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, 1999

[ ]  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 26,046,701 shares of the Company's common stock outstanding as of May
4, 1999.
<PAGE>

                               TRANSIT GROUP, INC.

                                    FORM 10-Q

                                      INDEX

PART I.  FINANCIAL INFORMATION                                      Page Number

         Item 1
         Financial Statements

         Consolidated Balance Sheets
          as of March 31, 1999 (unaudited) and December 31, 1998          2

         Consolidated Statements of Income (unaudited) for the three
          months ended March 31, 1999 and 1998                            3

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

         Consolidated Statements of Cash Flows (unaudited) for the 
          three months ended March 31, 1999 and 1998                      5

         Notes to Consolidated Financial Statements (unaudited)           6

         Item 2
         Management's Discussion and Analysis of Financial
          Condition and Results of Operations                             8

         Item 3
         Quantitative and Qualitative Disclosures About
          Market Risk                                                     13


PART II. OTHER INFORMATION

         Item 6
         Exhibits and Reports on Form 8-K                                 13
<PAGE>
<TABLE>
<CAPTION>

                                               TRANSIT GROUP, INC.

                                         CONSOLIDATED BALANCE SHEETS
 

                                                    ASSETS

                                                                            March 31,              December 31,
                                                                              1999                     1998
                                                                          -------------           --------------
                                                                           (Unaudited)

Current assets:
<S>                                                                      <C>                        <C>  
  Cash                                                                   $     1,943,065            $   2,019,715

  Accounts receivable (net of allowance of $695,943 and $706,000)             35,525,541               28,437,208

  Other current assets                                                         8,218,126                5,611,332

  Deferred  income taxes                                                       1,103,220                1,103,220
                                                                         ----------------           --------------
      Total current assets                                                    46,789,952               37,171,475
                                                                         ----------------           --------------

Noncurrent assets:

  Property, equipment, and capitalized leases                                 66,224,821               42,818,024

  Goodwill                                                                    54,903,276               50,061,862

  Other assets                                                                   495,133                  475,620
                                                                         ----------------           --------------
      Total noncurrent assets                                                121,623,230               93,355,506

                                                                         ----------------           --------------
      Total assets                                                       $   168,413,182            $ 130,526,981
                                                                         ================           ==============

                                                LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

  Current obligations under capital leases                                   $ 1,539,255              $ 1,518,187

  Current maturities of long-term debt                                        12,156,956               10,754,424

  Accounts payable                                                            10,165,369                6,169,561

  Bank overdrafts                                                              1,195,008                1,319,203

  Accrued expenses and other current liabilities                              11,723,425               10,028,776

  Net current liabilities of discontinued operations                              41,979                  272,832
                                                                         ----------------           --------------
      Total current liabilities                                               36,821,992               30,062,983
                                                                         ----------------           --------------
Noncurrent liabilities:

  Long-term obligations under capital leases                                   2,987,074                2,429,245

  Long-term debt                                                              55,353,370               36,534,421

  Note payable to affiliate of Chairman                                        4,000,000                3,500,000

  Other liabilities                                                            4,123,706                4,290,770

  Deferred income taxes                                                        3,891,285                  438,958
                                                                         ----------------           --------------
     Total noncurrent liabilities                                             70,355,435               47,193,394
                                                                         ----------------           --------------
     Total liabilities                                                       107,177,427               77,256,377
                                                                         ----------------           --------------
Redeemable common stock                                                        3,675,400                5,115,071
                                                                         ----------------           --------------
<PAGE>
Non redeemable preferred stock, common stock

 and other stockholders' equity:

  Preferred stock, no par value, 5,000,000 shares authorized,

   none outstanding                                                                -----                    -----

  Note receivable secured by stock                                              (742,500)                (729,000)

  Common Stock, $.01 par value, 30,000,000 shares

   authorized, 26,046,701 and 23,610,190 shares issued and outstanding           250,258                  222,177

