<PAGE>   1
                       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  SEPTEMBER 30, 1996

[   ]   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  0-24576

                    AASCHE TRANSPORTATION SERVICES, INC.
     ------------------------------------------------------------------
           (Exact name of Registrant as specified in its charter)

          DELAWARE                                              36-3964954
-------------------------------                             -------------------
(State or Other Jurisdiction of                             (I.R.S. Employer
 Incorporation or Organization)                             Identification No.)

                         10214 NORTH MOUNT VERNON ROAD
                            SHANNON, ILLINOIS  61078
                    (Address of Principal Executive Offices)

                                  815-864-2421
              (Registrant's telephone number, including area code)

                                      N/A
-------------------------------------------------------------------------------
             (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
                                   -----     ------

     Indicate the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date   3,953,077 SHARES OF PAR
VALUE $.0001 COMMON STOCK


<PAGE>   2
        PART I:  FINANCIAL INFORMATION

Item 1.  Financial Statements

                     AASCHE TRANSPORTATION SERVICES, INC.
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                       September 30,        December 31, 
                                                                                           1996                1995  
                                                                                       -------------      -------------  
                                                                                        (Unaudited)                     

<S>                                                                                    <C>                <C>
ASSETS                                                                                                                  
  Current assets:                                                                                                       
    Cash and cash equivalents                                                          $     86,000       $    503,000  
    Trade receivables, less allowance for doubtful accounts of $71,000 and $67,000        7,751,000          6,454,000  
    Prepaid expenses and other current assets                                             2,164,000          1,631,000  
                                                                                       ------------       ------------  

        Total current assets                                                             10,001,000          8,588,000  
                                                                                                                        
  Property and equipment, at cost                                                        58,057,000         60,640,000  
      Less accumulated depreciation and amortization                                    (16,206,000)       (12,360,000) 
                                                                                       ------------       ------------  
          Net property and equipment                                                     41,851,000         48,280,000  
                                                                                       ------------       ------------  
                                                                                                                        
  Excess of cost over net assets acquired, less accumulated                                                             
    amortization of $372,000 and $220,000                                                 7,698,000          7,850,000  
   Other assets                                                                             532,000            639,000  
                                                                                       ------------       ------------  
                   TOTAL ASSETS                                                        $ 60,082,000       $ 65,357,000  
                                                                                       ============       ============  
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                    
  Current liabilities:                                                                                                  
    Accounts payable                                                                   $  3,454,000       $  2,974,000  
    Accrued liabilities                                                                   1,425,000          1,659,000  
    Guaranteed obligation of Employee Stock Ownership Plan                                  256,000            334,000  
    Line of credit                                                                        4,732,000          2,859,000  
    Current maturities of long-term debt with unrelated parties                           7,325,000          7,108,000  
    Current maturities of long-term debt with related party                                 995,000            995,000  
    Current maturities of capital lease obligations with unrelated parties                3,024,000          3,447,000  
    Current maturities of capital lease obligations with related parties                  1,143,000          1,007,000  
                                                                                       ------------       ------------  
                                                                                                                        
      Total current liabilities                                                          22,354,000         20,383,000  
                                                                                                                        
  Long-term debt with unrelated parties, less current maturities                         11,173,000         15,470,000  
  Long-term debt with related party, less current maturities                              2,736,000          3,483,000  
  Capital lease obligations with unrelated parties, less current maturities               7,012,000          9,668,000  
  Capital lease obligations with related parties, less current maturities                 1,404,000          1,497,000  
  Deferred income taxes                                                                   2,104,000          1,951,000  
                                                                                       ------------       ------------  
                                                                                                                        
                   Total liabilities                                                     46,783,000         52,452,000  
                                                                                                                        
  Stockholders' equity:                                                                                                 
   Common stock, $.0001 par value, 10,000,000 shares authorized,                                                        
     3,953,077 shares issued and outstanding                                                      -                  -  
   Additional paid-in capital                                                            14,598,000         14,442,000  
   Guarantee of Employee Stock Ownership Plan obligation                                   (256,000)          (334,000) 
   Accumulated deficit                                                                   (1,043,000)        (1,203,000) 
                                                                                       ------------       ------------  
                                                                                                                        
                   Total stockholders' equity                                            13,299,000         12,905,000  
                                                                                       ------------       ------------  
                   TOTAL LIABILITIES AND                                                                                
                     STOCKHOLDERS' EQUITY                                              $ 60,082,000       $ 65,357,000  
                                                                                       ============       ============  
</TABLE>


The accompanying notes are an integral part of these consolidated financial 
statements.


