17

                     U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

        [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934
            For the quarterly period ended March 31, 2000
                                           --------------

        [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934
            For the transition period from_____ to_____




                        Commission File Number: 000-18601

                               TRANSIT GROUP, INC.
                               -------------------
             (Exact name of registrant as specified in its charter)

             State of Florida                           59-2576629
             ----------------                           ----------
        (State or other jurisdiction of              (I.R.S. Employer
        incorporation or organization)              Identification No.)



              2859 Paces Ferry, Suite 1740, Atlanta, Georgia 30339
              ----------------------------------------------------
              (Address of principal executive offices) - (zip code)


                                 (770) 444-0240
                                 --------------
              (Registrant's telephone number, including area code)


Check whether  issuer (1) has filed all reports  required to be filed by Section
13 or 15(d) of the  Securities  and 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

There were 31,848,244 shares of the Company's common stock outstanding as of May
11, 2000.


<PAGE>






                               TRANSIT GROUP, INC.

                                    FORM 10-Q

                                      INDEX
<TABLE>
<CAPTION>

PART I.    FINANCIAL INFORMATION                                                              Page Number
                                                                                              -----------

<S>               <C>                                                                         <C>
                  Item 1
                  Financial Statements

                  Consolidated Balance Sheets
                    as of March 31, 2000 (unaudited) and December 31, 1999                      2

                  Consolidated Statements of Operations (unaudited) for the three
                    months ended March 31, 2000 and 1999                                        3

                  Consolidated Statement of Changes in Total Non Redeemable
                    Preferred Stock, Common Stock and other Shareholders' Equity (unaudited)    4

                  Consolidated Statements of Cash Flows (unaudited) for the three
                    months ended March 31, 2000 and 1999                                        5

                  Notes to Consolidated Financial Statements (unaudited)                        6

                  Item 2
                  Management's Discussion and Analysis of Financial
                   Condition and Results of Operations                                          9

                  Item 3
                  Quantitative and Qualitative Disclosures About
                   Market Risk                                                                 14


PART II.  OTHER INFORMATION

                  Item 6
                  Exhibits and Reports on Form 8-K                                             14
</TABLE>












<PAGE>


<TABLE>
<CAPTION>

                               TRANSIT GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)

                                     ASSETS
                                                                          March 31,             December 31,
                                                                            2000                    1999
                                                                       ----------------        ----------------
                                                                         (Unaudited)
<S>                                                                    <C>                     <C>
Current assets:
  Cash                                                                         $ 3,051                 $ 2,156
  Accounts receivable (net of allowance of $2,982 and $3,441)                   78,530                  71,543
  Other current assets                                                          12,515                  10,259
  Prepaid income taxes                                                           3,224                   4,210
  Deferred  income taxes                                                         9,655                   9,655
                                                                       ----------------        ----------------
      Total current assets                                                     106,975                  97,823
                                                                       ----------------        ----------------

Noncurrent assets:
  Property, equipment, and capitalized leases                                  116,080                 114,718
  Goodwill                                                                     111,960                 112,197
  Other assets                                                                   1,974                   1,676
                                                                       ----------------        ----------------
      Total noncurrent assets                                                  230,014                 228,591
                                                                       ----------------        ----------------

      Total assets                                                           $ 336,989               $ 326,414
                                                                       ================        ================

         LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current maturities of long-term debt and capital leases                     $121,508                $ 23,990
  Accounts payable                                                              10,738                  11,014
  Bank overdrafts                                                                5,893                   2,856
  Accrued expenses and other current liabilities                                21,951                  16,708
                                                                       ----------------        ----------------
      Total current liabilities                                                160,090                  54,568
                                                                       ----------------        ----------------

Noncurrent liabilities:
  Long-term debt and capital lease obligations                                  49,044                 139,530
  Other liabilities                                                                314                     267
  Deferred income taxes                                                         23,131                  25,482
                                                                       ----------------        ----------------
     Total noncurrent liabilities                                               72,489                 165,279
                                                                       ----------------        ----------------

     Total liabilities                                                         232,579                 219,847
                                                                       ----------------        ----------------

Commitments and contingencies

Redeemable common stock                                                          3,675                   3,675
                                                                       ----------------        ----------------

Redeemable preferred  stock                                                     24,807                  24,795
                                                                       ----------------        ----------------

Non redeemable preferred stock, common stock
 and other stockholders' equity:
  Preferred stock, no par value, 20,000,000 and 5,000,000
   shares authorized, 5,000,000 and 5,000,000 outstanding                        -----                   -----
  Note receivable secured by stock                                               -----                   -----
  Common Stock, $.01 par value, 100,000,000 and 30,000,000 shares
   authorized, 31,848,244 and 31,823,751 shares issued and outstanding             308                     308
  Additional paid-in capital                                                    94,641                  94,577
  Accumulated deficit                                                          (19,021)                (16,788)
                                                                       ----------------        ----------------
      Total non redeemable preferred stock, common stock
       and other stockholders' equity                                           75,928                  78,097
                                                                       ----------------        ----------------

