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

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-Q/A

      (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, 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        0-24247
                                        -------

                      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


                                                                            Page
                                                                            ----
      ITEM 1. Financial Statements:

      Consolidated Balance Sheets at June 30, 1998 (audited) and March
          31, 1999 (unaudited)..............................................   1


      Consolidated Statements of Operations for the Three Month and
          Nine Month Periods Ended March 31, 1998 (unaudited) and 1999
          (unaudited).......................................................   2

      Consolidated Statements of Comprehensive Income (Loss) for the
          Three Months and Nine Months Ended March 31, 1998 (unaudited)
          and 1999 (unaudited)..............................................   3

      Consolidated Statements of Cash Flows for the Nine Month Periods
          Ended March 31, 1998 (unaudited) and 1999 (unaudited).............   4

      Notes to Consolidated Financial Statements (unaudited)................ 5-8

      ITEM 2. Management's Discussion and Analysis of Financial Condition
          and Results of Operations.........................................9-12

      ITEM 3. Quantitative and Qualitative Disclosures About Market Risk....  13


PART II. Other Information                                                    13


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

Index to Exhibits........................................................... E-1


<PAGE>

             Atlantic Express Transportation Corp. and Subsidiaries

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                                June 30,       March 31,
                                                                                                  1998           1999
                                                                                             -------------   ------------
                                                                                              (audited)      (unaudited)
<S>                                                                                          <C>            <C>
Assets
Current:
     Cash and cash equivalents ...........................................................   $ 13,772,537   $  4,381,703
     Current portion of marketable securities ............................................        850,000      2,860,200
     Accounts receivable, net of allowance for doubtful accounts .........................     37,310,006     40,619,548
     Inventories .........................................................................     10,762,839     12,130,276
     Notes receivable ....................................................................      1,182,425        106,994
     Prepaid expenses and other current assets ...........................................      5,692,610      6,746,360
                                                                                             ------------   ------------
       Total current assets ..............................................................     69,570,417     66,845,081
                                                                                             ------------   ------------
Property, plant and equipment, less accumulated depreciation .............................     99,887,054    125,469,447
                                                                                             ------------   ------------
Other assets:
     Goodwill, net .......................................................................     12,469,422     12,224,991
     Notes receivable from affiliates ....................................................        510,000             --
     Investments .........................................................................        229,000         75,000
     Marketable Securities ...............................................................      7,027,937      6,306,004
     Deferred lease expense ..............................................................        334,115        272,889
     Transportation contract rights, net .................................................      3,807,743      7,772,872
     Deferred financing and organization costs, net ......................................      8,310,723      8,486,981
     Due from affiliates .................................................................        672,589        883,117
     Notes receivable ....................................................................         25,000         17,157
     Deposits and other noncurrent assets ................................................      1,394,301      1,822,120
     Deferred tax  assets ................................................................      2,087,000      3,599,255
     Covenant not to compete, net ........................................................        160,000        229,750
                                                                                             ============   ============
Total other assets........................................................................     37,027,830     41,690,136
                                                                                             ============   ============
                                                                                             $206,485,301   $234,004,664
                                                                                             ============   ============

Liabilities and Stockholder's Equity
Current:
     Current portion of long-term debt ...................................................   $    641,574   $ 20,456,128
     Accounts payable ....................................................................      2,250,615      2,943,138
     Accrued compensation ................................................................      4,703,334     10,788,150
     Current portion of insurance reserve ................................................      3,657,442      4,058,200
     Accrued interest ....................................................................      6,776,630      2,878,885
     Other accrued expenses and current liabilities ......................................      4,158,333      5,842,730
                                                                                             ------------   ------------
     Total current liabilities ...........................................................     22,187,928     46,967,231
                                                                                             ------------   ------------
Long-term debt, net of current portion ...................................................    157,284,116    160,142,723
                                                                                             ------------   ------------
Premium on bond issuance .................................................................      1,202,550      1,041,000
                                                                                             ------------   ------------
Other long-term liabilities ..............................................................      5,641,135      4,789,853
                                                                                             ------------   ------------