  Additional paid-in capital                                                  76,868,981               68,411,245

  Accumulated deficit                                                        (18,816,384)             (19,748,889)
                                                                         ----------------           --------------
      Total non redeemable preferred stock, common stock

       and other stockholders' equity                                         57,560,355               48,155,533
                                                                         ----------------           --------------

      Total liabilities and stockholders' equity                         $   168,413,182            $ 130,526,981
                                                                         ================           ==============
</TABLE>
      See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                              TRANSIT GROUP, INC.
                                       CONSOLIDATED STATEMENTS OF INCOME
                                                  (Unaudited)


                                                                          Three Months Ended March 31,
                                                                    ---------------------------------------
                                                                                         
                                                                           1999                  1998
                                                                    ------------------   ------------------
<S>                                                                 <C>                  <C>
Operating revenues                                                  $      64,843,382    $      26,345,581
                                                                    ------------------   ------------------

Operating expenses:
Purchased transportation                                                   25,517,355           11,750,926
Salaries, wages and benefits                                               15,641,484            6,093,245
Fuel                                                                        4,857,754            2,022,807
Operating supplies and expenses                                             6,873,349            1,240,350
Lease expense - revenue equipment                                           4,136,001              725,155
Insurance                                                                     794,196              655,049
Depreciation and amortization expense                                       2,295,263            1,321,813
General and administrative expense                                          1,766,981              814,775
                                                                    ------------------   ------------------
    Total operating expenses                                              61,882,383           24,624,120
                                                                    ------------------   ------------------

     Operating income                                                       2,960,999            1,721,461

Interest expense                                                            1,002,712              778,963
                                                                    ------------------   ------------------

Income before income taxes                                                  1,958,287              942,498
Income taxes                                                                1,025,782              100,257
                                                                    ------------------   ------------------

  Net income                                                        $         932,505    $         842,241
                                                                    ==================   ==================

Income per common share -- basic and diluted                        $            0.04    $            0.04
                                                                    ==================   ==================

Weighted average number of common shares
  outstanding - basic                                                      24,432,823           20,822,664
                                                                    ==================   ==================

Weighted average number of common shares
  outstanding - diluted                                                    25,208,372           22,061,261
                                                                    ==================   ==================

</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                             TRANSIT GROUP, INC.

                               CONSOLIDATED STATEMENT OF CHANGES IN TOTAL

                              NON REDEEMABLE PREFERRED STOCK, COMMON STOCK

                                      AND OTHER SHAREHOLDERS' EQUITY

                                                (Unaudited)

                                                                                                                   Total
                                            Common         Additional     Note receivable     Accumulated      shareholders'
                                            stock        paid-in capital  secured by stock      deficit           equity
                                            -----        ---------------  ----------------      -------           ------
<S>                                       <C>            <C>              <C>               <C>              <C> 
Balance at December 31, 1998              $  222,177     $    68,411,245  $       (729,000) $   (19,748,889) $      48,155,533

Stock issued for acquisitions                 27,711           8,291,678             -----            -----          8,319,389

Stock purchased and retired                   (3,574)         (1,381,400)            -----            -----         (1,384,974)

Stock returned to settle contingencies

 and retired                                    (272)           (118,595)            -----            -----           (118,867)

Accrued interest                               -----               -----           (13,500)           -----            (13,500)

Stock issued to affiliate of Chairman            501             230,097             -----            -----            230,598

Stock no longer subject to redemption          3,715           1,435,956             -----            -----          1,439,671

Net income                                     -----               -----             -----          932,505            932,505

                                          ===========    ================ ================= ================ ==================
Balance March 31, 1999                    $  250,258     $    76,868,981  $       (742,500) $   (18,816,384) $      57,560,355
                                          ===========    ================ ================= ================ ==================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                                 TRANSIT GROUP, INC.
                                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                     (Unaudited)
                                                                                    Three Months Ended March 31,
                                                                         ----------------------------------------------
                                                                                    