      Total liabilities and stockholders' equity                             $ 336,989               $ 326,414
                                                                       ================        ================
</TABLE>
     See accompanying notes to consolidated financial statements.
<PAGE>



                              TRANSIT GROUP, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        (In thousands, except share data)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                       Three months ended March 31,
                                                                    -----------------------------------
                                                                        2000                 1999
                                                                    --------------       --------------
<S>                                                                     <C>                   <C>
Total operating revenues                                                $ 133,205             $ 64,843
                                                                    --------------       --------------

Operating expenses:
  Purchased transportation                                                 55,279               25,517
  Salaries, wages and benefits                                             32,536               15,642
  Fuel                                                                     13,755                4,858
  Operating supplies and expenses                                          12,802                6,873
  Lease expense-revenue equipment                                           6,810                4,136
  Insurance                                                                 1,836                  794
  Depreciation and amortization expense                                     5,328                2,295
  Restructuring charge                                                      1,079                    -
  General and administrative expense                                        3,956                1,767
                                                                    --------------       --------------
      Total operating expenses                                            133,381               61,882
                                                                    --------------       --------------

      Operating  income                                                      (176)               2,961
  Interest expense                                                          3,245                1,003
                                                                    --------------       --------------

   (Loss) income before income taxes                                       (3,421)               1,958
  Income tax (benefit)                                                     (1,750)               1,026
                                                                    --------------       --------------

      Net (loss) income                                                    (1,671)                 932

Preferred stock dividend requirement                                         (562)                   -
                                                                    --------------       --------------

         (Loss) income available to common shareholders                  $ (2,233)               $ 932
                                                                    ==============       ==============

(Loss) income  per basic and diluted common share:                        $ (0.07)              $ 0.04
                                                                    ==============       ==============

Weighted average number of basic
  common shares outstanding                                            31,847,437           24,432,823
                                                                    ==============       ==============
Weighted average number of diluted
  common shares outstanding                                            31,847,437           25,208,372
                                                                    ==============       ==============

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



                               TRANSIT GROUP, INC.

                   CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL
                  NON REDEEMABLE PREFERRED STOCK, COMMON STOCK
                         AND OTHER STOCKHOLDERS' EQUITY
                             (Dollars in thousands)
                                   (Unaudited
<TABLE>
<CAPTION>
                                                                                                    Total
                                                    Common       Additional      Accumulated    stockholders'
                                                    stock      paid-in capital     deficit          equity

<S>                                                   <C>           <C>             <C>              <C>
Balance December 31, 1999                              $ 308         $ 94,577        $ (16,788)       $ 78,097

Dividends on redeemable preferred stock                -----            -----             (562)           (562)

Stock issued to employee stock ownership plan          -----               64            -----              64

Net loss                                               -----            -----           (1,671)         (1,671)
                                                  -----------  --------------- ---------------- ---------------

Balance March 31, 2000                                 $ 308         $ 94,641        $ (19,021)       $ 75,928
                                                  ===========  =============== ================ ===============
</TABLE>






















        See accompanying notes to consolidated financial statements.










                                                      4
<PAGE>



                               TRANSIT GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                Three months ended March 31,
                                                                 -------------------------------------------
                                                                      2000                       1999
                                                                 ----------------           ----------------
<S>                                                                    <C>                         <C>
Cash flows from operating activities:
  Net (loss) income                                                     $ (1,671)                     $ 932
                                                                 ----------------           ----------------

  Adjustments to reconcile net income to cash
   (used) provided by operations:
     Depreciation and amortization                                         5,328                      2,295
     Deferred income taxes                                                (1,750)                         -
     Changes in assets and liabilities:
       (Increase) decrease in accounts receivable                         (8,569)                       274
       (Increase) decrease in other assets                                (1,591)                       344
       (Decrease) increase in accounts payable and accrued expenses        4,653                        279
       Other                                                                 420                       (618)
                                                                 ----------------           ----------------
         Total adjustments                                                (1,509)                     2,574
                                                                 ----------------           ----------------

         Net cash (used) provided by operating activities                 (3,180)                     3,506
                                                                 ----------------           ----------------

Cash flows from investing activities:
  Business combinations, net of cash acquired                                  -                     (2,695)
  Proceeds from disposal of equipment                                      1,260                      1,479
  Purchase of equipment                                                   (5,725)                    (2,025)
  Stock redeemed                                                               -                     (1,385)
                                                                 ----------------           ----------------
         Net cash used by investing activities                            (4,465)                    (4,626)
                                                                 ----------------           ----------------