                                       2
<PAGE>   3
                     AASCHE TRANSPORTATION SERVICES, INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (Unaudited)

<TABLE>
<CAPTION>
                                                Three Months Ended             Nine Months Ended
                                                   September 30,                  September 30,
                                             --------------------------    --------------------------
                                                 1996          1995           1996           1995
                                                 ----          ----           ----           ----     
<S>                                          <C>            <C>            <C>            <C>
NET REVENUES                                 $19,881,000    $18,641,000    $58,970,000    $48,982,000

OPERATING EXPENSES:
  Salaries, wages and benefits                 6,400,000      6,430,000     19,638,000     17,680,000
  Fuel                                         3,406,000      2,880,000      9,702,000      7,400,000
  Purchased transportation                     3,396,000      2,034,000      8,932,000      4,915,000
  Supplies and maintenance                     1,490,000      1,780,000      5,102,000      4,619,000
  Depreciation and amortization                2,013,000      2,157,000      6,139,000      5,368,000
  Taxes and licenses                             704,000        487,000      1,536,000      1,246,000
  Insurance                                      627,000        536,000      2,157,000      2,049,000
  Communications and utilities                   215,000        215,000        615,000        593,000
  Loss (gain) on disposition of equipment       (124,000)         9,000        (56,000)      (109,000)
  Litigation settlement                               -              -         150,000             - 
  Polar Express restructuring                         -              -         490,000             - 
  Severance                                           -              -          42,000             - 
  Other                                          741,000        345,000      1,692,000        914,000
                                             -----------    -----------    -----------    -----------

                   Total operating expenses   18,868,000     16,873,000     56,139,000     44,675,000
                                             -----------    -----------    -----------    -----------

OPERATING INCOME                               1,013,000      1,768,000      2,831,000      4,307,000

OTHER (EXPENSES) INCOME:
  Interest expense                              (830,000)    (1,118,000)    (2,666,000)    (2,907,000)
  Amortization of debt issuance cost                  -              -              -        (447,000)
  Other                                           48,000         31,000        106,000        114,000
                                             -----------    -----------    -----------    -----------

INCOME BEFORE INCOME TAX PROVISION               231,000        681,000        271,000      1,067,000

INCOME TAX PROVISION                             (96,000)      (171,000)      (111,000)      (307,000)
                                             -----------    -----------    -----------    -----------
NET INCOME                                   $   135,000    $   510,000    $   160,000    $   760,000
                                             ===========    ===========    ===========    ===========

NET INCOME PER COMMON SHARE                  $      0.03    $      0.13    $      0.04    $      0.20
                                             ===========    ===========    ===========    ===========
Weighted average common and
  common equivalent shares outstanding         4,001,069      3,977,260      3,963,287      3,842,926
                                             ===========    ===========    ===========    ===========

</TABLE>

The accompanying notes are an integral part of these consolidated financial 
statements.


                                       3
<PAGE>   4
                     AASCHE TRANSPORTATION SERVICES, INC.
                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                     
                                                                                   Guarantee
                                                   Common Stock                   of Employee
                                                -------------------                  Stock
                                                  $.0001 Par Value   Additional     Ownership                   Total
                                                -------------------   Paid-In         Plan      Accumulated  Stockholders'
                                                  Shares    Amount    Capital      Obligation     Deficit       Equity
                                                ------------------------------------------------------------------------
<S>                                             <C>         <C>    <C>             <C>         <C>           <C>
Balance at December 31, 1995                    3,947,107   $  -   $14,442,000     $(334,000)  $(1,203,000)  $12,905,000
Escrow shares in connection with
   Litigation Settlement (Note 6)                 (34,030)     -             -             -             -             - 
Common stock issued for options exercised          40,000      -       156,000             -             -       156,000
Reduction in Guarantee of Employee                                                  
   Stock Ownership Plan obligation                      -      -             -        78,000             -        78,000
Net Income                                              -      -             -             -       160,000       160,000
                                                ------------------------------------------------------------------------
Balance at September 30, 1996                   3,953,077   $  -   $14,598,000     $(256,000)  $(1,043,000)  $13,299,000
                                                ========================================================================

</TABLE>

The accompanying notes are an integral part of these consolidated financial 
statements.


