<PAGE>

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON D.C. 20549
                                   FORM 10-Q


(Mark One)

|X|      Quarterly report pursuant to Section 13 or 15 (d) of the
         Securities Exchange Act of 1934 for the quarterly period
         ended March 31, 2006 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                                                    07606
SOUTH HACKENSACK, NEW JERSEY                                     (Zip Code)
(Address of principal executive offices)

                                 (201) 487-7740
              (Registrant's telephone number, including area code)

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 whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. (as defined in Rule 12b-2 of the
Securities Exchange Act of 1934)
Large accelerated filer  |_| Accelerated filer  |_|  Non-accelerated filer  |X|

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

The number of shares of common stock of the Registrant, par value $.001 per
share, outstanding as of May 15, 2006 was 10,017,479.



                                       1
<PAGE>

                                   CD&L, INC.
                 FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2006

                                     INDEX
                                                                            PAGE
                                                                            ----

PART I - Financial Information

   ITEM 1 - Financial Statements

        CD&L, Inc. and Subsidiaries
            Condensed Consolidated Balance Sheets as of March 31,
               2006 (unaudited) and December 31, 2005                         3
            Condensed Consolidated Statements of Income for
              the Three Months Ended March 31, 2006
              and 2005 (unaudited)                                            4
            Condensed Consolidated Statements of Cash Flows
              for the Three Months Ended March 31, 2006
              and 2005 (unaudited)                                            5
            Notes to Condensed Consolidated Financial Statements              6

   ITEM 2 - Management's Discussion and Analysis of Financial
              Condition and Results of Operations                            14

   ITEM 3 - Quantitative and Qualitative Disclosures
              about Market Risk                                              20

   ITEM 4 - Controls and Procedures                                          20

PART II - Other Information

   ITEM 1A - Risk Factors                                                    21

   ITEM 6 - Exhibits                                                         21

SIGNATURE                                                                    22

CERTIFICATIONS                                                               23



                                       2
<PAGE>


                          CD&L, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                    (IN THOUSANDS, EXCEPT SHARE INFORMATION)


<TABLE>
<CAPTION>
                                                                        March 31,        December 31,
                                                                          2006              2005
                                                                       ----------        ------------
                                                                       (Unaudited)        (Note 1)

<S>                                                                     <C>               <C>
                             ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                                             $    777          $    837
  Accounts receivable, net                                                26,991            26,376
  Prepaid expenses and other current assets                                3,329             4,048
                                                                        --------          --------
    Total current assets                                                  31,097            31,261

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net                                  3,449             3,438
GOODWILL, net                                                             11,531            11,531
OTHER INTANGIBLE ASSETS AND DEFERRED FINANCING COSTS, net                  1,176             1,185
OTHER ASSETS                                                                 945               932
                                                                        --------          --------
    Total assets                                                        $ 48,198          $ 48,347
                                                                        ========          ========

              LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Short-term borrowings                                                 $  8,829          $  8,921
  Current maturities of long-term debt                                       532               552
  Accounts payable, accrued liabilities and bank overdrafts               15,247            15,423
                                                                        --------          --------
    Total current liabilities                                             24,608            24,896

LONG-TERM DEBT, net of current maturities                                  5,154             5,292
OTHER LONG-TERM LIABILITIES                                                1,766             1,775
                                                                        --------          --------
    Total liabilities                                                     31,528            31,963
                                                                        --------          --------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
 Preferred stock, $.001 par value; 2,000,000 shares
   authorized; 393,701 shares issued and outstanding at
   March 31, 2006 and December 31, 2005                                    4,000             4,000
 Common stock, $.001 par value; 30,000,000 shares
   authorized; 10,046,846 and 10,041,846 shares issued at March
   31, 2006 and December 31, 2005, respectively                               10                10
 Additional paid-in capital                                               15,689            15,592
 Treasury stock, 29,367 shares at cost                                      (162)             (162)
 Accumulated deficit                                                      (2,867)           (3,056)
                                                                        --------          --------
    Total stockholders' equity                                            16,670            16,384
                                                                        --------          --------
    Total liabilities and stockholders' equity                          $ 48,198          $ 48,347
                                                                        ========          ========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.



                                       3
<PAGE>

                          CD&L, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                             For the Three Months
                                                                Ended March 31,
                                                           --------------------------
                                                             2006              2005
                                                           --------          --------
<S>                                                        <C>               <C>
Revenue                                                    $ 60,439          $ 52,355

Cost of revenue                                              49,233            42,046
                                                           --------          --------

  Gross profit                                               11,206            10,309
                                                           --------          --------

Costs and Expenses:

Selling, general, and administrative expenses                10,192             8,880
Depreciation and amortization                                   318               274
Other income, net                                               (16)               (1)
Interest expense                                                356               391
                                                           --------          --------

  Total Costs and Expenses                                   10,850             9,544
                                                           --------          --------

Income before provision for income taxes                        356               765

Provision for income taxes                                      167               337

                                                           --------          --------
  Net income                                               $    189          $    428
                                                           ========          ========

Net income per share:
  Basic                                                    $    .02          $    .05
                                                           ========          ========
  Diluted                                                  $    .01          $    .03
                                                           ========          ========

Basic weighted average common shares outstanding             10,014             9,356
                                                           ========          ========

Diluted weighted average common shares outstanding           19,775            20,253
                                                           ========          ========
</TABLE>


     See accompanying notes to condensed consolidated financial statements.




