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

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 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, 2000 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    0-24247
                                   ---------------------------------------------

                      ATLANTIC EXPRESS TRANSPORTATION CORP.
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

            New York                                     13-392-3467
--------------------------------------      ------------------------------------
  (State or Other Jurisdiction of                     (I.R.S. Employer
   Incorporation or Organization)                    Identification No.)

               7 North Street, Staten Island, New York, 10302-1205
--------------------------------------------------------------------------------
  (Address of Principal Executive Offices)              (Zip Code)

                                 (718) 442-7000
--------------------------------------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)

--------------------------------------------------------------------------------
         (Former Name, Former Address and Former Fiscal Year, if Changed
                               Since Last Report)

      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
   -----   -----

                   APPLICABLE ONLY TO REGISTRANTS INVOLVED IN
                        BANKRUPTCY PROCEEDINGS DURING THE
                              PRECEDING FIVE YEARS

      Indicate by check mark whether the  registrant has filed all documents and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.
Yes     No
   -----  -----

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

      Indicate the number of shares  outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

100 Shares of Common Stock, no par value.

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


<PAGE>

                                TABLE OF CONTENTS

PART I. Financial Information

<TABLE>
<CAPTION>
                                                                                              Page
                                                                                              ----
<S>                                                                                          <C>
     ITEM 1. Financial Statements:

     Consolidated Balance Sheets at June 30, 1999 (audited) and March 31, 2000
          (unaudited).....................................................................       1

     Consolidated Statements of Operations for the Three Month and Nine Month Periods
          Ended March 31, 1999 (unaudited) and 2000 (unaudited)...........................       2

     Consolidated Statements of Stockholder's Equity for the Nine Months Ended March 31,
          2000............................................................................       3

     Consolidated Statements of Cash Flows for the Nine Month Periods Ended March 31,
          1999 (unaudited) and 2000 (unaudited)...........................................       4

     Notes to Consolidated Financial Statements (unaudited)...............................     5-9

     ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of
          Operations......................................................................   10-12

     ITEM 3. Quantitative and Qualitative Disclosures About Market Risk...................      12

PART II. Other Information                                                                      13

Signatures................................................................................      14

Index to Exhibits.........................................................................     E-1
</TABLE>

<PAGE>


             Atlantic Express Transportation Corp. and Subsidiaries

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                      June 30,        March 31,
                                                                                        1999            2000
                                                                                    -----------     ------------
                                                                                     (audited)       (unaudited)
<S>                                                                                <C>              <C>
Assets
Current:
   Cash and cash equivalents .................................................     $    855,983     $  1,862,951
   Current portion of marketable securities ..................................        3,842,000        1,780,000
   Accounts receivable, net of allowance for doubtful accounts ...............       48,468,255       53,741,347
   Inventories ...............................................................       15,215,018       10,136,398
   Notes receivable ..........................................................           31,964           17,800
   Prepaid expenses and other current assets .................................        6,190,766        6,027,209
                                                                                   ------------     ------------
          Total current assets ...............................................       74,603,986       73,565,705
                                                                                   ------------     ------------
Property, plant and equipment, less accumulated depreciation .................      119,138,827      125,467,292
                                                                                   ------------     ------------
Other assets:
   Goodwill, net .............................................................       12,143,514       11,899,083
   Investments ...............................................................           35,000           35,000
   Marketable securities .....................................................        5,869,380        7,155,337
   Deferred lease expense ....................................................          148,155          135,504
   Transportation contract rights, net .......................................        3,408,096        3,480,300
   Deferred financing and organization costs, net ............................        8,018,053        6,643,479
   Due from affiliates .......................................................          831,117          831,117
   Notes receivable ..........................................................           11,494            3,216
   Deposits and other noncurrent assets ......................................        3,248,336        3,263,440
   Deferred tax assets .......................................................        3,935,981        6,374,050
   Covenant not to compete, net ..............................................          120,000           90,000
                                                                                   ------------     ------------
          Total other assets .................................................       37,769,126       39,910,526
                                                                                   ------------     ------------
                                                                                   $231,511,939     $238,943,523
                                                                                   ============     ============
Liabilities and Stockholder's Equity
Current:
   Current portion of long-term debt .........................................     $ 21,411,180     $  1,807,211
   Accounts payable ..........................................................        2,453,411        2,258,468
   Accrued compensation ......................................................        7,392,071       11,772,487
   Current portion of insurance reserve ......................................        4,500,000        2,200,000
   Accrued interest ..........................................................        6,890,810        2,919,366
   Other accrued expenses and current liabilities ............................        3,992,443        7,622,085
                                                                                   ------------     ------------
          Total current liabilities ..........................................       46,639,915       28,579,617
                                                                                   ------------     ------------
Long-term debt, net of current portion .......................................      159,921,440      182,778,069
                                                                                   ------------     ------------
Premium on bond issuance .....................................................          987,150          825,600
                                                                                   ------------     ------------
Other long-term liabilities ..................................................        3,023,529        2,154,441
                                                                                   ------------     ------------

