligations incurred                  $-        $8       $693
  Reduction of purchase price for businesses
     previously acquired, net                          -         -        559

                                       56
<PAGE>

(19)     CHANGES TO DECEMBER 31, 2001 FINANCIAL STATEMENTS:

Subsequent to the issuance of the Company's 2001 financial statements, the
Company determined that the write-off of the $2,500,000 note receivable from the
purchasers of Sureway, which was included in discontinued operations, should be
included in continuing operations. As a result, the consolidated financial
statements for the year ended December 31, 2001 have been restated.

The impact of this restatement on reported operations is as follows (in
thousands) -

                                        As Originally Reported      As Restated
                                        -----------------------     ------------

Loss from continuing operations                 ($3,964)               ($5,804)
Loss from discontinued operations                (2,305)                  (465)
Net loss                                        ($6,269)               ($6,269)

Basic loss per share:
  Continuing operations                          ($.52)                 ($.76)
  Discontinued operations                         (.30)                  (.06)
  Net loss per share                             ($.82)                 ($.82)

Diluted loss per share:
  Continuing operations                          ($.52)                 ($.76)
  Discontinued operations                         (.30)                  (.06)
  Net loss per share                             ($.82)                  ($.82)



                                       57
<PAGE>

(20)     QUARTERLY FINANCIAL DATA (UNAUDITED):

Unaudited quarterly financial data for the years ended December 31, 2003 and
2002 was as follows (in thousands, except per share amounts) -

<TABLE>
<CAPTION>
                                                                               Quarter Ended
                                                  -------------------------------------------------------------------------
                                                     March 31,          June 30,        September 30,       December 31,
                                                  ----------------  -----------------  -----------------  -----------------
<S>                                               <C>               <C>                 <C>                <C>
Year ended December 31, 2003:
  Revenue                                             $40,307           $40,887            $40,846            $44,043
  Gross Profit                                          7,264             7,738              8,297              9,436
  Net Income (Loss)                                      $606(b)           $222               $442               $413
  Basic Income (Loss) Per Share                          $.08              $.03               $.06               $.05
  Diluted Income (Loss) Per Share                        $.07              $.03               $.05               $.05
  Basic Weighted Average Common
        Shares Outstanding                              7,659             7,659              7,659              7,659
  Diluted Weighted Average Common
        Shares Outstanding                              8,170             8,165              8,175              8,205

Year ended December 31, 2002:
  Revenue                                             $38,549           $38,885            $38,921            $40,877
  Gross Profit                                          7,928             8,232              7,681              6,239
  Net Income (Loss)                                        $6              $440               $381              $(542)(a)
  Basic Income (Loss) Per Share                          $.00              $.06               $.05              $(.07)
  Diluted Income (Loss) Per Share                        $.00              $.05               $.05              $(.07)
  Basic Weighted Average Common
        Shares Outstanding                              7,659             7,659              7,659              7,659
  Diluted Weighted Average Common
        Shares Outstanding                              8,167             8,169              8,166              7,659

</TABLE>

       (a) During the fourth quarter of 2002, the Company recorded an additional
           reserve of $300,000 in connection with a related party note
           receivable (Note 16).
       (b) During the first quarter of 2003, the Company recorded a gain of
           $1,034,000 as a result of the exchange of the Sureway Note Receivable
           previously discussed under "Discontinued Operations" in Item 7. of
           this Annual Report.

                                       58
<PAGE>

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


For information regarding the Company's change in independent auditors from
Arthur Andersen LLP to Deloitte & Touche LLP, please refer to our Current Report
on Form 8-K filed with the Commission on August 9, 2002. We have had no
disagreements with our independent auditors regarding accounting or financial
disclosure matters.


Item 9A.  Controls and Procedures

         (a)      Disclosure controls and procedures. As of December 31, 2003,
                  CD&L management, including the principal executive officer and
                  principal financial officer, evaluated the Company's
                  disclosure controls and procedures related to the recording,
                  processing, summarization and reporting of information in its
                  periodic reports that the Company files with the SEC. These
                  disclosure controls and procedures have been designed to
                  ensure that (a) material information relating to the Company,
                  including its consolidated subsidiaries, is made known to CD&L
                  management, including these officers, by other employees of
                  the Company and its subsidiaries, and (b) this information is
                  recorded, processed, summarized, evaluated and reported, as
                  applicable, within the time periods specified in the SEC's
                  rules and forms. Based upon the evaluation, the Company's
                  principal executive officer and principal financial officer
                  concluded that the Company's disclosure controls and
                  procedures are effective in ensuring that material information
                  relating to the Company, including its consolidated
                  subsidiaries, is made known to them by others within those
                  entities, particularly during the period in which this annual
                  report on Form 10-K was being prepared.

         (b)      Changes in internal controls over financial reporting. There
                  have been no changes in the Company's internal control over
                  financial reporting that occurred during the Company's last
                  fiscal quarter to which this report relates that have
                  materially affected, or are reasonably likely to materially
                  affect, the Company's internal control over financial
                  reporting.

                                       59
<PAGE>

                                    PART III

Item 10.  Directors and Executive Officers of the Company

         Set forth below are the names and ages (as of March 1, 2004) of each of
the directors and executive officers, the other positions and offices presently
held by each such person within the Company, the period during which each such
person has served on the Board of Directors of the Company, and the principal
occupations and employment of each such person during the past five years. In
each instance in which dates are not provided in connection with a director's
business experience, such director has held the position indicated for at least
the past five years.