Stockholder's equity:
     Common stock, no par value - shares authorized 200; issued and
       outstanding 100 ...................................................................        250,000        250,000
     Additional paid-in capital ..........................................................     13,188,926     15,898,517
     Retained earnings ...................................................................      6,354,353      3,832,823
     Accumulated other comprehensive income:
       Unrealized gain on marketable securities, net .....................................        376,293      1,082,517
                                                                                             ------------   ------------
         Total stockholder's equity ......................................................     20,169,572     21,063,857
                                                                                             ------------   ------------
                                                                                             $206,485,301   $234,004,664
                                                                                             ============   ============
</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,
                                            -------------------------------       -----------------------------------
                                                 1998              1999                1998                 1999
                                            -------------      ------------       -------------        --------------
                                                       (unaudited)                            (unaudited)

<S>                                          <C>               <C>                <C>                  <C>
Revenues ..................................  $ 67,502,640      $ 77,280,417       $ 194,794,115        $  233,281,518
                                             ------------      ------------       -------------        --------------

Costs and expenses:
     Cost of operations ...................    55,264,597        63,273,504         164,433,718           196,333,550
     General and administrative ...........     4,869,509         5,170,018          15,642,719            15,360,660
     Depreciation and amortization ........     2,277,073         3,124,050           8,988,413             9,104,032
                                             ------------      ------------       -------------        --------------

                                               62,411,179        71,567,572         189,064,850           220,798,242
                                             ------------      ------------       -------------        --------------

          Income (loss) from operations ...     5,091,461         5,712,845           5,729,265            12,483,276

     Interest .............................    (4,343,472)       (5,167,778)        (13,400,641)          (15,307,642)

Other income (expense) ....................       295,940           (49,750)            528,842              (122,748)
                                             ------------      ------------       -------------        --------------
          Income (loss) before provision
             (benefit) for income taxes ...     1,043,929           495,317          (7,142,534)           (2,947,114)

Nonrecurring item .........................            --                --                  --            (1,223,161)
                                             ------------      ------------       -------------        --------------

          Income (loss) before provision
              (benefit) for income taxes ..     1,043,929           495,317          (7,142,534)           (4,170,275)

Provision (benefit) for income taxes ......       469,770           222,893          (3,214,140)           (1,876,624)
                                             ------------      ------------       -------------        --------------

          Net income (loss) ...............  $    574,159      $    272,424       $  (3,928,394)       $   (2,293,651)
                                             ============      ============       =============        ==============


</TABLE>

          See accompanying notes to consolidated financial statements.




                                       2
<PAGE>



        Atlantic Express Transportation Corp. and Subsidiaries

        Consolidated Statements of Comprehensive Income (Loss)

<TABLE>
<CAPTION>

                                                   Three Months Ended                    Nine Months Ended
                                                        March 31,                            March 31,
                                            -------------------------------      --------------------------------
                                                 1998              1999              1998               1999
                                            --------------     ------------      -------------     --------------
                                                       (unaudited)                          (unaudited)

<S>                                         <C>                <C>               <C>               <C>
Net income (loss) ........................  $    574,159       $   272,424       $ (3,928,394)     $  (2,293,651)

Other comprehensive income (loss):

     Unrealized gain (loss) on marketable
          securities .....................       300,049          (245,154)           386,406            706,224
                                           ---------------    -------------     --------------    ---------------