                                       4
<PAGE>

                          CD&L, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                For the Three Months
                                                                                  Ended March 31,
                                                                              ------------------------
                                                                               2006             2005
                                                                              -------          -------

<S>                                                                           <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                    $   189          $   428
Adjustments to reconcile net income to net cash provided by operating
    activities -
    Gain on disposal of equipment and leasehold improvements                       (4)              --
    Depreciation, amortization and deferred financing amortization                336              301
    Stock-based compensation expense                                               95               --
    Changes in operating assets and liabilities
      (Increase) decrease in -
        Accounts receivable, net                                                 (615)             494
        Prepaid expenses and other current assets                                 719              248
        Other assets                                                              (13)            (244)
      Increase (decrease) in -
        Accounts payable and accrued liabilities                                 (176)           2,136
        Other long-term liabilities                                                (9)              87
                                                                              -------          -------
          Net cash provided by operating activities                               522            3,450
                                                                              -------          -------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of equipment and leasehold improvements                       18               17
  Additions to equipment and leasehold improvements                              (263)            (106)
                                                                              -------          -------
          Net cash used in investing activities                                  (245)             (89)
                                                                              -------          -------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayments of short-term borrowings, net                                        (92)          (2,312)
  Repayments of long-term debt                                                   (158)            (118)
  Issuance of common stock                                                          2               --
  Deferred financing costs                                                        (89)              --
                                                                              -------          -------
          Net cash used in financing activities                                  (337)          (2,430)
                                                                              -------          -------

          Net increase (decrease) in cash and cash equivalents                    (60)             931

CASH AND CASH EQUIVALENTS, beginning of period                                    837              617
                                                                              -------          -------

CASH AND CASH EQUIVALENTS, end of period                                      $   777          $ 1,548
                                                                              =======          =======
</TABLE>

     See accompanying notes to condensed consolidated financial statements.




                                       5
<PAGE>

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

(1)      BASIS OF PRESENTATION:

         The accompanying unaudited condensed consolidated financial statements
         have been prepared in accordance with generally accepted accounting
         principles for interim financial information and with the instructions
         to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
         include all of the information and footnotes required by generally
         accepted accounting principles for complete financial statements. The
         condensed consolidated balance sheet at December 31, 2005 has been
         derived from the audited financial statements at that date. In the
         opinion of management, all adjustments (consisting of normal recurring
         adjustments) considered necessary for a fair presentation have been
         included. Operating results for the three months ended March 31, 2006
         are not necessarily indicative of the results that may be expected for
         any other interim period or for the year ending December 31, 2006. For
         further information, refer to the consolidated financial statements and
         footnotes thereto included in the CD&L, Inc. (the "Company" or "CD&L")
         Form 10-K for the year ended December 31, 2005.


(2)      STOCK-BASED COMPENSATION

         As of March 31, 2006, the Company maintains certain stock-based
         compensation plans that are described in Note 12 to the Consolidated
         Financial Statements included in the Company's 2005 Annual Report on
         Form 10-K. Under these plans, the Company may grant stock options to
         employees and directors of the Company. The Company may grant up to a
         maximum of 4,000,000 options under the Employee Stock Compensation
         Program (the "ESCP") and up to a maximum of 500,000 options under the
         2002 Stock Option Plan for Independent Directors (the "Director Plan").
         At March 31, 2006, options available for grant under the ESCP and the
         Director Plan total 2,000,000 and 251,000, respectively. The 2,000,000
         options available for grant under the ESCP are subject to ratification
         at the June 2006 annual stockholder meeting.

         Prior to January 1, 2006, as permitted under SFAS No. 123, "Accounting
         for Stock-Based Compensation," ("SFAS 123"), compensation cost for
         employee and director stock options was recognized using the intrinsic
         value method described in APB No. 25, "Accounting for Stock Issued to
         Employees" ("APB 25"). Effective January 1, 2006, the Company adopted
         the fair-value recognition provisions of SFAS No. 123(R), "Share-Based
         Payment," ("SFAS 123R") and Securities and Exchange Commission Staff
         Accounting Bulletin No. 107. Under SFAS 123R, the fair value of options
         granted is amortized over the related service period. SFAS 123R was
         adopted using the modified prospective transition method; therefore,
         prior periods have not been restated. Compensation expense recognized
         in the three months ended March 31, 2006 includes compensation cost for
         all share-based payments granted to employees and directors prior to,
         but not yet vested as of January 1, 2006, based on the grant date fair
         value estimated in accordance with the original provisions of SFAS 123.
         Compensation cost for any share-based payments granted subsequent to
         January 1, 2006 will be based on the grant date fair value estimated in
         accordance with the provisions of SFAS 123R.

         Stock options are granted with exercise prices not less than the fair
         market value of the Company's common stock at the time of grant and
         with an exercise term not to exceed 10 years. Generally, stock options
         granted under the ESCP become exercisable in three installments over a
         period of two years. Stock options granted under the Director Plan
         generally become exercisable after one year. Option awards usually
         provide for accelerated vesting upon retirement, death or disability.
         During the three months ended March 31, 2006 and 2005, the Company
         granted 0 and 100,000 options, respectively.

                                       6
<PAGE>

         As a result of adopting SFAS 123R, our income before taxes and net
         income for the three months ended March 31, 2006 are $95,000 and
         $50,000 lower, respectively, than if we had continued to account for
         stock-based compensation under APB 25. This resulted in a decrease in
         our reported basic and diluted net income per share of $.00 and $.01,
         respectively, for the three months ended March 31, 2006. Compensation
         expense is recognized in the selling, general and administrative
         expenses line items of the accompanying condensed consolidated
         statements of income on a ratable basis over the vesting periods. These
         awards have been classified as equity instruments, and as such, a
         corresponding increase of $95,000 has been reflected in additional
         paid-in capital in the accompanying balance sheet as of March 31, 2006.
         There were no capitalized stock-based compensation costs at March 31,
         2006 and 2005. As of March 31, 2006, there was $151,000 of total
         unrecognized compensation cost related to non-vested stock options to
         be recognized over a weighted-average period of 1.75 years.

