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



                                   FORM 10-QSB



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

               For the quarterly period ended: September 30, 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
September 30, 2001


<PAGE>


                                      INDEX

Part  I: Financial Information

Item 1.  Financial Statements:

 Unaudited Consolidated Balance Sheet - as of September 30, 2001               2

 Unaudited  Consolidated  Statements  of  Operations,  Nine Months Ended
 September 30, 2001 and 2000 and the three months
 ending September 30, 2001 and 2000                                            3

 Unaudited Consolidated Statement of Cash Flows, Nine Months Ended
 September 30, 2001 2000                                                       4

 Notes to Consolidated Financial Statements                                  5-8

Item 2.
 Management's Discussion and Analysis or
 Plan of Operations                                                         9-11

Part II:
 Other Information                                                            11

Item 1.  Legal Proceedings                                                 11-12

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 RAIL CORPORATION AND AFFILIATES
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2001
                                   (Unaudited)



                                     ASSETS

CURRENT ASSETS:
 Accounts receivable - trade, net of allowance
   for doubtful accounts of $91,463                        $            439,933
 Note receivable                                                         28,000
 Other current assets                                                    23,443
                                                             -------------------
TOTAL CURRENT ASSETS                                                    491,376

PROPERTY AND EQUIPMENT, net                                           3,390,889

OTHER ASSETS                                                            927,369
                                                             -------------------
                                                           $          4,809,634
                                                             ===================


                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
 Cash overdraft                                            $             41,350
 Accounts payable and accrued expenses                                2,427,822
 Notes payable and current maturities of long term debt               1,558,106
 Payroll and payroll taxes payable                                    1,022,737
                                                             -------------------
 TOTAL CURRENT LIABILITIES                                            5,050,015
                                                             -------------------

DEFERRED RENT PAYABLE                                                   120,153

LONG TERM DEBT, NET OF CURRENT MATURITIES                               973,412

TEMPORARY EQUITY                                                      1,512,500

STOCKHOLDERS' DEFICIIT:
 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                                                (15,616,677)
                                                             -------------------
  TOTAL STOCKHOLDERS' DEFICIT                                        (2,846,446)
                                                             -------------------
                                                           $          4,809,634
                                                             ===================












                 The accompanying notes are an integral part of
                           the financial statements.
                                        2
<PAGE>
                    NEW YORK RAIL CORPORATION AND AFFILIATES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>


                       Three Months Ended September 30,   Nine Months Ended September 30,
                      --------------------------------- ---------------------------------
                               2001            2000           2001            2000
                      --------------------------------- ---------------------------------
                           (Unaudited)      (Unaudited)    (Unaudited)     (Unaudited)
                                                                            (Restated)

<S>                       <C>            <C>            <C>             <C>
OPERATING REVENUES        $    822,169   $   1,907,424  $   3,189,163   $   6,781,199

OPERATING EXPENSES             683,113       1,617,485      2,578,867       5,801,277
                         -------------    ------------- -------------    ------------

INCOME FROM OPERATIONS         139,056         289,939        610,296         979,922

ADMINISTRATIVE EXPENSES        312,643         182,760      1,117,941         944,873
                         -------------    ------------- -------------    ------------
INCOME (LOSS) FROM
 OPERATIONS                   (173,587)        107,179       (507,645)         35,049

Other income (expenses):
INTEREST EXPENSE               (55,908)        (65,936)      (167,999)       (952,993)
OTHER INCOME                    54,300            -            54,300            -
BENEFICIAL CONVERSION             -               -              -            (17,333)
(LOSS) GAIN ON DISPOSAL OF
  FIXED ASSETS                  14,805            -           (46,695)           -
                         -------------    ------------- -------------    ------------
                                13,197         (65,936)      (163,394)       (970,326)
                         -------------    ------------- -------------    ------------
INCOME (LOSS) BEFORE
 MINORITY INTEREST            (160,390)         41,783       (671,039)       (935,277)