Comprehensive income (loss) ..............  $    874,208       $    27,270       $ (3,541,988)     $  (1,587,427)
                                           ===============    =============     ==============    ===============
</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,
                                                                                    -------------------------------
                                                                                         1998             1999
                                                                                    --------------    -------------
                                                                                              (unaudited)
<S>                                                                                 <C>               <C>
Cash flows from operating activities:
     Net loss ...................................................................   $ (3,928,394)   $ (2,293,651)
Adjustments to reconcile net loss to net cash provided by operating activities:
          Gain on sale of marketable securities .................................       (527,817)       (977,358)
          Deferred income taxes .................................................     (3,418,438)     (1,876,624)
          Depreciation ..........................................................      7,916,119       8,201,044
          Amortization ..........................................................      2,299,465       1,989,955
          Write-off of accounts receivable ......................................        480,000              --
          Reserve for doubtful accounts receivable ..............................      1,270,000          90,000
          Interest accrued on notes receivable ..................................       (239,346)             --
          Transfer from restricted cash .........................................        914,408              --
          Nonrecurring item .....................................................      1,223,161              --
          Decrease (increase) in:
               Accounts receivable and retainage ................................     (1,146,944)     (2,779,532)
               Inventories ......................................................      3,320,241      (1,202,564)
               Prepaid expenses and other current assets ........................       (399,776)       (965,630)
               Deferred lease expense ...........................................        114,177          61,226
               Deposits and other noncurrent assets .............................       (220,891)        221,904
          Increase (decrease) in:
               Accounts payable .................................................       (376,571)        614,337
               Accrued expenses and other current liabilities ...................      3,783,272       2,862,356
               Other long-term liabilities ......................................      1,405,345        (851,283)
                                                                                    ------------    ------------
               Net cash provided by operating activities ........................     11,244,850       4,317,341
                                                                                    ------------    ------------
Cash flows from investing activities:
     Acquisition of subsidiaries (net of cash acquired of $207,441 and $1,100,009
          in 1998 and 1999 respectively .........................................    (21,519,397)     (6,014,361)
     Proceeds from sale of fixed assets .........................................        453,550          40,045
     Additions to property, plant and equipment .................................    (17,618,263)    (21,536,621)
     Purchase of transportation contract rights .................................        (57,139)        (69,540)
     Due from affiliates ........................................................       (541,753)       (336,978)
     Notes receivable ...........................................................       (517,685)      1,593,274
     Proceeds from sale of investment ...........................................             --         196,408
     Marketable securities sold (purchased), net ................................     (2,692,148)        352,907
                                                                                    ------------    ------------
               Net cash used in investing activities ............................    (42,492,835)    (25,774,866)
                                                                                    ------------    ------------
Cash flows from financing activities:
     Proceeds of additional borrowings ..........................................     41,400,000      17,671,251
     Principal payments on borrowings ...........................................    (13,366,493)     (5,374,518)
     Deferred financing and organization costs ..................................     (3,589,107)           (993)
     Other ......................................................................       (468,854)       (229,049)
                                                                                    ------------    ------------
          Net cash provided by financing activities .............................     23,975,546      12,066,691
                                                                                    ------------    ------------
Net decrease in cash and cash equivalents .......................................     (7,272,439)     (9,390,834)
Cash and cash equivalents, beginning of period ..................................     16,818,889      13,772,537
                                                                                    ------------    ------------
Cash and cash equivalents, end of period ........................................   $  9,546,450    $  4,381,703
                                                                                    ============    ============

Supplemental disclosures of cash flow information:
     Cash paid during the period for:
          Interest ..............................................................   $ 15,029,925    $ 18,330,644
          Income taxes ..........................................................        362,809         210,962

Supplemental schedule of noncash investing and financing activities:
     Loans incurred for purchase of property, plant and equipment ...............   $  6,368,900    $  5,823,824
     Additional paid-in capital contributed for bondholder consent fees
       and expenses .............................................................             --       2,709,591
     Transfer of bus from inventory to fixed assets .............................         47,558              --
</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,  1998 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.  Certain  amounts in the fiscal 1998 financial  statements have been
reclassified to conform with current period presentation.  Operating results for
the periods presented are not necessarily indicative of the results for the full
fiscal year.

2.   New Accounting Pronouncement

     Effective  July 1, 1998,  the  Company  adopted  SFAS No.  130,  "Reporting
Comprehensive  Income",  which  requires that all  components  of  comprehensive
income  (loss) and total  comprehensive  income (loss) be reported on one of the
following: a statement of income and comprehensive income (loss), a statement of
comprehensive income (loss) or a statement of stockholder's  equity. The Company
is reporting this information on a separate  statement of  comprehensive  income
(loss) which includes all changes to stockholder's  equity,  except those due to
investments by owners (changes in paid in capital) and  distributions  to owners
(dividends).  This statement did not change the current accounting treatment for
components of comprehensive income.

3.   Inventories

         Inventories comprised the following:

<TABLE>
<CAPTION>

                                                         June 30,          March 31,
                                                           1998              1999
                                                      -------------     --------------
<S>                                                   <C>               <C>
         Parts and fuel.............................  $  3,921,237      $   4,168,859
         Buses......................................     6,841,602          7,961,417
                                                      ------------      -------------
                                                      $ 10,762,839      $  12,130,276
                                                      ============      =============
</TABLE>


4.   Subsequent Event

     Effective  April 1, 1999,  the  Company  sold five  subsidiaries,  acquired
during the 2nd quarter of fiscal 1999,  to an affiliate for a price equal to its
original  investment  in these  subsidiaries  plus their net earnings  since the
dates of  acquisition.  In addition to the purchase  price of $7.5 million,  the
Company  was  repaid  $2.8  million  of  inter-company  advances  made to  these
subsidiaries. The gross proceeds ($10.3 million) were received on April 28, 1999
and used to reduce borrowings under the Company's Revolving Line of Credit.