         The intrinsic values of options exercised during the three months ended
         March 31, 2006 and 2005 were not significant. The total cash received
         from the exercise of stock options was $2,000 and $0 for the three
         months ended March 31, 2006 and 2005, respectively, and is classified
         as financing cash flows in the accompanying Statements of Cash Flows.
         New shares of the Company's common stock are issued upon exercise of
         the options. Prior to the adoption of SFAS 123R, any tax benefits of
         deductions resulting from the exercise of stock options would have been
         presented as operating cash flows in the statements of cash flows. SFAS
         123R requires that cash flows from tax benefits attributable to tax
         deductions in excess of the compensation cost recognized for those
         options (excess tax benefits) be classified as financing cash flows.
         The Company did not have any significant excess tax benefits for the
         three months ended March 31, 2006.

         The fair value for options granted used in determining pro forma net
         income below was estimated at the date of grant using the Black-Scholes
         option-pricing model with the following assumptions for the three
         months ended March 31, 2005. There were no stock options granted during
         the three months ended March 31, 2006.

                                                      For the Three
                                                       Months Ended
                                                        March 31,
                                                           2005
                                                   ---------------------

         Risk-free interest rate                           3.7%
         Volatility factor                                  46%
         Expected life                                   4 years
         Dividend yield                                    None


         The risk-free interest rate is based on reference to United States
         Treasury securities with terms matching the expected term of the
         subject options. The expected life of the first quarter 2005 option
         grants was based on historical exercises and terminations. Due to the
         insignificant number of stock option exercises during the past several
         years, the Company has estimated the expected life of options granted
         to be the midpoint between the average vesting term and the contractual
         term. The expected volatility was based on an analysis of the
         volatility of the Company's stock price using alternative historical
         periods of time and alternative statistical measures of volatility
         (exponential weighted moving average and the GARCH measure of
         volatility). The expected dividend yield is zero.



                                       7
<PAGE>




         Changes in outstanding options in the three months ended March 31, 2006
are as follows:

<TABLE>
<CAPTION>

                                                                                  Weighted
                                                                Weighted           Average
                                                                 Average          Remaining         Aggregate
                                                                Exercise         Contractual        Intrinsic
                                                Options           Price         Term (years)        Value (2)
                                              -------------    ------------     --------------    --------------
<S>                                          <C>               <C>              <C>               <C>
Options outstanding at
   December 31, 2005                           4,249,000             $1.97
      Granted                                          -                 -
      Exercised                                   (5,000)            $0.47
      Canceled                                         -                 -
                                              ------------
Options outstanding at March
   31, 2006                                    4,244,000             $1.97               6.56     $3,712,000
                                              ============
Options exercisable at March
   31, 2006                                    3,584,334             $2.06               6.19     $2,918,000
                                              ============
Options available for grant at
   March 31, 2006 (1)                          2,251,000
                                              ============
</TABLE>

(1)      Of this amount, 2,000,000 options are subject to ratification at the
         June 2006 annual stockholder meeting.

(2)      The aggregate intrinsic value has been calculated based on the
         difference between the exercise price of in-the-money options versus
         the Company's closing stock price as of March 31, 2006.

         The table below presents the pro forma effect on net income and basic
         and diluted net income per share if the Company had applied a fair
         value recognition method instead of the intrinsic value method to
         options granted under the Company's stock option plans for the three
         months ended March 31, 2005. For purposes of this pro forma disclosure,
         the value of the options is estimated using the Black-Scholes
         option-pricing model and amortized to expense over the options' vesting
         periods.


<TABLE>
<CAPTION>
                                                                    Three Months Ended March
                                                                            31, 2005
                                                                    --------------------------

<S>                                                                 <C>
         Net income, as reported                                               $428
         Stock-based employee compensation expense determined
           under fair value based method for all awards, net of
           related tax effects                                                 (104)
                                                                    --------------------------
         Pro forma net income                                                  $324
                                                                    ==========================

         Net income per share:
            Basic, as reported                                                $.05
            Diluted, as reported                                              $.03
            Basic, pro forma                                                  $.03
            Diluted, pro forma                                                $.02
</TABLE>



                                       8
<PAGE>

(3)      SHORT-TERM BORROWINGS:

         At March 31, 2006, short-term borrowings totaled $8,829,000 consisting
         of a line of credit balance of $8,659,000 and $170,000 of outstanding
         borrowings related to the insurance financing arrangements discussed
         below. At December 31, 2005, short-term borrowings totaled $8,921,000
         consisting of a line of credit balance of $8,080,000 and $841,000 of
         outstanding borrowings related to the insurance financing arrangements
         entered into in 2005.

         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 which was due to expire
         on June 27, 2005 but was extended through January 31, 2006, provided
         CD&L with standby letters of credit, prime rate based loans at the
         bank's prime rate, as defined, plus 25 basis points and LIBOR based
         loans at the bank's LIBOR, as defined, plus 225 basis points. Credit
         availability was based on eligible amounts of accounts receivable, as
         defined, up to a maximum amount of $15,000,000 and was collateralized
         by substantially all of the assets, including certain cash balances,
         accounts receivable, equipment, leasehold improvements and general
         intangibles of the Company and its subsidiaries.