Stockholder's equity:
   Common stock, no par value - shares  authorized 200; issued and
     outstanding 100 .........................................................          250,000          250,000
   Additional paid-in capital ................................................       15,898,517       22,048,517
   Accumulated other comprehensive income ....................................          925,950        1,421,706
   Retained earnings .........................................................        3,865,438          885,573
                                                                                   ------------     ------------
          Total stockholder's equity .........................................       20,939,905       24,605,796
                                                                                   ------------     ------------
                                                                                   $231,511,939     $238,943,523
                                                                                   ============     ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       1
<PAGE>

             Atlantic Express Transportation Corp. and Subsidiaries

                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                                   Three Months Ended                  Nine Months Ended
                                                                        March 31,                           March 31,
                                                              -----------------------------      ------------------------------
                                                                  1999              2000             1999              2000
                                                              -----------       -----------      ------------      ------------
                                                                       (unaudited)                         (unaudited)
<S>                                                           <C>               <C>              <C>               <C>
Revenues:
   Transportation Operations ...........................      $68,527,274       $76,167,498      $172,625,173      $193,757,170
   Bus Sales Operations ................................        8,753,143        13,203,195        60,656,345        68,670,745
                                                              -----------       -----------      ------------      ------------
Total revenues .........................................       77,280,417        89,370,693       233,281,518       262,427,915
                                                              -----------       -----------      ------------      ------------

Costs and expenses:
   Cost of operations - Transportation Operations ......       55,084,206        63,391,670       141,856,271       162,745,829
   Cost of operations - Bus Sales Operations ...........        8,189,298        12,118,397        54,477,279        62,174,171
   General and administrative ..........................        5,170,018         2,085,341        15,360,660        14,434,504
   Depreciation and amortization .......................        3,124,050         3,433,373         9,104,032        10,311,627
                                                              -----------       -----------      ------------      ------------
                                                               71,567,572        81,028,781       220,798,242       249,666,131
                                                              -----------       -----------      ------------      ------------

     Income from operations ............................        5,712,845         8,341,912        12,483,276        12,761,784
Interest expense (net) .................................       (5,167,778)       (5,628,264)      (15,307,642)      (16,838,915)
Other income (expense) .................................          (49,750)         (114,501)         (122,748)         (794,416)
                                                              -----------       -----------      ------------      ------------

      Income (loss)  before other items and  provision
        (benefit) for income taxes .....................          495,317         2,599,147        (2,947,114)       (4,871,547)
Cumulative effect of a change in accounting principles .               --                --                --          (546,388)
                                                              -----------       -----------      ------------      ------------

      Income (loss) before nonrecurring items and
         provision (benefit) for income taxes ..........          495,317         2,599,147        (2,947,114)       (5,417,935)
Nonrecurring item ......................................               --                --        (1,223,161)               --
                                                              -----------       -----------      ------------      ------------

      Income (loss) before provision (benefit) for
         income taxes ..................................          495,317         2,599,147        (4,170,275)       (5,417,935)
Provision (benefit) for income taxes ...................          222,893         1,169,618        (1,876,624)       (2,438,070)
                                                              -----------       -----------      ------------      ------------
      Net income (loss) ................................      $   272,424       $ 1,429,529      $ (2,293,651)     $ (2,979,865)
                                                              ===========       ===========      ============      ============
Unrealized gain (loss) on marketable securities ........         (245,154)          120,968           706,224           495,756
                                                              -----------       -----------      ------------      ------------
      Comprehensive income (loss) ......................      $    27,270       $ 1,550,497      $ (1,587,427)     $ (2,484,109)
                                                              ===========       ===========      ============      ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       2
<PAGE>


             Atlantic Express Transportation Corp. and Subsidiaries

                 Consolidated Statements of Stockholder's Equity

                        Nine months ended March 31, 2000

<TABLE>
<CAPTION>
                                                                                     Accumulated
                                                                    Retained            other
                                Common stock      Additional        earnings        comprehensive
                                No par value   paid-in capital      (deficit)           income             Total
                                ------------   ---------------      ---------       -------------       -----------
<S>                               <C>            <C>               <C>                <C>               <C>
Balance, June 30, 1999            $250,000       $15,898,517       $ 3,865,438        $  925,950        $20,939,905
Net loss ..................             --                --        (4,698,157)               --         (4,698,157)
Unrealized loss on
     marketable securities              --                --                --          (174,179)          (174,179)
--------------------------------------------------------------------------------------------------------------------
Balance, September 30, 1999       $250,000       $15,898,517       $  (832,719)       $  751,771        $16,067,569
--------------------------------------------------------------------------------------------------------------------
Additional paid-in capital              --         6,150,000                --                --          6,150,000
Net income ................             --                --           288,763                --            288,763
Unrealized gain on
     marketable securities              --                --                --           548,967            548,967
--------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999        $250,000       $22,048,517       $  (543,956)       $1,300,738        $23,055,299
--------------------------------------------------------------------------------------------------------------------
Net income ................             --                --         1,429,529                --          1,429,529
Unrealized gain on
     marketable securities              --                --                --           120,968            120,968
--------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2000           $250,000       $22,048,517       $   885,573        $1,421,706        $24,605,796
--------------------------------------------------------------------------------------------------------------------
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