                                       4
<PAGE>   5
                     AASCHE TRANSPORTATION SERVICES, INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (Unaudited)


<TABLE>
<CAPTION>
                                                                                           Nine Months Ended           
                                                                                              September 30,     
                                                                                    ---------------------------
                                                                                        1996              1995  
<S>                                                                                   <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                           
  Net Income                                                                        $  160,000      $  760,000  
  Adjustments to reconcile net income                                                                           
    to net cash provided by operating activities:                                                               
    Depreciation and amortization                                                    6,139,000       5,886,000  
    Gain on disposition of equipment                                                   (56,000)       (109,000) 
    Deferred income taxes                                                              153,000          65,000  
    Changes in other current operating items:                                                                   
      Trade receivables                                                             (1,297,000)       (752,000) 
      Prepaid expenses and other assets                                               (463,000)       (363,000) 
      Accounts payable                                                                 480,000          26,000  
      Accrued liabilities                                                             (234,000)        271,000
                                                                                    ----------      ----------
        Net cash provided by operating activities                                    4,882,000       5,784,000  
                                                                                    ----------      ----------
  
                                                                                                                
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                           
   Property and equipment additions:                                                                            
     Revenue equipment                                                                (322,000)     (7,434,000) 
     Building, office equipment and other                                             (628,000)     (1,084,000) 
   Proceeds from the sale of equipment                                               1,485,000         725,000  
   Purchase of AG Carriers, net of cash acquired                                            -       (2,974,000) 
   Retirements of revenue equipment and other                                               -        1,587,000  
                                                                                    ----------      ----------
     Net cash provided by (used in) investing activities                               535,000      (9,180,000) 
                                                                                    ----------      ----------
                                                                                                                
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                           
   Net borrowings on line of credit                                                  1,873,000       1,270,000  
   Borrowings on long-term debt                                                        800,000       5,854,000  
   Principal payments on long-term debt with unrelated parties                      (4,880,000)     (7,801,000) 
   Principal payments on long-term debt with related party                            (747,000)       (249,000) 
   Principal payments on capital leases with unrelated parties                      (2,418,000)     (1,119,000) 
   Principal payments on capial leases with related parties                           (618,000)       (316,000) 
   Issuance of common stock                                                            156,000       3,215,000  
                                                                                    ----------      ----------
     Net cash (used in) provided by financing activities                            (5,834,000)        854,000  
                                                                                    ----------      ----------
                                                                                                                
DECREASE IN CASH AND                                                                                            
CASH EQUIVALENTS                                                                      (417,000)     (2,542,000) 
                                                                                                                
CASH AND CASH EQUIVALENTS:                                                                                      
   Beginning of period                                                                 503,000       3,797,000  
                                                                                    ----------      ----------
   End of period                                                                    $   86,000      $1,255,000  
                                                                                    ==========      ==========
                                                                                                                
SUPPLEMENTAL DISCLOSURE OF                                                                                      
CASH FLOW INFORMATION:                                                                                          
   Interest paid                                                                    $2,661,000      $2,850,000  
                                                                                    ==========      ==========

</TABLE>

The accompanying notes are an integral part of these consolidated financial 
statements.

                                       5
<PAGE>   6

                      AASCHE TRANSPORTATION SERVICES, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


NOTE 1 -  BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission.  Certain information and footnote disclosures normally
included in annual consolidated financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management believes these
disclosures are adequate to make the information presented not misleading.  In
the opinion of management, all adjustments necessary for fair presentation for
the periods presented have been reflected and are of a normal recurring nature.
These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto
for the two years ended December 31, 1995 and 1994, as filed with the
Securities and Exchange Commission as part of the Company's Annual Report on
Form 10-KSB.  Results of operations for the interim periods are not necessarily
indicative of the results to be expected for the year.

NOTE 2 - PURCHASE OF AG TRANSPORTATION SERVICE, INC. AND AG. CARRIERS, INC.

