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 June 30, 1999 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


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


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



         380 Allwood Road                                             07012
    Clifton,  New Jersey                                           (Zip Code)
(Address of principal executive offices)

                                 (973) 471-1005
              (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 __ No___

          The  number of shares of  common  stock of the  Registrant,  par value
$.001 per share, outstanding as of July 31, 1999 was 7,311,026.


<PAGE>



                     CONSOLIDATED DELIVERY & LOGISTICS, INC.
                  FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1999

                                      INDEX



                                                                         Page


Part I - Financial Information (unaudited)

         Item 1 - Financial Statements

         Consolidated Delivery & Logistics, Inc. and Subsidiaries
         Condensed Consolidated Balance Sheets as of June 30, 1999 and
                December 31, 1998                                           3
         Condensed Consolidated Statements of Income for the Three
                and Six Months Ended June 30, 1999 and 1998                 4
         Condensed Consolidated Statements of Cash Flows for the Six
                Months Ended June 30, 1999 and 1998                         5
         Notes to Condensed Consolidated Financial Statements               6

  Item 2 - Management's Discussion and Analysis of Financial Condition
                and Results of Operations                                  12

Part II - Other Information

         Item 1 - Legal Proceedings                                        16

         Item 4 - Submission of Matters to a Vote of Security Holders      17

         Item 6 - Exhibits and Reports on Form 8-K                         18

         Signature                                                         19



<PAGE>

<TABLE>
<CAPTION>

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

                                                                      June 30,         December 31, 1998
                                                                        1999
                                                                  -----------------    ------------------
                                                                    (Unaudited)            (Note 1)

                             ASSETS

CURRENT ASSETS
<S>                                                                          <C>                 <C>
  Cash and cash equivalents                                                  $690                $295
  Accounts receivable, net                                                 26,313              24,491
  Prepaid expenses and other current assets                                 3,015               2,560
                                                                  -----------------    ------------------
    Total current assets                                                   30,018              27,346

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net                                   7,013               6,630
INTANGIBLE ASSETS, net                                                     28,673              16,491
OTHER ASSETS                                                                2,230               1,621
                                                                  ----------------    -------------------
    Total assets                                                          $67,934             $52,088
                                                                  =================    ==================

              LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Short-term borrowings                                                    $5,765             $13,577
  Current maturities of long-term debt                                      3,242               3,181
  Accounts payable and accrued liabilities                                 16,982              14,784
                                                                  -----------------    ------------------
    Total current liabilities                                              25,989              31,542

LONG-TERM DEBT                                                             23,588               6,383
OTHER LONG-TERM LIABILITIES                                                 3,336               2,756
                                                                  -----------------   ------------------
    Total liabilities                                                      52,913              40,681
                                                                  -----------------    ------------------

STOCKHOLDERS' EQUITY
 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;   7,311,026  and  6,843,702   shares  issued  and
   outstanding   at  June  30,  1999  and   December  31,  1998,
   respectively                                                                 7                   7
 Additional paid-in capital                                                12,207               9,670
 Treasury stock, 29,367 shares at cost                                       (162)               (162)
 Retained earnings                                                          2,969               1,892
                                                                  -----------------    ------------------
    Total stockholders' equity                                             15,021              11,407
                                                                  -----------------    ------------------
    Total liabilities and stockholders' equity                            $67,934             $52,088
                                                                  =================    ==================

</TABLE>



        See accompanying notes to condensed consolidated financial statements.


<PAGE>

<TABLE>
<CAPTION>

            CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)


                                                    For the Three Months Ended               For the Six Months
                                                             June 30,                               Ended
                                                                                                  June 30,
                                                  --------------------------------     -------------------------------
                                                       1999              1998             1999              1998
                                                  ---------------    -------------     ------------    ---------------

<S>                                                  <C>                <C>              <C>              <C>
     Revenue                                         $55,848            $44,592          $107,155         $87,278

     Cost of revenue                                  42,644             34,116            82,198          67,176
                                                  ---------------    -------------     ------------    ---------------

       Gross profit                                   13,204             10,476            24,957          20,102

     Selling, general, and
        administrative expenses                       10,158              8,966            19,913          17,399
     Depreciation and amortization                     1,063                623             2,082           1,231
                                                  ---------------    -------------     ------------    ---------------

       Operating income                                1,983                887             2,962           1,472

     Other (income) expense:
       Interest expense                                  878                234             1,525             498
       Other income, net                                 (81)               (91)             (315)           (171)
                                                  ---------------    -------------     ------------    ---------------

     Income before provision
        for income taxes                               1,186                744             1,752           1,145

