14

                     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    June 30, 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
August 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 June 30, 2000 (unaudited) and December 31, 1999                       3

                  Consolidated Statements of Income (unaudited) for the three
                    and six month periods ended June 30, 2000 and 1999                          4

                  Consolidated Statement of Changes in Total Non Redeemable

                    Preferred Stock, Common Stock and Other Shareholders' Equity (unaudited)    5

                  Consolidated Statements of Cash Flows (unaudited) for the six
                    months ended June 30, 2000 and 1999                                         6

                  Notes to Consolidated Financial Statements (unaudited)                        7

                  Item 2

                  Management's Discussion and Analysis of Financial

                   Condition and Results of Operations                                         11

                  Item 3

                  Quantitative and Qualitative Disclosures About

                   Market Risk                                                                 18


PART II.  OTHER INFORMATION

                  Item 1

                  Legal Proceedings                                                            19

                  Item 2

                  Changes in Securities and Use of Proceeds                                    19

                  Item 3

                  Defaults on Senior Securities                                                19

                  Item 4

                  Submission of Matters to a Vote of Security Holders                          20

                  Item 5

                  Other Information                                                            20

                  Item 6

                  Exhibits and Reports on Form 8-K                                             20
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                               TRANSIT GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)

                                     ASSETS
                                                                                June 30,              December 31,
                                                                                  2000                    1999
                                                                             ----------------        -----------
                                                                               (Unaudited)
Current assets:
<S>                                                                                  <C>                     <C>
  Cash                                                                               $ 3,523                 $ 2,156
  Accounts receivable (net of allowance of $2,838 and $3,441)                         80,536                  71,543
  Other current assets                                                                13,255                  10,259
  Refundable income taxes                                                              2,902                   4,210
  Deferred income taxes                                                                2,000                   9,655
                                                                             ----------------        ----------------
      Total current assets                                                           102,216                  97,823
                                                                             ----------------        ----------------

Noncurrent assets:
  Property, equipment, and capitalized leases                                        108,502                 114,718
  Goodwill                                                                           111,791                 112,197
  Other assets                                                                           775                   1,676
                                                                             ----------------        ----------------
      Total noncurrent assets                                                        221,068                 228,591
                                                                             ----------------        ----------------

      Total assets                                                                 $ 323,284               $ 326,414
                                                                             ================        ================

          LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current maturities of long-term debt and capital leases                     $      124,895             $    23,990
  Accounts payable                                                                    12,054                  11,014
  Bank overdrafts                                                                      7,887                   2,856
  Accrued expenses and other current liabilities                                      21,038                  16,708
                                                                             ----------------        ----------------
      Total current liabilities                                                      165,874                  54,568
                                                                             ----------------        ----------------

Noncurrent liabilities:
  Long-term debt and capital lease obligations                                        45,613                 139,530
  Other liabilities                                                                      471                     267
  Deferred income taxes                                                               15,596                  25,482
                                                                             ----------------        ----------------
     Total noncurrent liabilities                                                     61,680                 165,279
                                                                             ----------------        ----------------

     Total liabilities                                                               227,554                 219,847
                                                                             ----------------        ----------------

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

Redeemable preferred stock                                                            24,818                  24,795
                                                                             ----------------        ----------------

 Non redeemable preferred stock, common stock,
 and other shareholders' equity:
  Preferred stock, no par value, 20,000,000 shares authorized,
    5,000,000 outstanding                                                              -----                   -----
  Common Stock, $.01 par value, 100,000,000 shares
   authorized, 31,848,244 shares issued and outstanding                                  308                     308
  Additional paid-in capital                                                          94,641                  94,577
  Accumulated deficit                                                                (27,712)                (16,788)
                                                                             ----------------        ----------------
      Total non redeemable preferred stock, common stock
       and other shareholders' equity                                                 67,237                  78,097
                                                                             ----------------        ----------------

      Total liabilities and shareholders' equity                                   $ 323,284               $ 326,414
                                                                             ================        ================
</TABLE>
        See accompanying notes to consolidated financial statements.


<PAGE>
              TRANSIT GROUP, INC.
         CONSOLIDATED STATEMENTS OF INCOME
       (In thousands, except share data)
                  (Unaudited)


<TABLE>
<CAPTION>
                                                       Three Months Ended June 30,                 Six Months Ended June 30,
                                                --------------------------------------    -------------------------------------
                                                        2000                 1999               2000                1999
                                                -----------------   ------------------    ----------------  -------------------

<S>                                             <C>                 <C>                   <C>               <C>
Operating revenues                              $        132,136    $          75,167     $       265,341   $          140,011
                                                -----------------   ------------------    ----------------  -------------------

Operating expenses:
Purchased transportation                                  58,728               26,916             114,007               52,433
Salaries, wages, and benefits                             31,000               19,114              63,536               34,756
Fuel                                                      13,214                6,336              26,969               11,194
Operating supplies and expenses                           16,445                7,587              29,247               14,460
Lease expense - revenue equipment                          6,429                4,475              13,239                8,611
Insurance                                                  2,833                  990               4,669                1,785
Depreciation and amortization expense                      5,293                2,850              10,621                5,145
Restucturing charge                                         (225)               -----                 854                -----
General and administrative expense                         4,510                2,201               8,466                3,968
                                                -----------------   ------------------    ----------------  -------------------
     Total operating expenses                            138,227               70,469             271,608              132,352
                                                -----------------   ------------------    ----------------  -------------------

     Operating (loss) income                              (6,091)               4,698              (6,267)               7,659

Interest expense                                           3,232                1,517               6,477                2,519
                                                -----------------   ------------------    ----------------  -------------------


     (Loss) income before income taxes                    (9,323)               3,181             (12,744)               5,140
Income tax (benefit)                                      (1,195)              (1,092)             (2,945)                 (66)
                                                -----------------   ------------------    ----------------  -------------------