On May 16, 1995, the Company purchased all of the outstanding common stock of
AG Transportation Service, Inc. and the net assets of AG. Carriers, Inc.
(collectively, AG Carriers) in exchange for $11,250,000 consisting of
$5,275,000 cash, $1,000,000 in the Company's common stock (115,075 shares) and
two notes payable in the amount of $4,975,000.  The Company also issued 5,000
shares to a certain individual as consideration for a finders fee in connection
with the acquisition.  In conjunction with the acquisition, the Company
preliminarily recorded $5,871,000 in cost in excess of net assets acquired.
Subsequently, the Company adjusted the cost in excess of net assets acquired to
$6,279,000 to reflect finalization of the purchase price allocation.  This
acquisition was accounted for as a purchase and accordingly, the consolidated
statements of operations, include the results of AG Carriers from the date of
its acquisition.

AG Carriers is a Florida-based carrier specializing in transporting
temperature-controlled foodstuffs and juice concentrates.

NOTE 3 - MERGER WITH POLAR EXPRESS CORPORATION

On December 22, 1995, the Company completed a merger, pursuant to which Polar
Express Corporation ("Polar") became a wholly owned subsidiary of the Company.
Under the terms of the merger agreement, 1,401,355 shares of the Company's
common stock were issued in exchange for all of the outstanding common shares
and unit purchase options of Polar.  Approximately 5% of these shares were held
in an escrow account to cover liability and litigation costs related to the
litigation described in Note 6.  In addition, the Company issued 1,006,905
warrants to purchase the Company's common stock in exchange for all the
outstanding warrants of Polar.  The merger was accounted for as a pooling of
interests.  Accordingly, the accompanying consolidated financial statements
have been retroactively restated for all periods presented to include the
results of operations, financial position and cash flows of the merged
entities.

In connection with the acquisition of Polar Express, Inc. ("PEI") by Polar in
September 1994, Polar incurred a one-time, non-cash deferred debt issuance cost
of $2,233,000 resulting from the issuance of 1,000,000 shares of Polar common
stock to subordinated note holders, of which $1,786,000 was expensed in the
fourth quarter of 1994 and $447,000 was expensed in the first quarter of 1995.
In February 1995, Polar completed an initial public offering of 1,350,000
units, each consisting of one share of Polar common stock and one Polar common
stock purchase warrant, and raised net proceeds of approximately $3,020,000.


                                       6




<PAGE>   7


Polar is an Arkansas-based truckload carrier specializing in transporting
temperature-controlled and time-sensitive freight.

NOTE 4 - RELATED PARTY TRANSACTIONS

The Company currently leases certain of its revenue equipment from related
parties.  Effective July 1, 1995, the leases were renegotiated by lowering
imputed interest to a fixed 12% rate and adjusting the residual balance to more
closely approximate the fair market value of the trailers at the end of the
expected life of each lease.  These leases are accounted for as capital leases.
This change reduced interest expense by approximately $190,000 and increased
net income by approximately $118,000 in the nine month period ended September
30, 1996 ($0.03 per share) and reduced interest expense by approximately
$63,000 and increased net income by approximately $39,000 in the three month
periods ended September 30, 1996 and 1995, respectively.  Payments to related
parties on capital lease obligations for the nine months ended September 30,
1996 and 1995 were approximately $618,000 and $829,000, respectively.

NOTE 5 - NET INCOME PER SHARE

Net income per share is computed by dividing net income by the weighted average
number of common and common equivalent shares outstanding.

NOTE 6 - LITIGATION SETTLEMENT

In May 1996, the Company settled all outstanding litigation related to Polar's
acquisition of PEI for $150,000 ($93,000 after-tax).  This expense was accrued
for by the Company in the first quarter of 1996 ($0.02 net income per share).
This amount does not include the Company's legal costs incurred related to its
defense of this matter, which had been expensed as incurred and had not been
included in the settlement amount.

In conjunction with the Polar merger, 5% of the Company's common stock issued
in the merger (69,941 shares) were held in an escrow account pending final
determination of the litigation.  Upon reaching a final settlement, 34,030 of
the common shares held in the escrow account were retired by the Company.

NOTE 7 - RESTRUCTURING

The Company recorded a non-recurring one-time $490,000 restructuring charge
($304,000 after-tax) in the second quarter of 1996 related to severance
payments to terminated employees of Polar ($0.08 net income per share).

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

The following management's discussion and analysis of financial condition and
results of operations contain forward-looking statements which involve risks
and uncertainties.  The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors.