                                       5
<PAGE>


5.   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 Notes as of and
for the nine months ended March 31, 1999, and a  consolidating  balance sheet as
of June 30, 1998 and consolidating statements of operations for the three months
ended March 31, 1999 and 1998 and for the nine months ended March 31, 1998,  and
consolidating statement of cash flows for the nine months ended March 31, 1998.

<TABLE>
<CAPTION>

                                               Condensed Consolidating Balance Sheet
                                                           March 31, 1999

                                  Atlantic
                                   Express                               Non-
                               Transportation       Guarantor         Guarantor        Elimination
                                    Corp.          Subsidiaries      Subsidiaries        Entries         Consolidated
                               --------------     --------------    -------------    ---------------     -------------
<S>                            <C>                <C>               <C>              <C>                 <C>
Current assets ...............  $  2,082,418       $  60,629,266     $  4,133,397     $          --      $  66,845,081
Investment in affiliates .....    70,036,491                  --               --       (70,036,491)                --
Total assets .................   208,433,298         208,156,586       13,730,964      (196,316,184)       234,004,664
Current liabilities ..........    19,465,761          22,537,692        4,963,778                --         46,967,231
Total liabilities ............   170,506,761         162,322,150        9,713,631      (129,601,735)       212,940,807
Stockholder's equity .........    37,926,537          45,834,436        4,017,333       (66,714,449)        21,063,857


<CAPTION>


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

                                         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


<CAPTION>


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

                                             Atlantic
                                              Express
                                          Transportation        Guarantor           Non-           Elimination
                                               Corp.          Subsidiaries       Guarantors          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>





                                       6
<PAGE>



<TABLE>
<CAPTION>

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

                                             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


<CAPTION>


                                               Condensed Consolidating Balance Sheet
                                                           June 30, 1998

                                   Atlantic
                                    Express                               Non-
                                Transportation       Guarantor         Guarantor        Elimination
                                     Corp.          Subsidiaries      Subsidiaries        Entries         Consolidated
                                ----------------   --------------    -------------    ---------------    -------------

<S>                             <C>                 <C>               <C>              <C>                <C>
Current assets ...............   $ 13,459,022       $ 47,736,795     $  8,374,600     $          --       $ 69,570,417
Investment in affiliates .....     60,404,818                 --               --       (60,404,818)                --
Total assets .................    193,219,371        165,426,379       15,993,943      (168,154,392)       206,485,301
Current liabilities ..........      7,688,435          6,743,371        7,756,122                           22,187,928
Total liabilities ............    160,355,739        120,676,905       13,032,657      (107,749,572)       186,315,729
Stockholder's equity .........     32,863,632         44,749,474        2,961,286       (60,404,820)        20,169,572


<CAPTION>


                                          Condensed Consolidating Statement of Operations
                                                 Three months ended March 31, 1998

                                    Atlantic
                                     Express                               Non-
                                 Transportation         Guarantor        Guarantor        Elimination
                                      Corp.           Subsidiaries      Subsidiaries        Entries         Consolidated
                                 ----------------    --------------    -------------    ---------------    -------------
<S>                              <C>                 <C>               <C>              <C>                <C>
Net revenues ...................  $       --         $ 67,502,640       $ 1,386,474      $ (1,386,474)      $ 67,502,640
Income (loss) from operations ..          --            5,101,601           (10,140)               --          5,091,461
Income before income taxes .....          --              963,222            80,707                --          1,043,929
Net income of subsidiaries .....     574,159                   --                --          (574,159)                --
Net income .....................     574,159              520,892            53,267          (574,159)           574,159
</TABLE>





                                       7
<PAGE>


<TABLE>
<CAPTION>

                                          Condensed Consolidating Statement of Operations
                                                  Nine months ended March 31, 1998

                                      Atlantic
                                       Express                               Non-
                                   Transportation        Guarantor        Guarantor        Elimination
                                        Corp.          Subsidiaries      Subsidiaries        Entries          Consolidated
                                  ----------------    --------------    -------------    ---------------    --------------
<S>                               <C>                 <C>               <C>              <C>                <C>
Net revenues ....................  $          --      $ 194,794,115      $ 4,465,288      $ (4,465,288)      $ 194,794,115
Income (loss) from operations ...             --          5,837,915         (108,650)               --           5,729,265
Income (loss) before income taxes             --         (7,640,487)         497,953                --          (7,142,534)
Net loss of subsidiaries ........     (3,928,393)                --               --         3,928,393                  --
Net income (loss) ...............     (3,928,393)        (4,257,043)         328,649         3,928,393          (3,928,394)