     Net (loss) income                                    (8,128)               4,273              (9,799)               5,206

Preferred stock dividends                                   (563)                (296)             (1,125)                (296)
                                                -----------------   ------------------    ----------------  -------------------

     (Loss) income available to common
         shareholders                           $         (8,691)   $           3,977     $       (10,924)  $            4,910
                                                =================   ==================    ================  ===================

(Loss) income per common share -- basic         $          (0.27)   $            0.15     $         (0.34)  $             0.19
                                                =================   ==================    ================  ===================

(Loss) income per common share -- diluted       $          (0.27)   $            0.15     $         (0.34)  $             0.19
                                                =================   ==================    ================  ===================

Weighted average number of common shares
  outstanding - basic                                 31,848,244           26,038,631          31,847,840           25,240,163
                                                =================   ==================    ================  ===================

Weighted average number of common shares
  outstanding - diluted                               31,848,244           27,083,493          31,847,840           26,150,369
                                                =================   ==================    ================  ===================
</TABLE>


      See accompanying notes to consolidated financial statements.


<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                         -----              -----             (1,125)            (1,125)

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

Net loss                                                        -----              -----             (9,799)            (9,799)
                                                           ----------------   ----------------    ---------------    ---------------

Balance June 30, 2000                                           $ 308           $ 94,641          $ (27,712)          $ 67,237
                                                           ================   ================    ===============    ===============
</TABLE>





       See accompanying notes to consolidated financial statements.
<PAGE>
                                              TRANSIT GROUP, INC.
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                (In thousands)
                                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                Six Months Ended June 30,
                                                                     -------------------------------------------
                                                                                             --
                                                                             2000                    1999
                                                                     --------------------    -------------------
Cash flows from operating activities:
<S>                                                                  <C>                     <C>
  (Loss) income from continuing operations                           $            (9,799)    $            5,206
                                                                     --------------------    -------------------
    Adjustments to reconcile income to cash
       in continuing operations:
      Depreciation and amortization                                               10,621                  5,145
      Deferred taxes                                                              (2,945)                (2,671)
      Loss (gain) on sale of equipment                                             2,080                   (213)
    Changes in assets and liabilities
      Increase in accounts receivable                                             (8,993)                (4,400)
      Increase in other assets                                                    (2,095)                  (531)
      Increase (decrease) in accounts payable and accrued expenses                 5,370                 (2,844)
      Other                                                                         (106)                  (458)
                                                                     --------------------    -------------------
          Total adjustments                                                        3,932                 (5,972)
                                                                     --------------------    -------------------

          Net cash used in continuing operations                                  (5,867)                  (766)
          Net cash used in discontinued operations                                   (24)                   (13)
                                                                     --------------------    -------------------

              Net cash used in operating activities                               (5,891)                  (779)
                                                                     --------------------    -------------------

Cash flows from investing activities:
  Business combinations, net of cash acquired                                      -----                 (2,813)
  Proceeds from disposal of equipment                                              2,415                  4,164
  Purchase of equipment                                                           (8,442)                (3,818)
                                                                     --------------------    -------------------
               Net cash used in investing activities                              (6,027)                (2,467)
                                                                     --------------------    -------------------

Cash flows from financing activities:
  Proceeds from issuance of preferred stock                                        -----                 24,912
  Repayment of capital lease obligations and long-term debt                      (15,696)               (26,510)
  Increase in long-term debt                                                      25,011                  6,734
  Increase (decrease) in bank overdraft                                            5,031                 (1,418)
  Stock redeemed and retired                                                       -----                 (1,548)
  Dividends                                                                       (1,125)                 -----
  Stock issued to employee stock ownership plan                                       64                  -----
  Stock options exercised                                                          -----                     76
                                                                     --------------------    -------------------
               Net cash provided by financing activities                          13,285                  2,246
                                                                     --------------------    -------------------

Increase (decrease) in cash                                                        1,367                 (1,000)
Cash, beginning of period                                                          2,156                  2,020
                                                                     --------------------    -------------------
Cash, end of period                                                  $             3,523     $            1,020
                                                                     ====================    ===================

Supplemental cash flow data
   Cash paid for interest                                            $             7,301     $            1,836
                                                                     ====================    ===================

Business combinations
  Fair value of assets acquired                                      $             -----     $           42,139
  Fair value of liabilities assumed                                                -----                (30,707)
  Common stock issued                                                              -----                 (8,286)
                                                                       ------------------    -------------------
               Net cash payments                                     $             -----     $            3,146
                                                                     ====================    ===================
</TABLE>

                    See accompanying notes to consolidated financial statements.

<PAGE>









                                            TRANSIT GROUP, INC.

                   Notes to Consolidated Financial Statements

The information  presented herein as of June 30, 2000, and for the three and six
month periods  ended June 30, 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 June 30, 2000, our consolidated  statements
of income for the three and six month periods ended June 30, 2000 and 1999,  and
our  consolidated  statements of cash flows for the six month periods ended June
30, 2000 and 1999 include our nineteen acquired subsidiaries, and the results of
operations  and cash flows for the periods since  acquisition.  We have made the
following acquisitions:

                                 Company                         Date Acquired

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

There have been no acquisitions since Land Transportation.

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.


<PAGE>


3.  Business Combinations

Since July 1997,  we have  acquired 19  transportation  companies.  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 our operations as if all
of the  acquisitions  took place on January 1, 1999.  The following  adjustments
were made to the historical financial statements of the acquired companies prior
to their acquisition by us:

o Depreciation  expense was reduced due to changes in depreciation  policies and
estimated  lives; o  Amortization  of goodwill  incurred in connection  with the
acquisitions  has been  recorded;  o Lease expense  incurred in connection  with
certain sale-leaseback  transactions has been recorded; o Interest costs for the
cash portion of the acquisition costs has been recorded; o Interest costs of the
acquired  companies have been adjusted to reflect our financing costs and; o The
provision for income taxes has been  calculated  using our estimated  annual tax
rate.