MINORITY INTEREST IN
 INCOME (LOSS) OF
 SUBSIDIARY                     (7,652)         66,190        (85,234)        145,989
                         --------------   ------------- -------------    -------------

NET INCOME (LOSS)             (152,738)        (24,407)      (585,805)     (1,081,266)

Deemed preferred stock
 dividend                       12,500          12,500         37,500          29,167
                         --------------   ------------- -------------    -------------
Net loss to common
 shareholders             $   (165,238)  $     (36,907) $    (630,806)  $  (1,110,433)
                         ==============   ============= =============    =============

INCOME (LOSS) PER COMMON
SHARE-BASIC AND DILUTED   $       0.00   $       (0.00) $      (0.00)   $       (0.01)
                         ==============   ============= =============    =============

WEIGHTED AVERAGE NUMBER
 OF COMMON SHARES           171,426,189     161,500,000   171,127,043      161,500,000
                         ==============   ============= =============    =============


</TABLE>


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

                                        3

<PAGE>
                    NEW YORK RAIL CORPORATION AND AFFILIATES

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)
                                                 Nine Months Ended September 30,
                                                --------------------------------
                                                    2001                 2000
                                                --------------------------------
                                                 (Unaudited)         (Unaudited)
                                                                      (Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                     $   (585,805)        $ (1,081,266)
                                                ------------        ------------
 Adjustments to reconcile
  net loss to net cash (used in) provided  by
  operating activities:
   Depreciation and amortization                   415,458              336,665
   Non-cash compensation                           180,950                 -
   Bad debt expense                                315,278                 -
   Loss on disposal of fixed assets                 49,695                 -
   Minority interest in subsidiary                 (85,234)             145,989
   Warrants and options issued for debt               -                 717,038
   Beneficial conversion feature                      -                  17,333
   Common stock issued for services                   -                 143,480

Changes in assets and liabilities:
 (Increase) in accounts receivable                (315,810)            (189,451)
 (Increase)/decrease in prepaid expenses            67,557              (12,727)
 (Increase) decrease in other assets                30,325              154,387
 Increase (decrease) in accounts payable          (111,478)            (728,820)
 Increase (decrease) in accrued expenses            50,527                 -
 Inrease (decrease) in payroll taxes payable       117,152               35,083
 Increase in deferred rent                          18,653                2,750
                                             ---------------        ------------
                                                   733,073             (621,727)
                                             ---------------        ------------
NET CASH PROVIDED BY (USED IN)
 OPERATING ACTIVITIES                              147,268             (459,539)
                                             ---------------        ------------
CASH FLOWS FROM INVESTING ACTIVITIES
 Cash overdraft                                     41,350                 -
 Capital expenditures                             (120,617)            (359,603)
                                              ---------------        -----------
NET CASH USED IN INVESTING ACTIVITIES              (79,267)            (359,603)
                                             ---------------        ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from notes payable                          -                 522,500
 Payment of long term debt                        (109,071)              (1,308)
 Receipts from convertible
  notes - other                                       -                 170,000
                                              ---------------        -----------
NET CASH PROVIDED BY (USED IN)
 FINANCING ACTIVITIES                             (109,071)             703,423
                                             ---------------        ------------

NET INCREASE/ (DECREASE) IN CASH                   (41,070)            (115,719)

CASH - BEGINNING OF PERIOD                          41,070              202,974
                                             ---------------        ------------

CASH - END OF PERIOD                          $       -            $     87,255
                                             ===============        ============




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

                                        4


<PAGE>

                   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 September 30, 2001,  and the results of operations and cash flows
for the nine-month period ending September 30, 2001 and 2000 have been included.

The results of operations for the nine - month  period ended  September 30, 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


a.       Changes in Securities:

                None.