         As of January 31, 2006, CD&L and Bank of America, N.A. (successor by
         merger to Fleet Capital Corporation) entered into a new agreement (the
         "Bank of America Facility") which replaced the prior Fleet Facility.
         The Bank of America Facility, which expires on September 30, 2008,
         continues to provide CD&L with standby letters of credit, prime rate
         based loans at the bank's prime rate, as defined (7.75% at March 31,
         2006), and LIBOR based loans at the bank's LIBOR rate, as defined, plus
         200 basis points. Credit availability is based on eligible amounts of
         accounts receivable, as defined, up to a maximum amount of $20,000,000
         and is collateralized by substantially all of the assets, including
         certain cash balances, accounts receivable, equipment, leasehold
         improvements and general intangibles of the Company and its
         subsidiaries. The maximum borrowings outstanding under the Bank of
         America Facility during the three months ended March 31, 2006 were
         $9,617,000. As of March 31, 2006, the Company had total cash on hand
         and borrowing availability of $5,057,000 under the Bank of America
         Facility, after adjusting for restrictions related to outstanding
         standby letters of credit of $4,582,000 and minimum availability
         requirements.

         Under the terms of the Bank of America Facility, the Company is
         required to maintain certain financial ratios and comply with other
         financial conditions. The Bank of America 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 debt covenants as of March 31, 2006.

         Costs incurred relative to the establishment of the Bank of America
         Facility amounted to approximately $89,000. This has been accounted for
         as deferred financing costs and is being amortized over the term of the
         new financing agreement. As of March 31, 2006, the unamortized portion
         of the deferred financing costs amounted to approximately $81,000.

         Insurance Financing Agreements -

         In connection with the renewal of certain of the Company's insurance
         policies, CD&L entered into an agreement to finance annual insurance
         premiums. A total of $1,676,000 was financed through this arrangement
         as of July 30, 2005. Monthly payments, including interest, amount to
         $170,000. The interest rate is 4.75% and the note matures in May 2006.
         The related annual insurance premiums were paid to the various
         insurance companies at the beginning of each policy year. The
         outstanding debt amount of $170,000 at March 31, 2006 ($841,000 at
         December 31, 2005) was included in short-term borrowings. The
         corresponding prepaid insurance has been recorded in prepaid expenses
         and other current assets.

                                       9
<PAGE>

 (4)     LONG-TERM DEBT:

         On January 29, 1999, the Company completed a $15,000,000 private
         placement of the senior subordinated notes (the "Senior Notes") and
         warrants 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 was required to maintain certain
         financial ratios and comply with other financial conditions contained
         in the Senior Notes agreement.

         At March 31, 2004, the Company owed $11,000,000 of principal on the
         Senior Notes. On April 14, 2004, an agreement was reached among the
         Company, BNP Paribas ("Paribas"), Exeter Venture Lenders, L.P. ("Exeter
         Venture") and Exeter Capital Partners IV, L.P. ("Exeter Capital") and
         together with Exeter Venture and Paribas (the "Original Note holders")
         and certain members of CD&L management and others ("Investors") as to
         the financial restructuring of the Senior Notes. The Original Note
         holders agreed to convert a portion of the existing debt due from CD&L
         into equity and to modify the terms of the Senior Notes if the
         Investors purchased a portion of the notes and accepted similar
         modifications. The nature of the restructuring was as follows:

            (a)   The Original Note holders exchanged Senior Notes in the
                  aggregate principal amount of $4,000,000 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 $4,000,000. The Preferred Stock is
                  convertible into 3,937,010 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. The conversion price is $1.016 per share
                  which was equal to the average closing price for the Company's
                  common stock for the 5 days prior to the closing. Holders of
                  the Preferred Stock have the right to elect two directors.

            (b)   The Original Note holders and the Company amended the terms of
                  the remaining $7,000,000 principal balance of the Senior
                  Notes, and then exchanged the amended notes for the new 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 $3,000,000 and the Series B
                  Convertible Subordinated Notes ("Series B Convertible Notes")
                  in the principal amount of $4,000,000 (collectively, the
                  "Convertible Notes"). The loan agreement that governed the
                  Senior Notes was amended and restated to reflect the terms of
                  the Convertible Notes, including the elimination of most
                  financial covenants. The principal amount of the Convertible
                  Notes 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 and
                  will be paid quarterly. As the interest on the Convertible
                  Notes increases over the term of the notes, the Company
                  records the associated interest expense on a straight-line
                  basis using a blended rate of 10.71%, giving rise to accrued
                  interest over the early term of the Convertible Notes. 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
                  common stock for the 5 days prior to the closing and $2.032
                  for the Series B Convertible Notes). The Series B Convertible
                  Notes were subsequently extinguished on October 31, 2005, as
                  described below.

            (c)   The Investors purchased the Series A Convertible Notes from
                  the Original Note holders for a price of $3,000,000.

            (d)   The Company issued an additional $1,000,000 of Series A
                  Convertible Notes to the Investors for an additional payment
                  of $1,000,000, the proceeds of which were used to reduce
                  short-term debt.



                                       10
<PAGE>

            (e)   The Investors, the Original Note holders 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 (3,937,010 shares) and the
                  Convertible Notes (3,937,008 shares for Series A and 1,968,504
                  shares for Series B) would be registered for resale with the
                  Securities and Exchange Commission ("SEC"). Subsequently, on
                  August 2, 2005, the Company filed the required registration
                  statement and the registration statement was declared
                  effective on August 11, 2005.

            The Company cannot be compelled to redeem the Preferred Stock for
            cash at any time.

            Costs incurred relative to the aforementioned transactions amounted
            to approximately $592,000. Of this amount, $420,000 has been
            accounted for as deferred financing costs and is being amortized
            over the term of the new financing agreements. The remaining
            $172,000 has been accounted for as a reduction in paid-in capital.
            These amounts have been allocated based on the proportion of debt to
            equity raised in the aforementioned transactions. These amounts were
            subsequently adjusted due to the extinguishment of the Series B
            Convertible Notes. As of March 31, 2006, remaining costs related to
            this transaction amounted to approximately $337,000. Of this amount,
            $225,000 continues to be amortized as a deferred financing cost and
            $112,000 remains as a reduction of additional paid-in capital.

