U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                   FORM 10-QSB/A-2



 QUARTERLY REPORT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended: March 31, 2001


                        Commission file number: 000-28583


                             NEW YORK REGIONAL RAIL
                    CORPORATION (Exact name of small business
                       issuer as specified in its charter)


                               DELAWARE 13-3081571
                (State or other jurisdiction of (I.R.S. Employer
               incorporation or organization) Identification No.)



                        4302 First Ave Brooklyn, NY 11232
          (Address of principal executive offices, including zip code)


                                 (718) 788-3690
                           (Issuer's telephone number)


 Indicate by check mark whether the Issuer (1) has filed all reports required to
be   filed   by   Section   14 or 15 (d) of the Exchange Act during the  past 12
months(or for such shorter period that the registrant was  required to file such
reports), and (2) has been  subject  such  filing  requirements for  the past 90
days.

                                Yes [ X ] No [ ]


There were 171,426,189 shares of the Registrant's Common Stock outstanding as of
March 31, 2001.


<PAGE>





                                      INDEX

Part  I:          Financial Information

Item 1.           Financial Statements (Restated):

Unaudited Consolidated Balance Sheets - as of March 31, 2001 ........3

Unaudited Consolidated Statements of Operations,
Three Months Ended March 31, 2001 and March 31, 2000.................4

Unaudited Consolidated Statement of Cash Flows,
Three Months Ended March 31, 2001 and March 31, 2000.................5

Notes to Consolidated Financial Statements.........................6-8

Item 2.   Management's Discussion and Analysis or
          Plan of Operations.......................................8-12


Part II:  Other Information..........................................12

 Item 1.  Legal Proceedings..........................................12

 Item 2.  Change in Securities.......................................12

 Item 3. Defaults Upon Senior Securities.............................12

 Item 4. Submission of matters to a vote
                    of Security Holders..............................12

 Item 5. Other Information...........................................12

 Item 6. Exhibits and Reports on Form 8-K............................12


Signatures...........................................................13









<PAGE>










               NEW YORK REGIONAL RAIL CORPORATION AND AFFILIATES
                           CONSOLIDATED BALANCE SHEET

                                  (Unaudited)

                                   (Restated)

                                     ASSETS

                                                     March 31,
                                                       2001
                                                    -----------
CURRENT ASSETS:
 Cash                                              $    81,430
 Accounts receivable - trade, net of allowance
   for doubtful accounts of $106,461                   361,302
 Other current assets                                   65,000
                                                    -----------
  TOTAL CURRENT ASSETS                                 507,732

PROPERTY AND EQUIPMENT, net                          3,663,243

OTHER ASSETS                                           909,376
                                                    -----------
                                                   $ 5,080,351
                                                    ===========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
 Accounts payable
  and accrued expenses                             $ 2,403,769
 Notes payable and
  current maturities of long term debt               1,563,049
 Payroll and payroll taxes payable                     948,431
                                                    -----------
         TOTAL CURRENT LIABILITIES                   4,915,249
                                                    -----------

DEFERRED RENT PAYABLE                                  107,718

LONG TERM DEBT, NET OF CURRENT MATURITIES            1,032,286

MINORTY INTEREST                                        23,128

TEMPORARY EQUITY                                     1,512,500

STOCKHOLDERS' DEFICIT:
 Common stock, $ .0001 par value;
  authorized 200,000,000 shares;
  issued and outstanding 171,426,189 shares             17,143
 Preferred stock series C convertible                  500,000
 Additional paid-in capital                         12,253,088
 Accumulated deficit                               (15,280,761)
                                                    -----------
 TOTAL STOCKHOLDERS' DEFICT                         (2,510,530)
                                                    -----------
                                                   $ 5,080,351
                                                   ============

               The accompanying notes are an integral part of the
                              financial statements.

                                       3
<PAGE>


                NEW YORK REGIONAL RAIL CORPORATION AND AFFILIATES
                      CONSOLIDATED STATEMENTS OF OPERATIONS





                                    Three Months Ended March 31,
                                   ----------------------------------
                                       2001                2000
                                   ----------------------------------
                                     (Unaudited)       (Unaudited)
                                     (Restated)        (Restated)


OPERATING REVENUES                $   1,199,933      $  2,402,104

OPERATING EXPENSES                      995,026         2,147,819
                                    -------------      -----------
GROSS PROFIT                            204,907           254,285

ADMINISTRATIVE EXPENSES                 460,367           269,527
                                    -------------      -----------
LOSS FROM OPERATIONS                   (255,460)          (15,242)