     Provision for income taxes                          451                275               675             435
                                                  ---------------    -------------     ------------    ---------------

     Net income                                         $735               $469            $1,077            $710
                                                  ===============    =============     ============    ===============

     Net income per share:
       Basic                                            $.10               $.07              $.15            $.11
                                                  ---------------    -------------     ------------    ---------------
       Diluted                                          $.09               $.07              $.14            $.10
                                                  ---------------    -------------     ------------    ---------------

     Basic weighted average common
        shares outstanding                             7,246              6,653             7,095           6,660
                                                  ===============    =============     ============    ===============
     Diluted weighted average common
        shares outstanding                             7,962              6,848             7,710           6,824
                                                  ===============    =============     ============    ===============

       See accompanying notes to condensed consolidated financial statements.


</TABLE>

<PAGE>

<TABLE>
<CAPTION>


            CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)



                                                                                       For the Six Months
                                                                              ------------------------------------
                                                                                         Ended June 30,
                                                                                     1999               1998
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                <C>                   <C>
Net income                                                                         $1,077                $710
Adjustments to reconcile net income to net cash provided by
       Operating activities -
    Gain on disposal of equipment and leasehold improvements                          (31)                (11)
    Depreciation and amortization                                                   2,082               1,231
    Amortization of debt discount                                                      53                   -
    Changes in operating assets and liabilities
      (Increase) decrease in -
        Accounts receivable, net                                                     (479)              1,798
        Prepaid expenses and other current assets                                    (344)                339
        Other assets                                                                 (609)               (139)
      Increase (decrease) in -
        Accounts payable and accrued liabilities                                    1,140                 227
        Other long-term liabilities                                                   133                (216)
                                                                                  ---------             -------
          Net cash provided by operating activities                                 3,022               3,939
                                                                                  ---------             -------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of equipment and leasehold improvements                          166                  11
  Purchase of businesses, net of cash acquired                                     (6,438)                  -
  Additions to equipment and leasehold improvements                                (1,065)             (1,182)
                                                                                  ---------            --------
          Net cash used in investing activities                                    (7,337)             (1,171)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Short-term borrowings (repayments), net                                          (7,812)             (2,860)
  Borrowing of long-term debt                                                      15,000                 150
  Repayments of long-term debt                                                     (2,267)               (658)
  Issuance of stock warrants in connection with long-term financing                   885                   -
  Issuance of stock                                                                   267                   -
  Deferred financing costs                                                         (1,363)                  -
                                                                                  --------             --------
          Net cash provided by (used in) financing activities                       4,710              (3,368)

CASH PROVIDED BY DISCONTINUED OPERATIONS                                                -                  69
                                                                                  --------             ---------

          Net increase (decrease) in cash and cash equivalents                        395                (531)
CASH AND CASH EQUIVALENTS, beginning of period                                        295               1,812
                                                                                  --------             ---------
CASH AND CASH EQUIVALENTS, end of period                                             $690              $1,281
                                                                                  ========             =========

</TABLE>

      See accompanying notes to condensed consolidated financial statements.


<PAGE>


            CONSOLIDATED DELIVERY & LOGISTICS, 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, 1998,  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 and six months ended June 30,
         1999,  are  not  necessarily  indicative  of the  results  that  may be
         expected for any other interim  period or for the year ending  December
         31, 1999. For further information,  refer to the consolidated financial
         statements  and footnotes  thereto  included in the Company's Form 10-K
         for the year ended December 31, 1998.


(2)      BUSINESS COMBINATIONS:

         On February 16, 1999, Consolidated Delivery & Logistics, Inc. ("CDL" or
         the "Company") entered into and consummated an asset and stock purchase
         agreement  with  its  subsidiary,   Sureway  Air  Traffic   Corporation
         ("Sureway") and 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  $3.0 million in cash  including  estimated
         direct  acquisition  costs,  $1,650,000 in a 7% subordinated  note (the
         "Note") and 200,000 shares of CDL common stock at $3.875 per share. The
         Note is due April 16, 2001 with interest payable  quarterly  commencing
         April 1, 1999. The Note is subordinate to all existing or future senior
         debt of CDL. In addition, a contingent earn out in the aggregate amount
         of up to  $520,000  is  payable  based on the  achievement  of  certain
         financial goals during the two year period  following the closing.  The
         earn out is payable 55% in cash and 45% in CDL common stock.

         On April 30,  1999,  Consolidated  Delivery & Logistics,  Inc.  ("CDL")
         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 CDL's common stock at $3.25
         per share.  The Metro  Parcel Note is due April 30, 2001 with  interest
         payable  quarterly  commencing August 1, 1999. The Metro Parcel Note is
         subordinate to all existing or future senior debt of CDL.