            On October 31, 2005, the Company retired the Series B Convertible
            Notes that were issued to Paribas, Exeter Capital and Exeter
            Venture. The principal amount of the Series B Convertible Notes
            totaled $4,000,000 as of the retirement date. The portion of the
            Series B Convertible Notes held by Paribas was satisfied by a cash
            payment of $2,666,667 principal and $40,000 of accrued interest
            through October 31, 2005. Exeter Venture and Exeter Capital
            (collectively "Exeter") held the remaining $1,333,333 of the Series
            B Convertible Notes. Exeter exercised their right of conversion of
            their notes and, as such, the Company issued to Exeter a total of
            656,168 shares of the Company's Common Stock. In addition, a cash
            payment of $20,000 was made to Exeter relating to accrued interest
            through October 31, 2005.

            The warrants originally issued on January 29, 1999 remain
            outstanding at March 31, 2006 at an exercise price of $.001 per
            share (convertible into 506,250 shares of common stock). The
            warrants expire in January 2009.



                                       11
<PAGE>

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

<TABLE>
<CAPTION>
                                                                 MARCH 31, 2006     DECEMBER 31, 2005
                                                               -------------------  -------------------
<S>                                                            <C>                  <C>
Series A Convertible Subordinated Notes                                   $4,000               $4,000
Capital lease obligation due October 2007 with interest
    at 5.45% and collateralized by the related property.                       4                    7
Seller-financed debt on acquisitions, payable in monthly
    installments through May 2009, convertible into 144,788
    and 155,197 shares of common stock at March 31, 2006
    and December 31, 2005, respectively, at a weighted
    average exercise price of $6.15 per share. Interest
    is payable at rates ranging between 7.0% and 9.0%.                     1,682                1,837
                                                             -------------------  -------------------

                                                                           5,686                5,844


Less - Current maturities                                                   (532)                (552)
                                                             -------------------  -------------------

                                                                          $5,154               $5,292
                                                             ===================  ===================
</TABLE>

(5)      LITIGATION:

         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 $555,000 as of March 31, 2006 and December 31, 2005.

         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.


(6)      NET INCOME PER SHARE:

         Basic net income per share represents net income divided by the
         weighted average shares outstanding. Diluted net income per share
         represents net income divided by the weighted average shares
         outstanding adjusted for the incremental dilution of potentially
         dilutive common shares.



                                       12
<PAGE>




         A reconciliation of weighted average common shares outstanding to
         weighted average common shares outstanding assuming dilution follows
         (in thousands)-

<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED
                                                                           MARCH 31,
                                                                 --------------------------------
                                                                     2006               2005
                                                                 -------------      -------------
<S>                                                              <C>                <C>
             Basic weighted average common
               shares outstanding                                      10,014              9,356
             Effect of dilutive securities:
                 Stock options and warrants                             1,887              1,054
                 Convertible preferred stock                            3,937              3,937
                 Subordinated convertible debentures                    3,937              5,906
                                                                 -------------      -------------
             Diluted weighted average common
               Shares outstanding                                      19,775             20,253
                                                                 =============      =============
</TABLE>

          A reconciliation of net income as reported to net income as adjusted
          for the effect of dilutive securities follows (in thousands)-

<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED
                                                                           MARCH 31,
                                                                 --------------------------------
                                                                     2006               2005
                                                                 -------------      -------------

<S>                                                              <C>                <C>
             Net income, as reported                                     $189               $428
             Effect of dilutive securities:
                 Interest on subordinated convertible
                   debentures, net of tax                                  64                129
                                                                 -------------      -------------
             Net income, as adjusted for the effect
                of dilutive securities                                   $253               $557
                                                                 =============      =============
</TABLE>


         The following potentially dilutive common shares were excluded from the
         computation of diluted net income per share because the exercise or
         conversion price was greater than the average market price of common
         shares (in thousands):

<TABLE>
<CAPTION>
                                                                     THREE MONTHS ENDED
                                                                          MARCH 31,
                                                                ---------------------------------
                                                                     2006              2005
                                                                ---------------    --------------
<S>                                                                  <C>               <C>
             Stock options and warrants                              713               1,135
             Seller-financed convertible notes                       145                 185
</TABLE>




                                       13
<PAGE>


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

         DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

         This Form 10-Q contains forward-looking statements made pursuant to the
         safe harbor provisions of the Private Securities Litigation Reform Act
         of 1995. Forward-looking statements typically are identified by use of
         terms such as "may," "will," "should," "plan," "expect," "believe,"
         "anticipate," "estimate" and similar expressions, although some
         forward-looking statements are expressed differently. Forward-looking
         statements represent our management's judgment regarding future events.
         Although we believe that the expectations reflected in such
         forward-looking statements are reasonable, we can give no assurance
         that such expectations will prove to be correct. All statements other
         than statements of historical fact included in this report regarding
         our financial position, business strategy, products, services, markets,
         budgets, plans, or objectives for future operations are forward-looking
         statements. We cannot guarantee the accuracy of the forward-looking
         statements, and you should be aware that our actual results could
         differ materially from those contained in the forward-looking
         statements due to a number of factors, including the statements under
         "Risk Factors" and "Critical Accounting Policies" detailed in our
         annual report on Form 10-K for the year ended December 31, 2005, and
         other reports filed with the Securities and Exchange Commission
         ("SEC").