Cash flows from financing activities:
  Stock issued to employee stock ownership plan                               64                          -
  Dividends paid on preferred stock                                         (562)                         -
  Increase in long-term debt                                              15,453                      6,513
  Repayment of long-term debt and
   capital lease obligations                                              (9,452)                    (4,517)
   Increase (decrease) in bank overdraft                                   3,037                       (952)
                                                                 ----------------           ----------------
         Net cash provided by financing activities                         8,540                      1,044
                                                                 ----------------           ----------------

Decrease in cash                                                             895                        (76)
Cash beginning of period                                                   2,156                      2,020
                                                                 ----------------           ----------------
Cash end of period                                                       $ 3,051                    $ 1,944
                                                                 ================           ================

Supplemental cash flow data:
  Cash paid for interest                                                 $ 2,403                      $ 848
                                                                 ================           ================

Business combinations:
  Fair value of assets acquired                                              $ -                   $ 41,437
  Fair value of liabilities assumed                                            -                    (30,093)
  Common stock issued                                                          -                     (8,319)
                                                                 ----------------           ----------------
    Net cash payments                                                        $ -                    $ 3,025
                                                                 ================           ================


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

                                                       5
<PAGE>











                      TRANSIT GROUP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

The information  presented herein as of March 31, 2000, and for the three months
ended March 31, 2000 and 1999 is unaudited.  The December 31, 1999 balance sheet
was  derived  from  audited  financial  statements,  but  does not  include  all
disclosures required by generally accepted accounting principles.

1.  Basis of Presentation

Our consolidated balance sheet as of March 31, 2000, our consolidated statements
of operations, and our consolidated statements of cash flows for the three month
periods ended March 31, 2000 and 1999 include our nineteen acquired subsidiaries
and the  results  of their  operations  and cash  flows  for the  periods  since
acquisition. We have made the following acquisitions:

                                   Company                         Date Acquired

                Carolina Pacific Distributors, Inc.                    07/11/97
                Service Express, Inc.                                  08/16/97
                Transit Leasing, Inc.                                  08/16/97
                Carroll Fulmer Group, Inc.                             08/30/97
                Rainbow Trucking, Inc.                                 12/30/97
                Transportation Resources and Management, Inc.          01/31/98
                Certified Transport, Inc.                              05/05/98
                KJ Transportation, Inc.                                06/17/98
                Network Transportation, Inc.                           07/13/98
                Diversified Trucking, Inc.                             08/05/98
                Northstar Transportation, Inc.                         08/11/98
                Priority Transportation, Inc.                          01/19/99
                Massengill Trucking Service, Inc.                      03/03/99
                KAT, Inc.                                              03/22/99
                R&M Enterprises, Inc.                                  07/19/99
                MDR Cartage, Inc.                                      07/30/99
                Bestway Trucking Services, Inc.                        07/30/99
                Fox Midwest, Inc.                                      09/27/99
                Land Transportation, LLC                               11/04/99

Certain  prior year balances  have been  reclassified  to conform to the current
year financial statement presentation.

2.  Summary of Significant Accounting Policies

Management's Representation

The accompanying interim consolidated financial statements have been prepared by
us in accordance and consistent with the accounting  policies stated in our 1999
Annual  Report  on  Form  10-K  and  should  be  read in  conjunction  with  the
consolidated   financial   statements  appearing  therein.  In  the  opinion  of
management,   all  adjustments   necessary  for  a  fair  presentation  of  such
consolidated   financial   statements  are  reflected  in  the  interim  periods
presented.  Additionally,  all  adjustments  are of a normal  recurring  nature.
Interim results are not necessarily indicative of results for a full year.

The  consolidated  financial  statements and notes are presented as permitted by
Form  10-Q  and  do not  contain  certain  information  included  in the  annual
consolidated financial statements.

3.  Business Combinations

From July 1997  through  November  1999 we acquired 19 truckload  carriers.  The
business  combinations  of the acquired  companies  are  accounted for under the
purchase  method  of  accounting.  Accordingly,  the  operating  results  of the
acquired companies have been included in our consolidated  financial  statements
since their  respective  dates of  acquisition.  Assets acquired and liabilities
assumed were recorded at fair market value.

The unaudited pro forma  financial  information  reflects the  operations of the
acquired  companies  as if they all had been  acquired  on January 1, 1999.  The
following  adjustments  were  made to the  historical  financial  statements  of
acquired companies prior to their acquisition by us:

o Reduced  depreciation  expense  due to changes in  depreciation  policies  and
estimated  lives; o  Amortization  of goodwill  recorded in connection  with the
acquisitions;   o  Additional  interest  costs  for  the  cash  portion  of  the
acquisition costs; o Interest costs of the acquired companies have been adjusted
to reflect the Company's financing costs;

     and

o Provision for income taxes at the Company's estimated annual tax rate.