INTEREST EXPENSE                        (56,535)         (761,136)
                                    -------------      -----------
NET LOSS BEFORE
MINORITY INTEREST                      (311,995)         (776,378)

MINORITY INTEREST
IN (INCOME) LOSS OF SUBSIDIARY           62,106           (50,856)
                                    -------------      -----------

NET LOSS                               (249,889)         (827,234)

DEEMED PREFERRED STOCK DIVIDEND          12,500              -
                                    -------------      -----------
LOSS APPLICABLE TO COMMON
 SHAREHOLDERS                     $    (262,389)     $   (827,234)
                                    =============      ===========

LOSS PER  COMMON SHARE
 - BASIC AND DILUTED              $       (0.00)     $      (0.00)
                                    =============      ===========

WEIGHTED AVERAGE
 NUMBER OF COMMON SHARES             170,528,750       168,220,300
                                    =============      ===========


               The accompanying notes are an integral part of the
                              financial statements.

                                        4


<PAGE>



                NEW YORK REGIONAL RAIL CORPORATION AND AFFILIATE
                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                                    Three Months Ended March 31,
                                                    ----------------------------
                                                         2001           2000
                                                    ----------------------------
                                                      (Unaudited)    (Unaudited)
                                                      (Restated)      (Restated)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                             $   (249,889)   $(827,234)
                                                         ---------    ---------
Adjustments  to  reconcile
 net loss to net cash  (used  in)  provided  by
 operating activities:
Depreciation and amortization                             110,161       78,550
Non-cash compensation                                     180,950         -
Bad debt expense                                          157,490         -
Warrants and options issued for debt                         -         690,648
Beneficial cinversion feature                                -           5,778
Minority interest in subsidiary earnings                  (62,106)      50,856

Changes in assets and liabilities:
Decrease in accounts receivable                           (79,392)      59,737
(Increase)/decrease in current assets                      26,000       (3,397)
Decrease in other assets                                   80,381         -
Increase/(decrease) in accounts payable                    74,247     (604,625)
Increase/(decrease) in accrued expenses                  (149,251)       7,421
Increase in payroll taxes payable                          42,846      100,574
Increase/(decrease) in deferred rent                        6,218       (1,811)
                                                          ---------    ---------
                                                          387,544      383,731
                                                          ---------    ---------
NET CASH PROVIDED BY (USED IN)
 OPERATING ACTIVITIES                                     137,655     (445,503)
                                                          ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES
 Capital expenditures                                      (75,229)    (72,865)
                                                          ---------    --------
NET CASH USED IN INVESTING ACTIVITIES                      (75,229)    (72,865)
                                                          ---------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Payments of long term debt                                (32,754)   (147,109)
 Proceeds from ong term debt                                  -        202,500
 Proceeds from other current debt- related party              -        320,000
                                                          ---------    ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES        (32,754)    375,391
                                                          ---------    ---------
NET INCREASE/ (DECREASE) IN CASH                            40,360    (140,977)

CASH - BEGINNING OF PERIOD                                  41,070     202,974
                                                          ---------    ---------
CASH - END OF PERIOD                                     $  81,430   $  61,997
                                                          =========    =========


  The  accompanying  notes are  an  integral  part  of the financial statements.

                                    5
<PAGE>
                NEW YORK REGIONAL RAIL CORPORATION AND AFFILIATES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       BASIS OF PRESENTATION

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  statements and with the instructions to Form 10-QSB and Article 10 of
Regulation  S-X.  Accordingly,  they  do not  include  all the  information  and
disclosures required for annual financial statements.

     In the opinion of the Company's management,  all adjustments (consisting of
normal recurring  accruals)  necessary to present fairly the Company's financial
position as of March 31, 2001 are included.

     The results of operations  for the three - month period ended March 31,2001
are not necessarily indicative of the results to be expected for the full year.


2.       CAPITAL STOCK
                                                     Number of Shares
                                                     Issued and
                                    Authorized       Outstanding       Amount
                                    ----------       -----------      --------
Preferred C                            500,000          500,000        500,000

Common $.0001 par value            200,000,000      171,426,189         17,143

     On March 22, 2001 the Company  issued  9,500  shares of  restricted  stock,
pursuant to its "Stock Bonus Plan", to employees of its rail  subsidiary.  These
grants were issued on the basis of years employed.  On the date of the grant the
Company's  Common stock was valued at $0.10.  The Company has  recorded  $950 as
compensation expense.

On March 21, 2001, the Company issued  1,000,000 shares in the name of W. Robert
Bentley.  These shares will be distributed to Mr.Bentley in accordance  with his
employment  and  settlement  agreements  with  the  Company  of 1997  and  2000,
respectively.