                                                                                  1999                     1998
                                                                         ---------------------    ---------------------
<S>                                                                      <C>                      <C>   
Cash flows from operating activities:
  Income from continuing operations                                      $            932,505     $            842,241
                                                                         ---------------------    ---------------------
    Adjustments to reconcile income to cash provided by continuing operations:
      Depreciation and amortization                                                 2,295,263                1,321,813
      Gain on sale of equipment                                                      (146,451)                (142,282)
    Changes in assets and liabilities
      Increase (decrease) in accounts receivable                                      273,841                 (620,875)
      Increase (decrease) in other assets                                             343,910                 (400,566)
      Increase (decrease) in accounts payable and accrued expenses                    278,943                 (907,785)
      Other                                                                          (471,677)                 (39,827)
                                                                         ---------------------    ---------------------
          Total adjustments                                                         2,573,829                 (789,522)
                                                                         ---------------------    ---------------------

          Net cash provided by continuing operations                                3,506,334                   52,719
          Net cash used in discontinued operations                                       (255)                 (55,159)
                                                                         ---------------------    ---------------------
                                                                  
              Net cash provided by (used in) operating activities                   3,506,079                   (2,440)
                                                                         ---------------------    ---------------------

Cash flows from investing activities:
  Business combinations, net of cash acquired                                      (2,694,487)                (210,196)
  Proceeds from disposal of equipment                                               1,478,501                  843,510
  Purchase of equipment                                                            (2,025,403)                (188,606)
  Stock redeemed                                                                   (1,384,974)                   -----
                                                                         ---------------------    ---------------------
                                                                       
               Net cash (used in) provided by investing activities                 (4,626,363)                 444,708
                                                                         ---------------------    ---------------------

Cash flows from financing activities:
  Purchase of treasury stock                                                            -----                  (75,000)
  Repayment of capital lease obligations and long-term debt                        (4,517,350)              (3,237,851)
  Increase in long-term debt                                                        6,513,095                3,119,931
  Decrease in bank overdraft                                                         (952,111)                   -----
                                                                         ---------------------    ---------------------
                                                                        
               Net cash provided by (used in) financing activities                  1,043,634                 (192,920)
                                                                         ---------------------    ---------------------

(Decrease) increase in cash                                                           (76,650)                 249,348
Cash, beginning of period                                                           2,019,715                  789,791
                                                                         ---------------------    ---------------------
Cash, end of period                                                      $          1,943,065     $          1,039,139
                                                                         =====================    =====================

Supplemental cash flow data
   Cash paid for interest                                                $            847,681     $            910,279
                                                                         =====================    =====================

Business combinations
  Fair value of assets acquired                                          $         41,437,000     $          4,550,000
  Fair value of liabilities assumed                                               (30,093,000)              (2,800,000)
  Common stock issued                                                              (8,319,000)              (1,540,000)
                                                                         ---------------------    ---------------------
               Net cash payments                                         $          3,025,000     $            210,000
                                                                         =====================    =====================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
                      TRANSIT GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


The information  presented herein as of March 31, 1999, and for the three months
ended March 31, 1999 and 1998 is unaudited.  The December 31, 1998 balance sheet
was  derived  from  audited  financial  statements,  but  does not  include  all
disclosures required by generally accepted accounting principles.

1.  Basis of Presentation
The consolidated  balance sheet of Transit Group,  Inc.  ("Transit Group" or the
"Company") as of March 31, 1999, it's consolidated statements of income, and its
consolidated  statements  of cash flows for the three month  periods ended March
31, 1999 and 1998  include the  consolidated  balance  sheets of the Company and
it's fourteen  acquired  subsidiaries,  and the results of  operations  and cash
flows for the periods  since  acquisition.  The  Company has 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

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
the Company in accordance and consistent with the accounting  policies stated in
the  Company's  1998  Annual  Report  on  Form  10-KSB  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 and notes of Transit Group.