         Albert W. Van Ness, Jr., 61, has served as the Chairman of the Board,
Chief Executive Officer and Director of CD&L since January 1997. He was formerly
the President and Chief Operating Officer of Club Quarters, LLC, a privately
held hotel management company and remains a member partner. In the early
nineties, Mr. Van Ness served as Director of Managing People & Productivity, a
senior management consulting firm. During most of the eighties, Mr. Van Ness
held various executive positions with Cunard Line Limited, a passenger ship and
luxury hotel company, including Executive Vice President and Chief Operating
Officer of the Cunard Leisure Division and Managing Director and President of
the Hotels and Resorts Division. Earlier in his career Mr. Van Ness served as
the President of Seatrain Intermodal Services, Inc., a cargo shipping company.
Mr. Van Ness held various management positions at the start of his professional
life with Ford Motor Company, Citibank and Hertz. Mr. Van Ness majored in
Sociology and Economics and received a B.A. and M.A. degree and completed his
coursework towards his doctorate in Economics. He attended Duke University,
Northern State University, South Dakota State University and Syracuse
University.

         William T. Brannan, 55, has served as President, Chief Operating
Officer and Director of CD&L 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. Prior to that, Mr. Brannan spent 10 years with United Parcel Service
where he served as Vice President and General Manager of UPS Truck Leasing, a
wholly-owned UPS subsidiary which was formed by Mr. Brannan in 1981. Mr. Brannan
has more than 25 years of experience in the transportation and logistics
industry.

         Michael Brooks, 50, has served as Director of the Company since
December 1995 and as Group Operations President since December 2000. Mr. Brooks
previously had been the President of Silver Star Express, Inc., a subsidiary of
the Company, since November 1995. Prior to the merger of Silver Star Express,
Inc. into the Company, Mr. Brooks was President of Silver Star Express, Inc.
since 1988. Mr. Brooks has more than 25 years of experience in the same-day
delivery and distribution industries. In addition, Mr. Brooks is currently a
Member of the Express Carriers Association and various other transportation
associations.

         Thomas E. Durkin III, 50, Director since 1999. Mr. Durkin was appointed
as Vice President of Corporate Development, General Counsel and Secretary of
Capital Environmental Resource, Inc. in October 2001. He is also a partner to
Durkin & Durkin, a New Jersey based law firm, with whom Mr. Durkin practiced as
a partner from September 1978 until September 1997. Mr. Durkin served as a
consultant to Waste Management Inc., a multibillion dollar publicly held
international solid waste management company from January 2000 to September
2001. From October 1997 through December 1999, Mr. Durkin served as area Vice
President of Business Development of Waste Management Inc. In addition, Mr.
Durkin has served as a partner of two privately held real estate brokerage
companies. Mr. Durkin graduated from Fordham University in 1975 and graduated
Cum Laude from Seton Hall University School of Law in 1978.

         Jon F. Hanson, 67, Director since 1997. Mr. Hanson has served as the
President and Chairman of Hampshire Management Company, a real estate investment
firm since December 1976. From April 1991 to the present, Mr. Hanson has served
as a director to the Prudential Insurance Company of America. In addition, Mr.
Hanson currently serves as a director with the United Water Resources and the
Orange and Rockland Utilities from April 1985 and September 1995, respectively.

         Marilu Marshall, 58, Director since 1997. Vice President Human
Resources - North America for Estee Lauder Co. Inc. since October 1998. From
November 1987 until September 1998, Ms. Marshall served as Senior Vice-President
and General Counsel for Cunard Line Limited. Prior thereto, from July 1984 to
September 1987 Ms. Marshall served as the Vice-President and General Counsel of
GNOC, Corp., t/a Golden Nugget Hotel & Casino.

                                       60
<PAGE>

         Matthew Morahan, 54, Director since 2000. Mr. Morahan has been a
private investor since 1997. From 1994 until 1997, Mr. Morahan served as
Executive Vice President of the Macro Hedge Fund of Summit Capital Advisors LLC.
Prior thereto, Mr. Morahan served as Managing Director of the High Yield
Department of Paine Webber Group from 1991 to 1994. From 1976 to 1990, he served
as Partner and Managing Director of Wertheim & Co. Mr. Morahan served as Vice
President of the Corporate Bond Department for Hornblower & Weeks, Hemphill,
Noyes & Co. from 1971 to 1976.

         John A. Simourian, 69, Director since 1999. Mr. Simourian has served as
Chairman of the Board and Chief Executive Officer of Lily Transportation Corp.
("Lily"), a privately held truck leasing and dedicated logistics company, since
1958 when Mr. Simourian founded Lily. Lily currently employs approximately 750
employees and leases and or operates 4,000 vehicles out of 27 locations from New
England to North Carolina. Mr. Simourian attended Harvard University where he
received his undergraduate degree in 1957 and his graduate degree from the
Harvard Business School in 1961. In 1982 Mr. Simourian was elected to the
Harvard University Hall of Fame. Mr. Simourian also served in the United States
Navy from 1957 to 1959.

         John S. Wehrle, 52, Director since 1997. Managing Partner of Gryphon
Holdings, L.P. and Gryphon Holdings II, L.P. since January 1999. From August
1997 to December 1998, Mr. Wehrle served as President and CEO of Heartland
Capital Partners, L.P. Prior thereto, Mr. Wehrle served as Vice President and
Head of Mergers & Acquisitions for A.G. Edwards & Sons, Inc. from July 1994 to
July 1997. From 1989 to 1994 Mr. Wehrle served as Vice President-Financial
Planning for The Dyson-Kissner-Moran Corporation. He also served as Managing
Director of Chase Manhattan Bank, N.A. for three years from August 1986 to
October 1989 where he was engaged in the execution of Leveraged Acquisitions.
From 1976 to 1986 Mr. Wehrle held various positions with both Price Waterhouse
and Touche Ross & Co. in both New York and London.