<PAGE>
         On April 30,  1999,  Consolidated  Delivery & Logistics,  Inc.  ("CDL")
         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 CDL'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 is
         payable  quarterly  commencing  July 31, 1999.  The Westwind  Notes are
         subordinate  to all existing or future senior debt of CDL. In addition,
         a  contingent  earn out in the  aggregate  amount of up to  $700,000 is
         payable based on the achievement of certain  financial goals during the
         two year period  following the closing.  The earn out is 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.

         On May 10, 1999,  CDL entered into and  consummated  an asset  purchase
         agreement  (the  "Skycab  Purchase  Agreement")  with  its  subsidiary,
         Sureway Air Traffic Corporation ("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.  In  addition,  a  contingent  earn out is payable for
         sixteen quarters following the closing date. The amount of the earn-out
         per  quarter  is the  greater  of  either  $6,250  or 15% of  collected
         revenues  for the  three-month  period  then  ended,  as defined in the
         Skycab Purchase Agreement.

         CDL financed  each of the above  acquisitions  using  proceeds from its
         revolving credit facility with First Union Commercial Corporation.  The
         above transactions have been accounted for under the purchase method of
         accounting.  Accordingly,  the  allocation  of the cost of the acquired
         assets  and  liabilities  have been made on the basis of the  estimated
         fair value.  The  aggregate  amount of goodwill  recorded  for the Gold
         Wings,  Metro  Parcel and  Skycab  acquisitions  is $6.4  million to be
         amortized over 25 years.  The goodwill for the Westwind  acquisition is
         $5.1 million to be amortized over 40 years. The consolidated  financial
         statements  include the operating results of Gold Wings,  Metro Parcel,
         Westwind, and Skycab from their respective acquisition dates.

         The following summarized unaudited pro forma financial  information was
         prepared  assuming  that the Gold Wings,  Metro  Parcel,  Westwind  and
         Skycab  acquisitions  occurred  on the  first day of such  periods  and
         include  certain  pro  forma  adjustments.   This  information  is  not
         necessarily  indicative  of the results the Company would have obtained
         had these events  actually  occurred on such dates or of the  Company's
         actual or future results (in thousands, except per share amounts).

<PAGE>
<TABLE>

                                          -------------------------------- -- --------------------------------
                                                Three Months Ended                   Six Months Ended
                                          -------------------------------- -- --------------------------------
                                          June 30, 1999      June 30,         June 30, 1999      June 30,
                                            Pro Forma          1998              Pro Forma         1998
                                            Combined        Pro Forma            Combined        Pro Forma
                                                             Combined                            Combined
                                          -------------- ----------------- -- --------------- ----------------
                                          -------------- ----------------- -- --------------- ----------------
<S>                                            <C>            <C>                 <C>              <C>
         Revenue                               $56,659        $46,959             $112,189         $99,437
         Income from Operations                  2,041          1,067                3,233           1,967
         Net Income                               $744           $503               $1,111            $742

         Net Income per
                  share - basic                    $.10          $.07                  $.15          $.11
         Net Income per
                  share - diluted                  $.09          $.07                  $.14          $.10

</TABLE>



(3)      SHORT-TERM BORROWINGS:

         In November 1998, CDL and First Union  Commercial  Corporation  ("First
         Union") modified an agreement entered into in July 1997, establishing a
         revolving  credit  facility  (the "First Union  Agreement").  The First
         Union  Agreement  provides  for  an  increase  in the  original  credit
         facility  from $15  million  to  $22.5  million,  provides  CDL with an
         equipment  acquisition  term loan  facility  of up to $2.5  million and
         modifies other terms and conditions. Under the terms of the First Union
         Agreement, the Company is required to maintain certain financial ratios
         and comply with other financial  conditions.  The First Union Agreement
         contains certain covenants for which the Company is in compliance as of
         June 30, 1999.


(4)      LONG-TERM DEBT:

         On January  29,  1999,  the Company  completed  a $15  million  private
         placement  of  senior   subordinated  notes  and  warrants  with  three
         financial  institutions.  The notes bear  interest at 12% per annum and
         are  subordinate  to all senior debt  including  the  Company's  credit
         facility with First Union. Under the terms of the notes, the Company is
         required to  maintain  certain  financial  ratios and comply with other
         financial  conditions for which the Company is in compliance as of June
         30,  1999.  The notes  mature on January 29, 2006 and may be prepaid by
         the Company under certain circumstances. The warrants expire on January
         19, 2009 and are exercisable at any time prior to expiration at a price
         of $.001 per  equivalent  share of common  stock  for an  aggregate  of
         506,250   shares  of  the  Company's   stock,   subject  to  additional
         adjustments. The Company has recorded the fair value of the warrants of
         $885,000 as a credit to additional  paid-in-capital and a debt discount
         on the senior  subordinated  notes.  The Company  used the  proceeds to
         finance acquisitions and to reduce outstanding short-term borrowings.