No  projected  provision  for  cost  reductions  (such as  insurance,  overhead,
purchasing, and fuel) have been reflected in the historical financial statements
of the subsidiaries from January 1, 1999 through the date of acquisition.

               Unaudited Pro Forma Combined Results of Operations
                             (dollars in thousands)
<TABLE>
<CAPTION>

                                                                                  Three Months Ended March 31,
                                                                            -----------------------------------------
                                                                                   2000                  1999
                                                                            -------------------    ------------------

<S>                                                                         <C>                    <C>
         Revenue                                                            $         133,205      $         121,003
                                                                            ===================    ==================

         Net (loss) income                                                  $         (1,671)      $           2,094

         Preferred stock dividend requirement                                           (562)                   ----
                                                                            -------------------    ------------------

         (Loss) income available
            to common shareholders                                          $         (2,233)      $           2,094
                                                                            ===================    ==================

         (Loss) income per basic common share                               $           (.07)      $             .07
                                                                            ===================    ==================

         (Loss) income per diluted common share                             $           (.07)      $             .06
                                                                            ===================    ==================

         Weighted average number of basic    common  shares
         outstanding                                                              31,847,437              31,848,263
                                                                            ===================    ==================

         Weighted average number of diluted
         common shares outstanding                                                31,847,437              32,623,182
                                                                            ===================    ==================
</TABLE>

4.  Income Taxes

At  December  31,  1999,  we had $31  million  of  federal  net  operating  loss
carryforwards potentially available to offset taxable income which expire during
the years 2009 to 2018. At March 31, 2000 the net operating  loss  carryforwards
are approximately $32.7 million.

We determine  our  provisions  for income  taxes using our best  estimate of the
effective  tax rate  expected to be  applicable  for the full fiscal  year.  The
difference  between the  provision for income taxes and the amount that would be
expected  using the  Federal  statutory  income  tax rate of 34% is  related  to
nondeductible  goodwill  amortization  expense and certain  other  nondeductible
expenses.

5.  Credit Facility

In 1999 we entered into a $150 million credit  facility,  which replaced our $35
million  revolving  credit and term facility.  The facility  contains  customary
financial  covenants  that  include  limitations  on  dividends,   indebtedness,
mergers, sale of assets, and the repurchase of common stock.  Requirements exist
to maintain minimum levels of coverage for a Fixed Charge Coverage Ratio,  Asset
Coverage Ratio, and a Minimum Consolidated Net Worth (all defined).  We were not
in compliance with certain of the covenants at March 31, 2000.

We have received a 30 day waiver to allow the participant banks time to consider
an  amendment  to the  facility  at the  expiration  of that waiver  period.  In
consideration  for this  waiver,  the unused  commitment  under the  acquisition
facility will be cancelled,  the maximum  borrowings  under the revolving credit
facility  will be capped at the lesser of the borrowing  base or $95.9  million,
($94.5  million  currently  outstanding)  and we will incur a fee. In accordance
with the technical requirements of Generally Accepted Accounting Principles this
debt has been classified as a current liability.

In May 1999 we issued five million shares of 9% Redeemable  Preferred  Stock for
$5.00 per share.  Each Redeemable  Preferred Share may be converted at any time,
at the option of the preferred  shareholder,  for one share of our common stock.
The  Redeemable   Preferred  Stock  agreement  contains  certain   anti-dilutive
provisions which would require the issuance of additional  Redeemable  Preferred
Shares  if we issue  any of our  common  stock at less  than  $5.00  per  share.
Beginning  three  years from the date of issuance  of the  Redeemable  Preferred
Shares, (and for the succeeding two years) the preferred  shareholders can cause
us to purchase up to 33% per year of the outstanding  Redeemable Preferred Stock
for  $5.00  per  share.  In  addition,  certain  conditions  such as a change in
ownership can accelerate the redemption requirement.

We are required to provide financial  information and maintain certain financial
conditions. The conditions involve limitations on mergers,  acquisitions,  asset
sales and additional indebtedness.  We were in compliance of all of requirements
of this Agreement.  Should an Event of Default occur and remain,  the holders of
the  Preferred  Stock  will have the right to elect two  members of the Board of
Directors of the Company.

7. Restructuring Charge

Early in 1999 we began  formulating  a plan to  consolidate  most  "back  office
operations" at our service center in Groveland,  Florida. The plan was finalized
during the fourth quarter of 1999 with the  completion of the last  acquisition.
The first phase of the plan involves  consolidating the back office functions of
the  companies  acquired  during 1999 with a resulting  increase to the purchase
price of $0.5 million which was recorded as part of the acquisition  cost of the
companies  acquired  and  charged to  goodwill.  The charge is intended to cover
severance for approximately  100 employees  affected and the relocation of three
employees to Groveland service center.  The amount of severance each employee is
entitled to is based on the years of employment of each  employee  affected.  In
the  first  quarter  of 2000  there  were no  charges  or  adjustments  to these
accruals.  The plan is expected to be completed by September  2000 at which time
the  severance  will be paid.  Beginning in 2001, we expect the  elimination  of
these positions will result in annual pretax savings of $1.0-$2.0 million.