         Russell J. Reardon, 54, has served as Vice President - Chief Financial
Officer since November 1999. Mr. Reardon previously had been Vice President -
Treasurer of CD&L since January 1999. Prior thereto, from September 1998 until
January 1999 Mr. Reardon was Chief Financial Officer and Secretary of Able
Energy, Inc. a regional energy retailer. From April 1996 until June 1998, Mr.
Reardon was Chief Financial Officer and Secretary of Logimetrics, Inc. a
manufacturer of broad-band wireless communication devices. He earned an
accounting degree and an MBA in Finance from Fairleigh Dickinson University.

         Mark T. Carlesimo, 50, has served as Vice President - General Counsel
and Secretary of CD&L since September 1997. From July 1983 until September 1997,
Mr. Carlesimo served as Vice President of Legal Affairs of Cunard Line Limited.
Earlier in his career, Mr. Carlesimo served as Staff Counsel to Seatrain Lines,
Inc., a cargo shipping company and was engaged in the private practice of law.
Mr. Carlesimo received a B.A. in Economics from Fordham University in 1975 and
received his law degree from Fordham University School of Law in 1979. Mr.
Carlesimo is a Member of the Bar of the states of New York and New Jersey.

         James J. Cosentino, 49, was appointed Vice President - Corporate
Controller in May 2003. Prior to his appointment, Mr. Cosentino held several
financial management positions with both publicly and privately owned companies.
From 1980 through 1992 he was with the Macmillan Publishing Company and more
recently, from 1996 to 2002, he was the Controller of Prestige Window Fashions.
Mr. Cosentino earned his undergraduate degree from Westminster College and an
MBA in Finance from Fairleigh Dickinson University. Mr. Cosentino is a member of
the New Jersey State Society of CPAs and the Financial Executive Institute
(FEI).


Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company's directors, certain
officers and persons holding more than 10% of a registered class of the
Company's equity securities to file with the Securities and Exchange Commission
and to provide the Company with initial reports of ownership, reports of changes
in ownership and annual reports of ownership of Common Stock and other equity
securities of the Company. Based solely upon a review of such reports furnished
to the Company by its directors and executive officers, the Company believes
that all Section 16(a) reporting requirements were timely fulfilled during 2003.

                                       61
<PAGE>

Code of Ethics

The Company has adopted a code of ethics for senior financial officers of the
Company. A copy of this code of ethics has been filed as Exhibit 14.1 to this
Annual Report.

Audit Committee Financial Expert

The Company has determined that John S. Wehrle, the audit committee chairperson,
is an independent audit committee financial expert as defined by Item 401(h) of
Regulation S-K.

Item 11.  Executive Compensation

         The following table summarizes certain information relating to
compensation for services rendered during the years ended December 31, 2001,
2002 and 2003 to each person serving as the Chief Executive Officer of the
Company and each of the Company's four other most highly paid executive officers
whose compensation exceeded $100,000.

<TABLE>
<CAPTION>
                                                                                          Long-Term
                                                Annual Compensation                   Compensation (1)
                                ------------------------------------------------------------------------
                                                                                           Awards
                                ------------------------------------------------------------------------
                                                                          Other          Securities
                                                                          Annual         Underlying
                                                                         Compen-          Options/           All Other
           Name and                        Salary         Bonus           sation            SARs            Compensation
      Principal Position         Year        ($)           ($)            ($)(2)             (3)                ($)
------------------------------  -----     ---------      --------       -----------      ----------         ------------
<S>                             <C>       <C>            <C>            <C>              <C>                <C>
Albert W. Van Ness, Jr.         2003        252,875         -               -                   -                -
   Chairman and Chief           2002        299,988       75,000            -              25,000                -
   Executive Officer            2001        288,119      173,625            -              25,000                -

William T. Brannan              2003        299,988            -            -                   -                -
   President and Chief          2002        299,988       76,229            -                   -                -
   Operating Officer            2001        275,764       39,375            -                   -                -

Michael Brooks                  2003        240,923            -            -                   -                -
   Group Operations             2002        239,077       61,525            -                   -                -
   President                    2001        218,461       32,500            -                   -                -

Russell J. Reardon              2003        201,144            -            -                   -                -
   Chief Financial Officer      2002        200,000       51,201            -                   -                -
                                2001        185,385       37,500            -                   -                -

Mark Carlesimo                  2003        166,933            -            -                   -                -
   General Counsel and          2002        153,173       24,163            -                   -                -
   Secretary                    2001        146,154       20,250            -                   -                -

</TABLE>
-----------------

(1)      The Company did not grant any restricted stock awards or stock
         appreciation rights or make any long-term incentive plan pay-out during
         the years ended December 31, 2001, 2002 and 2003.

(2)      Excludes certain personal benefits, the total value of which was less
         than the lesser of either $50,000 or 10% of the total annual salary and
         bonus for each of the executives.

(3)      Comprised solely of incentive or non-qualified stock options. See
         "Stock Option Plans - Employee Stock Compensation Program."

                                       62
<PAGE>

Employment Agreements; Covenants-Not-To-Compete

         On or about November 15, 2002, Mr. Van Ness entered into an amended
Employment Agreement with the Company (the "2003 Agreement"). The 2003 Agreement
commenced on January 5, 2003 and continues through the close of business on May
1, 2005. The 2003 Agreement provides for an annual salary of $250,000 per year
subject to annual increases as determined by the Compensation Committee. In
addition, the 2003 Agreement provides for the right to receive an annual bonus
equal to up to 100% of Mr. Van Ness' then current base salary subject to the
Company attaining certain targets. Mr. Van Ness continues to serve as the
Company's Chairman of the Board and Chief Executive Officer.

