UNITED STATES
                       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 June 30, 2003

                                       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 000-20793

                           SMITHWAY MOTOR XPRESS CORP.
             (Exact name of registrant as specified in its charter)

         Nevada                                        42-1433844
-------------------------------------      ------------------------------------
(State or Other Jurisdiction of            (I.R.S. Employer Identification No.)
 Incorporation or Organization)

      2031 Quail Avenue
      Fort Dodge, Iowa                                   50501
-------------------------------------      ------------------------------------
(Address of Principal Executive Offices)               (Zip Code)

Registrant's telephone number, including area code:  515/576-7418


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
YES [X]  NO [ ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act).
YES [ ]  NO [X]

As of July 31, 2003, the registrant had 3,846,821 shares of Class A Common Stock
and 1,000,000 shares of Class B Common Stock outstanding.


<PAGE>
                                               PART I
                                       FINANCIAL INFORMATION
<TABLE>
                                                                                           PAGE
                                                                                          NUMBER
<S>          <C>                                                                            <C>
Item 1       Financial Statements                                                           3-10
             Condensed Consolidated Balance Sheets as of December 31, 2002 and
                    June 30, 2003  (unaudited)........................................      3-4
             Condensed Consolidated Statements of Operations for the three and six
                    months ended June 30, 2002 and 2003 (unaudited)...................       5
             Condensed Consolidated Statements of Cash Flows for the six
                    months ended June 30, 2002 and 2003 (unaudited)...................      6-7
             Notes to Condensed Consolidated Financial Statements (unaudited).........      8-10

Item 2       Management's Discussion and Analysis of Financial Condition and
                    Results of Operations.............................................     11-19

Item 3       Quantitative and Qualitative Disclosures About Market Risk...............      19

Item 4       Controls and Procedures..................................................      19

                                              PART II
                                         OTHER INFORMATION

Item 1       Legal Proceedings........................................................      20

Item 2       Changes in Securities and Use of Proceeds................................      20

Item 3       Defaults Upon Senior Securities..........................................      20

Item 4       Submission of Matters to a Vote of Security Holders......................      20

Item 5       Other Information........................................................      20

Item 6       Exhibits and Reports on Form 8-K.........................................      20

</TABLE>
                                        2

<PAGE>
                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
                  (Dollars in thousands, except per share data)
                                   (unaudited)

<TABLE>
                                                         ------------------------------------------
                                                               December 31,           June 30,
                                                                   2002                 2003
                                                         ---------------------  -------------------

                         ASSETS
<S>                                                         <C>                  <C>
Current assets:
  Cash and cash equivalents..............................   $             105    $             349
  Receivables:
     Trade...............................................              13,496               15,635
     Other...............................................                 629                1,210
  Inventories............................................                 868                  995
  Deposits, primarily with insurers......................                 753                  849
  Prepaid expenses.......................................               1,492                1,442
  Deferred income taxes..................................               2,263                2,457
                                                         ---------------------  -------------------
            Total current assets.........................              19,606               22,937
                                                         ---------------------  -------------------
Property and equipment:
  Land...................................................               1,548                1,548
  Buildings and improvements.............................               8,210                8,210
  Tractors...............................................              71,221               70,953
  Trailers...............................................              42,517               40,651
  Other equipment........................................               8,105                5,714
                                                         ---------------------  -------------------
                                                                      131,601              127,076
   Less accumulated depreciation.........................              64,031               66,053
            Net property and equipment...................              67,570               61,023
                                                         ---------------------  -------------------
Goodwill.................................................               1,745                1,745
Other assets.............................................                 488                  436
                                                         ---------------------  -------------------
                                                            $          89,409    $          86,141
                                                         =====================  ===================



             See accompanying notes to condensed consolidated financial statements.
</TABLE>
                                       3

<PAGE>

                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
                  (Dollars in thousands, except per share data)
                                   (unaudited)
<TABLE>
                                                                           ---------------------------------------------
                                                                                 December 31,             June 30,
                                                                                     2002                   2003
                                                                           ---------------------- ----------------------

                   LIABILITIES AND STOCKHOLDERS' EQUITY
<S>                                                                         <C>                    <C>
Current liabilities:
  Current maturities of long-term debt..................................... $             11,595   $             11,660
  Accounts payable.........................................................                4,556                  6,108
  Accrued loss reserves....................................................                3,882                  4,295
  Accrued compensation.....................................................                2,152                  2,690
  Checks in excess of cash balances........................................                1,086                    891
  Other accrued expenses...................................................                  463                    575
                                                                           ---------------------- ----------------------
            Total current liabilities......................................               23,734                 26,219
Long-term debt, less current maturities....................................               30,533                 26,827
Deferred income taxes......................................................               10,257                  9,299
Line of credit.............................................................                1,692                  2,619
                                                                           ---------------------- ----------------------
             Total liabilities.............................................               66,216                 64,964
                                                                           ---------------------- ----------------------
Stockholders' equity:
  Preferred stock..........................................................                    -                      -
  Common stock:
     Class A...............................................................                   40                     40
     Class B...............................................................                   10                     10
  Additional paid-in capital...............................................               11,393                 11,393
  Retained earnings........................................................               12,164                 10,148
  Reacquired shares, at cost...............................................                (414)                  (414)
                                                                           ---------------------- ----------------------
            Total stockholders' equity.....................................               23,193                 21,177
Commitments
                                                                           ---------------------- ----------------------
                                                                            $             89,409   $             86,141
                                                                           ====================== ======================


                      See accompanying notes to condensed consolidated financial statements.
</TABLE>
                                       4

<PAGE>
                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                 Condensed Consolidated Statements of Operations
                  (Dollars in thousands, except per share data)
                                   (unaudited)
<TABLE>
                                                    Three months ended                Six months ended
                                                          June 30,                         June 30,
                                             -----------------------------------------------------------------

                                                  2002             2003            2002             2003
                                             -----------------------------------------------------------------
<S>                                               <C>             <C>              <C>             <C>
Operating revenue:
     Freight.................................       $45,041         $42,196          $86,100         $82,075
     Other...................................           198              45              359              52
                                             -----------------------------------------------------------------
           Operating revenue.................        45,239          42,241           86,459          82,127
                                             -----------------------------------------------------------------
Operating expenses:
     Purchased transportation................        16,551          14,344           31,842          28,699
     Compensation and employee benefits......        13,740          12,653           27,144          25,027
     Fuel, supplies, and maintenance.........         7,023           7,094           13,507          14,931
     Insurance and claims....................         1,639           1,476            3,452           2,498
     Taxes and licenses......................           920             839            1,756           1,680
     General and administrative..............         1,928           1,856            3,737           3,214
     Communications and utilities............           432             381              939             793
     Depreciation and amortization...........         4,269           3,781            8,045           7,491
                                             -----------------------------------------------------------------
           Total operating expenses..........        46,502          42,424           90,422          84,333
                                             -----------------------------------------------------------------
         Loss from operations................        (1,263)           (183)          (3,963)         (2,206)
Financial (expense) income
     Interest expense........................          (524)           (496)          (1,085)           (946)
     Interest income.........................            10               2               17               4
                                             -----------------------------------------------------------------
         Loss before income taxes............        (1,777)           (677)          (5,031)         (3,148)
Income tax benefit...........................          (616)           (219)          (1,833)         (1,132)
                                             -----------------------------------------------------------------
          Net loss...........................       $(1,161)        $  (458)         $(3,198)        $(2,016)
                                             =================================================================
Basic and diluted loss per share.............       $ (0.24)        $ (0.09)         $ (0.66)        $ (0.42)
                                             =================================================================
Basic and diluted weighted average shares
outstanding..................................     4,846,021       4,846,821        4,845,277       4,846,821
                                             =================================================================