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

               Unaudited Pro Forma Combined Results of Operations

                        (In thousands except share data)
<TABLE>
<CAPTION>



                                                 Three months ended June 30,            Six months ended June 30,

                                                    2000              1999               2000                1999
                                                    ----              ----               ----                ----
<S>                                            <C>               <C>               <C>                <C>

      Revenues                                  $     132,136     $    120,370      $  265,341          $  241,373
                                                ==============    ==============    ===============     ===============


      Net (loss) income                         $     (8,128)     $      1,736      $    9,799)         $    3,830

      Preferred stock  dividend
      requirement

                                                        (563)             (296)          (1,125)              (296)
                                                --------------    --------------    ---------------     ---------------

      (Loss) income available to common
      shareholders                               $    (8,691)      $     1,440      $    (10,924)        $    3,534
                                                ==============    ==============    ===============     ===============

      (Loss) income per basic common share       $      (.27)     $        .05      $       (.34)        $      .11
                                                ==============    ==============    ===============     ===============

      (Loss) income per diluted common
      share                                      $      (.27)      $       .04      $       (.34)        $      .11
                                                ==============    ==============    ===============     ===============

      Weighted average number of basic
      common shares outstanding                    31,848,244        31,855,927         31,847,840           31,852,116
                                                ==============    ==============    ===============     ===============


      Weighted average number of diluted
      common shares outstanding                    31,848,244        32,900,789         31,847,840          32,762,323
                                                ==============    ==============    ===============     ===============
</TABLE>


4.       Income Taxes

At  December  31,  1999,  we had $31.0  million of federal  net  operating  loss
carryforwards potentially available to offset taxable income which expire during
the years 2009 to 2018. We will be limited in the amount of net operating losses
which  can be  offset  against  taxable  income in any  given  year  because  of
significant  changes in ownership.  Certain  pre-acquisition  losses of acquired
companies will be unusable  because of the change of ownership  provisions and a
valuation  allowance  remains for those  losses.  To the extent these losses are
utilized,  any  benefit  will be used to  reduce  goodwill  as the  losses  were
incurred by acquired  subsidiaries.  At June 30, 2000,  the net  operating  loss
carryforwards are approximately $41.2 million.

The Company  determines  its provisions for income taxes using its 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,  changes in valuation  allowances  for deferred  taxes,
amortization  expense,  the meal component of per diem expenses paid to drivers,
and certain other non-deductible expenses.

On June 25, 1999, new consolidated  return  regulations were issued that changed
the rules for using our operating loss carryovers by eliminating the requirement
to apply the separate return  limitation loss years  limitation to situations in
which a change of ownership,  as defined in Section 382 of the Internal  Revenue
Code,  occurred within six months of an acquired  company becoming a member of a
consolidated group. Prior to this change in the consolidated return regulations,
we limited the income tax benefit  recognized  in the financial  statements  for
certain net operating  losses of acquired  companies by establishing a valuation
allowance for deferred tax assets.

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 have not
been in compliance with certain of the covenants since December 31, 1999.

We have  received a series of waivers  through  September  15, 2000 to allow the
participant  banks  time  to  consider  an  amendment  to  the  facility  at the
expiration of the waiver period.  In consideration of these waivers,  the unused
commitment  under the acquisition  facility has been cancelled  ($10.3 currently
outstanding),  the maximum  borrowings  under the revolving  credit facility are
capped at the  lesser of the  borrowing  base or $95.9  million  ($95.3  million
currently outstanding), and we incurred fees of $.6 million. The waiver contains
various conditions including that we cure certain collateral deficiencies during
the current 30 day waiver period.  We are continuing  negotiations with the bank
group to amend the revolving  credit facility.  However,  there is no assurance,
that we can amend the facility, refinance the facility or that we can fulfil the
collateral  requirements  under  the  current  waiver.  In  accordance  with the
technical requirements of Generally Accepted Accounting Principles this debt has
been classified as a current liability.

6. Redeemable Preferred Stock

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.  Due to  restrictions  under our revolving
credit  facility  we did not make the June 30,  2000  preferred  stock  dividend
payment in the amount of  $563,000.  Should  this event of default  remain,  the
holders of the  Preferred  Stock will have the right to elect two members to our
Board of Directors.

7. Restructuring Charges

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 was intended to cover
severance for approximately  100 employees  affected and the relocation of three
employees to the Groveland service center. The amount of severance each employee
is entitled to is based on their respective years of employment.

In the six month period ended June 30, 2000, 16 persons  resigned prior to their
termination   and  seven  persons  were   separated  in   accordance   with  our
consolidation plan. The total amount of severance paid was $40,000.  The plan is
expected to be completed by September 2000 at which time the remaining 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 and his position.

In the six month  period ended June 30, 2000,  14  employees  resigned  prior to
their termination ($200,000) and nine employees were re-assigned ($25,000). As a
result,  we have  taken a credit to the  restructuring  charge in the  amount of
$225,000 in the three month  period  ended June 30,  2000.  Two  employees  were
separated under the terms of our consolidation plan and paid $30,000.  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.

8. Impairment of Fixed Assets

In  order to  optimize  our  fleet we will  sell  209  tractors  located  at six
divisions in our company.  The tractors  have a net book value of $6.4  million,
the sale of this  equipment  will  take  place  in the  third  quarter  and will
generate  proceeds  of $4.2  million.  A loss of $2.2  million  is  included  in
Operating  Supplies and Expenses in the three and six month  periods  ended June
30, 2000.