During the first  quarter of 2000, we finalized a plan to  consolidate  the back
office  operations of all remaining  divisions.  In connection with the plan, we
recorded  a  charge  to  income  of $1.1  million  to cover  severance  from the
termination  of 55 employees and costs  associated  with phasing out our Atlanta
headquarters.  Each employee affected will be entitled to an amount based on the
number of years of employment  with us and his position  within the Company.  In
the first quarter of 2000 there were no charges or adjustments to these accruals
We expect  the  project  to be  completed  by  December  2000 at which  time the
severance  will be paid and we expect that the  elimination  of these  positions
will result in annual pretax savings of $1.0-$2.0 million.


<PAGE>


                      TRANSIT GROUP, INC. AND SUBSIDIARIES

                 Item 2. Management's Discussion and Analysis of

                  Financial Condition and Results of Operations

The following  discussion  should be read in conjunction  with the  Consolidated
Financial Statements,  including the footnotes, and is qualified in its entirety
by the  foregoing  and  other  more  detailed  financial  information  appearing
elsewhere   herein.   Historical   results  of  operations  and  the  percentage
relationships  among any amounts  included  in the  Consolidated  Statements  of
Income, and any trends which may appear to be inferable therefrom, should not be
taken as being  necessarily  indicative  of trends in  operations  or results of
operations for any future periods.

Comments in this Management's Discussion and Analysis of Financial Condition and
Results of Operations  regarding our business which are not historical facts are
forward  looking  statements that involve risks and  uncertainties.  Among these
risks  are that we are in a  highly  competitive  business,  have a  history  of
operating losses,  and are pursuing a growth strategy that relies in part on the
completion of acquisitions of companies in the trucking  industry.  There can be
no  assurance  that in our  highly  competitive  business  environment,  we will
successfully   improve  our   operating   profitability   or   consummate   such
acquisitions.

Liquidity and Capital Resources

Our acquisition  strategy and requirements  for replacing our revenue  equipment
require significant capital resources. For the three months ended March 31, 2000
and 1999  cash flow from  operating  activities  was  $(3.2)  million,  and $3.5
million,  respectively,  and capital  expenditures  were $5.7 million,  and $2.0
million,  respectively, for new trucks and trailers. The first fiscal quarter is
typically  the  weakest  quarter in the  fiscal  year.  Beginning  in the fourth
quarter of 1999, and continuing into the first quarter of 2000 higher fuel costs
and the poor performance by certain of our 1999 acquisitions  resulted in losses
for the quarters  ended  December  31, 1999 and March 31, 2000.  Annual fees for
tags,  plates and permits  require  significant  cash payments  during the first
quarter of 2000.  The cash required to fund our growth  strategy and the capital
requirements for new equipment is significant.  In addition, our internal growth
has required us to finance a significant increase in accounts receivable.  These
factors have  combined to  negatively  impact our cash flow.  We expect that the
seasonal  increase in business and the continued  concentration on collection of
accounts receivable will alleviate these cash constraints.  Capital expenditures
for 2000 are  expected  to range from  $36.0-$40.0  million and will be financed
under our existing  credit  facility and by other  commercial  lenders.  Amounts
available from future cash flows,  funds available under our credit  facilities,
and other lending  sources  should be sufficient to meet our expected  operating
needs and planned  capital  expenditures  for the foreseeable  future.  However,
there can be no assurance that we can continue to finance our business  strategy
through operations or commercial lenders.

In 1999 we entered into a $150 million credit  facility,  which replaced our $35
million  revolving  credit and term facility.  The facility  contains  customary
financial  covenants  that  include  limitations  on  dividends,   indebtedness,
mergers,  sale of assets and the repurchase of common stock.  Requirements exist
to maintain minimum levels of coverage for a Fixed Charge Coverage Ratio,  Asset
Coverage Ratio, and a Minimum Consolidated Net Worth (all defined).  We were not
in compliance with certain of the covenants at March 31, 2000.

We have received a 30 day waiver to allow the participant banks time to consider
an  amendment  to the  facility  at the  expiration  of that waiver  period.  In
consideration  for this  waiver,  the unused  commitment  under the  acquisition
facility will be cancelled,  the maximum  borrowings  under the revolving credit
facility  will be capped at the lesser of the borrowing  base or $95.9  million,
($94.5  million  currently  outstanding)  and we will incur a fee. In accordance
with the technical requirements of Generally Accepted Accounting Principles this
debt has been classified as a current  liability.  We believe that we can either
amend the facility to change the  covenants or refinance  the debt. At such time
as we amend the covenants or obtain  alternative  financing , we will notify the
readers of these financial  statements.  There is, however, no assurance that we
will be able to amend the covenants or obtain alternative financing.