3.  Business Combinations

From July 1997 through December 1998 the Company acquired 11 truckload carriers.
In January 1999, the Company  acquired  Priority  Transportation,  Inc. an Olive
Branch,  Mississippi based truckload carrier. Total consideration for all of the
outstanding  shares of  Priority  was funded by the  issuance  of  approximately
890,000  shares of Transit Group common stock,  the payment of $1,000,000  cash,
and a $495,000 payment on a promissory note.

The Company acquired Massengill Trucking Service, Inc. in March 1999. Massengill
was a privately held truckload carrier based in Hickory Flat,  Mississippi.  The
acquisition  was funded by the  issuance of  approximately  1,070,000  shares of
Transit  Group common  stock,  a cash  payment of $1.3  million at closing,  and
approximately $850,000 over a five year period.

Also in March 1999, the Company acquired Chesterton, Indiana based KAT, Inc. for
consideration  comprised of approximately 812,000 shares of Transit Group common
stock and $725,000 in cash.

The  business  combinations  described  above  will be  accounted  for under the
purchase  method  of  accounting.  Accordingly,  the  operating  results  of the
acquired  companies have been included in the Company's  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 5
companies  acquired  in  1997,  the 6  companies  acquired  in  1998,  and the 3
companies  acquired in 1999 as if they all had been acquired on January 1, 1998.
The following  adjustments were made to the historical  financial  statements of
acquired companies prior to their acquisition by the Company:

   - Reduced  depreciation  expense  due to  changes  in  depreciation policies
     and estimated lives;  
   - Amortization of goodwill  recorded in connection with the  acquisitions; 
   - Additional  interest costs for the cash portion of the acquisition costs; 
   - Interest costs of the  acquired   companies have been adjusted to reflect
     the Company's financing costs; and
   - 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, 1998 through the date of acquisition.
<TABLE>
<CAPTION>
                                Unaudited Pro Forma Combined Results of Operations

                                                                              Three Months Ended March 31,
                                                                         ----------------------------------------
                                                                               1999                  1998
                                                                         ------------------    ------------------
           <S>                                                           <C>                   <C>  
           Revenue                                                       $      72,751,000     $
                                                                                                      71,944,000
                                                                         ==================    ==================

           Net income                                                    $       1,070,000     $       1,048,000
                                                                         ==================    ==================

           Income per basic common share                                 $             .04     $             .04
                                                                         ==================    ==================

           Income per diluted common share                               $             .04     $             .04
                                                                         ==================    ==================

           Weighted average number of basic common
           shares outstanding                                                   26,029,987           26,381,555
                                                                         ==================    ==================

           Weighted average number of diluted
           common shares outstanding                                            26,805,536           27,620,152
                                                                         ==================    ==================
</TABLE>
4.  Income Taxes

At December 31, 1998, the Company had  $27,401,275 of federal net operating loss
carryforwards potentially available to offset taxable income which expire during
the years 2007 to 2012. The Company recognized  $7,504,000 in benefits for these
net  operating  losses in the December  31, 1998  financial  statements  because
management  believed  it is more  likely  than  not that  the  benefits  will be
realized.  The Company will be limited in the amount of net operating loss 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  March  31,  1999  the net  operating  loss  carryforwards are
approximately $26.6 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  amortization  expense and certain  other  nondeductible
expenses.

5.  Subsequent Events

On May 14, 1999 the Company  consummated an equity  financing  transaction  with
General  Electric  Capital  Corporation  ("GECC").  GECC invested $25 million in
exchange  for 5  million  shares of 9%  cumulative  preferred  stock,  which are
convertible to common shares at any time. The proceeds will be used primarily to
finance future acquisitions although initially the Company will pay down certain
borrowings under its revolving credit facility, and other borrowings.
<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 the Company's business which are not historical
facts are forward looking statements that involve risks and uncertainties. Among
these risks are the Company is in a highly competitive  business,  has a history
of operating  losses,  and is 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 its highly competitive business environment, the Company
will  successfully  improve  its  operating  profitability  or  consummate  such
acquisitions.