(5)      COMMON STOCK:

         Effective  April 1, 1998,  CDL adopted an Employee  Stock Purchase Plan
         (the  "Employee  Purchase  Plan").  The Employee  Purchase Plan permits
         eligible  employees  to purchase CDL common stock at 85% of the closing
         market price on the last day prior to the  commencement of the purchase
         period.  On April 2, 1999,  CDL issued  30,740  total  shares of common
         stock to certain  employees  at a  purchase  price of $3.774 per share,
         which  represents  85% of the closing price of $4.44 per share on March
         31, 1998.

         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.  On April 9,  1999,  the  Company  awarded  the  Chief
         Executive Officer of the Company a stock bonus award under the Employee
         Stock  Compensation  Program of 47,051  shares of common stock at $3.19
         per share.



<PAGE>


(6)      REPORTABLE SEGMENTS:

         Effective  December 31, 1998,  CDL  implemented  Statement of Financial
         Accounting  Standards  No.  131,  "Disclosures  about  Segments  of  an
         Enterprise and Related  Information," ("SFAS 131"). SFAS 131 requires a
         company to disclose  reportable  segments  based on the way  management
         organizes  its segments for making  operating  decisions  and assessing
         performance.  CDL has two reportable segments: Air and Ground. Separate
         management  of each segment is required  because each  business unit is
         subject to different cost and delivery parameters.  Segment information
         for the three and six month  periods ended June 30, 1999 and 1998 is as
         follows (in thousands).

<TABLE>
<CAPTION>

                                                Three Months Ended                          Six Months Ended
                                      ---------------------------------------      ------------------------------------
                                          Air         Ground        Total              Air       Ground       Total
                                      ------------- ------------ ------------      ----------- ----------- ------------
         Revenue from external customers
<S>                <C>                     <C>          <C>          <C>              <C>         <C>         <C>
                   1999                    $16,918      $38,930      $55,848          $31,941     $75,214     $107,155
                   1998                     14,144       30,448       44,592           27,444      59,834       87,278
         Intersegment revenue
                   1999                         25          417          442               38         765          803
                   1998                         19          411          430               37         828          865
         Interest expense
                   1999                        266          612          878              455       1,070        1,525
                   1998                         74          160          234              157         341          498
         Depreciation and
               amortization
                   1999                        182          881        1,063              385       1,697        2,082
                   1998                        126          497          623              218       1,013        1,231
         Segment profit
                   1999                        125          610          735              181         896        1,077
                   1998                         99          370          469              137         573          710
         Segment assets
              June 30, 1999                 18,863       49,071       67,934           18,863      49,071       67,934
              Dec. 31, 1998                 11,489       40,599       52,088           11,489      40,599       52,088
         Expenditures for
              segment assets
                   1999                      (258)          616          358              166         899        1,065
                   1998                      (211)          360          149              433         749        1,182


</TABLE>


<PAGE>



(7)      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 and certain  other
         parties in the United States  District Court for the Southern  District
         of New York alleging,  among other things,  that Securities Courier had
         fraudulently  obtained  automobile  liability  insurance  from  Liberty
         Mutual in the late 1980s and early 1990s at below  market  rates.  This
         suit,  which claims  common law fraud,  fraudulent  inducement,  unjust
         enrichment and  violations of the civil  provisions of the Federal RICO
         statute,   among  other  things,   seeks  an   unspecified   amount  of
         compensatory  and  punitive  damages  from the  defendants,  as well as
         attorneys' fees and other expenses.  Three  additional  defendants were
         added by way of a second amended complaint on April 9, 1998. Securities
         and Mr. Brana have filed cross claims against each of these  additional
         defendants and certain  original  defendants who had acted as insurance
         brokers  for certain of the  policies at issue.  Under the terms of its
         acquisition  of Securities  Courier,  the Company has 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 and security  agreement securing up to $500,000 or such
         greater amount as may be due for any defense costs or award arising out
         of this suit.  Mr.  Brana has  delivered  150,000  shares of CDL common
         stock to the Company as collateral  security for the  promissory  note,
         which is due for repayment on December 1, 2002.