                  See accompanying notes to condensed consolidated financial statements.
</TABLE>

                                       5
<PAGE>

                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                 Condensed Consolidated Statements of Cash Flows
                             (Dollars in thousands)
                                   (unaudited)
<TABLE>
                                                                          Six months ended
                                                                              June 30,
                                                                    ------------------------------
                                                                        2002            2003
                                                                    --------------  --------------
<S>                                                                    <C>             <C>
Cash flows from operating activities:
  Net loss.........................................................    $  (3,198)      $  (2,016)
                                                                    --------------  --------------
  Adjustments to reconcile net loss to cash used by operating
  activities:
      Depreciation and amortization................................        8,045           7,491
      Deferred income tax benefit..................................       (1,843)         (1,152)
      Change in:
           Receivables.............................................       (1,843)         (2,720)
           Inventories.............................................          (35)           (127)
           Deposits, primarily with insurers.......................           31             (96)
           Prepaid expenses........................................         (493)             50
           Accounts payable and other accrued liabilities..........        2,533           2,615
                                                                    --------------  --------------
               Total adjustments...................................        6,395           6,061
                                                                    --------------  --------------
                 Net cash provided by operating activities.........        3,197           4,045
                                                                    --------------  --------------
Cash flows from investing activities:
  Purchase of property and equipment...............................         (837)           (271)
  Proceeds from sale of property and equipment.....................        2,735           2,231
  Other............................................................           46              52
                                                                    --------------  --------------
             Net cash provided by investing activities.............        1,944           2,012
                                                                    --------------  --------------
Cash flows from financing activities:
  Net borrowings on line of credit.................................        3,295             927
  Principal payments on long-term debt.............................       (8,055)         (6,545)
  Change in checks issued in excess of cash balances...............            -            (195)
  Treasury stock reissued..........................................            6               -
                                                                    --------------  --------------
            Net cash used in financing activities..................       (4,754)         (5,813)
                                                                    --------------  --------------
            Net increase in cash and cash equivalents..............          387             244
Cash and cash equivalents at beginning of period...................          722             105
                                                                    --------------  --------------
Cash and cash equivalents at end of period.........................    $   1,109       $     349
                                                                    ==============  ==============




                See accompanying notes to condensed consolidated financial statements.
</TABLE>
                                       6
<PAGE>

                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
           Condensed Consolidated Statements of Cash Flows, continued
                             (Dollars in thousands)
                                   (unaudited)
<TABLE>

                                                                             Six months ended
                                                                                 June 30,
                                                                       ------------------------------
                                                                           2002            2003
                                                                       --------------  --------------
<S>                                                                       <C>              <C>
Supplemental disclosure of cash flow information:
   Cash paid (received) during period for:
          Interest.................................................       $   1,114        $    894
          Income taxes.............................................          (1,041)             15
                                                                       ==============  ==============

Supplemental schedules of noncash investing and financing
activities:
   Notes payable issued for tractors and trailers..................       $   2,282        $  2,904
                                                                       ==============  ==============














                  See accompanying notes to condensed consolidated financial statements.
</TABLE>

                                       7
<PAGE>
                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1.  Basis of Presentation

     The condensed  consolidated  financial  statements  include the accounts of
     Smithway Motor Xpress Corp., a Nevada holding company,  and its four wholly
     owned subsidiaries.  All significant intercompany balances and transactions
     have been eliminated in consolidation.

     The condensed consolidated financial statements have been prepared, without
     audit, in accordance with accounting  principles  generally accepted in the
     United States of America,  pursuant to the published  rules and regulations
     of the  Securities and Exchange  Commission.  In the opinion of management,
     the accompanying  condensed  consolidated  financial statements include all
     adjustments  which are necessary for a fair presentation of the results for
     the interim periods presented, such adjustments being of a normal recurring
     nature. Certain information and footnote disclosures have been condensed or
     omitted  pursuant to such rules and  regulations.  The  December  31, 2002,
     Condensed  Consolidated  Balance Sheet was derived from the audited balance
     sheet of the Company for the year then ended.  It is  suggested  that these
     condensed  consolidated  financial  statements and notes thereto be read in
     conjunction  with the consolidated  financial  statements and notes thereto
     included in the Company's  Form 10-K for the year ended  December 31, 2002.
     Results of operations in interim periods are not necessarily  indicative of
     results to be expected for a full year.

Note 2.  Liquidity

     The Company incurred significant losses in 2001 and 2002, and has continued
     to incur  losses in the first two quarters of 2003.  In  addition,  working
     capital is a negative  $4,128 and $3,282 at December  31, 2002 and June 30,
     2003,  respectively.  The Company was in violation of its bank covenants at
     December 31, 2002,  March 31, 2003,  and June 30, 2003,  respectively,  but
     received  waivers.  Since the  beginning  of 2003,  there have been several
     amendments to the financing arrangement.  These amendments have temporarily
     increased the borrowing base,  permanently increased the interest rate, and
     revised the  financial  covenants  to reflect  financial  performance  that
     management  believes is  reasonably  achievable,  although  there can be no
     assurance that the required  financial  performance  will be achieved.  The
     Company's 2002 cash flows from operations  would not be sufficient to cover
     the 2003 debt service requirements.

     During 2002, the Company's primary sources of liquidity were funds provided
     by operations  and  borrowings  under credit  arrangements  with  financial
     institutions  and equipment  manufacturers.  The Company is  experiencing a
     period of negative  cash flow as continuing  losses and  declining  revenue
     have resulted in lower cash generated from operations and reduced borrowing
     capacity.  As of the  date of this  report,  management  believes  that the
     Company has  adequate  borrowing  availability  on its line of credit.  The
     Company  expects minimal  capital  expenditures  during 2003. The Company's
     ability to fund its cash  requirements in future periods will depend on its
     ability to comply with covenants  contained in financing  arrangements  and
     improve its  operating  results  and cash flow.  The  Company's  ability to
     achieve the required improvements will depend on general shipping demand of
     the  Company's  customers,  fuel prices,  the  availability  of drivers and
     independent  contractors,   insurance  and  claims  experience,  and  other
     factors.  Management is in the process of implementing  several steps, some
     of which were developed with the assistance of a consulting firm engaged by
     the  board of  directors,  that  are  intended  to  improve  the  Company's
     operating  results and achieve  compliance  with the  financial  covenants.
     These steps include: consolidating terminals; improving the utilization per
     tractor  through  a  full-time  production  manager;  implementing  a yield
     management program in which the Company seeks additional  favorable freight
     while ceasing to haul less favorable  freight;  and identifying  additional
     areas for cost  containment,  including,  personnel  costs and reducing the
     Company's  excess  insurance  coverage limit effective July 1, 2003 to $2.0
     million.   Although  management  believes  that  seasonal  improvements  in
     shipping  demand during the third  quarter and the actions being  evaluated
     should generate the required  improvements,  there is no assurance that the
     improvements  will occur as planned.  Assuming the improvements do occur as
     planned, management believes there will be sufficient cash flow to meet the
     Company's  liquidity  requirements  at least  through June 30, 2004. To the
     extent that actual  results or events  differ from  management's  financial
     projections  or business  plans,  the Company's  liquidity may be adversely
     affected  and the  Company  may be  unable  to  comply  with its  financial
     covenants.  In such event, the Company's  liquidity would be materially and
     adversely  impacted,  and the  Company's  ability  to  continue  as a going
     concern would be called into question if alternative financing could not be
     found.