Beginning in 1992, the Company commenced a program to increase its size and
operational efficiency.  This program changed the Company's strategic direction
by implementing a shift to company-owned revenue equipment and equipping
tractors with the QUALCOMMTM two-way satellite-based tracking and communication
system and advanced computer software systems.  The Company also implemented a
strategy of pursuing strategic acquisitions of other temperature-controlled
truckload carriers.  Since its initial public offering, the Company acquired
all of the assets of AG Carriers (the "AG Acquisition") and merged with Polar
(the "Polar Merger").

The Polar merger was accounted for as a pooling of interests.  Accordingly, the
Company restated its prior years' financial statements as if the Company and
Polar had been operated on a combined basis for all periods presented.
Therefore, all financial information presented reflects the combined operations
of both companies.


                                       7




<PAGE>   8


The results of operations discussed below are not necessarily comparable
between periods because the results from operations for the nine month period
ended September 30, 1995 only include AG Carriers since the date of the AG
Acquisition.

RESULTS OF OPERATIONS

COMPARISON OF THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1996 WITH THE NINE
MONTH PERIOD ENDED SEPTEMBER 30, 1995.

Net revenues increased $10.0 million, or 20.4%, to $59.0 million in 1996, from
$49.0 million in 1995, largely due to the AG Acquisition.  During the first
nine months of 1996, the Company increased its owned tractor fleet by 25 units.
Without giving effect to the additional net revenues contributed by the AG
Acquisition, the Company's net revenues increased by $3.1 million, or 7.2%, due
to having more tractors in service, increased volume from existing customers
and the addition of new customers.

Net revenues on a pro forma basis (assuming the AG Acquisition had occurred on
January 1, 1995) increased $3.8 million, or 6.8%, in 1996.  The higher pro
forma net revenues are due to having more tractors in service, increased volume
from existing customers and the addition of new customers.

Total miles increased 10.7 million, or 25.5%, to 52.8 million in 1996 from 42.0
million in 1995, largely due to the AG Acquisition.  Average miles per tractor
increased 3.3% to 90,339 miles in 1996 from 87,412 miles in 1995.  Average
revenue per tractor decreased 0.9% to $100,967 in 1996 from $101,834 in 1995.
The decrease in average revenue per tractor is attributable to the effects of
the AG Acquisition as well as increased competition in the industry.
Historically, AG Carriers has operated profitably with lower average miles per
tractor and lower average revenue per mile than Asche Transfer, Inc. and Polar.
Without giving effect to the AG Acquisition, the Company's total miles
increased by 4.5 million, or 12.3%, due to having more tractors in service,
increased volume from existing customers and the addition of new customers.

Total miles on a pro forma basis increased 5.4 million, or 11.3%, to 52.8
million in 1996.  The higher pro forma miles are due to having more tractors in
service, increased volume from existing customers and the addition of new
customers.

The Company's operating ratio (operating expenses divided by operating
revenues) increased 4.0%, to 95.2% in 1996 from 91.2% in 1995.  The increase in
the operating ratio is due to increased competition in the industry, the
litigation settlement described in Note 6, and Polar Express' restructuring
charge described in Note 7.  Total operating expenses increased $11.5 million,
or 25.7%, to $56.1 million in 1996, compared to $44.7 million in 1995, largely
due to the AG Acquisition.  Without giving effect to the AG Acquisition, the
Company's total operating expenses increased by $5.0 million, or 12.6%, due to
costs related to operating the additional tractors in service, the litigation
settlement and Polar Express' restructuring charge.

Operating expenses on a pro forma basis increased $6.1 million, or 12.2%, to
$56.1 million in 1996, due to costs related to operating the additional
tractors in service, the litigation settlement and Polar Express' restructuring
charge.

Salaries, wages, and benefits increased $2.0 million, or 11.1%, to $19.6
million in 1996 compared to $17.7 million in 1995, largely due to the AG
Acquisition.  Without giving effect to the AG Acquisition, the Company's
salaries, wages, and benefits decreased by $0.1 million, or 0.3%.

Salaries, wages, and benefits on a pro forma basis increased $0.2 million, or
1.1%, to $19.6 million in 1996.  The increase was due to an increase in drivers
related to increased equipment levels.