             Atlantic Express Transportation Corp. and Subsidiaries

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                                 Nine Months Ended
                                                                                                     March 31,
                                                                                          ------------------------------
                                                                                               1999             2000
                                                                                          ------------     -------------
                                                                                                   (unaudited)
<S>                                                                                       <C>              <C>
Cash flows from operating activities:
  Net loss ...........................................................................    $ (2,293,651)    $ (2,979,865)
Adjustments to reconcile net loss to net cash provided by operating activities:
       Gain on sale of marketable securities .........................................        (977,358)        (666,735)
       Deferred income taxes .........................................................      (1,876,624)      (2,438,070)
       Depreciation ..................................................................       8,201,044        9,566,714
       Amortization ..................................................................       1,989,955        1,954,722
       Reserve for doubtful accounts receivable ......................................          90,000           90,000
       Loss on sale of fixed assets ..................................................              --           29,552
       Nonrecurring item .............................................................       1,223,161               --
       Decrease (increase) in:
         Accounts receivable and retainage ...........................................      (2,779,532)      (5,363,092)
         Inventories .................................................................      (1,202,564)       5,078,620
         Prepaid expenses and other current assets ...................................        (965,630)         163,557
         Deferred lease expense ......................................................          61,226           12,651
         Deposits and other noncurrent assets ........................................         221,904          (15,103)
       Increase (decrease) in:
         Accounts payable ............................................................         614,337         (194,943)
         Accrued expenses and other current liabilities ..............................       2,862,356        1,738,614
         Other long-term liabilities .................................................        (851,283)        (869,088)
                                                                                          ------------     ------------
       Net cash provided by operating activities .....................................       4,317,341        6,107,534
                                                                                          ------------     ------------

Cash flows from investing activities:
  Acquisition of subsidiaries (net of cash acquired of $1,100,009) ...................      (6,014,361)              --
  Proceeds from sale of fixed assets .................................................          40,045          548,949
  Additions to property, plant and equipment .........................................     (21,536,621)     (15,248,527)
  Purchase of transportation contract rights .........................................         (69,540)         (49,092)
  Due from affiliates ................................................................        (336,978)              --
  Notes receivable ...................................................................       1,593,274           22,442
  Proceeds from sale of investment ...................................................         196,408               --
  Marketable securities sold (purchased), net ........................................         352,907        1,938,532
                                                                                          ------------     ------------
    Net cash used in investing activities ............................................     (25,774,866)     (12,787,696)
                                                                                          ------------     ------------

Cash flows from financing activities:
  Additional paid-in capital .........................................................              --        6,150,000
  Proceeds of additional borrowings ..................................................      17,671,251        2,655,924
  Principal payments on borrowings ...................................................      (5,374,518)      (1,043,736)
  Deferred financing and organization costs ..........................................            (993)         (75,058)
  Other ..............................................................................        (229,049)              --
                                                                                          ------------     ------------
    Net cash provided by financing activities ........................................      12,066,691        7,687,130
                                                                                          ------------     ------------
Net increase (decrease) in cash and cash equivalents .................................      (9,390,834)       1,006,968
Cash and cash equivalents, beginning of period .......................................      13,772,537          855,983
                                                                                          ------------     ------------
Cash and cash equivalents, end of period .............................................    $  4,381,703     $  1,862,951
                                                                                          ============     ============

Supplemental disclosures of cash flow information:
  Cash paid during the period for:
    Interest .........................................................................    $ 18,330,644     $ 19,214,274
    Income taxes .....................................................................         210,962           47,025

Supplemental schedule of noncash investing and financing activities:
  Loans incurred for purchase of property, plant and equipment .......................    $  5,823,824     $  1,225,152
  Liability incurred for acquisition of contract rights ..............................              --          415,320
  Additional paid-in capital contributed for bondholder consent fees and expenses ....       2,709,591               --
</TABLE>

                See accompanying notes to financial statements.


                                       4
<PAGE>

             Atlantic Express Transportation Corp. and Subsidiaries

                   Notes to Consolidated Financial Statements

1. Basis of Accounting

      These consolidated financial statements should be read in conjunction with
the  consolidated  financial  statements  and  related  notes  contained  in the
Company's  financial  statements  as of and for the year ended June 30,  1999 as
filed on Form 10-K. In the opinion of management,  all  adjustments and accruals
(consisting only of normal recurring adjustments) which are necessary for a fair
presentation of operating  results are reflected in the  accompanying  financial
statements.  Operating  results for the periods  presented  are not  necessarily
indicative of the results for the full fiscal year.


2. New Accounting Pronouncement

      On July 1, 1999, the Company  adopted the American  Institute of Certified
Public  Accountants  Statement of Position  98-5 ("SOP 98-5")  "Reporting on the
Costs of Start-Up Activities".  In connection therewith,  the Company recorded a
charge  of $0.5  million  described  as the  cumulative  effect  of a change  in
accounting  principle,  which represented  unamortized start-up costs as of June
30, 1999.