         Our annual reports on Form 10-K, quarterly reports on Form 10-Q,
         current reports on Form 8-K and all other documents filed by the
         Company or with respect to its securities with the SEC are available
         free of charge through our website at www.cdl.net. Information on our
         website does not constitute a part of this report.

         OVERVIEW

         The Company is 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. These services are
         provided throughout the United States. The Company currently operates
         in a single-business segment and thus additional disclosures under
         Statement of Financial Accounting Standards No. 131, Disclosures About
         Segments of an Enterprise and Related Information, are not required.

         The Company offers the following delivery services:

                  o        Rush delivery services, 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        Distribution services, providing same-day delivery
                           for many pharmaceutical and office supply
                           wholesalers, from manufacturers to retailers and
                           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 the economic benefits of
                           outsourcing.

         Revenue consists primarily of charges to the Company's customers for
         delivery services. These customers are billed as the services are
         rendered, mostly on a weekly basis. Recurring charges related to
         facilities management or contract logistics services are typically
         billed on a monthly basis. The Company's recent revenue growth has been
         attributable to the expansion of its current customer base into new
         geographical areas. The Company has always had a strong presence in the
         Northeast and Southeast regions of the country. As a result of its
         nationwide business development program, the Company has increased its
         revenue volume on the West coast during the first quarter of 2006 by
         61% as compared to the first quarter of 2005.

                                       14
<PAGE>

         Cost of revenue consists primarily of independent contractor delivery
         costs, other direct pick-up and delivery costs and the costs of
         dispatching rush demand messengers. The Company has experienced an
         overall increase in cost of revenue as a percent of revenue during the
         first quarter of 2006 compared to the first quarter of 2005. The
         reduced margin was due primarily to new business start-up costs and
         competitive rate pressures. Our pricing to new and existing customers
         has not kept pace with our increased driver costs. The significant
         increase in fuel costs has required us to pay more to attract and
         retain contract drivers.

         Selling, general and administrative expense ("SG&A") includes the costs
         to support the Company's sales effort and the expense of maintaining
         facilities, information systems, financial, legal and other
         administrative functions. While SG&A costs are not directly correlated
         with revenue volume, the Company has experienced increased rent charges
         and higher travel costs as a result of opening new facilities to
         facilitate its recent expansion into new geographical locations. In
         addition, the Company has increased its sales force and operating
         personnel significantly in the West coast to manage the recent revenue
         growth along with the anticipated growth of the region going forward.

         The Company continues to invest in its infrastructure and is currently
         in the development stage of implementing a state-of-the-art,
         web-enabled, business information management system. It will provide
         the scalability, availability and security required to manage the
         future growth of driver, route, tracking and reporting components of
         the Company's ground distribution services.

         The condensed 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.


         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 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. For a discussion of the Company's critical accounting
         policies, see the Company's Annual Report on Form 10-K for 2005.

         New Accounting Standards and Pronouncements -

         In December 2004, SFAS No. 123 (revised 2004), "Share-Based Payment"
         ("SFAS 123(R)") was issued. SFAS 123(R) revises SFAS 123 and supersedes
         APB No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). SFAS
         123, as originally issued in 1995, established as preferable a fair
         value-based method of accounting for share-based payment transactions
         with employees. However, SFAS 123 as amended permitted entities the
         option of continuing to apply the intrinsic value method under APB 25
         that the Company had been using, as long as the footnotes to the
         financial statements disclosed what net income would have been had the
         preferable fair value-based method been used. SFAS 123(R) requires that
         the compensation cost relating to all share-based payment transactions,
         including employee stock options, be recognized in the historical
         financial statements. That cost is measured based on the fair value of
         the equity or liability instrument issued and amortized over the
         related service period. The Company has adopted the guidance in SFAS
         123(R) effective January 1, 2006. As such, the accompanying condensed
         consolidated statement of income for the three months ended March 31,
         2006 includes $95,000 of compensation expense in SG&A related to the
         fair value of options granted to employees and directors under the
         Company's stock-based employee compensation plans which is being
         amortized over the service period in the financial statements, as
         required by SFAS 123(R). These awards have been classified as equity
         instruments, and as such, a corresponding increase of $95,000 has been
         reflected in additional paid-in capital in the accompanying balance
         sheet as of March 31, 2006.


                                       15
<PAGE>

         RESULTS OF OPERATIONS

         INCOME AND EXPENSE AS A PERCENTAGE OF REVENUE

<TABLE>
<CAPTION>
                                                                 For the Three Months Ended
                                                                         March 31,
                                                              ---------------------------------
                                                                  2006               2005
                                                              --------------    ---------------
<S>                                                            <C>               <C>
         Revenue                                                   100.0%            100.0%

         Gross profit                                               18.5%             19.7%

         Selling, general and
            administrative expenses                                 16.8%             17.0%

         Depreciation and amortization                               0.5%              0.5%

         Interest expense                                            0.6%              0.7%

         Income before provision for income taxes                    0.6%              1.5%

         Net income                                                  0.3%              0.8%
</TABLE>


         THREE MONTHS ENDED MARCH 31, 2006 COMPARED TO THE THREE MONTHS ENDED
         MARCH 31, 2005

         Revenue for the three months ended March 31, 2006 increased by
         $8,084,000, or 15.4%, to $60,439,000 from $52,355,000 for the three
         months ended March 31, 2005. This increase in revenue includes
         $6,400,000 from existing customers and $3,100,000 from new customers.
         These increases were partially offset by lost business of $1,400,000.


         Cost of revenue increased by $7,187,000, or 17.1%, to $49,233,000 for
         the three months ended March 31, 2006 from $42,046,000 for the three
         months ended March 31, 2005. Cost of revenue for the three months ended
         March 31, 2006 represented 81.5% of revenue as compared to 80.3% for
         the same period in 2005.