Liquidity and Capital Resources

In November  1998,  the Company  increased the capacity of its revolving line of
credit with  AmSouth  Bank from $20 million to $30  million.  At March 31, 1999,
$1.0 million was available under the credit facility.  Concurrent with expanding
its credit facility,  the Company converted $5 million of debt, which was due in
1999,  to a term  facility  which  amortizes  over  seven  years and has a final
maturity in January 2002.

Also  in  November  1998,  the  Company  entered  into a $50  million  equipment
operating lease facility with a commercial  lender. The facility is available to
restructure  the  financing of certain  existing  equipment and the remainder to
support future equipment leases. At March 31, 1999 approximately $14 million was
available under this facility.

The Company's  acquisition  strategy and  requirements for replacing its revenue
equipment require  significant  capital resources.  For three months ended March
31,  1999,  cash flow from  operating  activities  was $3.5  million and capital
expenditures  were $2.0  million  for new trucks and  trailers.  There can be no
assurance that the Company can continue to finance its fleet through operations,
leases or commercial lenders.

On May 14, 1999 the Company  consummated an equity  financing  transaction  with
General  Electric  Capital  Corporation  ("GECC").  GECC invested $25 million in
exchange  for 5  million  shares of 9%  cumulative  preferred  stock,  which are
convertible to common shares at any time. The proceeds will be used primarily to
finance future acquisitions although initially the Company will pay down certain
borrowings under its revolving credit facility, and other borrowings.

The Company believes that the amounts available from operating cash flows, funds
available under its current  facilities and its equipment lease facility will be
sufficient to meet the Company's  expected  operating  needs and planned capital
expenditures for the foreseeable future.

Redemption Rights for Selling Shareholders in Acquisitions

In connection with the acquisitions of Capitol Warehouse,  Service Express,  and
Carroll  Fulmer,  the  Company  granted the  selling  shareholders  the right to
require  the  Company to redeem a portion of the shares  which they  received in
exchange for selling their businesses to the Company. The dollar amount of stock
subject to mandatory  redemption by the Company  aggregated  approximately  $8.1
million upon acquisition of those companies.

At March 31, 1999,  holders of redemption rights with respect to $3.7 million of
stock may require either the Company to redeem the stock or a major  shareholder
of the Company to acquire the stock at a price of $3.60 per share. To the extent
such redemption  rights are exercised,  the Company will be required to fund the
cash required to meet its obligations  under the redemption rights by drawing on
bank lines which may be available to its  subsidiaries,  or to call upon a major
shareholder  to purchase  the stock  under such  shareholder's  obligations  and
guarantees associated with the acquisition contracts.
<PAGE>
Results of Operations - Three months ended March 31, 1999 compared with the 
  three months ended March 31, 1998

The following table sets forth items in the Consolidated Statement of Income for
the three  months  ended March 31, 1999 and 1998 as a  percentage  of  operating
revenues.
<TABLE>
<CAPTION>
                                                                                       Percentage of
                                                                                    Operating Revenues
                                                                                         March 31,
                                                                              --------------------------------
                                                                                     1999             1998
                                                                                  ------------    -------------
               <S>                                                                   <C>            <C> 
               Operating revenues                                                    100.00%        100.00%
                                                                                  ------------    -------------