3. Inventories

       Inventories comprised the following:
                                                 June 30,        March 31,
                                                   1999            2000
                                               -----------     -----------

       Parts and fuel........................  $ 3,919,018     $ 5,157,483
       Buses.................................   11,296,000       4,978,915
                                               -----------     -----------
                                               $15,215,018     $10,136,398
                                               ===========     ===========


4. Additional Paid-In Capital

      In December 1999, the Company received an additional capital  contribution
of $6.2 million from  Atlantic  Express  Transportation  Group Inc.  (the parent
company) ("AETG").

5. Inter-Company Transactions

      On August  11,  1999,  after  receiving  a fairness  opinion  issued by an
investment bank of national standing,  Central New York Coach Sales and Service,
Inc. and Jersey Bus Sales,  Inc., both wholly owned  subsidiaries of the Company
(collectively   "Central")   entered  into  an  agreement   with   Atlantic  Bus
Distributors,  Inc. ("ABD"), a wholly owned subsidiary of AETG, to order certain
buses through ABD. Central is required to deposit from fifteen to thirty percent
of the  cost of  these  vehicles  simultaneously  with  ABD's  receipt  of these
vehicles  from the  manufacturers  and pay the  balance  to ABD  upon  Central's
delivery  of these  vehicles to its  customers  or within one hundred and twenty
days,  whichever comes first. The purchase price of each bus equals the price at
which  ABD  purchased  such bus  together  with  any  costs  incurred  by ABD in
connection with the purchases of any such vehicles.

6. Revolving Line of Credit Extension

      In November 1999, Congress Financial Corporation  ("Congress") renewed the
Company's  $30.0 million  revolving  credit  facility (the  "Facility")  and the
Company's Accounts Purchase and Sale Agreement (the "Receivable  Agreement") for
an additional two years commencing February 4, 2000.


                                       5
<PAGE>

7. Contract Renewal

      In March 2000, the New York City Board of Education (the "Board") notified
the Company  that all its  contracts  with the Board have been  extended  for an
additional five years. These contracts  represented  approximately  39.5% of the
Transportation Operation's revenue for the fiscal year ended June 30, 1999.

8. Subsequent Events

      8a. In April 2000,  AETG and the Company  settled  their  litigation  with
National Express Group, PLC. ("National").  In connection therewith, the Company
has recorded a credit of $4.4 million to general and administrative  expenses at
March 31, 2000.

      8b.  Effective  April 30,  2000,  the  Company  and the  Regional  Transit
District of Denver (Colorado) (the "RTD") agreed to the early termination of the
Company's  paratransit  contract.  This occurred primarily because of inaccurate
information  received by the Company from the RTD, in its  original  Request for
Proposal  ("RFP"),  in  connection  with  the  expected  number  of  trips to be
performed during the life of the contract.  RTD reimbursed the Company the value
of capital  expenditures  incurred and assumed all leases in connection with the
Company's  facilities.  Additionally,  on May 16, 2000,  the Company was awarded
damages in the amount of $1.5 million by an  arbitrator on its claim against RTD
for losses incurred in performing the contract. Revenues from this contract were
approximately $5.6 million for the nine months ended March 31, 2000.

9. Supplemental Financial Information

      The following are unaudited condensed  consolidating  financial statements
regarding the Company (on a stand-alone  basis and on a consolidated  basis) and
its subsidiaries which are guarantors and non-guarantors of the Company's 103/4%
Senior  Secured  Notes due 2004 as of and for the nine  months  ended  March 31,
2000, and a  consolidating  balance sheet as of June 30, 1999 and  consolidating
statements of operations  for the three months ended March 31, 2000 and 1999 and
for the nine months ended March 31, 1999,  and  consolidating  statement of cash
flows for the nine months ended March 31, 1999.


                      Condensed Consolidating Balance Sheet
                                 March 31, 2000

<TABLE>
<CAPTION>
                                   Atlantic
                                    Express                               Non-
                                Transportation       Guarantor         Guarantor       Elimination
                                     Corp.         Subsidiaries       Subsidiaries        Entries          Consolidated
                                --------------     ------------       ------------    -------------        ------------
<S>                              <C>               <C>                <C>             <C>                  <C>
Current assets .........         $  5,791,236      $ 65,513,619       $ 2,260,850     $          --        $ 73,565,705
Investment in affiliates           55,426,285                --                --       (55,426,285)                 --
Total assets ...........          215,445,074       212,539,617        10,027,363      (199,068,531)        238,943,523
Current liabilities ....            3,708,483        22,371,172         2,499,962                --          28,579,617
Total liabilities ......          177,219,370       175,088,003         5,123,044      (143,092,690)        214,337,727
Stockholder's equity ...           38,225,704        37,451,614         4,904,319       (55,975,841)         24,605,796
</TABLE>


                                       6
<PAGE>

                 Condensed Consolidating Statement of Operations
                        Three months ended March 31, 2000