                                        8
<PAGE>
Note 3.  Net earnings per common share

     Basic earnings per share have been computed by dividing net earnings by the
     weighted average  outstanding Class A and Class B common shares during each
     of the quarters.  Diluted  earnings per share have been  calculated by also
     including  in  the  computation  the  effect  of  employee  stock  options,
     nonvested  stock,  and similar equity  instruments  granted to employees as
     potential  common shares.  Because the Company  suffered a net loss for the
     three months and six months ended June 30, 2002,  and 2003,  the effects of
     potential  common  shares  were not  included in the  calculation  as their
     effects would be anti-dilutive. Stock options outstanding at June 30, 2002,
     and 2003, totaled 594,525 and 303,150, respectively.

Note 4.  Stock Option Plans

     The Company has three stock-based employee compensation plans:

          (1) The Company has reserved 25,000 shares of Class A common stock for
          issuance  pursuant to an outside  director stock option plan. The term
          of each  option  granted  under  this plan is six years from the grant
          date.  Options fully vest on the first  anniversary of the grant date.
          The  exercise  price of each  stock  option is 85  percent of the fair
          market  value of the common  stock on the date of grant.  In July 2000
          the Company  granted  outside  directors  12,000 stock  options in the
          aggregate not covered by this plan.

          (2) The Company has  reserved  500,000  shares of Class A common stock
          for issuance  pursuant to an incentive  stock option plan.  Any shares
          which expire  unexercised or are forfeited  become available again for
          issuance under the plan. Under this plan, no awards of incentive stock
          options may be made after December 31, 2004.

          (3) The Company has  reserved  400,000  shares of Class A common stock
          for issuance  pursuant to a new employee  incentive  stock option plan
          adopted  during  2001.  Any shares  which  expire  unexercised  or are
          forfeited  become  available again for issuance under the plan.  Under
          this  plan,  no award of  incentive  stock  options  may be made after
          August 6, 2011.

     The Company  accounts for these plans under the recognition and measurement
     principles of Accounting  Principles Board Opinion No. 25,  "Accounting for
     Stock Issued to  Employees,"  and related  Interpretations.  No stock-based
     employee compensation cost is reflected in the statement of operations,  as
     all options  granted to employees  under these plans had an exercise  price
     equal to the market value of the common stock on the date of the grant.


                                       9
<PAGE>

     The following  table  illustrates the effect on net loss and loss per share
     if the Company had applied the fair value  recognition  provisions  of FASB
     Statement  No.  123,   "Accounting   for  Stock-Based   Compensation,"   to
     stock-based  employee  compensation.  The  Company  used the  Black-Scholes
     option  pricing  model to determine the fair value of stock options for the
     three  and six  months  ended  June  30,  2002,  and  2003.  The  following
     assumptions  were  used in  determining  the fair  value of these  options:
     weighted average risk-free  interest rate, 4.55% in 2002 and 2.54% in 2003;
     weighted  average  expected  life,  5 years in 2002 and 2003;  and weighted
     average expected volatility,  61% in 2002, , and 66% in 2003. There were no
     expected  dividends.  For purposes of pro forma disclosures,  the estimated
     fair value of options is amortized  to expense  over the  options'  vesting
     periods.
<TABLE>
                                            Three months ended                 Six months ended
                                                  June 30,                         June 30,
                                         ----------------------------    -----------------------------
                                            2002            2003            2002             2003
                                         -----------     ------------    ------------     ------------
<S>                                       <C>               <C>            <C>              <C>
Net loss, as reported                     $ (1,161)         $  (458)       $ (3,198)        $ (2,016)
Deduct:  Total stock-based
employee compensation expense
determined under fair value based
method for all awards, net of related
tax effects                                     (2)              (4)             (3)              (9)
                                         -----------     ------------    ------------     ------------
Pro forma net loss                        $ (1,163)         $  (462)       $ (3,201)        $ (2,025)
                                         ===========     ============    ============     ============
Loss per share
   Basic and Diluted - as reported        $  (0.24)         $ (0.09)       $  (0.66)        $  (0.42)
   Basic and Diluted - pro forma          $  (0.24)         $ (0.09)       $  (0.66)        $  (0.42)
</TABLE>

Note 5.  Long-Term Debt

     During  July 2003,  the  Company  amended its  financing  arrangement  with
     LaSalle Bank. This amendment  included  provisions which waive the covenant
     violation for the quarter ended June 30, 2003 and also as of July 31, 2003.
     The amendment also extends the expiration  date of the agreement to July 1,
     2004 and  reduces  the  maximum  loan limit from  $32,500 to  $27,500.  The
     Company  believes the covenant  compliance  requirements  for its financing
     agreements  are reasonably  achievable,  although there can be no assurance
     that the required financial performance will be achieved.

     During March and April 2003, the Company amended its financing  arrangement
     with LaSalle  Bank.  These  amendments  included  provisions  which waive a
     covenant  violation  at March 31, 2003,  adjust the  covenant  requirements
     going  forward,  increase the interest  rate from  LaSalle's  prime rate to
     prime rate plus two percent,  and  accelerate  the  expiration  date of the
     agreement to April 1, 2004. In addition,  the Company amended its equipment
     financing  arrangement  to provide for a waiver of a covenant  violation at
     March 31,  2003,  and the  adjustment  of the  covenant  requirement  going
     forward.



                                       10
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

Introduction

     Except for the historical  information  contained herein, the discussion in
this  quarterly  report on Form 10-K contains  forward-looking  statements  that
involve  risk,  assumptions,  and  uncertainties  that are difficult to predict.
Words such as "anticipates,"  "believes,"  "estimates,"  "projects,"  "expects,"
variations  of these words,  and similar  expressions,  are intended to identify
such forward-looking statements.  These statements are made pursuant to the safe
harbor provisions of the Private Securities  Litigation Reform Act of 1995. Such
statements are based upon the current beliefs and  expectations of the Company's
management  and are  subject  to  significant  risks and  uncertainties.  Actual
results  may differ  from  those set forth in  forward-looking  statements.  The
following factors, among others, could cause actual results to differ materially
from  those in  forward-looking  statements:  failure to turn  around  continued
operating losses,  which could result in further violation of bank covenants and
acceleration of indebtedness at several financial  institutions;  the ability to
obtain  financing on  acceptable  terms,  and obtain  waivers and  amendments to
current financing in the event of default;  economic  recessions or downturns in
customers'  business  cycles;  excessive  increases in capacity within truckload
markets;  surplus  inventories;  decreased  demand for  transportation  services
offered by the Company;  increases or rapid fluctuations in inflation,  interest
rates, fuel prices,  and fuel hedging;  the availability and costs of attracting
and  retaining  qualified  drivers and  owner-operators;  increases in insurance
premiums and  deductible  amounts,  or changes in excess  coverage,  relating to
accident,  cargo,  workers'  compensation,  health, and other claims;  increased
exposure  with  respect to  accident  claims as a result of a  reduction  of the
Company's  excess  insurance  coverage limit; the resale value of used equipment
and prices of new equipment;  seasonal factors such as harsh weather  conditions
that increase operating costs;  regulatory  requirements that increase costs and
decrease  efficiency,  including  new emissions  standards and  hours-of-service
regulations;  changes in management;  and the ability to negotiate,  consummate,
and  integrate  acquisitions.  Readers  should  review and  consider the various
disclosures made by the Company in its press releases,  stockholder reports, and
public  filings,  as well as the  factors  explained  in  greater  detail in the
Company's annual report on Form 10-K.

     The  Company's  fiscal year ends on December  31 of each year.  Thus,  this
report  discusses the second  quarter and first six months of the Company's 2002
and 2003 fiscal years.

     For the three months ended June 30, 2003,  operating revenue decreased 6.6%
to $42.2  million from $45.2 million  during the same quarter in 2002.  Net loss
was  $458,000,  or ($0.09) per  diluted  share,  compared  with net loss of $1.2
million,  or ($0.24) per diluted  share,  during the 2002  quarter.  For the six
months ended June 30, 2003,  operating  revenue  decreased 5.0% to $82.1 million
from $86.5 million during the same period in 2002. Net loss was $2.0 million, or
($0.42) per diluted  share,  compared with net loss of $3.2 million,  or ($0.66)
per diluted share, during the 2002 period.