Redemption Rights for Selling Shareholders in Acquisitions

In connection with the acquisitions in 1997, we granted the selling shareholders
the right to require us to redeem a portion of the shares which they received in
exchange for selling their  businesses to us. The dollar amount of stock subject
to  mandatory  redemption  by us  aggregated  approximately  $8.1  million  upon
acquisition of those companies.

At March 31, 2000,  holders of redemption rights with respect to $3.7 million of
stock may require that either 1.) we redeem the stock or 2.) a major shareholder
of the Company  acquire  the stock at a price of $3.60 per share.  To the extent
such  redemption  rights are  exercised,  we will be  required  to fund the cash
required to meet our obligations  under the redemption rights by drawing on bank
lines which may be available,  or to call upon a major  shareholder  to purchase
the stock under such  shareholder's  obligations and guarantees  associated with
the acquisition contracts.

Results of  Operations  - Three months  ended March 31, 2000  compared  with the
three months ended March 31, 1999

The following table sets forth items in the Consolidated Statement of Operations
for the three months ended March 31, 2000 and 1999 as a percentage  of operating
revenues.
<TABLE>
<CAPTION>

                                                                                         Percentage of
                                                                                      Operating Revenues

                                                                                           March 31,

                                                                                  ----------------------------
                                                                                     2000             1999
                                                                                  ------------    -------------
<S>                                                                                  <C>            <C>
             Operating revenues                                                      100.00%        100.00%
                                                                                  ------------    -------------

             Purchased transportation                                                 41.50           39.35
             Salaries, wages and benefits                                             24.43           24.12
             Fuel                                                                     10.32            7.49
             Operating supplies and expenses                                           9.61           10.60
             Lease expense - revenue equipment                                         5.11            6.38
             Insurance                                                                 1.38            1.22
             Depreciation and amortization expense                                     4.00            3.54
             Restructuring charge                                                       .81            -
             General and administrative expense                                        2.97            2.73
                                                                                                  -------------
                                                                                  ------------
             Total expenses                                                          100.13           95.43
                                                                                  ------------    -------------
               Operating (loss) income                                                 (.13)           4.57
             Interest expense                                                          2.43            1.55
                                                                                  ------------    -------------
               (Loss) income before income taxes                                      (2.56)           3.02
             Income tax (benefit)                                                     (1.31)           1.58
                                                                                  ------------    -------------

             Net (loss) income                                                        (1.25)%          1.44%
                                                                                  ============    =============
</TABLE>

Operating  revenue  increased from $64.8 million in 1999 to $133.2  million,  or
105.4%,  for 2000. The increase is due to the  acquisition of eight companies in
1999  ($62.8  million)  and an increase in  comparable  revenue of $5.5  million
(9.49%).

Purchased  transportation increased from $25.5 million in 1999 to $55.3 million,
or 116.6%.  Purchased  transportation  as a  percentage  of  operating  revenues
increased  from  39.35%  in 1999 to  41.50%  in 2000 as a  result  of  increased
emphasis  on  growth  through  owner  operators  and  brokerage  versus  company
equipment.

Salaries,  wages and  benefits  increased  from  $15.6  million in 1999 to $32.5
million,  or 108.0%,  in 2000.  Salaries,  wages and benefits as a percentage of
operating revenues increased from 24.12% in 1999 to 24.43% in 2000. The increase
as a percentage of operating  revenues is attributed to higher driver wages, and
increased  group  health and  workers  compensation  costs.  Should  these costs
continue to increase  there can be no  assurance  that they can be passed  along
through increased freight rates.

Fuel increased from $4.9 million in 1999 to $13.8 million,  or 183.1%,  in 2000.
Fuel as a  percentage  of  operating  revenues  increased  from 7.49% in 1999 to
10.32% in 2000. Fuel costs as a percentage of operating  revenues increased as a
result of higher  fuel  prices  compared  with the prior  year.  Fuel costs have
increased  significantly  over the prior  year.  Should  fuel costs  continue to
increase,  there can be no assurance that these costs can be passed along to our
customers.

Operating  supplies  and expenses  increased  from $6.9 million in 1999 to $12.8
million,  or 86.3%, in 2000.  Operating supplies and expenses as a percentage of
operating  revenues decreased from 10.60% in 1999 to 9.61% in 2000. The decrease
as a percentage  of operating  revenues is attributed to the change in the fleet
and revenue mix discussed above.