<TABLE>
<CAPTION>
                                     Atlantic
                                      Express                             Non-
                                  Transportation      Guarantor         Guarantor        Elimination
                                       Corp.         Subsidiaries     Subsidiaries         Entries         Consolidated
                                  --------------     ------------     ------------       -----------       ------------
<S>                                <C>               <C>               <C>                <C>              <C>
Net revenues ..............        $       --        $88,895,376       $1,475,175         $(999,858)       $89,370,693
Income from operations ....         4,400,000          3,522,377          419,535                --          8,341,912
Income (loss) before income
 taxes ...................          4,400,000         (2,220,388)         419,535                --          2,599,147
Net loss of subsidiaries ..          (990,471)                --               --           990,471                 --
Net income (loss) .........         1,429,529         (1,221,215)         230,744           990,471          1,429,529
</TABLE>


                 Condensed Consolidating Statement of Operations
                        Nine months ended March 31, 2000

<TABLE>
<CAPTION>
                                     Atlantic
                                      Express
                                  Transportation       Guarantor           Non-         Elimination
                                       Corp.         Subsidiaries      Guarantors         Entries         Consolidated
                                  --------------     ------------      ----------       -----------       ------------
<S>                                <C>               <C>               <C>              <C>               <C>
Net revenues ................      $        --       $261,581,573      $1,846,200       $ (999,858)       $262,427,915
Income from operations ......        4,400,000          7,667,093         694,691               --          12,761,784
Income (loss) before income
  taxes .....................        4,400,000         (9,966,238)        694,691               --          (4,871,547)
Cumulative effect of a change
  in accounting principal ...               --           (546,388)             --               --            (546,388)
Net loss of subsidiaries ....       (5,399,865)                --              --        5,399,865                  --
Net income (loss) ...........       (2,979,865)        (5,781,945)        382,080        5,399,865          (2,979,865)
</TABLE>


                 Condensed Consolidating Statement of Cash Flows
                        Nine months ended March 31, 2000

<TABLE>
<CAPTION>
                                      Atlantic
                                       Express                             Non-
                                   Transportation      Guarantor       Guarantor       Elimination
                                        Corp.        Subsidiaries     Subsidiaries       Entries        Consolidated
                                   --------------    ------------     ------------     -----------      ------------
<S>                                 <C>              <C>              <C>               <C>             <C>
Net cash provided by (used in)
  operating activities ........     $(7,274,210)     $ 15,558,276     $(2,176,532)        $ --          $  6,107,534
Net cash provided by (used in)
  investing activities ........        (606,817)      (14,119,411)      1,938,532           --           (12,787,696)
Net cash provided by (used in)
  financing activities ........       8,805,924        (1,118,794)             --           --             7,687,130
Increase (decrease) in cash and
  cash equivalents ............         924,897           320,071        (238,000)          --             1,006,968
Cash and cash equivalents,
  beginning of period .........        (324,134)          522,117         658,000           --               855,983
                                    --------------------------------------------------------------------------------
Cash and cash equivalents,
  end of period ...............     $   600,763      $    842,188     $   420,000         $ --          $  1,862,951
</TABLE>


                                       7
<PAGE>

                      Condensed Consolidating Balance Sheet
                                  June 30, 1999

<TABLE>
<CAPTION>
                                 Atlantic
                                  Express                               Non-
                              Transportation        Guarantor         Guarantor       Elimination
                                   Corp.          Subsidiaries      Subsidiaries        Entries           Consolidated
                              --------------      ------------      ------------     -------------        ------------
<S>                            <C>                <C>               <C>              <C>                  <C>
Current assets .........       $  1,220,437       $ 68,829,160      $ 4,554,389      $          --        $ 74,603,986
Investment in affiliates         60,330,394                 --               --        (60,330,394)                 --
Total assets ...........        208,820,247        204,637,409       12,596,989       (194,542,706)        231,511,939
Current liabilities ....         22,655,804         18,583,172        5,400,939                 --          46,639,915
Total liabilities ......        171,016,512        161,403,850        8,570,505       (130,418,833)        210,572,034
Stockholder's equity ...         37,803,735         43,233,559        4,026,484        (64,123,873)         20,939,905
</TABLE>


                 Condensed Consolidating Statement of Operations
                        Three months ended March 31, 1999

<TABLE>
<CAPTION>
                                          Atlantic
                                           Express                             Non-
                                       Transportation      Guarantor        Guarantor       Elimination
                                            Corp.        Subsidiaries      Subsidiaries       Entries        Consolidated
                                       --------------    ------------      ------------     -----------      ------------
<S>                                      <C>             <C>                 <C>             <C>             <C>
Net revenues ....................        $      --       $76,467,602         $812,815        $      --       $77,280,417
Income (loss) from operations ...         (311,781)        5,650,639          373,987               --         5,712,845
Income (loss) before nonrecurring
  item, (provision for) benefit
  from income taxes .............         (399,218)          520,548          373,987               --           495,317
Nonrecurring item ...............               --                --               --               --                --
Net income of subsidiaries ......          491,993                --               --         (491,993)               --
Net income ......................          272,424           286,300          205,693         (491,993)          272,424
</TABLE>


                 Condensed Consolidating Statement of Operations
                        Nine months ended March 31, 1999