<PAGE>


                      TRANSIT GROUP, INC. AND SUBSIDIARIES

                 Item 2. Management's Discussion and Analysis of

                  Financial Condition and Results of Operations

This Quarterly Report contains certain forward-looking statements,  including or
related to our future results including certain projections and business trends.
These and other statements, which are not historical facts, are based largely on
current  expectations  and assumptions of management and are subject to a number
of risks and uncertainties  that could cause actual results to differ materially
from those  contemplated  by such  forward-looking  statements.  Assumptions and
risks related to  forward-looking  statements  include that we have a history of
operating  losses  and  pursued  a growth  strategy  that  relied in part on the
completion of acquisitions of companies in the trucking  industry;  that we will
continue  to price and  market  our  services  competitively;  that  competitive
conditions within our markets will not change materially or adversely;  that the
demand  for our  services  will  remain  strong;  and  that we will  retain  key
managers, drivers and other personnel.

Assumptions  relating to  forward-looking  statements  involve  judgements  with
respect  to,  among  other  things,  future  economic,  competitive  and  market
conditions,  and  future  business  decisions,  all of which  are  difficult  or
impossible  to predict  accurately  and many which are beyond our control.  When
used in this Quarterly Report, the words "estimate",  "project",  "intend",  and
"expect"  and similar  expressions  are  intended  to  identify  forward-looking
statements.  Although we believe that assumptions underlying the forward-looking
statements are reasonable,  any of the assumptions  could prove  inaccurate and,
therefore,  there  can be no  assurance  that the  results  contemplated  in the
forward-looking information will be realized.

Management  decisions  are  subjective  in  many  respects  and  susceptible  to
interpretations  and periodic  revisions based on actual experience and business
developments,  the impact of which may cause us to alter our business  strategy,
which may in turn, affect our results of operations. In light of the significant
uncertainties  inherent in the forward-looking  information included herein, the
inclusion of such information should not be regarded as our representation  that
any strategy,  objectives,  or other plans will be achieved. The forward-looking
statements  contained in this Quarterly Report speak only as of the date of this
Quarterly Report, and we do not have any obligation to publicly update or revise
any of these forward-looking statements.

Liquidity and Capital Resources

For the six  months  ended  June 30,  2000 and 1999,  cash  flow from  operating
activities  was $(5.9)  million,  and $(.8) million,  respectively,  and capital
expenditures were $8.4 million, and $3.8 million,  respectively,  for new trucks
and  trailers.  Beginning in the fourth  quarter of 1999,  and  continuing  into
fiscal 2000,  higher fuel costs and the poor  performance by certain of our 1999
acquisitions  resulted in losses for the quarters ended December 31, 1999, March
31, 2000, and June 30, 2000. Annual fees for tags,  plates,  and permits require
significant  cash payments  during the first  quarter of 2000. 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 the  remainder of 2000 are  expected to range from  $8.0-$10.0
million and will be financed by  commercial  lenders.  There can be no assurance
that we can  continue to finance our business  strategy  through  operations  or
commercial  lenders or that our lenders will grant further  waivers for defaults
under our 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 have not
been in compliance with certain of the covenants since December 31, 1999.

We have  received  a series of waivers  to allow the  participant  banks time to
consider an amendment to the facility at the  expiration  of the waiver  period,
currently  September 15, 2000. In  consideration  of these  waivers,  the unused
commitment  under the  acquisition  facility  has been  cancelled,  the  maximum
borrowings  under the revolving  credit facility are capped at the lesser of the
borrowing base or $95.9 million,  and we incurred fees of $.6 million. The waver
contains  various   conditions   including  that  we  cure  certain   collateral
deficiencies  during  the  current  30 day  waiver  period.  We  are  continuing
negotiations  with  the  bank  group to amend  the  revolving  credit  facility.
However,  there is no assurance,  that we can amend the facility,  refinance the
facility  or that we can fulfil the  collateral  requirements  under the current
waiver.  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.  Due to  restrictions  under our revolving
credit  facility  we did not make the June 30,  2000  preferred  stock  dividend
payment in the amount of  $563,000.  Should  this event of default  remain,  the
holders of the  Preferred  Stock will have the right to elect two members to our
Board of Directors.

Redemption Rights for Selling Shareholders in Acquisitions

In  connection   with  certain  1997   acquisitions,   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.

On May 24, 2000, the holders of redemption  rights for $3.7 million or 1,020,831
shares of our common stock (the "Holders")  exercised their  redemption  rights.
The Holders'  redemption  rights  obligates  us and our  Chairman,  jointly,  to
purchase  1,020,831  shares of our common  stock from the  Holders at a price of
$3.60 per share.  The Holders have agreed to rescind this exercise  until August
26, 2000.  We are in  negotiations  with the Holders to determine an  acceptable
manner of satisfying our obligations to them.

Results of Operations - Three and six month periods ended June 30, 2000 compared
with the three and six month periods ended June 30, 1999

The following table sets forth items in the Consolidated Statement of Income for
the three and six month  periods ended June 30, 2000 and 1999 as a percentage of
operating revenues.
<TABLE>
<CAPTION>

                                                       Three months ended              Six months ended
                                                             June 30,                      June 30,
                                                             --------                      --------
                                                       2000          1999          2000           1999
                                                    ------------  ------------  ------------  -------------
<S>                                                    <C>          <C>            <C>          <C>
     Operating revenues                                100.0%       100.0%         100.0%       100.0%
                                                    ------------  ------------  ------------  -------------