Lease expense - revenue  equipment  increased  from $4.1 million in 1999 to $6.8
million,  or 64.7% in the first three months of 2000.  Expressed as a percent of
operating  revenues,  lease expense - revenue equipment  decreased from 6.38% in
1999 to 5.11% in 2000 as a result of the increase in comparable revenues.

Insurance expense increased from $.8 million in 1999 to $1.8 million, or 131.2%,
in  2000.  As a  percent  of  operating  revenues  insurance  expense  increased
nominally from 1.22% to 1.38%.

Depreciation  and  amortization  expense  increased from $2.3 million in 1999 to
$5.3 million,  or 132.2%,  in 2000.  Depreciation and amortization  expense as a
percentage of operating  revenues  increased from 3.54% in 1999 to 4.00% in 2000
primarily  as a result of higher  levels of  goodwill  amortization  incurred in
connection with the 8 companies acquired in 1999.

During the first  quarter of 2000, we finalized a plan to  consolidate  the back
office  operations of our operating  divisions.  In connection with the plan, we
recorded  a  charge  to  income  of $1.1  million  to cover  severance  from the
termination  of 55  employees.  Each  employee  affected  will be entitled to an
amount  based on the  number  of years of  employment  with us and his  position
within the Company.  We expect the project to be  completed by December  2000 at
which time the  severance  will be paid and we expect  that the  elimination  of
these positions will result in annual pretax savings of $1.0-$2.0 million.

General and  administrative  expense increased from $1.8 million in 1999 to $4.0
million, or 123.9%, in 2000. General and administrative  expense as a percentage
of operating revenues increased from 2.73% in 1999 to 2.97% in 2000 primarily as
a result of consulting  costs incurred in connection with the  consolidation  of
back office functions.

Operating income decreased from $3.0 million in 1999 to a loss of $.2 million in
2000.  Operating  income as a percentage of operating  revenues  decreased  from
4.57% in 1999 to (.09%) in 2000 as a result of the factors discussed above.

Interest expense increased from $1.0 million in 1999 to $3.2 million, or 223.5%,
in 2000.  Interest expense as a percentage of operating  revenues increased from
1.55% in 1999 to 2.43% in 2000.  The  increase in  interest  costs is related to
higher interest rates and increased seasonal borrowings.

Income taxes decreased from an expense $1.0 million in 1999 to a benefit of $1.8
million in 2000 as we recognized the value of net operating loss.

Results of  Operations  - Unaudited  Pro Forma three months ended March 31, 2000
compared with the three months ended March 31, 1999

Since July 1997, we have  acquired 19 truckload  carriers and have enabled these
companies  to reduce  certain  costs  particularly  in the  areas of  insurance,
interest and leasing  costs,  fuel, and redundant  overhead.  Our strategy is to
allow the  acquired  companies  to focus on  marketing,  customer  service,  and
operations  while  administrative  and financial  costs are  centralized  in the
Corporate Services Division of TGT.

The unaudited pro forma financial  information reflects the operations of the 19
acquired  companies  as if they all had been  acquired  on January 1, 1999.  The
following  adjustments  were  made to the  historical  financial  statements  of
acquired companies prior to their acquisition by us:

o Reduced  depreciation  expense  due to changes in  depreciation  policies  and
estimated  lives; o  Amortization  of goodwill  recorded in connection  with the
acquisitions;   o  Additional  interest  costs  for  the  cash  portion  of  the
acquisition costs; o Interest costs of the acquired companies have been adjusted
to reflect the Company's financing costs;

              and

o Provision for income taxes at the Company's estimated annual rates.

No  projected  provision  for  cost  reductions  (such as  insurance,  overhead,
purchasing, and fuel) have been reflected in the historical financial statements
of the subsidiaries from January 1, 1999 through the date of acquisition.

               Unaudited Pro Forma Combined Results of Operations
<TABLE>
<CAPTION>

                                                           March 31, 2000                      March 31, 1999
                                                  ---------------------------------    --------------------------------
                                                         $                 %                  $                 %
                                                  ----------------    -------------    ----------------    ------------

<S>                                                  <C>                <C>               <C>               <C>
Operating revenues                                   $    133,205       100.00%           $    121,003      100.00%
                                                  ----------------    -------------    ----------------    ------------

Operating expenses                                        109,263        82.03                  95,395       78.84
Fuel                                                       13,755        10.32                  10,079        8.33
Depreciation and amortization                               5,328         4.00                   5,344        4.41
Restructuring charge                                        1,079          .81                    ----           ----
General and administrative expenses                         3,956         2.97                   3,323        2.75
                                                  ----------------    -------------    ----------------    ------------

Total operating expenses                                  133,381                              114,141       94.33
                                                                        100.13

                                                  ----------------    -------------    ----------------    ------------

   Operating (loss) income                                   (176)        (.13)                  6,862        5.67

Interest expense                                            3,245         2.33                   2,757        2.28
                                                  ----------------    -------------    ----------------    ------------