         The 2003 Agreement provides that, in the event of a termination of
employment by the Company for any reason other than "cause" or "disability" (as
defined in the 2003 Agreement) or by Mr. Van Ness as a result of a material
breach by the Company, then Mr. Van Ness will be entitled to receive for the
remainder of the term all base salary due, all annual bonuses and all other
benefits and prerequisites. In the event that Mr. Van Ness' employment
terminates within 360 days of a "change in control" (as defined in the 2003
Agreement), Mr. Van Ness will be entitled to receive two times the sum of his
then-current base salary and the highest potential annual bonus during his
employment with the Company. Mr. Van Ness' employment agreement is subject to
certain non-competition, non-solicitation and anti-raiding provisions.

         Effective as of May 1, 2000 Messrs. Brannan, Brooks, Reardon and
Carlesimo entered into five year employment agreements with the Company. Annual
salaries for those individuals under the agreement are currently $300,000,
$250,000, $250,000 and $185,000, respectively.

         Each agreement contains identical terms and conditions (other than
salary) including covenants against competition and change in control
provisions. The change in control provision provides that if the employment with
the Company is terminated for any reason by either the employee or the Company
within six months following a change in control of the Company, the employee
will be entitled to receive a lump sum payment equal to two (2) times the sum of
employee's then current base salary plus the highest annual bonus payment made
to the employee during his employment with the Company. Each employment
agreement also contains non-competition covenants that will continue for two
years following termination of employment unless termination was by the Company
without cause or by the employee as a result of a breach of the employment
agreement by the Company in which event the covenants against competition will
cease upon termination of employment.


                                       63
<PAGE>

Stock Option Plans

During 2003, the Company did not grant any stock options to purchase Common
Stock or stock appreciation rights to any of the executives named in the Summary
Compensation Table above.



               AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                        AND FY-END OPTION/SAR VALUES (1)

<TABLE>
<CAPTION>
-------------------------------- ----------------- --------------- ------------------------- ---------------------------
                                                                     Number of Securities
                                                                    Underlying Unexercised      Value of Unexercised
                                                                      Options/SARs at        In-The-MoneyOptions/SARs
                                 Shares Acquired       Value              FY-End (#)              at FY-End ($)(3)
                                   on Exercise        Realized           Exercisable/               Exercisable/
             Name                     (#)(2)           ($)(2)           Unexercisable              Unexercisable
-------------------------------- ----------------- --------------- ------------------------- ---------------------------
<S>                              <C>               <C>             <C>                       <C>
Albert W. Van Ness, Jr.                 --               --                       672,814/0             -/-
-------------------------------- ----------------- --------------- ------------------------- ---------------------------
William T. Brannan                      --               --                       261,166/0             -/-
-------------------------------- ----------------- --------------- ------------------------- ---------------------------
Michael Brooks                          --               --                       203,461/0             -/-
-------------------------------- ----------------- --------------- ------------------------- ---------------------------
Russell J. Reardon                      --               --                       177,500/0             -/-
-------------------------------- ----------------- --------------- ------------------------- ---------------------------
Mark Carlesimo                          --               --                        36,250/0             -/-
-------------------------------- ----------------- --------------- ------------------------- ---------------------------

-------------------------------- ----------------- --------------- ------------------------- ---------------------------
</TABLE>

-------------
(1)      No stock appreciation rights have been granted by the Company.

(2)      No options were exercised in 2003.

(3)      As of December 31, 2003, the fair market value of a share of Common
         Stock (presumed to equal the closing sale price as reported on the
         American Stock Exchange) was $.73.

Compensation of Directors

Directors who are employees of the Company do not receive additional
compensation for serving as directors. Effective in 1997, each director who is
not an employee of the Company received an annual retainer of $16,000 ($26,000
and $18,000 for the Audit and Compensation Committee chairperson, respectively).
The total directors fees earned by non-employee directors in 2003 was $100,000.
Directors of the Company are reimbursed for out-of-pocket expenses incurred in
their capacity as directors of the Company. Non-employee directors also receive
stock options under the Company's 1995 Stock Option Plan. The Company granted
quarterly options of 1,250 shares at fair market value to each of the
non-employee directors.

Compensation Committee Interlocks and Insider Participation

The Company's Compensation Committee is comprised currently of Ms. Marilu
Marshall, Chair, Mr. Thomas E. Durkin III, Mr. Matthew J. Morahan, and Mr. John
S. Wehrle. None of the Committee's members have been an officer or employee of
the Company. At present, no executive officer of the Company and no member of
its Compensation Committee is a director or compensation committee member of any
other business entity which has an executive officer that sits on the Company's
Board of Directors or Compensation Committee.

                                       64
<PAGE>

Item 12. Security Ownership of Certain Beneficial Owners and Management

         Based upon information available to the Company, the following
stockholders beneficially owned more than 5% of the Common Stock as of April 14,
2004.