3.       LEGAL MATTERS AND OTHER CONTINGENCIES

In June 1997, the Company filed a complaint in U.S. District Court, Eastern
District of New York against Conrail, claiming that Conrail violated federal
antitrust laws by adopting policies and procedures which were designed to
restrain trade and undermine interstate commerce. The suit further alleges that
Conrail established a systematic policy of offering predatory and preferential
rates for shippers to move freight on Conrail through its Albany route, thereby
re-routing rail traffic away from the Company. The Company is seeking damages of
$901 million. The court declined Conrail's request for a dismissal, and required
that the Company's claims be heard by an arbitrator. Pending arbitration, the
Company is exploring the possibility of a settlement with CSX Transportation
("CSXT") and Norfolk Southern Railroad ("NSR"), the acquirers of Conrail. The
Company cannot give any assurance that discussions with CSXT or NSR will lead to
a settlement of the claims.

On November 19, 1998 the City of New York filed a lawsuit against the Company
and Robert Crawford, the Company's former President, in the U.S. District Court,
Southern District of New York for the purpose of recovering the cost of the
removal and cleanup of certain hazardous substances and petroleum at the
Company's Bush Terminal facility. The suit alleges that certain parties were
instructed by the Company to dispose of hazardous and toxic materials in an
illegal manner. The plaintiff is seeking recovery of approximately $600,000,
which it claims to have spent on the investigation and cleanup of the alleged
disposal, as well as all future investigation and cleanup costs, and the cost of
this litigation. The Company intends to vigorously defend this action. The
lawsuit is presently in the early stages of discovery; accordingly the ultimate
resolution of this matter is not ascertainable at this time. No provision has
been made in the financial statements related to this matter. The City of New
York v. New York Cross Harbor Railroad Terminal Corp., Robert R. Crawford and
New York Regional Rail Corporation. United States District Court Eastern
District of New York case no. 98 Civ. 7227.

Fraser, McIntyre and Spartz v NYCH. Supreme Court of the State of New
York,  County of Kings,  Index no. 45966/99 action commenced  November 23, 1999.
This lawsuit was filed by three persons  alleging  ownership in NYCH. One of the
individuals,  Stephen  H.  Fraser  is a  shareholder  of  NYCH.  The  other  two
individuals  sold  their  interest  to Robert  R.  Crawford  in 1993.  These two
individuals claim that they were not paid by Crawford. They allege that NYCH has
guaranteed  the  performance of Mr.  Crawford. The plaintiffs are seeking the
restoration of their equitable interest in the subsidiary (NYCH)and unspecified
monetary damages to be determined by the court. The term "restoration of their
equitable interest" is the exact wording used in the "claim for relief" section
of the complaint. The term is not defined, any further within the complaint."
The Company has not conducted an extensive review of the allegations in the
complaint.
                                       6
<PAGE>
  Murphy, Marseilles, Smith & Nammack, Inc. Chapter 7 Case No. 98 B 42104 (SMB)
Richard E. O'Connell v NYRR Adversary Proceeding No. 00-02413 filed on June 7,
2000. This is an action brought by the trustee for the Murphy, Marseilles, Smith
& Nammack, Inc. bankruptcy estate. The bankruptcy trustee claims that Murphy,
Marseilles, Smith & Nammack, Inc. made a $50,000 loan to the Company in April
1996. The Company has settled this claim for $7,500.

    Platinum Funding Corp. ("Platinum")v. New York Regional Rail, New York Cross
Harbor Railroad Terminal Corp. and CH Partners, Inc., Superior Court of New
Jersey, Law Division, Bergen County Docket No.: BER-L-10413-98 on December 24,
1998. The Company was named in a lawsuit by its former factoring agent for
approximately $250,000. The balance resulted from a dispute involving a
factoring agreement which the Company entered into in December 1995. The
arrearage represents a combination of uncollected accounts receivable, factoring
fees and fees charged due to the Company's inability to meet certain
predetermined minimum factoring levels. In March 1999, the case was dismissed.
In December 1999, the Company entered into an agreement whereby the Company
issued 300,000 shares of its common stock into escrow in the name of Platinum.
These shares were to be registered and sold on behalf of Platinum until $250,000
was attained from said sale. Any unsold balance of the 300,000 shares would be
returned to treasury. If the proceeds of $250,000 were not attained, the Company
would issue additional shares to be registered and sold until the total proceeds
to Platinum would be $250,000. The Company has been unable to register these
shares for sale and they still remain in escrow. Platinum refiled the lawsuit in
October 2000. Currently, the Company is negotiating a settlement with Platinum
and believes a settlement will be reached. The Company has reflected the
liability to Platinum as a current liability in the Company's financial
statements. Depending on the terms of the settlement, these shares may be
returned to treasury and/or this liability may be changed.