<CAPTION>


                                          Condensed Consolidating Statement of Cash Flows
                                                  Nine months ended March 31, 1998

                                           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 ...........  $  (22,684,533)       $ 31,791,341      $ 2,138,042       $       --        $  11,244,850
Net cash used in investing
     activities .....................     (21,942,765)        (17,632,876)      (2,917,194)              --          (42,492,835)
Net cash provided by (used in
     financing activities ...........      37,342,039         (13,366,493)              --               --           23,975,546
Increase (decrease) in cash and
     cash equivalents ...............      (7,285,259)            791,972         (779,152)              --           (7,272,439)
Cash and cash equivalents,
     beginning of period ............      15,029,114             479,933        1,309,842               --           16,818,889
                                      ---------------       -------------     ------------     ------------      ---------------
Cash and cash equivalents, end of
     period .........................  $    7,743,855        $  1,271,905      $   530,690       $       --        $   9,546,450
</TABLE>



                                       8
<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, 1999 compared to three months ended March 31, 1998.

        Revenues. Revenues from Transportation Operations were $68.5 million for
the three  months ended March 31, 1999  compared to $57.3  million for the three
months  ended  March 31,  1998,  an  increase  of $11.3  million or 19.7%.  This
increase was due primarily to (i) an increase in billings on existing operations
of $5.1  million;  (ii) the award of new  contracts  which added $3.6 million of
revenues;  and  (iii)  $2.6  million  from  operations  of five  newly  acquired
subsidiaries.  These  subsidiaries were sold to an affiliate  effective April 1,
1999 (see Note 4 to Consolidated Financial Statements).  Revenues from Bus Sales
Operations  were $8.8 million for the three months ended March 31, 1999 compared
to $10.2  million for the three  months ended March 31, 1998, a decrease of $1.5
million or 14.4%.  This decrease was due primarily to timing  differences in the
delivery of vehicles.

        Gross  Profit.  Gross profit from  Transportation  Operations  was $13.4
million for the three months ended March 31, 1999  compared to $10.9 million for
the three  months  ended March 31,  1998,  an increase of $2.6 million or 23.8%.
This increase was primarily due to increased  revenues and $0.9 million of gross
profit generated from operations of newly acquired subsidiaries. As a percentage
of revenues,  gross  profit  increased to 19.6% for the three months ended March
31, 1999 from 19.0 % for the three months ended March 31, 1998.  The increase in
gross profit percentage of 0.6% was primarily due to higher gross profit margins
of newly acquired  subsidiaries.  Gross profit for the Bus Sales  Operations was
$0.6 million for the three months ended March 31, 1999  compared to $1.4 million
for the three  months ended March 31, 1998, a decrease of $0.8 million or 59.2%.
As a percentage of revenues gross profit  decreased to 6.4% for the three months
ended March 31, 1999 from 13.5% for the three months  ended March 31, 1998.  The
reduction in gross profit  percentage  was  primarily  due to (i) lower  margins
generated on sales of commercial vehicles due to increased  competition and (ii)
increase in the  current  quarter of the  proportion  of sales in the New Jersey
market which has had historically lower gross margins than the New York market.

        General and administrative expenses. General and administrative expenses
for the  Transportation  Operations were $4.3 million for the three months ended
March 31, 1999  compared to $4.1  million for the three  months  ended March 31,
1998,  an increase of $0.2 million or 4.4%.  This  increase was primarily due to
general  and  administrative  expenses  of  newly  acquired  subsidiaries.  As a
percentage of revenues,  general and  administrative  expenses decreased to 6.2%
for the three  months  ended March 31, 1999 from 7.1% for the three months ended
March 31, 1998. General and administrative expenses for the Bus Sales Operations
were $0.9  million for the three  months  ended March 31, 1999  compared to $0.8
million for the three months  ended March 31, 1998,  an increase of $0.1 million
or 15.4%.  As a percentage  of  revenues,  general and  administrative  expenses
increased  to 10.3% for the three  months ended March 31, 1999 from 7.6% for the
three months ended March 31, 1998.