NAME AND ADDRESS              NUMBER OF SHARES    PERCENT OF
OF BENEFICIAL OWNER           BENEFICIALLY OWNED  CLASS

BNJ Paribas                   6,411,762(1)        45.6%
Exeter Capital and Venture
C/O BNP Paribas
787 Seventh Avenue
New York, NY 10019

Albert W. Van Ness, Jr.       1,399,525(2)        15.5%
80 Wesley Street
South Hackensack,
New Jersey 07606

Michael Brooks                1,129,300(3)        12.9%
80 Wesley Street
South Hackensack,
New Jersey 07606

William T. Brannan            1,048,846(4)        12.0%
80 Wesley Street
South Hackensack,
New Jersey 07606

Matthew J. Morahan              433,858(5)         5.4%
80 Wesley Street
South Hackensack,
New Jersey 07606

Russell J. Reardon              925,622(6)        10.8%
80 Wesley Street
South Hackensack,
New Jersey 07606

Vincent T. Brana                590,551(7)         7.2%
80 Wesley Street
South Hackensack,
New Jersey 07606

(1) Includes 506,250 shares of Common Stock issuable upon exercise of Warrants
    pursuant to the January 1999 private placement and 5,905,512 shares
    convertible for Series A Preferred Stock or convertible notes issued in
    connection with the financial restructuring.

(2) Includes 672,814 shares of Common Stock issuable upon the exercise of
    options pursuant to the Employee Stock Compensation Program which are
    exercisable within 60 days of April 14, 2004 and 590,551 shares upon
    conversion of convertible notes issued in connection with the financial
    restructuring.

(3) Includes 286,794 shares of Common Stock issuable upon the exercise of
    options pursuant to the Employee Stock Compensation Program which are
    exercisable within 60 days of April 14, 2004 and 590,551 shares upon
    conversion of convertible notes issued in connection with the financial
    restructuring.

(4) Includes 344,499 shares of Common Stock issuable upon the exercise of
    options pursuant to the Employee Stock Compensation Program which are
    exercisable within 60 days of April 14, 2004 and 590,551 shares upon
    conversion of convertible notes issued in connection with the financial
    restructuring.

(5) Includes 20,000 shares of Common Stock issuable upon the exercise of options
    pursuant to the Employee Stock Compensation Program which are exercisable
    within 60 days of April 14, 2004 and 196,850 shares upon conversion of
    convertible notes issued in connection with the financial restructuring.

(6) Includes 260,833 shares of Common Stock issuable upon the exercise of
    options pursuant to the Employee Stock Compensation Program which are
    exercisable within 60 days of April 14, 2004 and 590,551 shares upon
    conversion of convertible notes issued in connection with the financial
    restructuring.

(7) Includes 590,551 shares upon conversion of convertible notes issued in
    connection with the financial restructuring.

         The following table sets forth information as of April 14, 2004 with
respect to beneficial ownership of the Common Stock by (i) each director, (ii)
each executive named in the Summary Compensation Table (the "Named Executives")
and (iii) all executive officers and directors as a group. Unless otherwise
indicated, the address of each such person is c/o CD&L, Inc., 80 Wesley Street,
South Hackensack, New Jersey 07606. All persons listed have sole voting and
investment power with respect to their shares unless otherwise indicated.


                        Amount of Beneficial Ownership(1)
                        ---------------------------------
<TABLE>
<CAPTION>
                                                                      Shares
                                                                     Issuable
                                                     Shares            Upon
                                                    Issuable         Conversion
                                                  Upon Exercise      of Stock in
                                                   of Stock         the Financial         Total           Percentage
Name                                Shares        of Options(1)     Restructuring         Shares            Owned
----                                ------        -------------     -------------         ------            -----
<S>                                 <C>               <C>               <C>              <C>                <C>
Albert W. Van Ness, Jr.             136,160           672,814           590,551          1,399,525          15.5%
William T. Brannan                  113,796           344,499           590,551          1,048,846          12.0%
Michael Brooks                      251,955           286,794           590,551          1,129,300          12.9%
Thomas E. Durkin III                     --            20,000                --             20,000             *
Jon F. Hanson                        64,000(2)         28,750                --             92,750           1.2%
Marilu Marshall                          --            28,750                --             28,750             *
Matthew J. Morahan                  222,008            15,000           196,850            433,858           5.4%
John A. Simourian                        --            20,000                --             20,000             *
John S. Wehrle                           --            27,500                --             27,500             *
Russell J. Reardon                   74,238           260,833           590,551            925,622          10.8%
Mark T. Carlesimo                        --           119,583            98,425            218,008           2.8%

All executive officers and
directors as a group (11
persons)                            862,157         1,824,523         2,657,479          5,344,159          61.7%
</TABLE>
------------
* Less than 1%


Note: The sum of individual beneficial ownership percentages can exceed 100% due
to the nature of the calculation which assumes total outstanding shares and the
exercise of all convertible instruments for any individual shareholder without
regard to exercise of similar instruments by any other shareholder.

(1) Includes options granted pursuant to the Employee Stock Compensation Program
    and the Director Plan, which are exercisable within 60 days of April 14,
    2004.

(2) Represents 64,000 shares held by Ledgewood Employees Retirement Plan of
    which Mr. Hanson is a beneficiary.



                                       65


<PAGE>

Item 13.  Certain Relationships and Related Transactions

           Mr. Brooks and members of his immediate family own various real
estate partnerships which lease properties to Silver Star, a subsidiary of the
Company for use as terminals in Valdosta, Georgia and Dayton, Ohio. In 2003,
Silver Star paid approximately $46,000 in rent for these properties. As of
January 1, 2004, the Company is obligated to pay rentals of approximately
$18,000 for the Valdosta, Georgia property, which the Company believes to be the
fair market rental value of the property. The Dayton, Ohio lease expired in July
2003.

           Mr. Simourian, a member of the Company's board of directors, is the
Chief Executive Officer of Lily Transportation Corp. ("Lily"), a privately held
truck leasing and dedicated logistics company. In 2003, Click Messenger
Services, a subsidiary of the Company, paid approximately $240,000 to Lily for
vehicle rentals.