     Purchased transportation                           44.4         35.8           43.0         37.4
     Salaries, wages and benefits                       23.5         25.4           23.9         24.8
     Fuel                                               10.0          8.5           10.2          8.0
     Operating supplies and expenses                    12.5         10.1           11.0         10.3
     Lease expense - revenue equipment                   4.9          6.0            5.0          6.2
     Insurance                                           2.1          1.3            1.8          1.3
     Depreciation and amortization expense               4.0          3.8            4.0          3.7
     Restructuring charge                                (.2)         -               .3          -
     General and administrative expense                  3.4          2.9            3.2          2.8
                                                    ------------  ------------  ------------  -------------
     Total expenses                                    104.6         93.8          102.4         94.5
                                                    ------------  ------------  ------------  -------------
       Operating (loss) income                          (4.6)         6.2           (2.4)         5.5
     Interest expense                                    2.5          2.0            2.4          1.8
                                                    ------------  ------------  ------------  -------------
       (Loss) income before income taxes                (7.1)         4.2           (4.8)         3.7

     Income tax (benefit)                                (.9)        (1.5)          (1.1)         -
                                                    ------------  ------------  ------------  -------------

     Net (loss) income                                  (6.2)%        5.7%          (3.7)%        3.7%
                                                    ============  ============  ============  =============
</TABLE>

Results of  Operations - Three months ended June 30, 2000 vs. three months ended
--------------------------------------------------------------------------------
June 30, 1999
-------------

Operating  revenues  increased from $75.2 million in 1999 to $132.1 million,  or
75.8%,  for 2000.  The  increase is due  primarily  to the  acquisition  of five
companies since March 1999.  Comparable  revenues for the 12 companies  acquired
prior to April 1999 (excluding  Rainbow  Trucking whose operations were absorbed
by Bestway)  increased  by 11.6% for the three month  period ended June 30, 2000
compared to this same period in the prior year. We continue to  concentrate  our
growth  efforts on non-asset  based revenue - i.e.  owner-operators,  brokerage,
agency, and logistics revenue.

Purchased  transportation as a percentage of operating  revenues  increased from
35.8% in 1999 to 44.4% in 2000 due to  changes  in the  fleet  mix from  company
owned trucks to brokerage and owner-operators.

Salaries,  wages, and benefits as a percentage of operating  revenues  decreased
from 25.4% in 1999 to 23.5% in 2000.  The decrease as a percentage  of operating
revenues is  attributed  to the change in revenue mix discussed in the preceding
paragraphs.  With  the  change  in fleet  mix  discussed  above  we  would  have
anticipated  even lower salaries and wages in the current period compared to the
same period a year ago. However,  demand for drivers remains strong resulting in
higher wages paid to drivers. Should these costs continue to increase, there can
be no assurance  that they can be passed along to our customers  through  higher
freight rates.

Fuel as a percentage of operating  revenues increased from 8.5% in 1999 to 10.0%
in 2000 due to higher cost per gallon.  Should fuel costs  continue to increase,
there can be no assurance that these costs can be passed along to our customers.

In the  current  quarter we  recorded  an  impairment  loss of $2.2  million for
equipment segregated from service.  This loss is reflected in operating supplies
and expenses. We expect to dispose of this equipment in the third quarter.

Lease expense - revenue equipment, expressed as a percent of operating revenues,
decreased from 6.0% in 1999 to 4.9% in 2000.  This decrease is related to higher
revenue levels and the change in fleet mix discussed above.

Insurance  expense,  expressed as a percent of operating revenues increased from
1.3% in the  three  months  ended  June 30,  1999 to 2.1% in 2000 due to  higher
premium levels and a slight increase in claims experience.

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.  In the second quarter several  employees  eligible
for severance  resigned or transferred to other  positions in the company.  As a
result,  this  accrual was reduced by $.2  million.  We expect the project to be
completed by December 2000 at which time the remaining severance will be paid.

General  and  administrative  expense  as a  percentage  of  operating  revenues
increased  from  2.9% in 1999 to 3.4% in 2000 as a result of  incremental  costs
incurred in connection with the ongoing  consolidation of the back office at the
Groveland  Service  Center.  This  increase  is  expected  to last  through  the
remainder  of fiscal  2000  until all  duplicative  back  office  functions  are
eliminated from field operations.

Interest expense  increased from 2.0% of revenues in 1999 to 2.5% in 2000 due to
higher  interest rates incurred  during our waiver periods and higher  borrowing
levels related to our 1999 acquisitions.

We  determine  our  provision  for income  taxes using our best  estimate of the
effective tax rate  expected to be  applicable  for the full fiscal year. In the
quarter  ended June 30,  2000,  we  modified  our fiscal 2000  projection  which
resulted in a lower  effective  tax benefit  rate.  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,
changes in valuation  allowances for deferred taxes,  amortization  expense, the
meal  component  of per  diem  expenses  paid  to  drivers,  and  certain  other
non-deductible expenses.

Despite higher revenues,  continued cost pressures (fuel, driver wages,  general
and administrative  expenses, and interest) have severely impacted our operating
results. Additionally, in the current quarter we realized a loss of $2.2 million
on the anticipated  disposal of excess equipment.  Finally, we have continued to
experience  significant  negative  operating results at certain of the companies
acquired in 1999.  As a result,  we have realized a pre-tax loss of $9.3 million
in the current three month period compared to income of $3.2 million in the same
period a year ago.

We anticipate that fuel,  driver wages and general and  administrative  expenses
will remain at these relative  levels for the remainder of the fiscal year. With
regards to unprofitable  divisions  acquired in 1999, we have consolidated their
back office  operations  to the Groveland  Service  Center,  we have  identified
excess  equipment  to be sold in the third  quarter and we are  modifying  their
route structure to enhance profitability.