The City of New York has billed the Company in excess of $3,200,000 for property
taxes dating back to 1984. The Company claims that the tax assessments are for
the most part erroneous because they relate either to real property that the
Company does not own or lease, or to property which is not subject to the real
property tax. The Company further claims that New York City taxing authorities
have assessed taxes based on flawed valuations, resulting in substantial
overcharges. The New York State Board of Equalization and Assessment has
proposed significant reductions to these valuations, subject to the approval of
the New York City Corporation Counsel. Preliminary negotiations are underway
between the Company's representatives, the New York City Real Estate Tax
Assessor, and the Corporation Counsel's office. Pending a settlement of the tax
arrears, the Company has recorded a liability on its books of $466,200
representing the tax due on the Bush Terminal property, the only parcel
currently used in the rail operations. Management expects, but cannot give
assurance, that the outstanding liabilities will be settled for a lesser amount.

The State of New Jersey has assessed the Company approximately $63,000 per year
since 1996 for real estate taxes. The Company believes that the assessment is
incorrect and the proper tax should be approximately $17,000 annually. Pending a
settlement, the Company has recorded a liability on its books of approximately
$371,400 for these real estate taxes. The Company is working to resolve this
dispute.

In 1993 and again in 1995, the Port Authority of New York and New Jersey
("PANYNJ") obtained judgments against NYCH for approximately $440,000. The
judgments are for claims involving rent arrearages on property occupied by the
Company at the PANYNJ's Atlantic Terminal facility and for accrued lease
payments and miscellaneous repairs for a Tug Boat owned by the PANYNJ. The
financial statements reflect a liability of approximately $780,000 related to
these judgments including statutory interest at a rate of 9% per annum. In
January 2000, the PANYNJ enforced its judgments by placing a lien on the
Company's accounts receivables with Norfolk Southern ("NS"). In February 2000
the Company and the PANYNJ reached an agreement whereby, NS remitted 20% of all
accounts receivable due the Company to the PANYNJ. To date approximately $19,000
has been remitted to the PANYNJ in partial satisfaction of the judgments.
Subsequently, the Company and PANYNJ have entered into settlement negotiations
for a substantially lesser amount. During these negotiations, the PANYNJ has
agreed to suspend any collection efforts.

The Company is also a party to routine claims and suits brought against it in
the ordinary course of business. Some of these matters are covered by insurance.
In the opinion of management, the outcome of these claims is not expected to
have a material adverse effect on the Company's business, financial condition,
or results of operations. The Company has established a reserve of approximately
$315,000 for the estimated costs of litigation and settlements.

The Company's Board of Directors is reviewing transactions by former Management,
the Crawford family, as related to the litigation in the matters  entitled:  The
City of New York v. New York Cross Harbor  Railroad  Terminal  Corp.,  Robert R.
Crawford and New York Regional Rail  Corporation.  United States  District Court
Eastern  District  of New York case no. 98 Civ.  7227 and Fraser,  McIntyre  and
Spartz v NYCH.  Supreme Court of the State of New York,  County of Kings,  Index
no.  45966/99,  as well as, issues  surrounding  the  cancellation of shares and
attempted  issuance  of  Series  "B"  preferred  shares.  The  Company  does not
anticipate that there will be any adverse material effects on it, as a result of
its review.

                                       7
<PAGE>

4.   Segment Information

The  following  information  is  presented  in  accordance  with  SFAS No.  131,
Disclosures About Segments of an Enterprise and Related  Information,  which was
adopted by the Company during 1999.

The following tables provide summarized information concerning the Company's
reportable segments.

                                  Railroad         Trucking             Total
                                -------------   ---------------      -----------
As of March 31, 2001
-----------------------
Segment assets                  $ 3,320,982      $ 1,759,369         $5,080,351

Three months ended March 31, 2001
----------------------------------
Operating revenues              $ 321,797       $  878,136           $1,199,933
Gross profit                      152,719           52,188              204,907
Segment profit (loss)            (185,248)         (64,641)            (249,889)
Interest income                      -                -                    -
Interest expense                   35,458           21,077               56,535
Depreciation and amortization      40,236           69,925              110,161

                                  Railroad         Trucking             Total
                                -------------   ---------------      -----------
Three months ended March 31, 2000
----------------------------------
Operating revenues              $ 310,954       $2,091,150           $2,402,104
Gross profit                       87,982          166,303              254,285
Segment profit (loss)            (880,165)          52,931             (827,234)
Interest income                      -                -                    -
Interest expense                  758,815            2,321              761,136
Depreciation and amortization      44,800           33,750               78,550