Item 14.  Principal Accountant Fees and Services

The Company has been billed the following fees for services rendered by its
principal accountant during 2003 and 2002 (in thousands):



                                                      2003            2002
                                                   -----------    -------------
               Audit Fees                             $227            $219
               Audit-Related Fees                       38              15
               Tax Fees                                124             132
               All Other Fees                            4               -
                                                   -----------    -------------

               Total                                  $393            $366
                                                   ===========    =============

         Audit-related fees consist of professional services rendered in
conjunction with the Company's various responses to an SEC comment letter. Tax
fees primarily relate to the preparation of Federal and state tax returns and
tax advice associated with those filings. All other fees include administrative
and out-of-pocket expenses incurred by the principal accountant.

         The principal accountant is engaged each year by the Company's audit
committee and as such, all fees are pre-approved by the audit committee at the
beginning of each year.

                                       66
<PAGE>

                                     PART IV

Item 15.  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

                                                                            Page
                                                                            ----
CD&L, INC. AND SUBSIDIARIES:
       Schedule II - Valuation and Qualifying Accounts -
           For the years ended December 31, 2003, 2002 and 2001..............S-1

         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 (b) below are filed herewith.

(b) Reports on Form 8-K

         The following current reports on Form 8-K were filed during the fourth
quarter of 2003.

o        Report on Form 8-K filed on November 18, 2003 concerning the November
         17, 2003 press release announcing third quarter earnings for the 2003
         fiscal year.

(c) Exhibits

<TABLE>
<CAPTION>
       Exhibit
        Number                                             Description
        ------                                             -----------
<S>              <C>

         3.1      Second Restated Certificate of Incorporation of CD&L, 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      Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of CD&L, Inc. (filed as
                  Exhibit 3ci) to the Company's Form 10-Q for the quarter ended June 30, 2000 and incorporated herein by reference).

         3.3      Amended and Restated By-laws of CD&L, Inc. amended through November 6, 1997 (filed as Exhibit 3.2 to the Company's
                  Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference).

         4.1      Form of certificate evidencing ownership of Common Stock of CD&L, 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).
</TABLE>

                                       67
<PAGE>
<TABLE>
<CAPTION>
<S>              <C>

         4.3      CD&L, Inc. Shareholder Protection Rights Agreement (filed as Exhibit 4.1 to the Company's Form 8-K dated December
                  27, 1999 and incorporated herein by reference).

         4.4      Amendment No. 1 to Shareholder Protection Rights Agreement dated April 14, 2004 by and between CD&L, Inc. and
                  American Stock Transfer & Trust Company.

         4.5      Certificate of Designations, Preferences and Rights of Series A Convertible Redeemable Preferred Stock of CD&L,
                  Inc.

         10.1     CD&L, 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     CD&L, Inc. 1995 Stock Option Plan for Independent Directors as amended and restated through March 31, 1999 (filed
                  as Exhibit A to the Company's 1999 Proxy Statement and incorporated herein by reference).

         10.3     CD&L, Inc. Year 2000 Stock Incentive Plan (filed as Exhibit A to the Company's 2000 Proxy Statement and
                  incorporated herein by reference).

         10.4     CD&L, Inc. 2002 Stock Option Plan for Independent Directors (filed as Exhibit A to the Company's 2002 Proxy
                  Statement and incorporated herein by reference).

         10.5     Employee Stock Purchase Program (filed as Exhibit B to the Company's 2000 Proxy Statement and incorporated herein
                  by reference).

         10.6     Loan and Security Agreement, dated July 14, 1997 by and between First Union Commercial Corporation and CD&L, Inc.
                  and Subsidiaries (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter
                  ended June 30, 1997 and incorporated herein by reference) (hereinafter "First Union Credit Agreement").

         10.7     Amendment dated March 30, 2001 to First Union Credit Agreement (filed as Exhibit 10.5 to the Company's Annual
                  Report on Form 10-K for the year ended December 31, 2000 and incorporated herein by reference).

         10.8     Amendment dated as of March 31, 2002 to First Union Credit Agreement (filed as Exhibit 10.6 to the Company's
                  Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein by reference).

         10.9     Loan and Security Agreement dated June 27, 2002 by and among CD&L, Inc. (and subsidiaries) and Summit Business
                  Capital Corp., doing business as Fleet Capital - Business Finance Division (filed as Exhibit 10.1 to the Company's
                  Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2002 and incorporated herein by reference)
                  (hereinafter "Fleet Facility").

         10.10    Amendment dated April 23, 2003 to Fleet Facility (filed as Exhibit 10.10 to the Company's Annual Report on Form
                  10-K for the year ended December 31, 2002 and incorporated herein by reference).

         10.11    Senior Subordinated Loan Agreement dated as of January 29, 1999 with Paribas Capital Funding, LLC, Exeter Venture
                  Lenders, L.P. and Exeter Capital Partners IV, L.P. (filed as Exhibit 99.3 to the Company's Current Report on Form
                  8-K/A filed on June 23, 1999 and incorporated herein by reference) (hereinafter "Paribas Agreement").

         10.12    Warrant Agreement dated as of January 29, 1999 with Paribas Capital Funding, LLC, Exeter Venture Lenders, L.P. and
                  Exeter Capital Partners IV, L.P. (filed as Exhibit 99.4 to the Company's Current Report on Form 8-K/A filed on
                  July 23, 1999 and incorporated herein by reference)
</TABLE>

                                       68
<PAGE>
<TABLE>
<CAPTION>
<S>              <C>

         10.13    Amendment dated March 30, 2001 to Paribas Agreement (filed as Exhibit 10.8 to the Company's Annual Report on Form
                  10-K for the year ended December 31, 2000 and incorporated herein by reference).