         On April  13,  1999 a  motion  for  summary  judgement  dismissing  the
         complaint,  based upon  statute of  limitation  defenses,  was filed on
         behalf of Securities and Mr. Brana. The current  briefing  schedule for
         preparing and serving motion papers has been extended to  mid-September
         1999.  Discovery is currently  pending and as a result,  the Company is
         unable  to make a  determination  as to the  merits of the  claim.  The
         Company does not believe that an adverse  determination  in this matter
         would result in a material adverse effect on the consolidated financial
         position or results of operations of the Company.

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




<PAGE>



(8)      INCOME (LOSS) PER SHARE:

         Basic  earnings  per share  includes  no  dilution  and is  computed by
         dividing   income    available   to   common    stockholders   by   the
         weighted-average  number of common shares  outstanding  for the period.
         Diluted  earnings per share reflects the potential  dilution if certain
         securities are converted.

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

<TABLE>
<CAPTION>

                                                         Three Months Ended                  Six Months Ended
                                                                    June 30,                          June 30,
                                                 --------------------------------
                                                 --------------- -- -------------      ------------- --- ------------
                                                      1999              1998               1999             1998
                                                 ---------------    -------------      -------------     ------------
<S>                                              <C>                      <C>          <C>                     <C>
         Basic weighted average
          common shares outstanding                     7,246              6,653              7,095            6,660
         Effect of dilutive securities:
             Stock Options                                209                195                184              164
             Warrants                                     505                  -                427                -
              ESPP                                          2                 -                   4                -
                                                 ---------------    -------------      -------------     ------------
         Diluted weighted average
           Common shares
           Outstanding                                  7,962             6,848               7,710            6,824
                                                 ===============    =============      =============     ============

</TABLE>

         The  following   common  stock   equivalents  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>

                                                         Three Months Ended                  Six Months Ended
                                                                    June 30,                     June 30,
                                                 --------------------------------      ------------------------------
                                                      1999              1998               1999             1998
                                                 ---------------    -------------      -------------     ------------
<S>                                                   <C>                <C>                <C>              <C>
         Stock options                                555,442            576,764            555,442          583,014
         Subordinated convertible debentures          161,818            275,845            161,818          275,845
         Seller financed convertible notes            676,666                  -            676,666                -

</TABLE>



<PAGE>


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

Overview

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

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,  inability to conclude  acquisitions  on  satisfactory  terms,  the
effect of economic  and market  conditions,  the impact of  competition  and the
Company's   actual  results  varying   materially  from   management's   current
expectations.


RESULTS OF OPERATIONS

Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998

Revenue  for the first  half of 1999  increased  by $19.9  million,  or 22.8% to
$107.2  million from $87.3 million for the first half of 1998.  Revenue from the
Company's  recently  completed  acquisitions  contributed  $18.9  million to the
increase,  or 21.6%.  Revenue from internal growth contributed $1 million to the
increase, or 1.2% for the first half of 1999.

Ground delivery revenue,  net of acquisition related revenue,  increased by $2.2
million or 3.7% from $59.8 million for the first half of 1998 to $62 million for
the similar period for 1999 primarily due to newly added customers combined with
an expansion  of routes with  existing  customers  in the contract  distribution
business in the Northeast and Southeast regions.

Overall, Air courier revenue increased to $31.9 million for the six months ended
June 30, 1999 from $27.4  million  for the same  period in 1998.  The growth was
achieved due to the Gold Wings  acquisition which occurred in February 1999. The
Company  continues  in its ongoing effort to  evaluate  its  customer base so as
to  eliminate unprofitable business within the Air division.

Cost of revenue  increased by $15 million,  or 22.3%,  to $82.2  million for the
first six  months of 1999 from $67.2  million  for the first six months of 1998.
Cost of revenue  for the six  months  ended June 30,  1999  represents  76.7% of
revenues  as  compared  to 77.0% for the same  period in 1998.  The  increase in
revenue  from the  contract  distribution  business  described  above  typically
produces  higher  initial  costs,  which  caused a greater  increase  in cost of
revenue.

Selling,  general and  administrative  expenses  increased by $2.5  million,  or
14.4%,  to $19.9  million from $17.4 million for the first six months of 1999 as
compared to the same period in 1998. The increase is primarily attributed to the
administrative  expenses  associated  with the  Company's  recent  acquisitions.
Depreciation and amortization  increased  $851,000 to $2.1 million for the first
six months of 1999  compared  to $1.2  million  for the first six months of 1998
reflecting  an  increase  attributable  to  the  goodwill  amortization  expense
recorded as a result of the Company's acquisitions.

As a result of the matters  discussed above,  operating income increased by $1.5
million or 100% to $3 million from $1.5 million for the first six months of 1999
as compared to the same period in 1998. Interest expense increased by $1 million
for the first half of 1999 due to  increased  borrowings  to fund the  Company's
recent  acquisitions.