Results of Operations  -Six months ended June 30, 2000 vs. six months ended June
--------------------------------------------------------------------------------
30, 1999
--------


Operating revenues  increased from $140.0 million in 1999 to $265.3 million,  or
89.5%,  for 2000.  The  increase is due  primarily to the  acquisition  of eight
companies from January 1999 through November 1999.  Comparable  revenues for the
11 companies  acquired prior to January 1999 (excluding  Rainbow  Trucking whose
operations  were  absorbed by Bestway)  increased  9.2% for the six month period
ended June 30,  2000  compared  to the same  period a year ago.  We  continue to
concentrate our growth efforts on non-asset based revenue - i.e. owner-operators
brokerage,  agency, and logistics revenue. To that extent,  revenue from company
equipment has declined from approximately 50% of revenue in the six month period
ended June 30, 1999 to approximately 44% in the current six month period.

Purchased  transportation as a percentage of operating  revenues  increased from
37.4% in 1999 to 43.0% in 2000 due to changes in the fleet mix to brokerage  and
owner-operators from company owned trucks.

Salaries,  wages, and benefits as a percentage of operating  revenues  decreased
from 24.8% in 1999 to 23.9% in 2000.  The decrease as a percentage  of operating
revenues is  attributed  to the change in revenue mix discussed in the preceding
paragraph.  With this change in fleet mix we would have  anticipated  even lower
salaries and wages in the current period compared to the same period a year ago.
However, demand for drivers remains strong causing higher wages paid to drivers.
Should these costs  continue to increase there can be no assurance that they can
be passed along to our customers through higher freight rates.

Fuel as a percentage of operating  revenues increased from 8.0% in 1999 to 10.2%
in 2000. Should fuel costs continue to increase,  there can be no assurance that
these costs can be passed along to our customers.

In the  current  quarter we  recorded  an  impairment  loss of $2.2  million for
equipment segregated from service.  This loss is reflected in operating supplies
and expenses. We expect to dispose of this equipment in the third quarter.

Lease expense - revenue equipment, expressed as a percent of operating revenues,
decreased from 6.2% in 1999 to 5.0% in 2000 due to higher revenue levels and the
change in fleet mix discussed above.

Insurance  expense,  expressed as a percent of operating revenues increased from
1.3% in the  three  months  ended  June 30,  1999 to 1.8% in 2000 due to  higher
premium levels and a slight increase in claims experience.

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.  In the second quarter,  several employees eligible
for severance  resigned or transferred to other  positions in the company.  As a
result,  this  accrual was reduced by $.2  million.  We expect the project to be
completed by December 2000 at which time the remaining severance will be paid.

General  and  administrative  expense  as a  percentage  of  operating  revenues
increased  from  2.8% in 1999 to 3.2% in 2000 as a result of  incremental  costs
incurred in connection with the back office  functions at the Groveland  Service
Center.  This  increase is expected to continue  through the remainder of fiscal
2000 until all duplicative back office functions in the field are eliminated.

Interest expense increased from $2.5 million in 1999 to $6.5 million, in 2000 as
a result  of  increased  borrowings  to fund our 1999  acquisitions  and  higher
interest costs incurred during our waiver period.

We  determine  our  provision  for income  taxes using our best  estimate of the
effective tax rate  expected to be  applicable  for the full fiscal year. In the
period  ended June 30,  2000,  we  modified  our fiscal  2000  projection  which
resulted in a lower  effective  tax benefit rate for the six month  period.  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,  changes in valuation  allowances  for deferred  taxes,
amortization  expense,  the meal component of per diem expenses paid to drivers,
and certain other non-deductible expenses.

Despite higher revenues,  continued cost pressures (fuel, driver wages,  general
and administrative  expenses, and interest) have severely impacted our operating
results. Additionally, in the current quarter we realized a loss of $2.2 million
on the anticipated  disposal of excess equipment.  Finally, we have continued to
experience  significant  negative  operating results at certain of the companies
acquired in 1999. As a result,  we have realized a pre-tax loss of $12.7 million
in the current six month  period  compared to income of $5.1 million in the same
period a year ago.

We anticipate that fuel,  driver wages and general and  administrative  expenses
will remain at these relative  levels for the remainder of the fiscal year. With
regards to unprofitable  divisions  acquired in 1999, we have consolidated their
back office  operations  to the Groveland  Service  Center,  we have  identified
excess  equipment  to be sold in the third  quarter and we are  modifying  their
route structure to enhance profitability.

Results of  Operations - Unaudited  Pro Forma results three and six months ended
June 30, 2000 compared with the three and six months ended June 30, 1999

Since July 1997, the Company has acquired 19 truckload  carriers.  The Company's
strategy is to allow the  acquired  companies  to focus on  marketing,  customer
service,  and  operations  while  administrative  and  financial  functions  are
centralized in the Groveland Service Center.

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 the Company:

o Reduced  depreciation  expense  due to changes in  depreciation  policies  and
estimated  lives; o Reflected  amortization  of goodwill  incurred in connection
with the  acquisitions;  o Recognized  lease expense incurred in connection with
certain  sale-lease back  transactions;  o Reflected interest costs for the cash
portion of the  acquisition  costs; o Interest  costs of the acquired  companies
have been  adjusted  to reflect our  financing  costs and; o The  provision  for
income taxes has been calculated using our 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.