               Purchased transportation                                               39.35          44.60
               Salaries, wages and benefits                                           24.12          23.13
               Fuel                                                                    7.49           7.68
               Operating supplies and expenses                                        10.60           4.71
               Lease expense - revenue equipment                                       6.38           2.75
               Insurance                                                               1.22           2.49
               Depreciation and amortization expense                                   3.54           5.02
               General and administrative expense                                      2.73           3.09
                                                                                                  -------------
                                                                                  ------------
               Total expenses                                                         95.43          93.47
                                                                                  ------------    -------------
                 Operating income                                                      4.57           6.53
               Interest expense                                                        1.55           2.95
                                                                                  ------------    -------------
                 Income before income taxes                                            3.02           3.58
               Income taxes                                                            1.58            .38
                                                                                  ------------    -------------

               Net income                                                             1.44%          3.20%
                                                                                  ============    =============
</TABLE>

Operating  revenue  increased  from $26.3 million in 1998 to $64.8  million,  or
146.1%,  for 1999.  The  increase is due  primarily to the  acquisition  of nine
companies  from  January  1998  through  March  1999.  Purchased  transportation
increased  from $11.8  million in 1998 to $25.5  million,  or 117.2%.  Purchased
transportation  as a percentage of operating  revenues  decreased from 44.60% in
1998  to  39.35%  in  1999.   Changes  in  the  fleet  mix  from  brokerage  and
owner-operators to company owned trucks as a result of the acquisitions resulted
in the decline in purchase transportation as a percentage of sales.

Salaries,  wages  and  benefits  increased  from $6.1  million  in 1998 to $15.6
million,  or 156.7%,  in 1999.  Salaries,  wages and benefits as a percentage of
operating revenues increased from 23.13% in 1998 to 24.12% in 1999. The increase
as a percentage of operating revenues is attributed to the change in revenue mix
discussed in the  preceding  paragraph  as well as continued  pressure on driver
wages. Should driver wages continue to increase as a result of the industry-wide
driver shortage,  there can be no assurance that these costs can be passed along
through increased freight rates.

Fuel  increased from $2.0 million in 1998 to $4.9 million,  or 140.1%,  in 1998.
Fuel as a percentage of operating revenues decreased from 7.68% in 1998 to 7.49%
in 1999. Fuel costs as a percentage of operating  revenues decreased as a result
of lower fuel prices  compared  with the prior year,  the  Company's  ability to
negotiate  more  favorable  fuel  contracts  and  improved  gas mileage from the
purchase of new, more efficient  equipment.  In the first quarter of 1999,  fuel
costs  began to  increase  over the amount  paid in the fourth  quarter of 1998.
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 $1.2 million in 1998 to $6.9
million, or 454.1%, in 1999.  Operating supplies and expenses as a percentage of
operating  revenues increased from 4.71% in 1998 to 10.60% in 1999. The increase
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 $.7 million in 1998 to $4.1
million, or 470.4% in 1999. Expressed as a percent of operating revenues,  lease
expense - revenue equipment  increased from 2.75% in 1998 to 6.38% in 1999. This
increase is related to the  utilization  of the Company's $50 million  equipment
operating lease facility.
<PAGE>
Insurance expense  increased from $.7 million in 1998 to $.8 million,  or 21.2%,
in 1999.  Insurance expense as a percentage of operating revenues decreased from
2.49% in 1998 to 1.22%  in 1999.  The  decrease  as a  percentage  of  operating
revenues is due to the Company's  ability to negotiate more favorable  insurance
rates because of its larger, more diverse insurance base.

Depreciation  and  amortization  expense  increased from $1.3 million in 1998 to
$2.3 million,  or 73.6%, in 1999.  Depreciation  and  amortization  expense as a
percentage of operating  revenues decreased from 5.02% in 1998 to 3.54% in 1999.
The decrease as a percentage  of operating  revenues is due to the increased use
of leased equipment.

General and  administrative  expense  increased from $.8 million in 1998 to $1.8
million, or 116.8%, in 1999. General and administrative  expense as a percentage
of  operating  revenues  decreased  from  3.09% in 1998 to  2.73%  in 1999.  The
decrease  as a  percentage  of  operating  revenues  is related  to the  ongoing
consolidation  of  certain  accounting,   finance,   and  legal   administrative
functions.