     The  Company   operates  a   tractor-trailer   fleet   comprised   of  both
Company-owned  vehicles and  vehicles  obtained  under  leases from  independent
contractors  and  third-party  finance  companies.  Fluctuations  among  expense
categories  may occur as a result of changes in the relative  percentage  of the
fleet obtained  through  equipment that is owned versus equipment that is leased
from independent contractors or financing sources. Costs associated with revenue
equipment acquired under operating leases or through agreements with independent
contractors are expensed as "purchased  transportation." For these categories of
equipment the Company does not incur costs such as interest and  depreciation as
it might with owned equipment.  In addition,  independent  contractor  tractors,
driver compensation, fuel, communications,  and certain other expenses are borne
by the independent  contractors  and are not incurred by the Company.  Obtaining
equipment  from  independent  contractors  and under  operating  leases  reduces
capital  expenditures  and  on-balance  sheet  leverage and  effectively  shifts
expenses from interest to "above the line" operating expenses. The fleet profile
of acquired  companies  and the  Company's  relative  recruiting  and  retention
success with  Company-employed  drivers and independent  contractors  will cause
fluctuations  from time-to-time in the percentage of the Company's fleet that is
owned versus obtained from independent contractors and under operating leases.


                                       11
<PAGE>
Results of Operations

     The following table sets forth the percentage relationship of certain items
to revenue for the three and six months ended June 30, 2002 and 2003:
<TABLE>
                                                         Three months ended         Six months ended
                                                              June 30,                  June 30,
                                                       ------------------------  -----------------------
                                                          2002         2003        2002         2003
                                                       -----------  -----------  ----------   ----------
<S>                                                      <C>          <C>          <C>          <C>
Operating revenue.....................................   100.0%       100.0%       100.0%       100.0%
Operating expenses:
    Purchased transportation..........................    36.6         34.0         36.8         34.9
    Compensation and employee benefits................    30.4         30.0         31.4         30.5
    Fuel, supplies, and maintenance...................    15.5         16.8         15.6         18.2
    Insurance and claims..............................     3.6          3.5          4.0          3.0
    Taxes and licenses................................     2.0          2.0          2.0          2.0
    General and administrative........................     4.3          4.4          4.3          3.9
    Communication and utilities.......................     1.0          0.9          1.1          1.0
    Depreciation and amortization.....................     9.4          9.0          9.3          9.1
                                                       -----------  -----------  ----------   ----------
    Total operating expenses..........................   102.8        100.4        104.6        102.7
                                                       -----------  -----------  ----------   ----------
Loss from operations..................................   (2.8)        (0.4)        (4.6)        (2.7)
Interest expense, net.................................    1.2          1.2          1.3          1.2
                                                       -----------  -----------  ----------   ----------
Loss before income taxes..............................   (3.9)        (1.6)        (5.8)        (3.8)
Income tax benefit....................................   (1.4)        (0.5)        (2.1)        (1.4)
                                                       -----------  -----------  ----------   ----------
Net loss..............................................   (2.6)%       (1.1)%       (3.7)%       (2.5)%
                                                       ===========  ===========  ==========   ==========
</TABLE>

Comparison of three months ended June 30, 2003, with three months ended June 30,
2002.

     Operating  revenue  decreased $3.0 million (6.6%),  to $42.2 million in the
2003 quarter from $45.2  million in the 2002  quarter.  Lower  weighted  average
tractors, partially offset by increased average revenue per tractor per week and
increased fuel surcharge revenue, were responsible for the decrease in operating
revenue.  Weighted average tractors  decreased to 1,257 in the 2003 quarter from
1,466 in the 2002  quarter as the Company  disposed of a portion of its unseated
company  owned  tractors  in the last  half of 2002 and  contracted  with  fewer
independent  contractor  providers of  equipment.  In the near term,  management
expects weighted average tractors will remain approximately at current levels as
few tractors are scheduled to be added in 2003.  Average revenue per tractor per
week (excluding revenue from brokerage  operations,  fuel surcharges,  and other
revenue)  increased  to  $2,389  in the 2003  quarter  from  $2,221  in the 2002
quarter,  primarily due to a lower number of unseated company tractors.  Revenue
per loaded mile, net of surcharges,  increased to $1.37 in the 2003 quarter from
$1.36 in the 2002 quarter. Finally, fuel surcharge revenue increased $759,000 to
$1.4 million in the 2003 quarter from $686,000 in the 2002  quarter.  During the
2003 and 2002 quarters,  approximately $979,000 and $376,000,  respectively,  of
the fuel surcharge  revenue  collected  helped to offset Company fuel costs. The
remainder was passed through to independent contractors.

     Purchased  transportation  consists  primarily  of payments to  independent
contractor  providers  of  revenue  equipment,  expenses  related  to  brokerage
activities, and payments under operating leases of revenue equipment.  Purchased
transportation  decreased  $2.2 million  (13.3%),  to $14.3  million in the 2003
quarter from $16.6 million in the 2002 quarter,  as the Company  contracted with
fewer independent contractor providers of revenue equipment.  As a percentage of
revenue,  purchased  transportation  decreased  to 34.0% of  revenue in the 2003
quarter compared with 36.6% in the 2002 quarter. This reflects a decrease in the
percentage of the fleet supplied by independent contractors. Management believes
the decline in independent contractors as a percentage of the Company's fleet is
attributable to high fuel costs, high insurance costs, tighter credit standards,
and slow freight demand, which have diminished the pool of drivers interested in
becoming or remaining independent contractors. The percentage of total operating
revenue  provided  by  independent  contractors  decreased  to 36.5% in the 2003
quarter from 39.8% in the 2002 quarter.

     Compensation and employee benefits  decreased $1.1 million (7.9%), to $12.7
million  in the 2003  quarter  from  $13.7  million  in the 2002  quarter.  As a
percentage of revenue,  compensation and employee benefits decreased to 30.0% in
the 2003 quarter  from 30.4% in the 2002  quarter.  The  decrease was  primarily
attributable to a decrease in wages paid to non-driver  employees resulting from
staff  reductions  and a  decrease  in  workers'  compensation

                                       12
<PAGE>
claims paid and  reserved.  These  factors were  partially  offset by additional
wages paid to new drivers  for sign-on  bonuses  implemented  to enhance  driver
recruiting.

     Fuel, supplies,  and maintenance  increased $71,000 (1.0%), to $7.1 million
in the 2003 quarter from $7.0 million in the 2002  quarter.  As a percentage  of
revenue,  fuel, supplies,  and maintenance  increased to 16.8% of revenue in the
2003 quarter  compared with 15.5% in the 2002 quarter.  This reflects a decrease
in the  percentage of the fleet supplied by  independent  contractors.  Although
fuel prices increased approximately 11% to an average of $1.37 per gallon in the
2003  quarter  from $1.23 per gallon in the 2002  quarter,  the increase in fuel
prices was partially  offset by a $603,000  increase in fuel  surcharge  revenue
which is included in operating revenue.

     Insurance and claims decreased $163,000 (9.9%), to $1.5 million in the 2003
quarter  from $1.6  million in the 2002  quarter.  As a  percentage  of revenue,
insurance and claims remained relatively constant at 3.5% of revenue in the 2003
quarter compared with 3.6% in the 2002 quarter. The cost of insurance and claims
increased  substantially  on  July 1,  2002,  when  the  Company  increased  its
self-insured  retention  from  $50,000 to  $250,000  per  occurrence,  without a
premium  reduction  that fully  offset the  increase  in  retention.  The higher
self-insured  retention  increases the Company's risk  associated with frequency
and severity of accidents and could increase the Company's expenses or make them
more volatile from period to period. The insurance policies were renewed on July
1, 2003 without  modification  to the  self-retention  level,  but the Company's
excess insurance coverage limit was reduced to $2.0 million.  Management expects
insurance and claims expense, as a percentage of revenue, will remain at current
levels in future  periods  unless the Company were to  experience an increase in
the number or severity of  accidents  over the reduced  excess  policy  coverage
limit, which could result in a substantial  increase in this expense category as
a percentage of revenue.