        Depreciation  and amortization  expenses.  Depreciation and amortization
expenses  for the  Transportation  Operations  were $2.9  million  for the three
months ended March 31, 1999  compared to $2.1 million for the three months ended
March 31, 1998, an increase of $0.9 million.  This increase was primarily due to
depreciation  in connection  with the purchase of new vehicles and  depreciation
and  amortization  of assets of newly acquired  subsidiaries.  Depreciation  and
amortization of Bus Sales Operations was $0.2 million for the three months ended
March 31, 1999 and 1998.


                                       9
<PAGE>


        Income from operations.  Income from operations was $5.7 million for the
three months ended March 31, 1999  compared to $5.1 million for the three months
ended March 31, 1998, an increase of $0.6 million.  This increase was due to the
net effect of the items discussed above.

        Net  interest  expense.  Net  interest  expense was $5.2 million for the
three months ended March 31, 1999  compared to $4.3 million for the three months
ended March 31, 1998,  an increase of $0.8 million or 19.0%.  This  increase was
primarily due to increased  interest in connection with the Company's  Revolving
Credit Facility.

        Net income.  The Company  generated  net income of $0.3  million for the
three months ended March 31, 1999  compared to $0.6 million for the three months
ended March 31,  1998,  a decrease of $0.3  million due to the net effect of the
items discussed above.

Nine months ended March 31, 1999 compared to nine months ended March 31, 1998


        Revenues.  Revenues from  Transportation  Operations were $172.6 million
for the nine months ended March 31, 1999 compared to $144.6 million for the nine
months  ended  March 31,  1998,  an  increase  of $28.0  million or 19.4%.  This
increase was due primarily to (i) the award of new  contracts  which added $11.9
million of revenues; (ii) an increase in billings of existing operations of $9.3
million;  (iii) $1.1 million of additional summer revenues and (iv) $5.7 million
from operations of five newly acquired  subsidiaries.  These  subsidiaries  were
sold to an  affiliate  effective  April  1,  1999  (see  Note 4 to  Consolidated
Financial Statements). Revenues from Bus Sales Operations were $60.7 million for
the nine  months  ended March 31,  1999  compared to $50.2  million for the nine
months  ended  March 31,  1998,  an  increase  of $10.5  million or 20.8%.  This
increase was primarily due to increased volume.


        Gross  Profit.  Gross profit from  Transportation  Operations  was $30.8
million for the nine months ended March 31, 1999  compared to $23.8  million for
the nine months ended March 31, 1998, an increase of $7.0 million or 29.2%. As a
percentage  of  revenues,  gross  profit  increased to 17.8% for the nine months
ended March 31, 1999 from 16.5% for the nine months ended March 31, 1998. In the
second  quarter of fiscal 1998,  there was a one time bonus which  reduced gross
profit for the nine months  ended March 31,  1998 by $1.7  million or 1.2%.  The
increase in gross profit  (exclusive  of the one time bonus) of $5.3 million was
due  primarily to (i)  increased  revenues and (ii) $2.1 million of gross profit
generated  from  newly  acquired  subsidiaries.  Gross  profit  from  Bus  Sales
Operations was $6.2 million for the nine months ended March 31, 1999 compared to
$6.6  million  for the nine  months  ended  March 31,  1998,  a decrease of $0.4
million or 5.7%.  As a percentage of revenues,  gross profit  decreased to 10.2%
for the nine months  ended  March 31, 1999 from 13.1% for the nine months  ended
March 31, 1998.  This  decrease was due  primarily to an increase in the current
nine months of the  proportion  of sales in the New Jersey  market which has had
historically  lower gross  margins  then the New York  market and lower  margins
generated by sales of commercial vehicles.

        General and administrative expenses. General and administrative expenses
for the  Transportation  Operations were $12.5 million for the nine months ended
March 31,  1999  compared  to $13.1  million  for the nine  months  ended  March
31,1998,  a decrease of $0.6 million or 4.7%. This decrease was primarily due to
a $1.8 million  provision for doubtful  accounts  taken in the second quarter of
fiscal 1998 partially  offset by increases in professional  fees of $0.8 million
and $0.6  million of  general  and  administrative  expenses  incurred  by newly
acquired subsidiaries.  As a percentage of revenues,  general and administrative
expenses  decreased  to 7.2% for the nine months  ended March 31, 1999 from 9.1%
for the nine months ended March 31, 1998.  General and  administrative  expenses
for the Bus Sales  Operations  was $2.9  million for the nine months ended March
31, 1999  compared to $2.5 million for the nine months ended March 31, 1998,  an
increase of $0.3  million or 13.2%.  As a percentage  of  revenues,  general and
administrative  expenses  decreased  to 4.7% for the nine months ended March 31,
1999 from 5.0% for the nine months ended March 31, 1998.