Fuel expenses increased $2.3 million, or 31.1%, to $9.7 million in 1996
compared to $7.4 million in 1995, largely due to the AG Acquisition, increased
fuel costs, as well as additional volume related to company-owned units added

                                       8




<PAGE>   9

in 1996.  Without giving effect to the AG Acquisition, the Company's fuel
expense increased by $1.3 million, or 19.5%, due to having more tractors in
service and increased fuel costs.

Fuel expense on a pro forma basis increased $1.4 million, or 17.0%, to $9.7
million for 1996, due to having more tractors in service and increased fuel
costs.

Purchased transportation expense increased $4.0 million, or 81.7%, to $8.9
million in 1996 compared to $4.9 million in 1995, largely due to the AG
Acquisition and expenses related to brokerage operations, as well as an
increase in contractor-operated units.  Without giving effect to the AG
Acquisition, the Company's purchased transportation expense increased by $2.1
million, or 52.4%, due to an increase in contractor-operated units.

Purchased transportation expense on a pro forma basis increased $3.2 million,
or 54.8%, to $8.9 million for 1996, due to an increase in contractor-operated
units.

Supplies and maintenance expenses increased $0.5 million, or 10.5%, to $5.1
million in 1996 compared to $4.6 million in 1995, largely due to the AG
Acquisition.  Without giving effect to the AG Acquisition, the Company's
supplies and maintenance expense decreased by $0.1 million, or 2.3%.

Supplies and maintenance expense on a pro forma basis increased $0.9 million,
or 17.4%, to $5.1 million for 1996.

Depreciation and amortization expense increased $0.8 million, or 14.4%, to $6.1
million in 1996 compared to $5.4 million in 1995, largely due to the AG
Acquisition, as well as costs related to additional company-owned units in
service and amortization of goodwill related to the AG Acquisition.  Without
giving effect to the AG Acquisition, the Company's depreciation and
amortization expense increased by $0.2 million, or 3.5%, due to costs related
to additional company-owned units in service.

Depreciation and amortization expense on a pro forma basis increased $0.1
million, or 1.8%, to $6.1 million for 1996, due to costs related to additional
company-owned units in service.

Litigation settlement expense represents the final settlement of all
outstanding litigation related to Polar's acquisition of PEI.

PEI restructuring expense represents severance payments to terminated employees
of Polar.

Interest expense decreased $0.2 million, or 8.3%, to $2.7 million in 1996
compared to $2.9 million in 1995, due to the AG Acquisition and a lower overall
interest rate.  Without giving effect to the AG Acquisition, the Company's
interest expense decreased $0.5 million, due to lower debt levels and a lower
overall interest rate.

Interest expense on a pro forma basis decreased $0.4 million, due to lower debt
levels and a lower overall interest rate.

In connection with the Polar acquisition of PEI in September 1994, Polar
incurred a one-time non-cash deferred debt issuance cost of $2.2 million
resulting from the issuance of one million shares of Polar common stock to
subordinated note holders, of which $0.4 million was expensed in the first
quarter of 1995 and $1.8 million was expensed in the fourth quarter of 1994.

COMPARISON OF THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 1996 WITH THE THREE
MONTH PERIOD ENDED SEPTEMBER 30, 1995.

Net revenues increased $1.2 million, or 6.7%, to $19.9 million in 1996, from
$18.6 million in 1995, due to having more tractors in service, increased volume
from existing customers and the addition of new customers.  During the third
quarter of 1996, the Company increased its owned tractor fleet by 9 units.


                                       9




<PAGE>   10


Total miles increased 1.7 million, or 10.4%, to 18.1 million in 1996 from 16.4
million in 1995, largely due to having more tractors in service and increased
volume.  Average miles per tractor decreased 0.9% to 30,759 miles in 1996 from
31,047 miles in 1995.  Average revenue per tractor decreased 4.2% to $33,869 in
1996 from $35,372 in 1995.  The decreases in average miles per tractor and
average revenue per tractor are attributable to increased competition in the
industry.

The Company's operating ratio (operating expenses divided by operating
revenues) increased 4.4%, to 94.9% in 1996 from 90.5% in 1995.  The increase in
the operating ratio is due to increased competition in the industry.  Total
operating expenses increased $2.0 million, or 11.8%, to $18.9 million in 1996,
compared to $16.9 million in 1995.

Salaries, wages, and benefits remained constant at $6.4 million in 1996 and
1995.