         If the gross profit margin had remained the same as last year's 19.7%,
         the $11,206,000 gross profit for the three months ended March 31, 2006
         would have been $700,000 higher. The reduced margin was due primarily
         to new business start-up costs and competitive rate pressures. Our
         pricing to new and existing customers has not kept pace with our
         increased driver costs. The significant increase in fuel costs has
         required us to pay more to attract and retain contract drivers.

                                       16
<PAGE>

         SG&A increased by $1,312,000, or 14.8%, to $10,192,000 for the three
         months ended March 31, 2006 from $8,880,000 for the same period in
         2005. Stated as a percentage of revenue, SG&A was 16.8% as of March 31,
         2006 and 17.0% as of March 31, 2005. The increase in SG&A was due
         primarily to the following:

                                                              Increase from
                                                               1st Qtr 2005
                                                           --------------------
                 Legal fees                                $276,000      183.9%
                 Compensation, other than stock-based       197,000        5.2%
                 Premises rent                              158,000       10.9%
                 Computer costs                             148,000       81.5%
                 Travel and entertainment                   147,000       40.2%
                 Stock-based compensation                    95,000         (1)

            (1)  The Company implemented SFAS 123(R) during the first
                 quarter of 2006. As such, there was no comparable
                 expense recorded in 2005.

         The increase in legal fees related to various business development
         initiatives. The increases in compensation (other than stock-based),
         premises rent, computer costs and travel and entertainment all relate
         primarily to additional facilities opened on the West coast and
         Southeast region as a result of the expansion into new geographic
         locations.

         Depreciation and amortization was $318,000 as of March 31, 2006 as
         compared to $274,000 for the same period in 2005. This increase
         resulted from depreciation on the 2005 total fixed asset additions.

         Interest expense decreased by $35,000 to $356,000 for the three months
         ended March 31, 2006 as compared to $391,000 for the same period last
         year. The reduction in interest was due to the extinguishment of the
         Series B Convertible Notes in October 2005.

         As a result of the factors discussed above, income before provision for
         income taxes decreased by $409,000 to $356,000 for the three months
         ended March 31, 2006 from $765,000 for the same period last year.

         Provision for income taxes decreased by $170,000 to $167,000 for the
         three months ended March 31, 2006 as compared to $337,000 for the same
         period in 2005. This was due to the decrease in income before provision
         for income taxes discussed above, partially offset by an increased
         effective tax rate of 47% for the first quarter of 2006 as compared to
         44% for the first quarter of 2005.

         Net income decreased by $239,000 to $189,000 for the three months ended
         March 31, 2006 as compared to $428,000 for the same period last year.
         This was due to the factors discussed above.

         LIQUIDITY AND CAPITAL RESOURCES

         At March 31, 2004, the Company was indebted to Paribas and Exeter in
         the sum of $11.0 million pursuant to a subordinated note bearing
         interest at 12% per annum (see Senior Notes in Note 4). On April 14,
         2004, an agreement was reached between Paribas, Exeter and the
         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 purchased a portion of the note and accepted similar
         modifications. The loan agreement that governed the Senior Notes 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. The principal amount of the
         Convertible Notes 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 Series B Convertible Notes
         were subsequently extinguished on October 31, 2005. At March 31, 2006
         and 2005, long-term debt included $4,000,000 of Series A Convertible
         Notes. At March 31, 2005, long-term debt also included $4,000,000 of
         Series B Convertible Notes.

                                       17
<PAGE>

         The Company's working capital increased by $124,000 from $6,365,000 as
         of December 31, 2005 to $6,489,000 as of March 31, 2006. Cash and cash
         equivalents decreased by $60,000 to $777,000 as of March 31, 2006. Cash
         of $522,000 was provided by operations primarily due to a $553,000
         reduction in prepaid expenses relating to the insurance financing
         arrangements. Cash of $245,000 was used in net investing activities for
         capital expenditures discussed below and cash of $337,000 was used in
         net financing activities primarily for the repayment of long-term debt.
         Capital expenditures amounted to $263,000 and $106,000 for the three
         months ended March 31, 2006 and 2005, respectively. Increased capital
         expenditures in the first quarter of 2006 related to the purchase of
         scanners and improving the functionality of our internal network.

         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 which was due to expire
         on June 27, 2005 but was extended through January 31, 2006, provided
         CD&L with standby letters of credit, prime rate based loans at the
         bank's prime rate, as defined, plus 25 basis points and LIBOR based
         loans at the bank's LIBOR, as defined, plus 225 basis points. Credit
         availability was based on eligible amounts of accounts receivable, as
         defined, up to a maximum amount of $15,000,000 and was collateralized
         by substantially all of the assets, including certain cash balances,
         accounts receivable, equipment, leasehold improvements and general
         intangibles of the Company and its subsidiaries.

         As of January 31, 2006, CD&L and Bank of America, N.A. (successor by
         merger to Fleet Capital Corporation) entered into a new agreement (the
         "Bank of America Facility") which replaced the prior Fleet Facility.
         The Bank of America Facility, which expires on September 30, 2008,
         continues to provide CD&L with standby letters of credit, prime rate
         based loans at the bank's prime rate, as defined (7.75% at March 31,
         2006), and LIBOR based loans at the bank's LIBOR rate, as defined, plus
         200 basis points. Credit availability is based on eligible amounts of
         accounts receivable, as defined, up to a maximum amount of $20,000,000
         and is collateralized by substantially all of the assets, including
         certain cash balances, accounts receivable, equipment, leasehold
         improvements and general intangibles of the Company and its
         subsidiaries. The maximum borrowings outstanding under the Bank of
         America Facility during the three months ended March 31, 2006 were
         $9,617,000. As of March 31, 2006, the Company had total cash on hand
         and borrowing availability of $5,057,000 under the Bank of America
         Facility, after adjusting for restrictions related to outstanding
         standby letters of credit of $4,582,000 and minimum availability
         requirements.