         10.14    Amendment dated April 12, 2002 to Paribas Agreement (filed as Exhibit 10.10 to the Company's Annual Report on Form
                  10-K for the year ended December 31, 2001 and incorporated herein by reference).

         10.15    Amendment dated June 28, 2002 to Paribas Agreement (filed as Exhibit 10.2 to the Company's Quarterly Report on
                  Form 10-Q for the fiscal quarter ended June 30, 2002 and incorporated herein by reference).

         10.16    Amendment dated April 23, 2003 to Paribas Agreement (filed as Exhibit 10.16 to the Company's Annual Report on Form
                  10-K for the year ended December 31, 2002 and incorporated herein by reference).

         10.17    Form of Employment Agreement, dated as of May 1, 2000, with William T. Brannan (Employment agreements of Michael
                  Brooks, Russell J. Reardon and Mark T. Carlesimo are in the same form) (filed as Exhibit 10.9 to the Company's
                  Annual Report on Form 10-K for the year ended December 31, 2000 and incorporated herein by reference).

         10.18    Amendment to Albert W. Van Ness, Jr. Employment Agreement dated March 15, 2001 (filed as Exhibit 10.18 to the
                  Company's Annual Report on Form 10-K for the year ended December 31, 2000 and incorporated herein by reference).

         10.19    Amendment Number 2 dated June 6, 2001 to the Employment Agreement dated June 5, 2000 by and between the Company
                  and Albert W. Van Ness, Jr. (filed as Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the quarter
                  ended June 30, 2001 and incorporated herein by reference).

         10.20    Asset Purchase Agreement by and among Sureway Worldwide, LLC, Global Delivery Systems, LLC, Sureway Air Traffic
                  Corporation and CD&L, Inc. (hereinafter "Sureway Agreement") (filed as Exhibit 10.16 to the Company's Annual
                  Report on Form 10-K for the year ended December 31, 2000 and incorporated herein by reference).

         10.21    $2,500,000 Subordinated Note in favor of CD&L, Inc. issued pursuant to Sureway Agreement by the purchaser, Sureway
                  Worldwide, LLC (filed as Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended December 31,
                  2000 and incorporated herein by reference).

         10.22    Stock Purchase Agreement dated June 14, 2001 by and among Executive Express, Inc., Charles Walch, National Express
                  Company, Inc. and CD&L, Inc. (hereinafter "National Express Agreement") (filed as Exhibit 10.1 to the Company's
                  Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by reference).

         10.23    Promissory Note in the sum of $1,650,000 of Executive Express, Inc. due June 14, 2006 (filed as Exhibit 10.2 to
                  the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by
                  reference).

         10.24    Asset Purchase Agreement dated February 27, 2004 by and among Executive Express, Inc., Charles Walch, Silver Star
                  Express, Inc. and CD&L, Inc. (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 1,
                  2004 and incorporated herein by reference.)
</TABLE>

                                       69
<PAGE>
<TABLE>
<CAPTION>
<S>              <C>

         10.25    Restructuring and Exchange Agreement dated April 14, 2004 by and among CD&L, Inc., BNP Paribas SA, Exeter Venture
                  Lenders, L.P., Exeter Capital Partners IV, L.P., Albert W. VanNess, Jr., William T. Brannan, Michael Brooks,
                  Russell J. Reardon, Mark Carlesimo and Matthew Morahan and others (hereinafter "Paribas Restructuring and Exchange
                  Agreement").

         10.26    Amended and Restated $8,000,000 Senior Subordinated Loan Agreement by and among CD&L, Inc. and Various Lenders
                  dated as of January 29, 1999 amended and restated as of April 14, 2004.

         10.27    Form of Amended and Restated Note dated April 14, 2004 by and between CD&L, Inc. and various lenders.

         10.28    Form of Registration Rights Agreement dated April 14, 2004 by and between CD&L, Inc. and various investors and
                  lenders.

         10.29    Form of Stockholders Agreement dated April 14, 2004 by and between CD&L, Inc. and various investors and lenders.

         10.30    Form of Amended Employment Agreement dated April 14, 2004 with William T. Brannan (Employment agreements of
                  Michael Brooks, Russell J. Reardon and Mark T. Carlesimo are in the same form).

         11.1     Statement Regarding Computation of Net Income (Loss) Per Share.

         14.1     Code of Ethics for Senior Financial Officers

         21.1     List of Subsidiaries of CD&L, Inc.

         23.1     Independent Auditors' Consent

         23.2     Notice of Inability to Obtain Consent From Arthur Andersen LLP

         24.1     Power of Attorney

         31.1     Certification of Albert W. Van Ness, Jr. Pursuant to Exchange Act Rules 13a-14a and 15d-14a, as Adopted Pursuant
                  to Section 302 of the Sarbanes-Oxley Act of 2002.

         31.2     Certification of Russell J. Reardon Pursuant to Exchange Act Rules 13a-14a and 15d-14a, as Adopted Pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002.

         32.1     Certification of Albert W. Van Ness, Jr. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
                  the Sarbanes-Oxley Act of 2002.

         32.2     Certification of Russell J. Reardon Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.
</TABLE>

                                       70
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this annual report on Form
10-K for the year ended December 31, 2003 to be signed on its behalf by the
undersigned, thereunto duly authorized, on April 14, 2004.

                                            CD&L, Inc.


                                            By: /s/Russell J. Reardon
                                                ---------------------
                                                Russell J. Reardon
                                                Chief Financial Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
and in the capacities indicated on April 14, 2004.