     Taxes and  licenses  decreased  $81,000  (8.8%),  to  $839,000  in the 2003
quarter from $920,000 in the 2002 quarter  reflecting a decrease in the weighted
average number of tractors in the fleet.  As a percentage of revenue,  taxes and
licenses remained constant at 2.0% of revenue in the 2003 and 2002 quarter.

     General and  administrative  expenses  decreased  $72,000  (3.7%),  to $1.9
million  in the  2003  quarter  from  $1.9  million  in the 2002  quarter.  As a
percentage of revenue,  general and administrative  expenses remained relatively
constant at 4.4% of revenue in the 2003 quarter compared with 4.3% of revenue in
the 2002 quarter. During the quarter,  decreases attributable to successful cost
cutting  measures and the  elimination of  commissioned  agents at two locations
were offset by a $307,000 increase in professional and consulting fees.

     Communications and utilities  decreased $51,000 (11.8%), to $381,000 in the
2003  quarter  from  $432,000 in the 2002  quarter  reflecting a decrease in the
weighted  average  number of tractors in the fleet.  As a percentage of revenue,
communications and utilities remained  relatively constant at 0.9% of revenue in
the 2003 quarter compared with 1.0% of revenue in the 2002 quarter.

     Depreciation and amortization  decreased $488,000 (11.4%),  to $3.8 million
in the 2003 quarter from $4.3 million in the 2002  quarter.  The gain or loss on
retirement,  sale, or write-down  of equipment is included in  depreciation  and
amortization.  In the 2003  and  2002  quarter,  depreciation  and  amortization
included  net  gains  from  the  sale  of  equipment  of  $69,000  and  $54,000,
respectively.   As  a  percentage  of  revenue,  depreciation  and  amortization
decreased to 9.0% of revenue in the 2003 quarter  compared  with 9.4% of revenue
in the 2002 quarter  because of higher  revenue per seated  tractor,  which more
effectively spread this cost.

     Interest  expense,  net,  decreased $20,000 (3.9%), to $494,000 in the 2003
quarter  from  $514,000  in the  2002  quarter  reflecting  lower  average  debt
outstanding,  partially  offset by higher  interest  rates.  As a percentage  of
revenue, interest expense, net, remained constant at 1.2% of revenue in the 2003
and 2002 quarter.

     As a result of the  foregoing,  the Company's  pre-tax margin was (1.6%) in
the 2003 quarter versus (3.9%) in the 2002 quarter.

     The  Company's  income tax  benefit was  $219,000,  or 32.3% of loss before
income taxes. The Company's income tax benefit in the 2002 quarter was $616,000,
or 34.7% of loss before income taxes.  In both quarters,  the effective tax rate
is different from the expected combined tax rate for a company  headquartered in
Iowa because of the cost of  nondeductible  driver per diem expense  absorbed by
the Company.  The impact of the Company's paying per diem travel expenses varies
depending upon the ratio of drivers to independent  contractors and the level of
the Company's pre-tax earnings.

                                       13
<PAGE>
     As a result of the factors  described  above,  net loss was $458,000 in the
2003 quarter  (1.1% of revenue),  compared  with net loss of $1.2 million in the
2002 quarter (2.6% of revenue).

Comparison of six months ended June 30, 2003, with six months ended June 30,
2002.

     Operating  revenue  decreased $4.3 million (5.0%),  to $82.1 million in the
2003  period  from $86.5  million in the 2002  period.  Lower  weighted  average
tractors, partially offset by increased average revenue per tractor per week and
increased fuel surcharge revenue, were responsible for the decrease in operating
revenue.  Weighted average  tractors  decreased to 1,271 in the 2003 period from
1,492 in the 2002  period as the Company  disposed of a portion of its  unseated
company  owned  tractors  in the last  half of 2002 and  contracted  with  fewer
independent  contractor  providers of  equipment.  In the near term,  management
expects weighted average tractors will remain approximately at current levels as
few tractors are scheduled to be added in 2003.  Average revenue per tractor per
week (excluding revenue from brokerage  operations,  fuel surcharges,  and other
income)  increased  to $2,285 in the 2003 period from $2,103 in the 2002 period,
primarily due to a lower number of unseated company tractors. Revenue per loaded
mile, net of surcharges,  remained  constant at $1.36 in both periods.  Finally,
fuel surcharge revenue increased $2.3 million to $3.2 million in the 2003 period
from   $906,000  in  the  2002  period.   During  the  2003  and  2002  periods,
approximately  $2.1 million and $488,000,  respectively,  of the fuel  surcharge
revenue  collected helped to offset Company fuel costs. The remainder was passed
through to independent contractors.

     Purchased  transportation  consists  primarily  of payments to  independent
contractor  providers  of  revenue  equipment,  expenses  related  to  brokerage
activities, and payments under operating leases of revenue equipment.  Purchased
transportation  decreased  $3.1  million  (9.9%),  to $28.7  million in the 2003
period from $31.8  million in the 2002 period,  as the Company  contracted  with
fewer independent contractor providers of revenue equipment.  As a percentage of
revenue,  purchased  transportation  decreased  to 34.9% of  revenue in the 2003
period  compared with 36.8% in the 2002 period.  This reflects a decrease in the
percentage of the fleet supplied by independent contractors. Management believes
the decline in independent contractors as a percentage of the Company's fleet is
attributable to high fuel costs, high insurance costs, tighter credit standards,
and slow freight demand, which have diminished the pool of drivers interested in
becoming or remaining independent contractors. The percentage of total operating
revenue  provided  by  independent  contractors  decreased  to 37.3% in the 2003
period from 40.5% in the 2002 period.

     Compensation and employee benefits  decreased $2.1 million (7.8%), to $25.0
million  in the  2003  period  from  $27.1  million  in the  2002  period.  As a
percentage of revenue,  compensation and employee benefits decreased to 30.5% in
the 2003  period  from 31.4% in the 2002  period.  The  decrease  was  primarily
attributable to a decrease in wages paid to non-driver  employees resulting from
staff  reductions  and a  decrease  in  workers'  compensation  claims  paid and
reserved.  These factors were partially  offset by additional  wages paid to new
drivers  for  sign-on  bonuses  implemented  to enhance  driver  recruiting  and
increased health claims and premiums in the 2003 period.

     Fuel,  supplies,  and maintenance  increased $1.4 million (10.5%), to $14.9
million  in the  2003  period  from  $13.5  million  in the  2002  period.  As a
percentage of revenue,  fuel,  supplies,  and maintenance  increased to 18.2% of
revenue in the 2003 period compared with 15.6% in the 2002 period. This reflects
a decrease in the percentage of the fleet  supplied by independent  contractors.
Although  fuel  prices  increased  approximately  24% to an average of $1.45 per
gallon in the 2003 period from $1.17 per gallon in the 2002 period, the increase
in fuel prices was partially offset by a $1.6 million increase in fuel surcharge
revenue which is included in operating revenue.