<TABLE>
<CAPTION>
                                            Atlantic
                                             Express                            Non-
                                         Transportation     Guarantor        Guarantor       Elimination
                                              Corp.       Subsidiaries      Subsidiaries        Entries       Consolidated
                                         --------------   ------------       ------------     -----------      ------------
<S>                                      <C>              <C>                <C>             <C>              <C>
Net revenues ....................        $        --      $232,112,007       $4,255,047      $(3,085,536)     $233,281,518
Income (loss) from operations ...           (632,687)       12,479,920          636,043               --        12,483,276
Income (loss) before nonrecurring
  item, (provision for) benefit
  from income taxes .............           (778,415)       (2,804,742)         636,043               --        (2,947,114)
Nonrecurring item ...............         (1,223,161)               --               --               --        (1,223,161)
Net loss of subsidiaries ........         (1,192,787)               --               --        1,192,787                --
Net income (loss) ...............         (2,293,651)       (1,542,611)         349,824        1,192,787        (2,293,651)
</TABLE>


                                       8
<PAGE>


                 Condensed Consolidating Statement of Cash Flows
                        Nine months ended March 31, 1999

<TABLE>
<CAPTION>
                                       Atlantic
                                       Express                             Non-
                                    Transportation       Guarantor      Guarantor      Elimination
                                         Corp.         Subsidiaries    Subsidiaries      Entries      Consolidated
                                    --------------     ------------    ------------    -----------    ------------
<S>                                 <C>                <C>             <C>               <C>          <C>
Net cash provided by (used in)
  operating activities .......      $(17,934,338)      $ 24,231,629    $(1,979,950)        $ --       $  4,317,341
Net cash provided by (used in)
  investing activities .......        (6,177,592)       (19,950,181)       352,907           --        (25,774,866)
Net cash provided by (used in)
  financing activities .......        17,441,209         (5,374,518)          --             --         12,066,691
Decrease in cash and cash
  equivalents ................        (6,670,721)        (1,093,070)    (1,627,043)          --         (9,390,834)
Cash and cash equivalents,
  beginning of period ........         6,932,910          4,014,584      2,825,043           --         13,772,537
                                    -------------------------------------------------------------------------------
Cash and cash equivalents,
  end of period ..............      $    262,189       $  2,921,514    $ 1,198,000         $ --       $  4,381,703
</TABLE>


                                       9
<PAGE>

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

      The Company believes that this report contains forward-looking  statements
within the meaning of the federal  securities laws and as such involve known and
unknown risks and uncertainties.  These statements may use forward-looking words
such as "anticipate", "estimate", "expect", "will" or other similar words. These
statements discuss future  expectations or contain projections of future events.
Actual  results may differ  materially  from those  expressed  or implied by the
forward-looking  statements  for various  reasons,  including  general  economic
conditions,  reliance on suppliers,  labor relations and other factors,  many of
which are beyond the Company's control. Readers are cautioned not to place undue
reliance on such forward-looking statements.

Three months ended March 31, 2000 compared to three months ended March 31, 1999.

      Revenues.  Revenues from Transportation  Operations were $76.2 million for
the three  months ended March 31, 2000  compared to $68.5  million for the three
months ended March 31, 1999, an increase of $7.6 million or 11.1%. This increase
was due primarily to $3.4 million as a result of new contracts  awarded and $6.8
million due to increases in contract rate and service  requirements  of existing
contracts, partially offset by $2.6 million decrease in revenues due to the sale
of subsidiaries to an affiliate effective April 1, 1999. Revenues from Bus Sales
Operations  was $13.2 million for the three months ended March 31, 2000 compared
to $8.8 million for the three  months ended March 31, 1999,  an increase of $4.5
million or 50.8%.  This increase was primarily due to a $4.9 million increase in
new vehicles sales partially offset by a $0.4 million decrease in other sales.

      Gross  Profit.  Gross  profit  from  Transportation  Operations  was $12.8
million for the three months ended March 31, 2000  compared to $13.4 million for
the three months ended March 31, 1999, a decrease of $0.7 million or 5.0%.  As a
percentage  of revenues,  gross  profit  decreased to 16.8% for the three months
ended March 31, 2000 from 19.6% for the three months ended March 31, 1999.  This
decrease was due  primarily  to an increase in salaries  (1.6%) due to the tight
labor  market and  increased  fuel costs  (1.2%).  Gross  profit  from Bus Sales
Operations  was $1.1 million for the three months ended March 31, 2000  compared
to $0.6 million for the three  months ended March 31, 1999,  an increase of $0.5
million or 92.4%.  As a percentage of revenues,  gross profit  increased to 8.2%
for the three  months  ended March 31, 2000 from 6.4% for the three months ended
March 31, 1999. This increase was primarily due to the type of vehicles sold.

      General and administrative  expenses.  General and administrative expenses
for the  Transportation  Operations were $1.1 million for the three months ended
March 31, 2000  compared to $4.3  million for the three  months  ended March 31,
1999, a decrease of $3.2 million or 73.9%.  This decrease was primarily due to a
$4.4 million credit in connection with the National lawsuit settlement (see Note
8a to Consolidated  Financial  Statements)  partially offset by increases of (i)
$0.5 million in  professional  fees  primarily in  connection  with the National
lawsuit  settlement;  (ii) $0.4 million in  advertising  in relation to employee
recruitment;  and (iii) $0.3  million  increase  in  administrative  payroll and
fringe  benefits  due to  expansion  in new areas.  General  and  administrative
expenses for the Bus Sales  Operations for the three months ended March 31, 2000
were $1.0 million  compared to $0.9 million for the three months ended March 31,
1999 an increase of $0.1 million or 7.9%.  As a percentage  of revenues  general
and  administrative  expenses decreased to 7.4% for the three months ended March
31, 2000 from 10.3% for the three months ended March 31, 1999.