         Under the terms of the Bank of America Facility, the Company is
         required to maintain certain financial ratios and comply with other
         financial conditions. The Bank of America 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 debt covenants as of March 31, 2006.

         Costs incurred relative to the establishment of the Bank of America
         Facility amounted to approximately $89,000. This has been accounted for
         as deferred financing costs and is being amortized over the term of the
         new financing agreement. As of March 31, 2006, the unamortized portion
         of the deferred financing costs amounted to approximately $81,000.

         The Company retains a risk of incurring uninsured losses. There can be
         no assurances that the Company's risk management policies and
         procedures will minimize future uninsured losses or that a material
         increase in frequency or severity of uninsured losses will not occur
         and adversely impact the Company's future consolidated financial
         results.
                                       18
<PAGE>


         The Company had an accumulated deficit of ($2,867,000) as of March 31,
         2006. On numerous occasions, the Company has had to amend and obtain
         waivers of the terms of its credit facilities and senior debt as a
         result of covenant violations or for other reasons. On April 14, 2004,
         the Company restructured its senior debt and related covenants. The
         restructuring included an agreement among the Company, its lenders and
         certain members of CD&L management and others which improved the
         Company's short-term liquidity and reduced interest expense. The
         restructuring eased the financial covenants to which the Company was
         subject. However, if the Company were to fail to meet such covenants in
         the future, there can be no assurances that the Company's lenders would
         agree to waive any future covenant violations, 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 are sufficient to support the Company's operations and general
         business and capital requirements through at least March 31, 2007. Such
         conclusions are predicated upon sufficient cash flows from operations
         and the continued availability of a revolving credit facility. The
         risks associated with cash flows 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.

         INFLATION

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




                                       19
<PAGE>

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company is exposed to the effect of changing interest rates. At
         March 31, 2006, the Company's debt consisted of approximately
         $5,856,000 of fixed rate debt with a weighted average interest rate of
         8.30% and $8,659,000 of variable rate debt with a weighted average
         interest rate of 7.54%. The variable rate debt consists of borrowings
         of revolving line of credit debt at the bank's prime rate (7.75% at
         March 31, 2006). If interest rates on variable rate debt were to
         increase by 75 basis points (one-tenth of the weighted average interest
         rate at March 31, 2006), the net impact to the Company's results of
         operations and cash flows for the three months ended March 31, 2006
         would be a decrease of income before provision for income taxes and
         cash flows from operating activities of approximately $16,000. Maximum
         borrowings of revolving line of credit debt during the three months
         ended March 31, 2006 were $9,617,000.


ITEM 4 - CONTROLS AND PROCEDURES

         (a)      Disclosure controls and procedures. As of the end of the
                  Company's most recently completed fiscal quarter covered by
                  this report, the Company carried out an evaluation, with the
                  participation of the Company's management, including the
                  Company's Chief Executive Officer and Chief Financial Officer,
                  of the effectiveness of the Company's disclosure controls and
                  procedures pursuant to Securities Exchange Act Rule 13a-15.
                  Based upon that evaluation, the Company's Chief Executive
                  Officer and Chief Financial Officer concluded that the
                  Company's disclosure controls and procedures are effective in
                  ensuring that information required to be disclosed by the
                  Company in the reports that it files or submits under the
                  Securities Exchange Act is recorded, processed, summarized and
                  reported, within the time periods specified in the SEC rules
                  and forms.

         (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.



                                       20
<PAGE>

                           PART II - OTHER INFORMATION
                           ---------------------------


ITEM 1A - Risk Factors

         Aside from the risk factor noted below, there have not been any
         material changes in the risk factors that were previously disclosed in
         Item 1A to Part I of the Company's Annual Report on Form 10-K for the
         year ended December 31, 2005.

         BASED ON CURRENT DISCUSSIONS WITH THE SEC, WE MAY BE REQUIRED TO AMEND
         PRIOR FILINGS.

         The SEC has asked the Company to provide additional support for its
         accounting for the March 1, 2004 transaction wherein the Company
         repurchased certain Indiana-based assets and liabilities originally
         sold to First Choice Courier in June 2001. Consideration for the
         repurchase included cancellation of a promissory note receivable owed
         by First Choice plus a three year contingent earn-out based on retained
         revenue. The majority of the purchase price related to the value of the
         First Choice customer list. An intangible asset of $1,602,000 was
         recorded as of the purchase date. The asset is being amortized over
         five years. The SEC is questioning if all, or part, of the purchase
         price should have been accounted for as forgiveness of debt. The
         Company disagrees with that position and believes its accounting for
         the transaction is correct.

         If however, after review and discussion, the SEC does not ultimately
         agree with the Company's accounting, the Company may be required to
         amend prior years filings.

         The Company will be communicating with the SEC subsequent to this
         filing to resolve this issue.


ITEM 6 - Exhibits

(a)      Exhibits

                  31.1     Certification of Albert W. Van Ness, Jr. Pursuant to
                           Exchange Act Rules 13a-14(a) and 15d-14(a), 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- 14(a) and 15d-14(a), 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.




                                       21
<PAGE>





                                    SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Dated: May 15, 2006                           CD&L, INC.




                                               By:  \s\ Russell J. Reardon
                                                    ----------------------
                                                      Russell J. Reardon
                                                      Vice President and
                                                      Chief Financial Officer