     Insurance and claims decreased $1.0 million (27.6%), to $2.5 million in the
2003 period from $3.5  million in the 2002 period.  As a percentage  of revenue,
insurance  and claims  decreased to 3.0% of revenue in the 2003 period  compared
with 4.0% in the 2002 period,  primarily due to a net premium refund of $467,000
for the policy year ended June 30, 2002,  upon  accepting a $75,000  increase in
self-insured  retention  for such policy year.  The cost of insurance and claims
increased  substantially  on  July 1,  2002,  when  the  Company  increased  its
self-insured  retention  from  $50,000 to  $250,000  per  occurrence,  without a
premium  reduction  that fully  offset the  increase  in  retention.  The higher
self-insured  retention  increases the Company's risk  associated with frequency
and severity of accidents and could increase the Company's expenses or make them
more volatile from period to period. The insurance policies were renewed on July
1, 2003 without  modification  to the  self-retention  level,  but the Company's
excess insurance coverage limit was reduced to $2.0 million.  Management expects
insurance and claims expense, as a percentage of revenue, will remain at current
levels in future  periods  unless the Company were to  experience an increase in
the number or severity of  accidents  over the reduced  excess  policy  coverage
limit, which could result in a substantial  increase in this expense category as
a percentage of revenue.

                                       14
<PAGE>
     Taxes and licenses  decreased  $76,000 (4.3%),  to $1.7 million in the 2003
period from $1.8 million in the 2002 period.  As a percentage of revenue,  taxes
and licenses remained constant at 2.0% of revenue in the 2003 and 2002 period.

     General and administrative  expenses  decreased  $523,000 (14.0%),  to $3.2
million in the 2003 period from $3.7 million in the 2002 period. As a percentage
of revenue,  general and administrative expenses decreased to 3.9% of revenue in
the 2003 period  compared  with 4.3% of revenue in the 2002  period.  During the
period,  decreases  attributable  to  successful  cost cutting  measures and the
elimination of commissioned  agents at two locations were partially  offset by a
$307,000 increase in professional and consulting fees in the second quarter.

     Communications and utilities decreased $146,000 (15.5%), to $793,000 in the
2003  period  from  $939,000  in the 2002  period  reflecting  a decrease in the
weighted  average  number of tractors in the fleet.  As a percentage of revenue,
communications and utilities remained  relatively constant at 1.0% of revenue in
the 2003 period compared with 1.1% of revenue in the 2002 period.

     Depreciation and amortization decreased $554,000 (6.9%), to $7.5 million in
the 2003  period  from  $8.0  million  in the 2002  period.  The gain or loss on
retirement,  sale, or write-down  of equipment is included in  depreciation  and
amortization.  In the  2003  and  2002  period,  depreciation  and  amortization
included  net  gains  from the  sale of  equipment  of  $279,000  and  $703,000,
respectively. As a percentage of revenue, depreciation and amortization remained
relatively  constant at 9.1% of revenue in the 2003 period compared with 9.3% of
revenue in the 2002 period because of higher revenue per seated  tractor,  which
more effectively spread this cost.

     Interest expense,  net, decreased $126,000 (11.8%), to $942,000 in the 2003
period  from $1.1  million in the 2002  period  reflecting  lower  average  debt
outstanding,  partially  offset by higher  interest  rates.  As a percentage  of
revenue,  interest expense, net, decreased to 1.2% of revenue in the 2003 period
compared with 1.3% in the 2002 period.

     As a result of the  foregoing,  the Company's  pre-tax margin was (3.8%) in
the 2003 period versus (5.8%) in the 2002 period.

     The Company's income tax benefit was $1.1 million,  or 36.0% of loss before
income  taxes.  The  Company's  income tax  benefit in the 2002  period was $1.8
million,  or 36.4% of loss before income taxes.  In both periods,  the effective
tax  rate is  different  from the  expected  combined  tax  rate  for a  company
headquartered  in Iowa  because  of the cost of  nondeductible  driver  per diem
expense  absorbed by the Company.  The impact of the  Company's  paying per diem
travel  expenses  varies  depending  upon the ratio of  drivers  to  independent
contractors and the level of the Company's pre-tax earnings.

     As a result of the factors  described  above,  net loss was $2.0 million in
the 2003 period (2.5% of revenue), compared with net loss of $3.2 million in the
2002 period (3.7% of revenue).


                                       15
<PAGE>
Liquidity and Capital Resources

     Uses and Sources of Cash

     The Company  requires  cash to fund  working  capital  requirements  and to
service its debt.  The Company has  historically  financed  acquisitions  of new
equipment with borrowings under installment notes payable to commercial  lending
institutions and equipment manufacturers, borrowings under lines of credit, cash
flow from operations, and equipment leases from third-party lessors. The Company
also has  obtained a portion of its  revenue  equipment  fleet from  independent
contractors  who own and operate the equipment,  which reduces  overall  capital
expenditure   requirements   compared   with   providing  a  fleet  of  entirely
company-owned equipment.

     The  Company's  primary  sources of liquidity  have been funds  provided by
operations and borrowings under credit arrangements with financial  institutions
and equipment manufacturers. The Company's ability to fund its cash requirements
in future periods will depend on its ability to comply with covenants  contained
in financing arrangements, and will require improvement in its operating results
and cash flow. The Company's  ability to achieve the required  improvements will
depend on general shipping demand of the Company's  customers,  fuel prices, the
availability  of  drivers  and  independent  contractors,  insurance  and claims
experience,  and other  factors.  Management  is in the process of  implementing
several steps,  some of which were developed with the assistance of a consulting
firm  engaged  by the board of  directors,  that are  intended  to  improve  the
Company's operating results and achieve compliance with the financial covenants.
These steps include:  consolidating  terminals;  improving the  utilization  per
tractor through a full-time production manager;  implementing a yield management
program in which the Company seeks additional favorable freight while ceasing to
haul  less  favorable  freight;  and  identifying   additional  areas  for  cost
containment,  including,  personnel  costs and  reducing  the  Company's  excess
insurance  coverage  limit  effective  July 1,  2003 to $2.0  million.  Although
management  believes that seasonal  improvements  in shipping  demand during the
third  quarter and the actions  being  evaluated  should  generate  the required
improvements, there is no assurance that the improvements will occur as planned.

     Although there can be no assurance, management believes that cash generated
by operations  and available  sources of financing for  acquisitions  of revenue
equipment,  although  such  sources  are  limited,  will be adequate to meet its
currently  anticipated working capital requirements and other cash needs through
June 30,  2004.  To the  extent  that  actual  results  or  events  differ  from
management's  financial  projections or business plans, the Company's  liquidity
may  be  adversely  affected.  Specifically,  the  Company's  liquidity  may  be
adversely  affected by one or more of the  following  factors:  continuing  weak
freight  demand or a loss in customer  relationships  or volume;  the ability to
attract and retain sufficient numbers of qualified drivers and  owner-operators;
elevated  fuel  prices  and  the  ability  to  collect  fuel  surcharges;  costs
associated  with  insurance  and  claims;  increased  exposure  with  respect to
accident  claims as a result of a reduction of the  Company's  excess  insurance
coverage limit;  inability to maintain compliance with, or negotiate  amendments
to, loan  covenants;  and the  possibility  of  shortened  payment  terms by the
Company's  suppliers and vendors  worried  about the  Company's  ability to meet
payment obligations. The Company expects to fund its cash requirements primarily
with cash generated  from  operations  and revolving  borrowings  under its bank
financing.

     Net cash  provided by  operating  activities  was $4.0  million for the six
months ended June 30, 2003,  compared with $3.2 million for the 2002 period. The
increase in net cash  provided by  operating  activities  was  primarily  due to
improved operating results.  Historically,  the Company's  principal use of cash
from  operations is to service debt and to internally  finance  acquisitions  of
revenue equipment.  Total receivables  increased $2.7 million for the six months
ended June 30, 2003. The average age of the Company's trade accounts  receivable
was approximately 33.1 days in the 2002 period and 34.1 days in the 2003 period.