        Depreciation  and amortization  expenses.  Depreciation and amortization
expenses for the Transportation Operations were $8.5 million for the nine months
ended March 31, 1999  compared to $8.1  million for the nine months  ended March
31,  1998,  an increase of $0.4  million.  This  increase  was due  primarily to
depreciation  and  amortization  incurred by newly acquired  subsidiaries  ($0.8
million) and


                                       10
<PAGE>

increases  in  depreciation  in  connection  with the  purchase of new  vehicles
partially  offset  due to the  Company  reassessing  (on  January  1,  1998) and
extending the useful life of certain fixed assets which reduced  depreciation by
approximately  $1.8  million  for  the  six  months  ended  December  31,  1998.
Depreciation  and amortization of the Bus Sales Operations were $0.6 million for
the nine  months  ended March 31,  1999  compared  to $0.9  million for the nine
months ended March 31, 1998, a decrease of $0.3 million.

        Income from operations. Income from operations was $12.5 million for the
nine months  ended March 31, 1999  compared to $5.7  million for the nine months
ended March 31, 1998, an increase of $6.8 million.  This increase was due to the
net effect of the items discussed above.

        Net interest  expense.  Net interest  expense was $15.3  million for the
nine months ended March 31, 1999  compared to $13.4  million for the nine months
ended March 31, 1998, an increase of $1.9  million.  This increase was primarily
due to increased  interest in connection  with the Company's  revolving  line of
credit.

        Loss before  nonrecurring item and taxes. Loss before  nonrecurring item
and taxes was $2.9 million for the nine months ended March 31, 1999  compared to
$7.1  million  for the nine  months  ended  March 31,  1998,  a decrease of $4.2
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 Atlantic Express Transportation Group, Inc. (the parent of AETC)
for the benefit of the Company.  There were no  nonrecurring  items for the nine
months ended March 31, 1998.

        Net loss. The Company  generated a net loss of $2.3 million for the nine
months ended March 31, 1999  compared to a net loss of $3.9 million for the nine
months ended March 31, 1998, a decrease of $1.6 million due to the net effect of
the items discussed above.

Liquidity and Capital Resources

        Management  anticipates  total capital  expenditures of $28.9 million in
fiscal 1999 of which  approximately  $27.4  million were made by March 31, 1999.
This included  approximately $22.3 million for purchase of new vehicles and $5.1
million for other property and equipment.

        Net  Cash  Provided  By  Operating  Activities.  Net  cash  provided  by
operating  activities  of $4.3  million for the nine months ended March 31, 1999
resulted primarily from non-cash items of depreciation and amortization of $10.2
million and a nonrecurring item of $1.2 million offset by (i) a net loss of $2.3
million; (ii) $1.9 million increase in deferred tax benefit;  (iii) $1.5 million
use of cash for working capital and (iv) $1.4 million  decrease in other sources
of funds.

        Net Cash Used in Investing  Activities.  For the nine months ended March
31, 1999,  the Company  made $27.4  million of capital  expenditures  to acquire
additional  vehicles and equipment.  Of these capital  expenditures $5.8 million
were directly financed. Effective October 1, 1998, the Company acquired five new
subsidiaries  for  $6.0  million  (net of $1.1  million  cash  acquired).  These
acquisitions were funded from the Company's revolving line of credit.

        Net  Cash  Provided  by  Financing  Activities.  Net  cash  provided  by
financing  activities  totaled  $12.1 million due primarily to $17.9 million net
borrowings  under the Company's  revolving line of credit,  partially  offset by
principal payments of $5.4 million on other borrowings.


        Effective  April 1,  1999 the  Company  sold  its  five  newly  acquired
subsidiaries to an affiliate (see Note 4 to Consolidated  Financial Statements).
The gross proceeds  received from this transaction  ($10.3 million) were used to
reduce  borrowings  under the Company's $30.0 million  Revolving Credit Facility
(the "Facility").  At March 31, 1999, $10.6 million of the Facility was undrawn.
The  extension of the  Facility,  which  expires  February 4, 2000, is currently
being  negotiated  with its  existing  lender and the  Company  expects  that an
identical  facility will be in place prior to the first quarter of the Company's
2000 fiscal year.