   (Loss) income before income taxes                       (3,421)       (2.46)                  4,105        3.39

Income tax (benefit)                                       (1,750)       (1.31)                  2,011        1.66
                                                  ----------------    -------------    ----------------    ------------

   Net income (loss)                                       (1,671)       (1.15)                  2,094        1.73

Preferred stock  dividend requirement                        (562)        (.42)                   ----        ----
                                                  ----------------    -------------    ----------------    ------------

(Loss) income available

   to common shareholders                         $         (2,233)      (1.57)        $         2,094        1.73%
                                                  ================    =============    ================    ============

(Loss) income per basic common share              $           (.07)                    $           .07
                                                  ================                     ================

(Loss) income per diluted common share            $           (.07)                    $           .06
                                                  ================                     ================

Weighted average number of basic    common
shares outstanding                                     31,847,437                           31,848,263
                                                  ================                     ================

Weighted average number of diluted
common shares outstanding                              31,847,437                           32,623,812
                                                  ================                     ================
</TABLE>

Comparable unaudited pro forma revenues increased by approximately $12.2 million
(10.1%) for the three months ended March 31, 2000 compared to the same period in
1999.

Operating  expenses  increased from $95.4 million in unaudited pro forma 1999 to
$109.3 million in unaudited pro forma 2000.  Operating  expenses as a percent of
total revenues and other income increased from 78.84% in 1999 to 82.03% in 2000.

Fuel costs have increased  dramatically over prior year periods.  Expressed as a
percentage of operating revenues fuel has increased from 8.33% in 1999 to 10.32%
in 2000.

During the first  quarter of 2000, we finalized a plan to  consolidate  the back
office  operations of all remaining  divisions.  In connection with the plan, we
recorded  a  charge  to  income  of $1.1  million  to cover  severance  from the
termination  of 55  employees.  Each  employee  affected  will be entitled to an
amount  based on the  number  of years of  employment  with us and his  position
within the Company.  We expect the project to be  completed by December  2000 at
which time the  severance  will be paid and we expect  that the  elimination  of
these positions will result in annual pretax savings of $1.0-$2.0 million.

General and  administrative  expenses  have  increased on a pro forma basis as a
result of higher staff  levels  required  for the  consolidation  of back office
functions and the  consulting  costs  incurred in connection  with this process.
Expressed  as  a  percentage  of  operating  revenues,  pro  forma  general  and
administrative costs increased from 2.75% in 1999 to 2.97% in 2000.

Due to  higher  operating  costs,  significantly  higher  fuel  costs,  and  the
restructuring  charge pro forma  operating  income declined from $6.9 million in
1999 to a loss of $.2 million in 2000.

Interest  expense  increased by $.5 million as a result of higher interest rates
in 2000  compared  with  1999 and the cost  associated  with the  growth  of our
business.

As a result of the above  factors we incurred a loss of $1.7  million in the pro
forma three months ended March 31, 2000 compared with net income of $2.1 million
in the comparable prior year pro forma period.


<PAGE>


                      TRANSIT GROUP, INC. AND SUBSIDIARIES

           Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable

                      TRANSIT GROUP, INC. AND SUBSIDIARIES

                           Part II - Other Information

Item 3 - Default on Senior Securities

In 1999 we entered into a $150 million credit  facility,  which replaced our $35
million  revolving  credit and term facility.  The facility  contains  customary
financial  covenants  that  include  limitations  on  dividends,   indebtedness,
mergers, sale of assets, and the repurchase of common stock.  Requirements exist
to maintain minimum levels of coverage for a Fixed Charge Coverage Ratio,  Asset
Coverage Ratio, and a Minimum Consolidated Net Worth (all defined).  We were not
in compliance with certain of the covenants at March 31, 2000.

We have received a 30 day waiver to allow the participant banks time to consider
an  amendment  to the  facility  at the  expiration  of that waiver  period.  In
consideration  for this  waiver,  the unused  commitment  under the  acquisition
facility will be cancelled,  the maximum  borrowings  under the revolving credit
facility  will be capped at the lesser of the borrowing  base or $95.9  million,
($94.5  million  currently  outstanding)  and we will incur a fee. In accordance
with the technical requirements of Generally Accepted Accounting Principles this
debt has been classified as a current liability.

Item 6 - Exhibits and Reports on Form 8-K

   (a)   Exhibits

         11.1 Statement regarding computation of earnings per share

         27.1 Financial Data Schedule

   (b) The Company filed no Current Reports on Form 8-K during the first quarter
of 2000.

Signature

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.

                                                     Transit Group, Inc.

Date: May 22, 2000

                                                     By: /s/ N. Mark DiLuzio

                                                          N. Mark DiLuzio
                                                          Senior Vice President,
                                                          and Chief Financial
                                                          Officer