     Net cash  provided by  investing  activities  was $2.0  million for the six
months ended June 30, 2003 compared with $1.9 million for the 2002 period.  Such
amounts related primarily to sales of revenue equipment and other fixed assets.

     Net cash used in financing  activities  was $5.8 million for the six months
ended June 30, 2003  compared  with $4.8 million for the 2002  period.  Net cash
used in financing  primarily  consisted  of net payments of principal  under the
Company's long-term debt agreements.

     The Company has a financing arrangement with LaSalle Bank, which expires on
July 1, 2004, and provides for automatic  month-to-month  renewals under certain
conditions.  LaSalle may terminate the arrangement prior to

                                       16
<PAGE>
July 1, 2004, in the event of default,  and may terminate at anytime  during the
renewal  terms.  The  arrangement  provides for a term loan, a revolving line of
credit,  a capital  expenditure  loan, and financing for letters of credit.  The
combination  of all loans with  LaSalle  Bank cannot  exceed the lesser of $27.5
million or a specified borrowing base.

     At June 30, 2003,  the term loan had a principal  balance of $11.3 million,
payable in 54 remaining equal monthly  principal  installments of $210,000.  The
revolving  line of credit  allows for  borrowings  up to 85 percent of  eligible
receivables.  At June 30, 2003,  total  borrowings under the revolving line were
$2.6 million. The capital expenditure loan allows for borrowing up to 80 percent
of the  purchase  price of  revenue  equipment  purchased  with  such  advances,
provided  borrowings  under the  capital  expenditure  loan are  limited to $2.0
million annually, and $4.0 million over the term of the arrangement. At June 30,
2003, the amount owed under capital  expenditure notes was $1.1 million. At June
30, 2003, the Company had  outstanding  letters of credit  totaling $7.4 million
for self-insured  amounts under its insurance programs.  These letters of credit
directly reduce the amount of potential borrowings available under the financing
arrangement.  Any increase in  self-insured  retention,  as well as increases in
claim reserves,  may require  additional  letters of credit to be posted,  which
would negatively affect the Company's liquidity. At June 30, 2003, the Company's
borrowing  limit under the  financing  arrangement  was $24.2  million,  leaving
approximately $1.8 million in remaining availability at such date.

     The  Company is required  to pay a facility  fee on the  LaSalle  financing
arrangement  of .25% of the maximum loan limit.  In order to reduce  costs,  the
maximum  loan  limit was  reduced  from $32.5  million  to $27.5  million as the
Company's  actual  borrowing  capacity is not  expected  to exceed $27  million.
Borrowings  under the  arrangement  are  secured by liens on revenue  equipment,
accounts receivable, and certain other assets. In connection with the March 2003
amendment, the interest rate on outstanding borrowings under the arrangement was
increased from LaSalle's prime rate to the prime rate plus two percent.

     The  LaSalle  financing   arrangement   requires  compliance  with  certain
financial  covenants,  including  compliance with a minimum  tangible net worth,
capital  expenditure  limits, and a fixed charge coverage ratio. The Company was
in compliance with the tangible net worth covenant at June 30, 2003. The Company
was not in compliance with the fixed charge  coverage ratio  requirement at June
30, 2003. A waiver of such  noncompliance  was obtained though July 31, 2003. In
addition,  equipment  financing  provided by a  manufacturer  contains a minimum
tangible net worth requirement.  The Company was in compliance with the required
minimum tangible net worth  requirement at June 30, 2003.  Although there can be
no  assurance,  management  expects  to remain in  compliance  with the  various
financial  covenants  under its financing  arrangements  going  forward.  If the
Company  fails to maintain  compliance  with these  financial  covenants,  or to
obtain a waiver of any noncompliance, the lenders will have the right to declare
all sums  immediately  due and  pursue  other  remedies.  In such an event,  the
Company's  liquidity  would  be  materially  and  adversely  impacted,  and  the
Company's  ability to continue as a going  concern could be called into question
if alternative financing could not be found.

     Contractual Obligations and Commercial Commitments

     The  following  tables  set forth  the  contractual  obligations  and other
commercial commitments as of June 30, 2003:
<TABLE>
                                                                Principal Payments Due by Year
                                                                        (In Thousands)
                                                                Less than                                  After
  Contractual Obligations                          Total        One year       2-3 years     4-5 years    5 years
  ------------------------------------------------------------------------------------------------------------------
  <S>                                              <C>           <C>            <C>           <C>         <C>
  Long-term debt                                   $38,487       $11,659        $16,487       $10,340     $   -
  Line of credit                                     2,619             -          2,619             -         -
  Operating leases                                     615           347             90            78        101
                                                --------------------------------------------------------------------
  Total contractual cash obligations               $41,721       $12,006        $19,196       $10,418     $  101
                                                ====================================================================
</TABLE>

The Company had no other commercial commitments at June 30, 2003. Long-term debt
payment dates assume continued compliance with debt covenants.

                                       17

<PAGE>
Critical Accounting Policies

     The  preparation  of financial  statements  in conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make decisions based upon estimates,  assumptions,  and factors it
considers as relevant to the circumstances. Such decisions include the selection
of  applicable   accounting   principles  and  the  use  of  judgment  in  their
application,  the results of which  impact  reported  amounts  and  disclosures.
Changes in future economic conditions or other business circumstances may affect
the outcomes of  management's  estimates and  assumptions.  Accordingly,  actual
results  could  differ  from those  anticipated.  A summary  of the  significant
accounting policies followed in preparation of the financial statements included
in  this  Form  10-Q  is  contained  in  Note  1 of the  consolidated  financial
statements  included in the Company's  Form 10-K for the year ended December 31,
2002.  Other  footnotes  in the  Form  10-K  describe  various  elements  of the
financial  statements  included in this Form 10-Q and the  assumptions  on which
specific amounts were determined.

     The Company's critical accounting policies include the following:

     Revenue Recognition

     The Company generally  recognizes  operating revenue when the freight to be
transported   has  been   loaded.   The  Company   operates   primarily  in  the
short-to-medium  length haul category of the trucking industry;  therefore,  the
Company's   typical  customer  delivery  is  completed  one  day  after  pickup.
Accordingly, this method of revenue recognition is not materially different from
recognizing  revenue  based on completion  of delivery.  The Company  recognizes
operating  revenue  when the  freight is  delivered  for longer haul loads where
delivery  is  completed  more  than one day after  pickup.  Amounts  payable  to
independent  contractors  for purchased  transportation,  to Company drivers for
wages,  and other  direct  expenses  are  accrued  when the  related  revenue is
recognized.

     Property and Equipment

     Property and  equipment are recorded at cost.  Depreciation  is provided by
use of the  straight-line  and  declining-balance  methods over lives of 5 to 39
years  for  buildings  and  improvements,  5 years  for  tractors,  7 years  for
trailers,  and 3 to 10 years for other  equipment.  Tires  purchased  as part of
revenue equipment are capitalized as a cost of the equipment.  Replacement tires
are expensed  when placed in service.  Expenditures  for  maintenance  and minor
repairs are charged to operations,  and expenditures for major  replacements and
betterments are capitalized.  The cost and related  accumulated  depreciation on
property and equipment retired, traded, or sold are eliminated from the property
accounts  at the  time  of  retirement,  trade,  or  sale.  The  gain or loss on
retirement  or  sale  is  included  in  depreciation  and  amortization  in  the
consolidated statements of operation.  Gains or losses on trade-ins are included
in the basis of the new asset.