MAJOR CUSTOMER

Trucking  operations sales to Waste Management Inc.,  represented  approximately
12% of net sales for the three  months  ended March 31, 2001 and 2000;  trucking
operations sales to Atlantic  Demolition  represented  approximately 13% for the
three months ended March 31, 2000; trucking operations sales to Conatruction and
Demolition  represented  approximately  19% for the three months ended March 31,
2001 and trucking  operations  sales to Republic  Services and Source  Marketing
represented approximately 10% each of net sales for the three months ended March
31, 2001. There was no other customer of the Company whose sales exceeded 10%.


5.      RESTATEMENT

The  accompanying  financial  statements have been restated to properly  reflect
restatements made to the financial statements of 2001 and prior years.

The 2000  financial  statements  have been  restated to reflect the  issuance of
warrants on conversion of notes in March of $673,358,  the beneficial conversion
feature on $20,000 of notes issued in March 2000 of $5,778 and the reversal of a
liability of $53,271.

The 2001 financial  statements  have been restated to reflect the adjustment for
the increase to valuation reserves against certain Company assets.


The effect of such restatements on the Company's quarterly financial statement
is as follows:

                                           As                            As
                                        Reported      Adjustments     Restated
                                      ------------------------------------------

Statement of Operations
 Adjustments
Three months ended March 31, 2000
 Loss from operations                $     68,513   $    (53,271)  $     15,242
 Net loss                                 184,079        643,155        827,234
 Net loss per common share basic     $      (0.00)  $       -      $      (0.00)

Three months ended March 31, 2001
 Loss from operations                $    105,271   $    150,189   $    255,460
 Net loss                                 163,077         86,812        249,889
 Net loss per common share basic     $      (0.00)  $       -      $      (0.00)




                                       8


<PAGE>

Item 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

The following discussion contains forward-looking statements that involve a
number of risks and uncertainties. While these statements represent the
Company's current judgment in the future direction of the business, such risks
and uncertainties could cause actual results to differ materially from any
future performance suggested herein. Certain factors that could cause results to
differ materially from those projected in the forward-looking statements include
level of freight shipments, competition, future contractual terms with landfill
authorities, impact of government regulations, availability of capital to
finance growth and general economic conditions.

                  The following should be read in conjunction with the attached
financial statements and notes thereto of the company.

RESULTS OF OPERATIONS

The components of the Company's operating revenues and expenses by business
segment during the three months ending March 31, 2001 were

                                            Railroad       Trucking

Operating revenues                         $ 322,000       $878,000
Operating expenses                         $ 169,000       $826,000
Gross profit                               $ 153,000       $ 52,000


                  During the three months ended March 31, 2001, the Company had
$1,200,000 in revenue compared to $2,402,000 in revenue during the
corresponding prior period, a decrease of $ 1,202,000 or 50%. This decrease was
due to a decrease in the trucking operations to approximately $878,000 from
approximately $2,100,000 for the corresponding period in 2000, due to the loss
of the Gloucester Landfill contract, a decrease of 54%.

                  Operating expenses for the three months ended March 31, 2001
were $995,000 compared to $2,148,000 a decrease of $1,153,000 or 54%. This
decrease in expense is due to the corresponding decrease in revenues from the
loss of the Gloucester Landfill contract.

                  Operating expenses as a percentage of operating revenues were
89% for the three months ended March 31, 2000. In 2001 operating expenses
decreased to 83% of operating revenues due to the larger percentage of revenue
coming from the railroad, the more profitable segment. Operating expense from
rail operations decreased by 24% in 2001 to approximately $169,000 from
approximately $223,000 in 2000.

       Administrative expenses increased in the three months ended March 31,
2001, by $190,000. As a percentage of operating revenues, administrative
expenses increased to 38% for the three months ended March 31, 2001, from 11%
for the three months ended March 31, 2000. The increase of $190,000, comes
primarily from a reserve for possible bad debts of approximately $157,000.

      Interest expense was $57,000 for the three months ended March 31, 2001, as
compared to $761,000 for the three months ended March 31, 2000. This major
reduction was due to the fact that the Company did not have to raise any money
during the quarter and therefore did not issue any convertible debt. In the
prior period the Company recognized beneficial conversion feature and interest
on the issuance of warrants and options on the sale of promissory notes which
were convertible into shares of the Company's common stock at prices below
prevailing market rates, of $679,000.

      The Company recognized a net loss for the three months ended March 31,
2001 of $250,000 versus a loss for the three months ended March 31, 2000 of
$827,000.

