<SUBMISSION>
<ACCESSION-NUMBER>0001011438-06-000526
<TYPE>SC 13G/A
<PUBLIC-DOCUMENT-COUNT>1
<FILING-DATE>20060810
<DATE-OF-FILING-DATE-CHANGE>20060810
<SUBJECT-COMPANY>
<COMPANY-DATA>
<CONFORMED-NAME>VELOCITY EXPRESS CORP
<CIK>0001002902
<ASSIGNED-SIC>4513
<IRS-NUMBER>870355929
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>0629
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>SC 13G/A
<ACT>34
<FILE-NUMBER>005-46377
<FILM-NUMBER>061021202
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>ONE MORNINGSIDE DRIVE NORTH
<STREET2>BUILDING B SUITE 300
<CITY>WESTPORT
<STATE>X1
<ZIP>06880
<PHONE>203-349-4160
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>ONE MORNINGSIDE DRIVE NORTH
<STREET2>BUILDING B SUITE 300
<CITY>WESTPORT
<STATE>X1
<ZIP>06880
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>UNITED SHIPPING & TECHNOLOGY INC
<DATE-CHANGED>19990512
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>U SHIP INC
<DATE-CHANGED>19960313
</FORMER-COMPANY>
</SUBJECT-COMPANY>
<FILED-BY>
<COMPANY-DATA>
<CONFORMED-NAME>PEQUOT CAPITAL MANAGEMENT INC
<CIK>0001071955
<IRS-NUMBER>061524885
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>SC 13G/A
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>500 NYALA FARM ROAD
<CITY>WESTPORT
<STATE>CT
<ZIP>06880
<PHONE>2034292200
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>500 NYALA FARM ROAD
<CITY>WESTPORT
<STATE>CT
<ZIP>06880
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>PEQUOT CAPITAL MANAGEMENT INC/CT/
<DATE-CHANGED>19981118
</FORMER-COMPANY>
</FILED-BY>
<DOCUMENT>
<TYPE>SC 13G/A
<SEQUENCE>1
<FILENAME>form_sc13ga-velocity.txt
<TEXT>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 SCHEDULE 13G/A

                    UNDER THE SECURITIES EXCHANGE ACT OF 1934
                               (AMENDMENT NO. 2)*

                          VELOCITY EXPRESS CORPORATION
                                (Name of Issuer)

                         COMMON STOCK, $0.004 PAR VALUE
                         (Title of Class of Securities)

                                    92257T608
                                 (CUSIP Number)

                                  JULY 3, 2006
                      (Date of Event which Requires Filing
                               of this Statement)

Check the appropriate box to designate the rule pursuant to which this Schedule
is filed:

                                [X] Rule 13d-1(b)
                                [ ] Rule 13d-1(c)
                                [ ] Rule 13d-1(d)


*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).

                          Continued on following pages
                                Page 1 of 5 Pages



<PAGE>



Y62196103                                                      PAGE 2 OF 5 PAGES


1        Names of Reporting Persons
         I.R.S. Identification Nos. of above persons (entities only)

                  PEQUOT CAPITAL MANAGEMENT, INC.
                  06-1524885

2        Check the Appropriate Box If a Member of a Group (See Instructions)
                                        a.   [ ]
                                        b.   [ ]

3        SEC Use Only

4        Citizenship or Place of Organization

                  CONNECTICUT

                            5             Sole Voting Power
Number of                                          6,181,905
  Shares
Beneficially                6             Shared Voting Power
  Owned By                                         0
    Each
Reporting                   7             Sole Dispositive Power
    Person                                         6,285,162
    With
                            8             Shared Dispositive Power
                                                   0

9        Aggregate Amount Beneficially Owned by Each Reporting Person

                                    6,285,162

10       Check Box If the Aggregate Amount in Row (9) Excludes Certain
         Shares (See Instructions)

                                       [ ]

11       Percent of Class Represented By Amount in Row (9)

                                    23.5%

12       Type of Reporting Person (See Instructions)

                                    IA, CO





<PAGE>



92257T608                                                      PAGE 3 OF 5 PAGES


ITEM 1(A) NAME OF ISSUER: Velocity Express Corporation (the "Issuer").

     1(B) ADDRESS OF THE ISSUER'S PRINCIPAL EXECUTIVE OFFICES: One Morningside
     Drive North, Building B-Suite 300, Westport, CT 06880

ITEM 2(A) - (C) NAME, PRINCIPAL BUSINESS ADDRESS, AND CITIZENSHIP OF PERSON
     FILING: Pequot Capital Management, Inc., 500 Nyala Farm Road, Westport, CT,
     06880, which is a Connecticut corporation.

     2(D) TITLE OF CLASS OF SECURITIES: Common Stock, $0.004 par value

     2(E) CUSIP NUMBER: 92257T608

ITEM 3. This statement is filed pursuant to Rule 13(d)(b)(1)(ii)(E). Pequot
        Capital Management, Inc. is an investment adviser registered under
        Section 203 of the Investment Advisers Act of 1940.

ITEM 4. OWNERSHIP:

     Ownership as of July 31, 2006 is incorporated herein by reference from
     items (5) - (9) and (11) of the cover page of the Reporting Person.

     The number of shares reported in Items (5) - (9) and (11) consists of
     common stock and shares issuable upon the conversion of shares of Series M
     preferred stock and Series Q preferred stock of the Issuer, held for the
     accounts of the Reporting Person's clients.

ITEM 5. OWNERSHIP OF FIVE PERCENT OR LESS OF A CLASS:

     Not applicable.

ITEM 6. OWNERSHIP OF MORE THAN FIVE PERCENT ON BEHALF OF ANOTHER PERSON:

     The Reporting Person is an investment adviser registered under Section 203
     of the Investment Advisers Act of 1940 and, as such, has beneficial
     ownership of the shares which are the subject of this filing through the
     investment discretion the Reporting Person exercises over its clients'
     accounts. Although such accounts do not have beneficial ownership of such
     shares for purposes of Section 13 and Section 16 of the Securities Exchange
     Act of 1934, two accounts of the Reporting Person, Pequot Scout Fund, L.P.
     and Pequot Mariner Master Fund, L.P., each owns of record more than 5% of
     the Issuer's outstanding shares.

ITEM 7. IDENTIFICATION AND CLASSIFICATION OF THE SUBSIDIARY WHICH ACQUIRED THE
        SECURITY BEING REPORTED ON BY THE PARENT HOLDING COMPANY:

     Not applicable.

ITEM 8. IDENTIFICATION AND CLASSIFICATION OF MEMBERS OF THE GROUP:

     Not applicable.

ITEM 9. NOTICE OF DISSOLUTION OF GROUP:

     Not applicable.


<PAGE>

92257T608                                                      PAGE 4 OF 5 PAGES


ITEM 10. CERTIFICATION:

     By signing below, I certify that, to the best of my knowledge and belief,
the securities referred to above were acquired and are held in the ordinary
course of business and were not acquired and are not held for the purpose or
with the effect of changing or influencing the control of the issuer of such
securities and were not acquired and are not held in connection with or as a
participant in any transaction having that purpose or effect.



<PAGE>


                                   SIGNATURES


     After reasonable inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.

Date:  August 10, 2006         PEQUOT CAPITAL MANAGEMENT, INC.



                               By:    /s/ Aryeh Davis
                                      ------------------------------------------
                               Name:  Aryeh Davis
                               Title: Chief Operating Officer, General Counsel
                                      and Secretary


</TEXT>
</DOCUMENT>
</SUBMISSION>