<PAGE>

Three  Months  ended June 30, 1999  Compared to the Three Months Ended
June 30, 1998.

Revenue for the second quarter of 1999  increased by $11.2 million,  or 25.1% to
$55.8  million from $44.6 million for the second  quarter of 1998.  Revenue from
the Company's recently completed acquisitions  contributed  substantially all of
the increase in revenue achieved during the second quarter of 1999.

The Company's ground delivery divisions contributed a slight increase in revenue
of $750,000, excluding revenue from acquisitions, primarily due to the expansion
of routes with existing customers in the contract  distribution  business in the
Northeast and Southeast  regions.  Excluding  revenues  from  acquisitions,  air
courier revenue  declined by $1.1 million for the quarter ended June 30, 1999 as
a result of the Company's ongoing efforts to eliminate unprofitable business.

Cost of revenue  increased  by $8.5  million,  or 25%, to $42.6  million for the
three months  ended June 30, 1999 from $34.1  million for the three months ended
June 30, 1998 resulting from the increases in revenue from acquisitions and from
the contract  distribution  business  described  above.  Cost of revenue for the
three  months  ended June 30, 1999  represents  76.4% of revenues as compared to
76.5% for the same period in 1998.

Selling,  general and  administrative  expenses  increased by $1.2  million,  or
13.3%, to $10.2 million from $9 million for the three months ended June 30, 1999
as compared to the same period in 1998. The primary  contributor to the increase
in selling,  general and  administrative  expense  was  administrative  expenses
related to the Company's recent acquisitions.

As a result of the factors  discussed above,  operating income increased by $1.1
million to $2.0 million from $887,000 for the three months ended June 30,1999 as
compared to the same period in 1998.

LIQUIDITY AND CAPITAL RESOURCES

Working  capital  increased by $8.2 million from a deficit of $4.2 million as of
December  31,  1998 to working  capital of $4.0  million at June 30,  1999.  The
increase results from a repayment of the Company's  short-term  borrowings under
the Revolving Credit Facility with proceeds from the senior  subordinated notes.
Cash and cash  equivalents  increased  to  $690,000  as of June  30,  1999  from
$295,000 at December 31, 1998. Cash of $3 million was provided by operations for
the six months ended June 30, 1999 as compared to cash provided by operations of
$3.9 million for the same period in 1998. For the first half of 1999,  cash used
in investing activities totaled $7.3 million as compared to $1.2 million for the
same period in 1998. The increase  primarily results from the use of cash during
1999 to purchase  businesses.  For the first half of 1999,  financing activities
provided  cash  of  $4.7  million  and for the  same  period  in 1998  financing
activities used cash of $3.4 million.  The net increase  between periods in cash
provided by financing  activities  was $8.1  million.  This  increase  primarily
results  from $15 million of  proceeds  from the senior  subordinated  notes and
warrants, offset by repayments of $7.3 million of short-term borrowings.

Capital expenditures amounted to $1.1 million and $1.2 million for the six-month
periods ended June 30, 1999 and 1998, respectively.  These expenditures upgraded
computer systems  capabilities and maintained Company facilities in the ordinary
course of business.  As of June 30, 1999,  the Company had  available  under its
revolving credit facility $15.6 million.

The Company  completed a $15 million  private  placement of senior  subordinated
notes and warrants on January 29, 1999.  Proceeds were used primarily to finance
acquisitions  and  to  reduce  outstanding  short-term  borrowings.  The  senior
subordinated  notes  mature  in 2006  and bear  interest  at the rate of 12% per
annum.  The senior  subordinated  notes were  issued  with  detachable  warrants
subject to a warrant agreement dated January 29, 1999.

<PAGE>

Management believes that cash flows from operations,  together with its existing
and  anticipated  borrowing  capacity,  as discussed  above,  are  sufficient to
support the Company's operations and general business and liquidity requirements
for the foreseeable future, including anticipated acquisitions.

Year 2000 Compliance

         The Company is  continuing  its process of evaluating  its  information
technology infrastructure for Year 2000 compliance.  The Company does not expect
that the cost to modify its  information  technology  infrastructure  to be Year
2000  compliant  will be  material  to its  financial  position  or  results  of
operations.  The Company  does not  anticipate  any material  disruption  in its
operations  as a result of any failure by the Company to be in  compliance.  The
Company is in the  process of  obtaining  information  concerning  the Year 2000
compliance  status of its suppliers and customers.  In the event that any of the
Company's  significant  suppliers or customers does not  successfully and timely
achieve Year 2000  compliance,  the Company's  business or  operations  could be
adversely affected.