LIQUIDITY AND CAPITAL RESOURCES

                  The Company's  working  capital  deficit at March 31, 2001
was $4,407,517  compared to a deficiency of $3,849,205 at December 31, 2000. The
decrease in working capital was primarily due to the reclass of $517,000 in
receivables to long-term assets. The Company recognized a loss from operations
for the three months ended March 31, 2001 of $255,460 versus a loss from
operations for the three months ended March 31, 2000 of $15,242 with the
decrease coming primarily from the reserve against certain assets of $157,000.

                                       9

<PAGE>

As of March 31, 2001 the Company had the following liabilities;

   Accounts payable and accrued expenses        $       2,403,769
   Notes payable and current maturities
    of long-term debt                                   1,563,049
   Payroll taxes payable                                  948,341

                  Accounts payable and accrued liabilities include $442,000 owed
for accrued interest on convertible notes, debt and for accrued legal fees. The
Company anticipates that most of the accrued interest and legal fees will be
satisfied through the exercise of said conversion features.

                  Accounts payable and accrued expenses include a perfected
judgement by the Port Authority of New York and New Jersey ("PANYNJ") in the
amount of approximately $780,000 including interest. The Company is currently
negotiating with the PANYNJ for a long-term payout. Management is confident such
an agreement will be reached in the near future.

                  Accounts payable and accrued expenses include $135,000 to a
former customer for advances and accrued tug boat charges. Management has been
negotiating a settlement in exchange for shares of common stock and anticipates
a resolution in the near future.

         Accounts payable and accrued expenses include $200,000 in accrued rent.
In February 2001 both the Company and Conrail Shared Assets Operation  ("CSAO"),
the  successor to Conrail,  submitted  its  appraisal of the fair market  rental
value of the  property  subject  to the terms of the 1993 lease  agreement.  The
agreement  contains rent  concessions  early in the lease term,  but  eventually
requires the Company to pay a maximum of 10% of the fair market rent, determined
on  the  basis  of an  average  of  appraised  values  supplied  by  independent
appraisers  selected by each party. Based upon different  interpretations of the
rent calculation per the lease  agreement,  CSAO contends that the Company has a
rent  arrearage of  approximately  $1,800,000.  Based upon the  Company's  legal
counsel's  interpretation  of  the  rent  calculation,   rent  arrearages  total
approximately $200,000. Both parties are currently in negotiations.

         Accounts payable and accrued expenses also include approximately
$838,000 for accrued real estate taxes. The City of New York has billed the
Company in excess of $3,200,000 for property taxes dating back to 1984. The
Company claims that the tax assessments are for the most part erroneous because
they relate either to real property that the Company does not own or lease, or
to property which is not subject to the real property tax. The Company further
claims that New York City taxing authorities have assessed taxes based on flawed
valuations, resulting in substantial overcharges. The New York State Board of
Equalization and Assessment has proposed significant reductions to these
valuations, subject to the approval of the New York City Corporation Counsel.
Management expects, but cannot give assurance, that the outstanding liabilities
will be settled for a lesser amount. Pending a settlement of the tax arrears,
the Company has recorded a liability on its books of $466,200 for these real
estate taxes. Based upon recent discussions the Company has had with local
taxing authorities, the Company believes that its liability for real estate
taxes can be settled for approximately $150,000. This dispute has not yet been
settled. The State of New Jersey has assessed the Company approximately $63,000
per year since 1996 for real estate taxes. The Company believes that the
assessment is incorrect and the proper tax should be approximately $17,000
annually. Pending a settlement, the Company has recorded a liability on its
books of approximately $371,400 for these real estate taxes. The Company is
working to resolve this dispute.

         The Company has an accrual for payroll taxes payable in the amount of
$948,431.  The dispute  regarding  the payroll  taxes stems from 1996 and prior,
when the Company  was first  delinquent  in payment of such taxes.  The past due
taxes then had interest and penalties applied.  Subsequently,  the Company began
paying its payroll  taxes,  however these  payments were applied to the past due
amounts,  causing penalties and interest to be imposed on the current liability.
If properly  applied only interest would have been charged on the older past due
taxes. This misapplication  continued until 1998 when the Company was successful
in obtaining relief for a portion of this misapplication. The Company received a
refund in 1999.  The Company feels they are still due a  substantial  refund for
past  misapplied  payments  and  expects  that  the  final  settlement  will  be
substantially less than amount which it has accrued.