Operating income increased from $1.7 million in 1998 to $3.0 million,  or 72.0%,
in 1999.  Operating income as a percentage of operating  revenues decreased from
6.53% in 1998 to 4.57% in 1999 as a result of the factors discussed above.

Interest expense  increased from $.8 million in 1998 to $1.0 million,  or 28.7%,
in 1999 as a result of increased  borrowings to fund acquisitions offset by more
favorable interest rates and the increased use of leased equipment.

Income taxes  increased  from $.1 million in 1998 to $1.0 million in 1999 as the
Company  recognized the future value of net operating loss  carryforwards in the
fourth quarter of 1998.  Previously these benefits were recognized when realized
which lowered the effective tax rates in prior periods.

Income per basic and diluted common share was $.04 in both periods presented.
Results of  Operations  - Unaudited  Pro Forma Three months ended March 31, 1999
compared with the three months ended March 31, 1998

Since July 1997, the Company has acquired 14 truckload  carriers.  Transit Group
has enabled these companies to reduce certain costs particularly in the areas of
insurance,  interest  and leasing  costs,  fuel,  and  redundant  overhead.  The
Company's  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 14
acquired  companies  as if they all had been  acquired  on January 1, 1998.  The
following  adjustments  were  made to the  historical  financial  statements  of
acquired companies prior to their acquisition by the Company:

   - Reduced  depreciation  expense  due to  changes  in  depreciation policies
     and estimated lives;  
   - Amortization of goodwill  recorded in connection with the  acquisitions; 
   - Additional  interest costs for the cash portion of the acquisition costs; 
   - Interest costs of the  acquired   companies have been adjusted to reflect
     the Company's financing costs; and
   - 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, 1998 through the date of acquisition.
<PAGE>
<TABLE>
<CAPTION>
                                Unaudited Pro Forma Combined Results of Operations

                                                         March 31, 1999                       March 31, 1998
                                                 --------------------------------    ---------------------------------
                                                        $                 %                 $                  %
                                                 ----------------    ------------    -----------------    ------------
<S>                                              <C>                   <C>           <C>                   <C>   
Operating revenues                               $    72,751,000       100.00%       $    71,944,000       100.00%
                                                 ----------------    ------------    -----------------    ------------

Operating expenses                                    64,658,000        88.88             61,825,000        85.93
Depreciation and amortization                          2,579,000         3.54              3,723,000         5.18
General and administrative expenses                    1,913,000         2.63              2,153,000         2.99
                                                 ----------------    ------------    -----------------    ------------

Total operating expenses                              69,150,000        95.05             67,701,000        94.10
                                                 ----------------    ------------    -----------------    ------------
   Operating income                                    3,601,000         4.95              4,243,000         5.90

Interest expense                                       1,356,000         1.86              1,914,000         2.66
                                                 ----------------    ------------    -----------------    ------------
   Income before income taxes                          2,245,000         3.09              2,329,000         3.24

Income taxes                                           1,175,000         1.62              1,281,000         1.78
                                                 ----------------    ------------    -----------------    ------------

   Net income                                          1,070,000         1.47              1,048,000         1.46
                                                 ================    ============    =================    ============

Income per basic common share                    $           .04                     $           .04
                                                 ================                    =================

Income per diluted common share                  $           .04                     $           .04
                                                 ================                    =================

Weighted average number of basic common
shares outstanding                                    26,029,987                          26,381,555
                                                 ================                    =================

Weighted average number of diluted
common shares outstanding                             26,805,536                          27,620,152
                                                 ================                    =================
</TABLE>
Excluding the impact of the Rainbow/Capitol  merger discussed below,  comparable
unaudited pro forma revenues  increased by approximately $1.9 million (2.7%) for
the three months ended March 31, 1999 compared to the same period in 1998.