<PAGE>

         The Company  continues to implement its Year 2000  compliance  program.
The following table provides a summary of the Company's  progress in each of the
phases,  estimated  percentage  complete and the anticipated  completion date of
each phase:

<TABLE>
<CAPTION>

------------------------ ---------------------------------------------------------------- -------------- ---------------
                                                                                           Estimated %      Estimated
         Phase                                     Definition                              Complete       Complete Date
------------------------ ---------------------------------------------------------------- -------------- ---------------
<S>                      <C>                                                              <C>              <C>
Awareness                Generate   awareness   of  the   Y2K   issue   throughout   the  100%
                         organization and establish compliance program.
------------------------ ---------------------------------------------------------------- -------------- ---------------
Inventory                Analyze all  relevant  hardware/application  software/operating  100%
                         systems and networks for compliance
------------------------ ---------------------------------------------------------------- -------------- ---------------
Assessment,              Prioritize  hardware  and  software  issues,  initiate  changes  90%            9/30/99
Conversion               necessary  to  achieve  compliance  and test  changes  made for
Testing and              actual compliance.
Implementation
------------------------ ---------------------------------------------------------------- -------------- ---------------
Imbedded Technology      Determine whether equipment with imbedded  technology,  such as  90%            9/30/99
                         PBX  switches,   elevators,   alarm   systems,   etc.  are  Y2K
                         compliant.  Analysis to date has identified limited exposure in
                         this area. Analysis of recent acquisitions continues.
------------------------ ---------------------------------------------------------------- -------------- ---------------
Third-Party Interfaces   Determine whether electronic  interfaces with third parties are  90%            9/30/99
                         compliant.  There are only a few such  interfaces  that will be
                         fully  tested  later in the  year.  If  necessary,  contingency
                         arrangements will be readily  available,  as the interfaces are
                         not "real-time".
------------------------ ---------------------------------------------------------------- -------------- ---------------
Third-Party              Determine   whether   third   parties  that  provide   material  80%            8/31/99
Relationships            services/supplies  are  compliant.  Feedback to date  indicates
                         that  companies with whom we have a material  relationship  are
                         well  advanced  in  bringing   their   internal   systems  into
                         compliance.  Less well defined is whether  their third  parties
                         are in compliance.
------------------------ ---------------------------------------------------------------- -------------- ---------------
                         We will  continue to cooperate  in the exchange of  information  70%            10/31/99
                         with  material  third  parties  in an effort  to  ensure  their
                         compliance  and/or  assess the impact of their  non-compliance.
                         Where the risk of  non-compliance  is serious,  we will
                         select alternate vendors.
------------------------ ---------------------------------------------------------------- -------------- ---------------
</TABLE>

         The Company  estimates that the cost of compliance  will not exceed the
initial amount budgeted of $250,000.

<PAGE>

         Where practical the Company will develop  contingency  plans during the
coming months in an effort to ensure minimal disruption to our clients.


Inflation

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


Quantitative and Qualitative Disclosures About Market Risk.

         CDL's major "market risk"  exposure is the effect of changing  interest
rates.  CDL manages its  interest  expense by using a  combination  of fixed and
variable  rate  debt.  At  June  30,  1999,  the  Company's  debt  consisted  of
approximately  $28 million of fixed rate debt with a weighted  average  interest
rate of 9.9% and $5.8  million of  variable  rate debt with a  weighted  average
interest  rate of 7.5% The amount of variable  rate debt  fluctuates  during the
year based on CDL's cash  requirements.  If interest rates on such variable rate
debt were to  increase  by 75 basis  points  (one-tenth  of the rate at June 30,
1999), the net impact to the Company's  results of operations and cash flows for
the six  months  ended  June 30,  1999  would  be a  decrease  of  approximately
$122,000.



<PAGE>



                           Part II - OTHER INFORMATION

Item 1 - 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 and certain other parties in the
United States  District  Court for the Southern  District of New York  alleging,
among other things, that Securities Courier had fraudulently obtained automobile
liability  insurance  from  Liberty  Mutual in the late 1980s and early 1990s at
below  market  rates.  This suit,  which  claims  common  law fraud,  fraudulent
inducement,  unjust  enrichment  and  violations of the civil  provisions of the
Federal  RICO  statute,  among  other  things,  seeks an  unspecified  amount of
compensatory  and punitive  damages from the  defendants,  as well as attorneys'
fees and other  expenses.  Three  additional  defendants  were added by way of a
second amended  complaint on April 9, 1998.  Securities and Mr. Brana have filed
cross claims against each of these  additional  defendants and certain  original
defendants  who had acted as  insurance  brokers for certain of the  policies at
issue. Under the terms of its acquisition of Securities Courier, the Company has
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 and security agreement securing up to $500,000 or such greater
amount as may be due for any  defense  costs or award  arising out of this suit.
Mr.  Brana has  delivered  150,000  shares of CDL common stock to the Company as
collateral  security  for the  promissory  note,  which is due for  repayment on
December 1, 2002.