<PAGE>


<TABLE>
Unaudited Results of Operations - Three months ended June 30, 2000 vs. three months ended June 30, 1999
-------------------------------------------------------------------------------------------------------

               Unaudited Pro Forma Combined Results of Operations

                         (In thousands except share data)

                                                                            Three months ended

                                                  ---------------------------------------------------------------------
                                                           June 30, 2000                        June 30, 1999
                                                  ---------------------------------    --------------------------------
                                                         $                 %                  $                 %
                                                  ----------------    -------------    ----------------    ------------

<S>                                               <C>                   <C>            <C>                  <C>
Operating revenues                                $       132,136       100.0%         $       120,370      100.0%
                                                  ----------------    -------------    ----------------    ------------

Operating expenses                                        115,435        87.4                   93,877       78.0
Fuel                                                       13,214        10.0                   10,327        8.6
Depreciation and amortization                               5,293         4.0                    6,331        5.2
Restructuring charge                                         (225)        (.2)                    ----        ----
General and administrative expenses                         4,510         3.4                    2,652        2.2
                                                  ----------------    -------------    ----------------    ------------

Total operating expenses                                  138,227       104.6                  113,187       94.0
                                                  ----------------    -------------    ----------------    ------------
   Operating  (loss) income                                (6,091)       (4.6)                   7,183        6.0
Interest expense                                            3,232         2.5                    2,997        2.5
                                                  ----------------    -------------    ----------------    ------------

(Loss) income before income taxes                          (9,323)       (7.1)                   4,186        3.5
Income tax (benefit)                                       (1,195)        (.9)                   2,450        2.0
                                                  ----------------    -------------    ----------------    ------------

Net (loss) income                                          (8,128)       (6.2)%                  1,736        1.5%
                                                                      =============                        ============

Preferred stock dividend requirement                         (563)                                (296)
                                                  ----------------                     ----------------

(Loss) income available to
 common shareholders                               $       (8,691)                     $          1,440
                                                  ================                     ================

(Loss) income per basic common share               $         (.27)                     $            .05
                                                  ================                     ================

(Loss) income per diluted common share             $         (.27)                     $            .04
      $                                           ================                     ================

Weighted  average  number of basic common shares
outstanding                                            31,848,244                           31,855,927
                                                  ================                     ================

Weighted average number of diluted common
shares outstanding                                     31,848,244                           32,900,789
                                                  ================                     ================
</TABLE>


Comparable  revenues  increased by 9.8% in the three month period ended June 30,
2000 compared to the same period in the prior year. Our  acquisitions,  strength
of the U.S.  economy and  improvements  in load sharing  arrangements  among the
acquired companies contributed to this improvement.

In the  current  quarter we  recorded  an  impairment  loss of $2.2  million for
equipment segregated from service. This loss is reflected in operating expenses.
We expect to dispose of this equipment in the third quarter.

Fuel costs have increased  approximately  28% over prior year levels  offsetting
the ongoing revenue shift to non-asset based sources.

Depreciation  expense  has  declined as a result of the change in fleet mix from
company  owned  equipment  to  non  asset  based  revenue  (owner-operators  and
brokerage).

We are  currently  incurring  higher  general and  administrative  costs due the
consolidation  of  back  office  functions  at  the  Groveland  Service  Center.
Duplicative back office functions in our operating  companies will be eliminated
by the end of the fiscal year.

We continue to  experience  significant  negative  operating  results at certain
companies  acquired in 1999. We are in the process of disposing of underutilized
equipment at these divisions,  consolidating  their back office functions at the
Groveland  Service Center,  and modifying their  respective  route structures to
enhance profitability.

As a result of the factors  discussed above our pro-forma  results for the three
months  ended June 30 declined  from pretax  income of $4.2 million in 1999 to a
loss of $9.3 million in 2000.

<TABLE>
<CAPTION>
Unaudited Results of Operations -Six months ended June 30, 2000 vs. six months ended June 30, 1999
--------------------------------------------------------------------------------------------------

               Unaudited Pro Forma Combined Results of Operations
                           (In thousands except share data)

                                                                            Six months ended
                                                  ---------------------------------------------------------------------
                                                           June 30, 2000                        June 30, 1999
                                                  ---------------------------------    --------------------------------
                                                         $                 %                  $                 %
                                                  ----------------    -------------    ----------------    ------------

<S>                                               <C>                   <C>            <C>                  <C>
Operating revenues                                $       265,341       100.0%         $       241,373      100.0%
                                                   ---------------    -------------    ----------------    ------------

Operating expenses                                        224,698        84.7                  189,272       78.4
Fuel                                                       26,969        10.2                   20,406        8.5
Depreciation and amortization                              10,621         4.0                   11,675        4.8
Restructuring charge                                          854          .3                     ----        ----
General and administrative expenses                         8,466         3.2                    5,975        2.5
                                                  ----------------    -------------    ----------------    ------------

Total operating expenses                                  271,608       102.4                  227,328       94.2
                                                  ----------------    -------------    ----------------    ------------
   Operating (loss) income                                 (6,267)       (2.4)                  14,045        5.8

Interest expense                                            6,477         2.4                    5,754        2.4
                                                  ----------------    -------------    ----------------    ------------
   (Loss) income before income taxes                      (12,744)       (4.8)                   8,291        3.4

Income tax (benefit)                                       (2,945)       (1.1)                   4,461        1.8
                                                  ----------------    -------------    ----------------    ------------

   Net income                                              (9,799)       (3.7)%                  3,830        1.6%
                                                                      =============                        ============

Preferred stock dividend requirement                       (1,125)                                (296)
                                                  ----------------                     ----------------

(Loss) income available to
common requirement                                 $      (10,924)                        $       3,534
                                                  ================                     ================

(Loss) income per basic common share               $      (.34)                           $     .11
                                                  ================                     ================

(Loss) income per diluted common share             $      (.34)                           $     .11
                                                  ================                     ================

Weighted average number of basic    common
shares outstanding                                     31,847,840                           31,852,116
                                                  ================                     ================

Weighted average number of diluted
common shares outstanding                              31,847,840                           32,762,323
                                                  ================                     ================
</TABLE>

Comparable  revenues  increased  by 9.9% in the six month  period ended June 30,
2000 compared to the same period in the prior year. Our  acquisitions,  strength
of the U.S.  economy and  improvements  in load sharing  arrangements  among the
acquired companies contributed to this improvement.

In the  current  quarter we  recorded  an  impairment  loss of $2.2  million for
equipment segregated from service. This loss is reflected in operating expenses.
We expect to dispose of this equipment in the third quarter.