The Company phased out the warehouse  operations of Capitol Warehouse due to its
marginal  profitability and merged its trucking operations into those of Rainbow
Trucking  during fiscal 1998. The combined  operations had a decrease in revenue
of $1.0 million in  unaudited  pro forma 1999  compared to  unaudited  pro forma
1998.

Operating  expenses  increased from $61.8 million in unaudited pro forma 1998 to
$64.6  million in unaudited pro forma 1999.  Operating  expenses as a percent of
total revenues and other income increased from 85.93% in 1998 to 88.88% in 1999.
These increases are related to the Company's  increased use of leased  equipment
as compared to purchasing revenue equipment.

Depreciation  and  interest  costs have  declined  both in terms of dollars  and
percent of revenue as a result of the Company's  lower cost of capital  compared
to the  acquired  companies  and  emphasis  on leasing  rather  than  purchasing
equipment.

On an unaudited pro forma basis,  the operating  ratio  increased from 94.10% to
95.05% for the three months ended March 31, 1999  compared to the same period in
the prior year.  This change is primarily a result of the increased  emphasis on
leased equipment compared to purchasing equipment in the prior period.
<PAGE>
Year 2000

The Company is aware of the  seriousness  associated  with the issues related to
the Year 2000 and its potential impact. In response to this unprecedented event,
management believes that it has identified,  outlined and set forth actions that
will upgrade all information  technology and non-information  technology systems
that are not Year 2000 compliant  with year 2000  compliant  systems by no later
than September  1999.  Currently,  management  estimates that the Company is 90%
complete in its efforts to be Year 2000 compliant.

Due to the contractual relationships with current software and hardware vendors,
the majority of the costs associated with Year 2000 compliance have been covered
under the annual  maintenance  fees that the Company  normally  pays.  Since the
majority  of  expenses  are  spread  throughout  the  year,  management  has not
specifically  itemized expenses related to the Year 2000.  Management  estimates
that  the  Company  has  spent  approximately  $225,000  to date  on  Year  2000
compliance  and  estimates  spending an  additional  $75,000  towards  Year 2000
compliance during the remainder of 1999.

During  its  review of the  Company's  Year  2000  compliance  plan,  management
realized  that as important as internal  systems are to its mission of Year 2000
compliance,   customers,  vendors  and  community  resources  (utilities,  local
telephone  company,  etc),  represent  a  significant  portion  of the  business
processes as well.  To that end, the Company is asking its critical  partners to
provide to the Company in writing,  their own Year 2000 progress plans. Although
management  cannot  guarantee  the  Company's  compliance,  it will  continue to
monitor  its  progress  during  the  remainder  of 1999  and  refine  plans,  as
information becomes available.

The  Company  has  identified  its  billing,  dispatch,  settlement,  and  fleet
monitoring system as its mission critical internal system that could be affected
by the Year 2000.  The Company  plans to begin  testing the Year 2000  compliant
version of this software in the second quarter of 1999.

The Company has  developed a  contingency  plan that  includes  external  vendor
readiness as well as the possibility of an internal system failure.  If external
vendors are not Year 2000  compliant  by September  1999,  the Company will find
alternate  sources to supply it with  needed  products  and  services  if at all
possible.  If internal  systems  were to fail,  the  Company  will have a manual
system in place to provide the  necessary  business  activities to its customers
until the Company can correct any such failure.

Although the  possibility of failure exists,  management  believes that its Year
2000  efforts  will  be  completed,  and  its  systems  tested  in a  production
environment in accordance with its plan by September 1999.

                      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 6 - Exhibits and Reports on Form 8-K

   (a)   Exhibits

             3i.1       Amended and Restated Articles of Incorporation

             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 1999.
<PAGE>
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 17, 1999

                               By:   /s/Wayne N. Nellums
                                     -------------------
                                        Wayne N. Nellums
                                        Senior Vice President,
                                        Chief Financial Officer
                                         and Secretary