         On April  13,  1999 a  motion  for  summary  judgement  dismissing  the
complaint,  based upon statute of  limitation  defenses,  was filed on behalf of
Securities  and Mr.  Brana.  The current  briefing  schedule for  preparing  and
serving  motion papers has been  extended to  mid-September  1999.  Discovery is
currently pending and as a result, the Company is unable to make a determination
as to the merits of the claim.  The  Company  does not  believe  that an adverse
determination  in this matter would result in a material  adverse  effect on the
consolidated financial position or results of operations of the Company.

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



<PAGE>


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

         On June 16, 1999, the Company held its annual meeting of  stockholders.
         The following  sets forth a brief  description of each matter which was
         acted upon, as well as the votes cast for, against or withheld for each
         such matter,  and,  where  applicable,  the number of  abstentions  and
         broker non-votes for each matter:

<PAGE>

         1.       Election of Directors.

                   Name of Director              Votes For         Votes Against
                   -------------------------------------------------------------

                       Class I
                   Albert W. Van Ness, Jr.       5,841,855             36,398
                   Thomas E. Durkin III          5,841,855             36,398
                   John A. Simourian             5,841,855             36,398

                       Class II
                   Randall Catlin                5,668,456             209,797


         2. Approval of the Amendment to 1995 Stock Option Plan for  Independent
Directors.

                    Votes For:                               5,557,250
                    Votes Against:                             172,790
                    Abstentions:                               148,213



         3.  Ratification  of the  selection by the Board of Directors of Arthur
         Andersen LLP as the Company's independent auditors for 1999.

                    Votes For:                               5,202,642
                    Votes Against:                             664,977
                    Abstentions:                                10,634



<PAGE>



Item 6 - Exhibits and Reports on Form 8-K

         (a)  Exhibits

              27.1     Financial Data Schedule (for electronic submission only)

         (b)  Report on Form 8-K/A filed on May 3, 1999 concerning the Company's
              asset and stock purchase  agreement between Gold Wings and Sureway
              Air Traffic Corporation.

         (c)  Report on Form 8-K filed on May 12, 1999  concerning the Company's
              asset purchase agreement with its subsidiary, Silver Star Express,
              Inc. and Metro Parcel Service, Inc., Nathan Spaulding and Kelly M.
              Spaulding.

         (d)  Report on Form 8-K filed on May 12, 1999  concerning the Company's
              asset  purchase  agreement with its  subsidiary,  Clayton/National
              Courier  Systems,  Inc.  and  Westwind  Express,  Inc.,  Logistics
              Delivery Systems,  Inc.,  Fastrak Delivery  Systems,  Inc., Sierra
              Delivery Services, Inc., and Steven S.
              Keihner.

         (e)  Report on Form 8-K/A filed on July 14, 1999  concerning the
              Company's  asset purchase  agreement with  its subsidiary,  Silver
              Star  Express,   Inc. and   Metro  Parcel  Service,  Inc.,  Nathan
              Spaulding and Kelly M. Spaulding.

         (f)  Report  on Form  8-K/A  filed  on July  14,  1999  concerning  the
              Company's   asset   purchase   agreement   with  its   subsidiary,
              Clayton/National Courier Systems, Inc. and Westwind Express, Inc.,
              Logistics Delivery Systems,  Inc., Fastrak Delivery Systems, Inc.,
              Sierra Delivery Services, Inc., and Steven S. Keihner.

(g)           Report  on Form  8-K/A  filed  on July  23,  1999  concerning  the
              Company's  $15 million  private  placement of senior  subordinated
              notes and warrants with three financial institutions.


<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:   August 16, 1999             CONSOLIDATED DELIVERY & LOGISTICS, INC.




                                     By: /s/ Albert W. Van Ness, Jr.
                                         _______________________________________
                                         Albert W. Van Ness, Jr.
                                         Chairman of the Board, Chief Executive
                                         Officer and Chief Financial Officer


<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:   August 16, 1999              CONSOLIDATED DELIVERY & LOGISTICS, INC.




                                      By: /s/ Albert W. Van Ness, Jr.
                                          ______________________________________
                                          Albert W. Van Ness, Jr.
                                          Chairman of the Board, Chief Executive
                                          Officer and Chief Financial Officer


<PAGE>


                                  EXHIBIT INDEX


         27.1     Financial Data Schedule (for electronic submission only)