                                       11
<PAGE>


The  Company  believes  that its  current  operating  cash flow,  along with its
borrowing  capacity  under a  revolving  credit  facility  will  provide it with
sufficient  liquidity  to conduct  its  operations  and pay  interest  under the
Facility and Senior Notes for the fiscal year ended June 30, 2000.


        At March 31, 1999,  the Company's  total debt and  stockholder's  equity
were $180.6 million and $20.3 million respectively.

Impact of Year 2000 on the Company's Systems

        The Company has  completed  its  assessment  of all of its  computerized
systems and has  determined  what changes,  if any, need to be made so that such
systems, which include information and non-information  technology systems, will
function  properly  with  respect  to dates in the year 2000 and  thereafter  to
ensure that the Company's  financial,  information and  operational  systems are
year 2000  compliant.  The Company has  developed a program to  implement  these
changes,  which consists of the following phases:  (i) developing  solutions for
affected technology and systems; (ii) modifying or replacing affected technology
and systems; (iii) testing and verifying solutions;  (iv) implementing solutions
and (v) developing  contingency  plans.  The Company has completed its year 2000
compliance at 6 of its locations,  including its corporate office,  which is its
most  important  and most  computer-reliant  location.  The  Company  intends to
complete its compliance of its remaining 27 locations according to the following
schedule:  3 locations  to become  compliant  by June  30,1999,  22 locations to
become  compliant by September  30, 1999 and 2 locations to become  compliant by
October 31, 1999.

        Costs incurred to date directly  related to the year 2000 issue have not
been material to the Company.  Having  completed  its  assessment of the changes
required to become year 2000 compliant,  the Company expects that the total cost
of meeting the goals of its year 2000  program  will not be material and will be
expensed or capitalized as incurred.


        Management  continues  to assess the  potential  impact of any year 2000
non-compliant  systems of its vendors or customers  and has begun  communicating
with  those  vendors  and  customers  with  whom the  Company  does  significant
business.  The Company has received  assurances from its two largest  customers,
which represented  approximately 32% of the Company's net sales for fiscal 1998,
its two major fuel suppliers,  which provided approximately 69% of the Company's
fuel  requirements in fiscal 1998, and its three largest  suppliers of parts and
tires, which provided  approximately 26% of the Company's requirements for parts
and tires in fiscal  1998,  that they are or will be year 2000  compliant by the
end of 1999.  A  third-party's  failure  to become  year 2000  compliant  or the
Company's  inability  to become  compatible  with third  parties  with which the
Company has a material  relationship  may have an adverse effect on the Company.
Although  initial  responses from the Company's major customers and suppliers of
fuel,  parts and tires  have  assured  the  Company  that they will be year 2000
compliant  before the end of 1999,  there can be no assurance that the Company's
operations will not be materially  adversely  impacted by any potential  systems
problems incurred by such vendors or customers.


        The Company is in the process of developing its contingency plan for its
facilities  to provide  for the most  reasonable  likely  worst  case  scenarios
regarding  year  2000  compliance.  This  contingency  plan  is  expected  to be
completed in 1999.

New Accounting Pronouncement

        Effective  July 1, 1998,  the Company  adopted SFAS No. 130,  "Reporting
Comprehensive  Income",  which  requires that all  components  of  comprehensive
income  (loss) and total  comprehensive  income (loss) be reported on one of the
following:  a statement  of income and  comprehensive  (loss),  a  statement  of
comprehensive income (loss) or a statement of stockholder's  equity. The Company
is reporting this information on a separate  statement of  comprehensive  income
(loss).  Comprehensive  income  (loss) is comprised of net income (loss) and all
changes to  stockholder's  equity,  except  those due to  investments  by owners
(changes in paid-in  capital)  and  distributions  to owners  (dividends).  This
statement  did not change the current  accounting  treatment  for  components of
comprehensive income.


                                       12
<PAGE>

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         Not Applicable.


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

November 23, 1999



                                       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.

<TABLE>
<CAPTION>

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

<S>                <C>                                                              <C>
       4.1         Third Supplemental  Indenture,  dated as of October 29, 1998,
                   by and  among  Atlantic  Express  Transportation  Corp.,  the
                   Guarantors named therein and The Bank of New York, as Trustee
                   (incorporated  by reference  to Exhibit 1.1 to the  Company's
                   Current Report on Form 8-K filed November 10, 1998).

      27.1         Financial Data Schedule
</TABLE>




                                      E-1