Fuel expenses increased $0.5 million, or 18.3%, to $3.4 million in 1996
compared to $2.9 million in 1995, largely due to increased fuel costs, as well
as additional volume related to company-owned units added in 1996.

Purchased transportation expense increased $1.4 million, or 67.0%, to $3.4
million in 1996 compared to $2.0 million in 1995, largely due to expenses
related to brokerage operations, which the Company had not previously engaged
in, as well as an increase in contractor-operated units.

Supplies and maintenance expense decreased $0.3 million, or 16.3%, to $1.5
million in 1996 compared to $1.8 million in 1995.

Depreciation and amortization expense decreased $0.1 million, or 6.7%, to $2.0
million in 1996 compared to $2.2 million in 1995.

Interest expense decreased $0.3 million, or 25.8%, to $0.8 million in 1996
compared to $1.1 million in 1995, due to lower debt levels and a lower overall
interest rate.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 1996, the Company had a net working capital deficit of $12.4
million, partially attributable to the impact of growth of the Company through
acquisitions.  The working capital deficit also results from the financing of
revenue equipment purchases (non-current assets) through borrowings, a portion
of which is in current liabilities.  The Company historically has funded its
working capital requirements through a combination of operating profits, short
turnover in trade accounts receivable, effective cash management practices, and
borrowings under its revolving bank line of credit.  The Company has a
revolving bank line of credit  with a $5.0 million borrowing limit based on a
percentage of eligible accounts receivables, $4.7 million of which was borrowed
against this line of credit at September 30, 1996, and approximately $0.3
million was available.

The Company's growth and the significant investment in its modern fleet of
tractors and temperature-controlled trailers has been financed substantially
through long-term debt and capital lease obligations collateralized by the
equipment.  During the first nine months of 1996, the Company increased its
owned tractor fleet by 25 units and trailers by 97 units.  The Company's
outstanding debt and capital lease obligations, including current maturities,
aggregated $39.8 million and $45.9 million at September 30, 1996 and December
31, 1995, respectively.

In October 1994, the Company completed an initial public offering of its common
stock that raised net proceeds to the Company of $6.4 million.  To date, the
Company has utilized proceeds to repay outstanding indebtedness under its
revolving bank line of credit and certain long-term debt obligations, to
purchase trailers and for the AG Acquisition and the Polar Merger.  The AG
Acquisition and the Polar Merger, as well as the continued growth of Asche
Transfer's fleet, has resulted in a debt to equity ratio (calculated excluding
payables and other liabilities) of 2.99:1 at September 30, 1996, and 3.55:1 at
December 31, 1995.  The Company believes that available cash, cash flow from
future operations, and borrowings available under its line of credit will be
sufficient to meet its current working capital needs.  As the Company continues
to facilitate its planned future growth, the Company's capital needs may
require additional borrowings or an equity infusion.

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<PAGE>   11



RELATED PARTY LEASES

The Company currently leases certain of its revenue equipment from related
parties.  Effective July 1, 1995, the leases were renegotiated by lowering
imputed interest to a fixed 12% rate and adjusting the residual balances to
more closely approximate the fair market value of the trailers at the end of
the expected life of each lease.  These leases are accounted for as capital
leases.  This change reduced interest expense by approximately $190,000 and
increased net income by approximately $118,000 in the third quarter of 1996
($0.03 net income per share) and reduced interest expense by approximately
$63,000 and increased net income by approximately $39,000 in the three month
periods ended September 30, 1996 and 1995, respectively.  Payments to related
parties on capital lease obligations during the nine month periods ended
September 30, 1996 and 1995 were approximately $618,000 and $829,000,
respectively.

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<PAGE>   12



PART II:  OTHER INFORMATION


Item 1.  Legal Proceedings

Item 2.  Changes in Securities

         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 - None.

         (b)  Reports on Form 8-K.


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<PAGE>   13


                                   SIGNATURE


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

                 
                                  Aasche Transportation Services, Inc.



Date  November 4 , 1996           BY:  /s/Leon M. Monachos
                                       -----------------------------------------
                                       Leon M. Monachos, Chief Financial Officer


Date  November 4 , 1996           BY:  /s/Larry L. Asche
                                       -----------------------------------------
                                       Larry L. Asche, Chairman and
                                       Chief Operating Officer





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