      Depreciation  and  amortization  expenses.  Depreciation  and amortization
expenses for the Transportation Operations was $3.2 million for the three months
ended March 31, 2000  compared to $2.9  million for the three months ended March
31,  1999,  an  increase  of $0.3  million  or  10%.  This  increase  was due to
additional  depreciation relating to the purchase of new vehicles.  Depreciation
and amortization  expenses for the Bus Sales Operations was $0.2 million for the
three months ended March 31, 2000 and 1999 respectively.

      Income from  operations.  Income from  operations was $8.3 million for the
three months ended March 31, 2000  compared to $5.7 million for the three months
ended March 31, 1999, an increase of $2.6 million.  This increase was due to the
net effect of the items discussed above.


                                       10
<PAGE>

      Net interest expense.  Net interest expense was $5.6 million for the three
months ended March 31, 2000  compared to $5.2 million for the three months ended
March 31,  1999,  an increase of $0.5  million or 8.9%.  This  increase  was due
primarily to higher  average  indebtedness  outstanding  during the three months
ended March 31, 2000.

      Net income. The Company generated net income of $1.4 million for the three
months ended March 31, 2000 compared to net income of $0.3 million for the three
months ended March 31, 1999, an increase of $1.2 million.  This increase was due
to the net effect of the items discussed above.

Nine months ended March 31, 2000 compared to nine months ended March 31, 1999

      Revenues.  Revenues from Transportation Operations were $193.8 million for
the nine months  ended March 31,  2000  compared to $172.6  million for the nine
months  ended  March 31,  1999,  an  increase  of $21.1  million or 12.2%.  This
increase was due  primarily to (i) $1.4 million in additional  summer  revenues;
(ii) $8.3 million as a result of new contracts awarded;  and (iii) $17.1 million
due to  increases  in  contract  rates  and  service  requirements  of  existing
contracts  partially offset by $5.7 million decrease due to sale of subsidiaries
to an affiliate effective April 1, 1999. Revenues from Bus Sales Operations were
$68.7 million for the nine months ended March 31, 2000 compared to $60.7 million
for the nine months ended March 31, 1999,  an increase of $8.0 million or 13.2%.
This increase was due primarily to a $9.3 million increase in new vehicles sales
partially offset by a $1.3 million decrease in other sales.

      Gross  Profit.  Gross  profit  from  Transportation  Operations  was $31.0
million for the nine months ended March 31, 2000  compared to $30.8  million for
the nine months ended March 31, 1999,  an increase of $0.2 million or 0.8%. As a
percentage  of  revenues,  gross  profit  decreased to 16.0% for the nine months
ended March 31, 2000 from 17.8% for the nine months  ended March 31,  1999.  The
decrease in gross profit percentage was due primarily to increased  salaries due
to a tight labor market  (1.3%) and increased  fuel costs  (0.6%).  Gross profit
from the Bus Sales  Operations  was $6.5 million for the nine months ended March
31, 2000  compared to $6.2 million for the nine months ended March 31, 1999,  an
increase of $0.3 million or 5.1%.  This  increase was primarily due to increased
revenues.  As a percentage of revenues,  gross profit  decreased to 9.5% for the
nine months  ended March 31, 2000 from 10.2% for the nine months ended March 31,
1999 due primarily to the increase in proportion of sales made in the New Jersey
market which has had  historically  lower gross profit margins than the New York
market and reduced gross profit on sales to a municipal customer.

      General and administrative  expenses.  General and administrative expenses
for the  Transportation  Operations were $11.6 million for the nine months ended
March 31,  2000  compared  to $12.5  million  for the nine  months  ended  March
31,1999,  a decrease of $0.9 million or 0.8%. This decrease was primarily due to
a $4.4 million credit in connection  with the National  lawsuit  settlement (see
Note 8a to Consolidated  Financial  Statements) partially offset by increases of
(i) $1.2 million in professional  fees primarily in connection with the National
lawsuit  settlement;  (ii) $0.9 million in  advertising  in relation to employee
recruitment;  and (iii) $1.0  million  increase  in  administrative  payroll and
benefits due to expansion in new areas. General and administrative  expenses for
the Bus Sales  Operations  were $2.9 million for the nine months ended March 31,
2000  and  1999  respectively.   As  a  percentage  of  revenues,   general  and
administrative  expenses  were 4.2% and 4.7% for the nine months ended March 31,
2000 and 1999 respectively.

      Depreciation  and  amortization  expenses.  Depreciation  and amortization
expenses for the Transportation Operations were $9.7 million for the nine months
ended March 31, 2000  compared to $8.5  million for the nine months  ended March
31,  1999,  an  increase  of $1.2  million or 13.7%.  This  increase  was due to
additional  depreciation relating to the purchase of new vehicles.  Depreciation
and  amortization  of the Bus Sales  Operations  were $0.6  million for the nine
months ended March 31, 2000 and 1999 respectively.