         The Company is currently negotiating with vendors, federal and state
taxing  authorities  and the holders of several  material  obligations,  whereby
management is confident that  settlement of these amounts will be  significantly
less than the amounts currently recognized on the Company's books. Additionally,
there  are  administrative   remedies  available  to  the  Company's   creditors
including, but not limited to, judgments,  liens and levies, which can be placed
on the Company's bank accounts.  Historically,  these remedies have been used by
the creditors of the Company and have resulted in additional cash flow hardships
for the Company.  There can be no assurance  that these remedies may not be used
in the future.  Absent  resolution  of these  matters and assuming the agencies,
vendors and taxing  authorities  fully  prevail in court  proceedings,  monetary
damages could approximate  $7,800,000,  but management currently anticipate that
these matters will be amicably resolved at a comparatively insignificant sum and
further believes absent of satisfactory  resolution it would ultimately  prevail
in the judicial process.

                                       10
<PAGE>

         Long-range plans considered by management include application for low
interest  loans through the Federal Rail  Administration  ("FRA") for short-line
railroad's  and  grants  from  New  York  and New  Jersey  State  Department  of
Transportation.

         During the three months ended March 31, 2001 the Company's operations
provided  $137,655 in cash and the  Company  acquired  approximately  $76,000 of
property and  equipment.  From the cash generated by operations the Company paid
down long-term debt by approximately $33,000.

         The Company has incurred substantial losses since it was formed.
Although the Company  expects to continue to incur  losses  until such time,  if
ever,  as it earns net  income.  Management  has  taken  many  steps to  improve
profitability  and  increase  revenues.  The  Company  has  reduced  outstanding
liabilities  substantially  which has in turn reduced interest expense.  Between
January 1998 and February 2000, the Company reduced  administrative  expenses by
the  reduction  of over nine  full-time  employees  from its  workforce  and has
reduced  operating costs through better  utilization of manpower,  equipment and
other expense  reductions.  Since  February  2000,  the Company has continued to
reduce operating costs through the better  utilization of its manpower,  its use
of  part-time  employees,  use of  part-time  outside  labor and the use of more
modern fleets, which reduced maintenance and downtime,  in both its trucking and
rail operations.

         The Gloucester contract terminated on December 31, 2000 as per the
agreement.  The contract was not renewed because  Gloucester,  which was selling
excess  capacity to  out-of-county  waste suppliers - ran out of spare space and
was unable to renew the contract.  The Company verbally  sub-contracted  with an
in-county  waste  supplier to  Gloucester  to dump the  Company's  out-of-county
waste.  The per ton rate was only  slightly  higher than the  Company's  expired
agreement  with  Gloucester.  This  agreement  only  lasted  one  month  due  to
Gloucester  informing  the  contractor  that if it wanted to renew its agreement
upon expiration it would have to terminate  immediately all out-of-county  waste
dumping.  The Company has also  negotiated two  additional  contracts with other
landfills; Eagle Land Management in PA and Recovermat in MD. Both agreements are
at  slightly  higher  rates than  previous  agreements.  The Company was able to
convert  some of its  customers  to these  landfills,  however  due to the extra
distance,  lack of the Company providing credit terms and increased costs, other
landfills became cost competitive and the Company began to lose its marketshare.

         The Company has needed to fund its working capital deficit. The Company
has raised these funds though issuance of floating rate convertible debentures.
The Company agreed to the terms of the convertible notes because the Company was
unable to obtain conventional financing due to the Company's financial condition

         The Company has no commitments for capital expenditures over the next
twelve months.

         The Company expects that any additional tractors or trailers required
by JST can be acquired  through  capital  leases or similar  types of  equipment
financing.  JST has been able to arrange these types of financing  since January
of 2000.

         The Company rail operations do not have any available credit, bank
financing or other external  sources of liquidity.  Due to historical  operating
losses, the Company's rail operations have not been a source of liquidity. Until
such time as the Company becomes profitable,  the Company's continued operations
will depend upon the  availability  of  additional  funding.  In order to obtain
capital,  the Company may need to sell additional  shares of its common stock or
borrow funds from private  lenders.  There can be no assurance  that the Company
will be able to obtain additional funding, if needed, or, if available, on terms
satisfactory to the Company.  There can be no assurance that the Company will be
able to generate sufficient revenues to be profitable.

         Additionally, there are administrative remedies available to the
Company's creditors including, but not limited to, judgments,  liens and levies,
which can be placed on the Company's bank accounts. Historically, these remedies
have been used by the  creditors of the Company and have  resulted in additional
cash flow  hardships  for the  Company.  There can be no  assurance  that  these
remedies may not be used in the future.