<TABLE>
<CAPTION>
                        Signature                                                     Capacity
                        ---------                                                     --------
<S>                                                         <C>
               /s/ Albert W. Van Ness, Jr.                  Chairman of the Board, Chief Executive Officer (Principal
               ---------------------------                  Executive Officer) and Director
                 Albert W. Van Ness, Jr.

                 /s/ William T. Brannan *                   President, Chief Operating Officer and Director
                 ------------------------
                    William T. Brannan

                 /s/ Russell J. Reardon *                   Vice President, Chief Financial Officer (Principal Financial
                 ------------------------                   and Accounting Officer)
                    Russell J. Reardon

                   /s/ Michael Brooks *                     Group Operations President and Director
                   --------------------
                      Michael Brooks

               /s/ Thomas E. Durkin, III *                  Director
               ---------------------------
                  Thomas E. Durkin, III

                   /s/ Jon F. Hanson *                      Director
                   -------------------
                      Jon F. Hanson

                  /s/ Marilu Marshall *                     Director
                  ---------------------
                     Marilu Marshall

                  /s/ Matthew Morahan *                     Director
                  ---------------------
                     Matthew Morahan

                   /s/ John Simourian *                     Director
                   --------------------
                      John Simourian

                   /s/ John S. Wehrle *                     Director
                   --------------------
                      John S. Wehrle



*By:    /s/ Albert W. Van Ness, Jr.
        ---------------------------
           Albert W. Van Ness, Jr.
           Attorney-in-Fact
</TABLE>

                                       71
<PAGE>

                                                                     Schedule II

                           CD&L, INC. AND SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)


<TABLE>
<CAPTION>
                                         Balance            Charged
                                            at             to Costs          Write-offs                              Balance
                                        Beginning             And             (Net of                               at End of
          Description                   of Period          Expenses          Recoveries)         Other (a)           Period
----------------------------------  -----------------    --------------    ----------------    --------------    --------------
<S>                                 <C>                  <C>               <C>                 <C>               <C>
For the year ended
   December 31, 2003 -
   Allowance for doubtful
   accounts                               $492               $629              ($249)                -               $872
                                     ================    ==============    ================    ==============    ==============
   Allowance for doubtful
   note receivable                       $2,800                -              ($2,800)               -                $ -
                                     ================    ==============    ================    ==============    ==============

For the year ended
   December 31, 2002 -
   Allowance for doubtful
   accounts                               $951              ($165)             ($294)                -               $492
                                     ================    ==============    ================    ==============    ==============
   Allowance for doubtful
   note receivable                       $2,500              $300                 -                  -             $2,800
                                     ================    ==============    ================    ==============    ==============

For the year ended
   December 31, 2001 -
   Allowance for doubtful
   accounts                              $1,840              ($69)             ($720)             ($100)             $951
                                     ================    ==============    ================    ==============    ==============
   Allowance for doubtful
   note receivable                       $2,500                      -            -                  -             $2,500
                                     ================    ==============    ================    ==============    ==============
</TABLE>

(a) Represents allowance for doubtful accounts of company disposed of.

                                       72
<PAGE>

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
       Exhibits
<S>               <C>

         4.4      Amendment No. 1 to Shareholder Protection Rights Agreement dated April 14, 2004 by and between CD&L, Inc. and
                  American Stock Transfer & Trust Company.

         4.5      Certificate of Designations, Preferences and Rights of Series A Convertible Redeemable Preferred Stock of CD&L,
                  Inc.

         10.25    Restructuring and Exchange Agreement dated April 14, 2004 by and among CD&L, Inc., BNP Paribas SA, Exeter Venture
                  Lenders, L.P., Exeter Capital Partners IV, L.P., Albert W. VanNess, Jr., William T. Brannan, Michael Brooks,
                  Russell J. Reardon, Mark Carlesimo and Matthew Morahan and others (hereinafter "Paribas Restructuring and Exchange
                  Agreement").

         10.26    Amended and Restated $8,000,000 Senior Subordinated Loan Agreement by and among CD&L, Inc. and Various Lenders
                  dated as of January 29, 1999 amended and restated as of April 14, 2004.

         10.27    Form of Amended and Restated Note dated April 14, 2004 by and between CD&L, Inc. and various lenders.

         10.28    Form of Registration Rights Agreement dated April 14, 2004 by and between CD&L, Inc. and various investors and
                  lenders.

         10.29    Form of Stockholders Agreement dated April 14, 2004 by and between CD&L, Inc. and various investors and lenders.

         10.30    Form of Amended Employment Agreement dated April 14, 2004 with William T. Brannan (Employment agreements of
                  Michael Brooks, Russell J. Reardon and Mark T. Carlesimo are in the same form).

         11.1     Statement Regarding Computation of Net Income (Loss) Per Share

         14.1     Code of Ethics for Senior Financial Officers

         21.1     List of Subsidiaries of CD&L, Inc.

         23.1     Independent Auditors' Consent

         23.2     Notice of Inability to Obtain Consent From Arthur Andersen LLP

         24.1     Power of Attorney

         31.1     Certification of Albert W. Van Ness, Jr. Pursuant to Exchange Act Rules 13a-14a and 15d-14a, as Adopted Pursuant
                  to Section 302 of the Sarbanes-Oxley Act of 2002.

         31.2     Certification of Russell J. Reardon Pursuant to Exchange Act Rules 13a-14a and 15d-14a, as Adopted Pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002.

         32.1     Certification of Albert W. Van Ness, Jr. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
                  the Sarbanes-Oxley Act of 2002.

         32.2     Certification of Russell J. Reardon Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.
</TABLE>

                                       73