      Income from  operations.  Income from operations was $12.8 million for the
nine months ended March 31, 2000  compared to $12.5  million for the nine months
ended March 31, 1999, an increase of $0.3 million.  This increase was due to the
net effect of the items discussed above.


                                       11
<PAGE>

      Net interest expense.  Net interest expense was $16.8 million for the nine
months ended March 31, 2000  compared to $15.3 million for the nine months ended
March 31,  1999,  an increase of $1.5  million or 10.0%.  This  increase was due
primarily  to higher  average  indebtedness  outstanding  during the nine months
ended March 31, 2000.

      Loss before  nonrecurring  item.  Loss before  nonrecurring  item was $5.4
million for the nine months  ended March 31, 2000  compared to $2.9  million for
the nine months ended March 31, 1999, an increase of $2.5 million.

      Nonrecurring item.  Nonrecurring item was $1.2 million for the nine months
ended  March  31,  1999.  This   represented  fees  and  expenses  paid  by  the
shareholders of AETG for the benefit of the Company.  There were no nonrecurring
items for the nine months ended March 31, 2000.

      Net loss.  The Company  generated a net loss of $3.0  million for the nine
months ended March 31, 2000  compared to a net loss of $2.3 million for the nine
months ended March 31,  1999,  an increase of $0.7 million due to the net effect
of the items discussed above.

Liquidity and Capital Resources

      Management  anticipates  total  capital  expenditures  of $18.9 million in
fiscal 2000 of which  approximately  $16.5  million were made by March 31, 2000.
This included  approximately $12.4 million for purchase of new vehicles and $4.1
million for other property and equipment.

      Net Cash Provided By Operating Activities.  Net cash provided by operating
activities  of $6.1  million for the nine months  ended March 31, 2000  resulted
primarily  from $1.4 million  increases  in source of funds for working  capital
plus non-cash items of depreciation  and amortization of $11.5 million offset by
(i) net loss of $3.0 million; (ii) $2.4 million increase in deferred income tax;
and (iii) $1.4 million decrease in other sources of funds.

      Net Cash Used in Investing Activities. For the nine months ended March 31,
2000,  the  Company  made  $16.5  million  of  capital  expenditures  to acquire
additional vehicles, other property and equipment. Of these capital expenditures
$1.2 million were  directly  financed.  In addition  the Company  received  $1.9
million from net sales of marketable securities.

      Net Cash Provided by Financing Activities.  Net cash provided by financing
activities totaled $7.7 million for the nine months ended March 31, 2000, due to
$6.2 million  capital  contribution  by AETG plus $2.7 million of net borrowings
under the Company's  revolving line of credit,  partially offset by $1.0 million
principal payment on other debt. In addition,  the Company incurred $1.2 million
of indebtedness to directly  finance  capital  expenditures  for the nine months
ended March 31, 2000.

      The Company  continues  to  experience  higher  labor costs due to a tight
labor market and higher fuel costs which are impacting profit margins.

      The Company believes that its current  operating cash flow, along with its
borrowing  capacity under a $30 million revolving credit facility (of which $7.3
million was undrawn at March 31, 2000) will provide it with sufficient liquidity
to conduct its operations for the balance of the year.

      At March 31, 2000, the Company's total debt and stockholder's  equity were
$184.6 million and $24.6 million respectively.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

      Not Applicable.


                                       12
<PAGE>

PART II  OTHER INFORMATION

Item 1.  Legal Proceedings

         None.

Item 2.  Changes in Securities and Use of Proceeds

         None.

Item 3.  Defaults Upon Senior Securities

         None.

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

         None.

Item 5.  Other Information

         None.

Item 6.  Exhibits and Reports on Form 8-K

         a) Exhibits

         See Exhibit  Index on Page E-1 for  exhibits  filed with this report on
         Form 10-Q.

         b) Reports on Form 8-K - None.


                                       13
<PAGE>

                                   SIGNATURES

      In accordance with the  requirements of the Securities and Exchange Act of
1934,  the  Company  has duly  caused  this report to be signed on behalf by the
undersigned, thereunto duly authorized.

                                           ATLANTIC EXPRESS TRANSPORTATION CORP.

                                           By:  /s/ NATHAN SCHLENKER
                                              ----------------------------------
                                                Nathan Schlenker
                                                Chief Financial Officer

May 22, 2000


                                       14
<PAGE>

                                Index to Exhibits

      The  following  documents  are exhibits to this  Quarterly  Report on Form
10-Q. For convenient reference,  each exhibit is listed according to the Exhibit
Table of Regulation  S-K. The page number,  if any,  listed  opposite an exhibit
indicates  the page number in the  sequential  numbering  system on the manually
signed original of this Quarterly  Report on Form 10-Q where such exhibit can be
found.

     Exhibit                                                   Sequential Page
     Number                        Exhibit                         Number
     ------                        -------                         ------

      27.1         Financial Data Schedule


                                      E-1