         The Company expects that it will be able to meet all its routine
working capital needs and operational  costs from new business  created based on
customer demand during the current year. The Company's two largest  expenditures
in its rail  operations  are towing and  manpower.  By utilizing  its larger car
float the Company has greatly reduced these two expenditures.  The third largest
expense  is per diem car hire.  The per diem car hire  expenses  are the  rental
charges that the owners of rail cars charge railroads.  Rents are charged to the
Company after the first day for cars  destined for  immediate  transfer to other
railroads,  and five days for cars, which are destined, for loading by the local
customers of the Company.  The largest local  customers of the Company's are its
cocoa  customers.  In the past these per diem car hire charges have  amounted to
10% of the Company's  revenue.  The Company has  renegotiated the rate for local
customers  whereas  the rents now begin  five days after the cars are loaded not
received. This change has greatly reduced the fees the Company will be charged.

                                       11
<PAGE>
         The Company has been in negotiations with the respective agencies in
regards to the following disputed current  liabilities.  The liabilities include
approximately $948,000 in payroll taxes, approximately $780,000 in principle and
interest owed to the PANYNJ, and the approximately $838,000 in real estate taxes
to New York and New Jersey.  These current  liabilities  amount to approximately
$2.5  million and the bulk of this amount is over one year old.  These  agencies
are  working  with the  Company  to  resolve  the  disputed  amounts.  It is the
Company's   expectation,   although  no  guarantee  can  be  given,  that  these
liabilities  will be  settled  for  substantially  less  than the  $2.5  million
accrued. The Company further expects long-term repayment plans to be granted. In
addition  to  these  liabilities   there  are  approximately   $1.1  million  in
convertible  or related  party  debts.  Holders of these debts have not demanded
payment and it is expected  that the  majority of the  convertible  note holders
will opt for conversion into the Company's common stock. Additionally,  $249,000
of current  maturities of long-term  debt is primarily for equipment  leases and
are payable over 12 months; and trade payables,  which account for approximately
$315,000,  are being paid in accordance with their terms. The Company reasonably
expects to continue to pay these two  accounts  from cash flow from  operations.
The remaining  liabilities of approximately  $400,000 are primarily accruals for
what the Company  believes  could be the  liability  for  settlement  of pending
lawsuits.

                           Part II: Other Information

Item:  1.         Legal Proceedings:

Murphy,  Marseilles,  Smith & Nammack,  Inc. Chapter 7 Case No. 98 B 42104 (SMB)
Richard E. O'Connell v NYRR Adversary Proceeding No. 00-02413. This is an action
brought  by the  trustee  for the  Murphy,  Marseilles,  Smith &  Nammack,  Inc.
bankruptcy estate. The bankruptcy trustee claims that Murphy, Marseilles,  Smith
& Nammack,  Inc.  made a $50,000 loan to the Company in April 1996.  The Company
has settled this claim for $7,500 in April 2001.

Item  2. Changes in Securities:

On March 22, 2001 the Company issued 9,500 shares of restricted stock,  pursuant
to its "Stock Bonus Plan",  to  employees of its rail  subsidiary.  These grants
were  issued  on the  basis of years  employed.  On the  date of the  grant  the
Company's  Common stock was valued at $0.10.  The Company has  recorded  $950 as
compensation expense.

On March 21, 2001, the Company issued  1,000,000 shares in the name of W. Robert
Bentley.  These shares will be distributed to Mr.Bentley in accordance  with his
employment  and  settlement   agreements  with  the  Company of 1997  and  2000,
respectively.

The Company relied upon the exemption provided by Section 4(2) of the Securities
Act of 1933 in connection  with the sale of these shares  described  above.  The
securities referred to in this paragraph are "restricted"  securities as defined
in Rule 144 of the Securities and Exchange Commission. No underwriters were used
and no commissions were paid in connection with the issuance of these shares.

Item  3. Defaults Upon Senior Securities:

                  None

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

                  None

Item  5. Other Information:

                  None

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

         (a)

                                Index to Exhibits
 Exhibit
   No.    Description

  10.1    Transportation Agreement between Merco Joint Venture, LLC , NYCH
          Railroad Company dated February 12, 2001. (Incorporated by reference
          to Exhibit 10.1 of the Registrant's quarterly report on Form 10-QSB
          Registration No.028583 filed December 3, 2001).


         (b)      Reports on Form 8-K:

                  None

                                       12

<PAGE>

                                   Signatures


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


Date: January 18,2002             By:/s/ Ronald Bridges
                                          ----------------------------
                                          Ronald Bridges, President & CEO

Date: January 18,2002             By:/s/ Joel Marcus
                                          ---------------------------------
                                          Joel Marcus, Chief Financial Officer


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