     Estimated Liability for Insurance Claims

     Losses   resulting  from  auto   liability,   physical   damage,   workers'
compensation,  and cargo  loss and damage are  covered by  insurance  subject to
certain deductibles.  Losses resulting from uninsured claims are recognized when
such losses are known and can be estimated.  The Company estimates and accrues a
liability for its share of ultimate settlements using all available information.
The Company accrues for claims reported,  as well as for claims incurred but not
reported,  based upon the Company's past  experience.  Expenses depend on actual
loss  experience and changes in estimates of settlement  amounts for open claims
which have not been fully resolved.  However,  final  settlement of these claims
could  differ  materially  from the amounts the Company has accrued at year-end.
Management's judgment concerning the ultimate cost of claims and modification of
initial reserved  amounts is an important part of establishing  claims reserves,
and is of increasing significance with higher self-insured retention.

     Impairment of Long-Lived Assets

     Long-lived assets are reviewed for impairment whenever events or changes in
circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable.  Recoverability  of  assets  to be held and used is  measured  by a
comparison of the carrying  amount of an asset to future net  undiscounted  cash
flows expected to be generated by the asset.  Management's  judgment  concerning
future cash flows is an important part of this determination. If such assets are
considered  to be impaired,  the  impairment to be recognized is measured by the
amount by which the carrying  amount of the assets exceeds the fair value of the
assets.  Assets to be  disposed  of are  reported  at the lower of the  carrying
amount or fair value less the costs to sell. The Company has decided to maintain
its revenue

                                       18
<PAGE>
equipment for the foreseeable  future and not replace aging tractors.  If resale
values  remain at current  levels or decline,  the  Company may incur  increased
maintenance  costs and a lower  gain or loss on sale  resulting  from  retaining
equipment even longer.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The  Company is exposed to market  risks from  changes in certain  interest
rates on its debt. In connection  with the March 2003  amendment,  the Company's
financing  arrangement  with  LaSalle  Bank was  amended  to  provide a variable
interest rate based on LaSalle's prime rate plus two percent, provided there has
been no default. Prior to the amendment the variable interest rate was LaSalle's
prime rate. In addition, approximately $24.2 million of the Company's other debt
carries variable  interest rates.  This variable interest exposes the Company to
the risk that interest  rates may rise.  Assuming  borrowing  levels at June 30,
2003,  a one-point  increase in the prime rate would  increase  annual  interest
expense by  approximately  $392,000.  The remainder of the Company's  other debt
carries fixed  interest  rates and exposes the Company to the risk that interest
rates  may fall.  At June 30,  2003,  approximately  95% of the  Company's  debt
carries a variable interest rate and the remainder is fixed.

ITEM 4.  CONTROLS AND PROCEDURES

     The Company maintains  disclosure controls and procedures that are designed
to ensure that  information  required to be disclosed  in its  periodic  reports
filed with the  Securities  and  Exchange  Commission  is  recorded,  processed,
summarized,  and  reported  within the time  periods  specified in the rules and
forms  of  the  Commission  and  that  such   information  is  accumulated   and
communicated  to the  Company's  management.  In designing  and  evaluating  the
disclosure controls and procedures,  management recognized that any controls and
procedures,  no  matter  how  well  designed  and  operated,  can  provide  only
reasonable  assurance of achieving the desired control objectives and management
necessarily  was required to apply its judgment in evaluating  the  cost-benefit
relationship of possible controls and procedures.

     As required by Rule 13a-15 under the  Securities  Exchange Act of 1934,  as
amended (the "Exchange Act"),  the Company has carried out an evaluation,  under
the  supervision  and  with  the  participation  of  the  Company's  management,
including the Company's Chief Executive Officer and Chief Financial Officer,  of
the  effectiveness  of the  design and  operation  of the  Company's  disclosure
controls and procedures  (as defined in Rule 13a-15(e)  under the Exchange Act).
Based upon that  evaluation,  the Company's  Chief  Executive  Officer and Chief
Financial  Officer  concluded  that  the  Company's   disclosure   controls  and
procedures were effective as of the end of period covered by this report.  There
were no changes in the Company's internal control over financial  reporting that
occurred during the quarter ended June 30, 2003, that have materially  affected,
or that are  reasonably  likely to materially  affect,  the  Company's  internal
control over financial reporting.





                                       19
<PAGE>
                                     PART II
                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     No reportable  events or material  changes  occurred during the quarter for
which this report is filed.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     The Company's  financing  arrangement with LaSalle Bank requires compliance
with certain financial  covenants,  including compliance with a minimum tangible
net worth,  capital  expenditure  limits, and a fixed charge coverage ratio. The
Company was in compliance with the tangible net worth covenant at June 30, 2003.
The  Company  was  not in  compliance  with  the  fixed  charge  coverage  ratio
requirement at June 30, 2003. A waiver of such noncompliance was obtained though
July 31, 2003. Although there can be no assurance,  management expects to remain
in  compliance  with  the  various  financial   covenants  under  its  financing
arrangements  going forward.  If the Company fails to maintain  compliance  with
these  financial  covenants,  or to  obtain a waiver of any  noncompliance,  the
lenders will have the right to declare all sums immediately due and pursue other
remedies.  In such an event,  the Company's  liquidity  would be materially  and
adversely  impacted,  and the  Company's  ability to continue as a going concern
could be called into question if alternative financing could not be found.

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
<TABLE>
Exhibit
Number                                                 Description
<S>        <C>             <C>
3.1        *               Articles of Incorporation.

3.2        *               Bylaws.

4.1        *               Articles of Incorporation.

4.2        *               Bylaws.

10.15      #               Fifth  Amendment to Amended and Restated  Loan and  Security  Agreement  dated April 15,
                           2003,  between  LaSalle Bank  National  Association,  Smithway  Motor  Xpress,  Inc., as
                           Borrower, and East West Motor Express, Inc., as Borrower.

31.1       #               Certification  pursuant to Item  601(b)(31)  of Regulation  S-K, as adopted  pursuant to
                           Section 302 of the  Sarbanes-Oxley Act of 2002, by William G. Smith, the Company's Chief
                           Executive Officer

31.2       #               Certification  pursuant to Item  601(b)(31)  of Regulation  S-K, as adopted  pursuant to
                           Section 302 of the  Sarbanes-Oxley  Act of 2002, by G. Larry Owens,  the Company's Chief
                           Financial Officer

32.1       #               Certification  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
                           the  Sarbanes-Oxley  Act of 2002,  by William G. Smith,  the Company's  Chief  Executive
                           Officer

                                       20
<PAGE>
32.2       #               Certification  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
                           the Sarbanes-Oxley Act of 2002, by G. Larry Owens, the Company's Chief Financial Officer
------------------------------------
*         Incorporated by reference from the Company's Registration Statement on Form S-1, Registration No. 33-
          90356, effective June 27, 1996.
#         Filed herewith.

(b)       Reports on Form 8-K.

          During the quarter ended June 30, 2003, the Company filed with, or furnished to, the Securities and
          Exchange Commission (the "Commission") the following Current Reports on Form 8-K:

          Current Report on Form 8-K dated April 18, 2003 (filed with the Commission on April 21, 2003)
          reporting the Company's issuance of a press release to announce financial and operating results for the
          quarter and year ended December 31, 2002, the filing of the Company's Annual Report on Form 10-K,
          amendments to the Company's financing arrangements, and expectations regarding results for the first
          quarter of 2003; and

          Current Report on Form 8-K dated April 25, 2003 (filed with the Commission on April 29, 2003) reporting
          the Company's issuance of a press release to announce financial and operating results for the quarter
          ended March 31, 2003.
</TABLE>





                                       21
<PAGE>
                                   SIGNATURES


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

                            SMITHWAY MOTOR XPRESS CORP.



Date: August 14, 2003       By:  /s/ G. Larry Owens
                               -------------------------------------
                               G. Larry Owens
                               Executive Vice President, Chief Administrative
                               Officer, and Chief Financial Officer, in his
                               capacity as such and on behalf of the issuer












                                       22