Fuel costs have increased  approximately  32% over prior year levels  offsetting
the ongoing revenue shift to non-asset based sources.

We continue to  experience  significant  negative  operating  results at certain
companies  acquired in 1999. We are in the process of disposing of underutilized
equipment at these divisions,  consolidating  their back office functions at the
Groveland  Service Center,  and modifying their  respective  route structures to
enhance profitability.

As a result of the factors  discussed  above our  pro-forma  results for the six
months  ended June 30 declined  from pretax  income of $8.3 in 1999 to a loss of
$12.7 million in 2000.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Not applicable


<PAGE>


                      TRANSIT GROUP, INC. AND SUBSIDIARIES

                           Part II - Other Information

Item 1.  Legal Proceedings

On April 20, 2000, Land Transportation,  LLC, one of our subsidiaries,  filed an
action in the Superior  Court of Cobb  County,  Georgia  (Civil  Action File No.
00-1-03130-28) against ROCOR International and R.M. Services, LLC. This case was
removed on May 31, 2000 to the U.S.  District Court for the Northern District of
Georgia,  Atlanta Division (Case Number 1:00CV1368).  Land Transportation  filed
this complaint alleging breach of contract, conversion and unjust enrichment for
breach of the terms of two asset purchase  agreements between the parties.  Land
Transportation is seeking damages in excess of $1 million.

On June 2, 2000, R.M.  Services,  LLC, one of the defendants in the above action
filed a complaint  against Land  Transportation,  LLC and Transit Group, Inc. in
the  District   Court  of  Oklahoma   County,   State  of  Oklahoma   (Case  No.
CJ-2000-4060).  The case was removed on June 26, 2000 to the U.S. District Court
for the Western District of Oklahoma (Case No. Civ-00-1126-R).  R.M. Services is
seeking  damages  from Land  Transportation  and  Transit  Group  for  breach of
contract based on Land  Transportation's  alleged  failure to pay two promissory
notes in  connection  with two asset  purchase  agreements  and Transit  Group's
alleged failure as guarantor to pay the obligations  under the promissory  notes
of approximately  $750,000.  Land Transportation  withheld the payment due under
the note to R.M.  Services due to the claims asserted by Land  Transportation in
connection   with  its  pending   action   against   R.M.   Services  and  ROCOR
International.

Item 2.  Changes in Securities and Use of Proceeds

Due to working capital  restrictions  under our revolving credit facility we did
not make the June 30, 2000  preferred  stock  dividend  payment in the amount of
$563,000.

Item 3.  Defaults 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 have not
been in compliance with certain of the covenants since December 31, 1999.

We have  received  a series of waivers  to allow the  participant  banks time to
consider an amendment to the facility at the  expiration  of the waiver  period,
currently  September 15, 2000. In  consideration  of these  waivers,  the unused
commitment  under the  acquisition  facility  has been  cancelled,  the  maximum
borrowings  under the revolving  credit facility are capped at the lesser of the
borrowing base or $95.9 million, and we incurred fees of $.6 million. The waiver
contains  various   conditions   including  that  we  cure  certain   collateral
deficiencies  during  the  current  30 day  waiver  period.  We  are  continuing
negotiations  with  the  bank  group to amend  the  revolving  credit  facility.
However,  there is no assurance,  that we can amend the facility,  refinance the
facility or that we can fulfill the  collateral  requirements  under the current
waiver.  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 Stock 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.  Due to  restrictions  under our  revolving
credit  facility  we did not make the June 30,  2000  preferred  stock  dividend
payment in the amount of  $563,000.  Should  this event of default  remain,  the
holders of the  Preferred  Stock will have the right to elect two members to our
Board of Directors.

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

The  following  proposals  were  submitted  to our  shareholders  at our  annual
shareholders meeting on May 18, 2000.

1.   The  proposal to elect T. Wayne Davis,  Philip A.  Belyew,  Derek E. Dewan,
     Carroll L. Fulmer, Robert R. Hermann, Jr., and Ford G. Pearson as Directors
     to serve until the 2001 annual  shareholders'  meeting. For T. Wayne Davis,
     Derek E. Dewan,  Robert R.  Hermann,  and Ford G. Pearson this proposal was
     approved with 33,582,853 shares or 99% voting for the proposal, and 336,849
     shares or .01% withholding  authority.  For Carroll L. Fulmer this proposal
     was approved with 31,643,442  shares or 94.4% voting for the proposal,  and
     1,879,360 shares or 5.6% withholding  authority.  For Philip A. Belyew this
     proposal  was  approved  with  31,582,853  shares or 94.2%  voting  for the
     proposal and 1,939,949 shares or 5.8% withholding authority.

2.   The proposal to ratify the selection of  PricewaterhouseCoopers  LLP as our
     independent  public accountants for the year ending December 31, 2000. This
     proposal  was  approved  with  31,523,894  shares or 94.0%  voting  for the
     proposal,  1,544,666 shares or 4.6% voting against the proposal and 454,297
     or 1.4% abstaining from the proposal.

Item 5.  Other Information

On July 17, 2000, we received a letter from The Nasdaq Stock Market notifying us
that our common  stock had failed to maintain  the minimum bid price as required
for continued  listing on The Nasdaq Small Cap Market. We have until October 16,
2000 to regain  compliance  with the Nasdaq  minimum bid price rules.  If we are
unable to demonstrate  compliance  with the Nasdaq minimum bid price rules on or
before  October 16,  2000,  our common  stock will be delisted at the opening of
business on October 18, 2000.

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

         10.1     Credit Facility Waiver

         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 second  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: August 14, 2000                                By:   /s/N. Mark DiLuzio
                                                          -------------------
                                                          N. Mark DiLuzio
                                                          Senior Vice President,
                                                          and Interim Chief
                                                          Financial Officer