3.       LEGAL MATTERS AND OTHER COMMITMENTS AND CONTINGENCIES


LEGAL

The City of New York  ("plaintiff") has brought suit against the Company,  NYCH,
and its former  President in U.S.  District Court,  Eastern District of New York
for the  purpose  of  recovering  the cost of  removal  and  cleanup  of certain
hazardous  substances and petroleum.  The suit alleges that certain parties were
instructed by the Company to dispose of the substances 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 is currently in settlement negotiations with the City.

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.

                                       5

<PAGE>

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  $772,000 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.

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 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 is currently reviewing certain transactions by former management.

                                       6

<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 September 30, 2001
-----------------------
Segment assets                  $ 3,133,123      $ 1,676,511         $4,809,634

Nine months ended September 30, 2001
-------------------------------------
Operating revenues              $   929,628      $ 2,259,535         $3,189,163
Gross profit                        466,438          143,858            610,296
Segment loss                        430,121          155,684            585,805
Interest income                        -                -                  -
Interest expense                    106,402           61,597            167,999
Depreciation and amortization       205,683          209,775            415,458


                                  Railroad         Trucking             Total
                                -------------   ---------------      -----------
Nine months ended September 30, 2000
-------------------------------------
Operating revenues              $   965,683      $ 5,815,516         $6,781,199
Gross profit                        639,176          340,746            979,922
Segment profit (loss)            (1,233,215)         151,949         (1,081,266)
Interest income                        -                -                  -
Interest expense                    922,493           30,500            952,993
Depreciation and amortization       150,621          186,044            336,665



 MAJOR CUSTOMER

Trucking  operations sales to Waste Management Inc.,  represented  approximately
12% of net sales  for the nine  months ended  September 30, 2001 and 13% for the
nine months ended September 30 2000;  trucking operations sales to Atlantic
Demolition  represented  approximately 13% for the nine months ended September
30, 2000;  trucking operations  sales to Construction and Demolition represented
approximately 22% for the nine months ended September 30, 2001 and trucking
operations sales to Republic Services represented approximately 12% of net sales
for the nine months ended September 30, 2001. There was no other customer of the
Company whose sales exceeded 10%.


5.      CONTINGENCIES

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  $458,700,
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.

                                       7

<PAGE>

6.      RESTATEMENT

The  accompanying  financial  statements have been restated to properly  reflect
restatements made to the financial statements of 2000.

The 2000  financial  statements  have been  restated to reflect the  issuance of
warrants  on  conversion  of  notes in March  and May 2000 of  $717,038  and the
beneficial  conversion feature on $60,000 of notes issued in March/April 2000 of
$17,333.

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

                                           As                            As
                                        Reported      Adjustments     Restated
                                      ------------------------------------------
Statement of Operations
 Adjustments

Nine months ended September 30, 2000
 Income from operations                $   61,778   $    (26,729)  $     35,049
 Net loss                                 268,292        812,974      1,081,266
 Net loss per common share basic     $      (0.00)  $       -      $      (0.01)


7. SUBSEQUENT EVENT

NEW YORK CITY ECONOMIC DEVELOPMENT  CORPORATION - ADVERSE ABANDONMENT - NEW YORK
CROSS HARBOR  RAILROAD,  INC. By petition filed with the SURFACE  TRANSPORTATION
BOARD-STB  Docket  No.  AB-596,  on  November  2, 2001.  New York City  Economic
Development  Corporation (NYCEDC),  acting on behalf of the City of New York, NY
(City), an "adverse"  abandonment to remove NYCH, the Company's rail operations,
in  Brooklyn,  NY.  The  Company  intends to vigorously  defend this  action.


                                       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 nine months ended September 30, 2001 were

                                            Railroad       Trucking

Operating revenues                         $ 929,628       $2,259,535
Operating expenses                         $ 463,190       $2,115,677
Gross profit                               $ 466,438       $  143,858


                  During the nine months ended September 30, 2001,the Company
had  $3,189,163  in  revenue  compared  to  $6,781,199  in  revenue  during  the
corresponding  prior period,  a decrease of $ 3,592,036 or 53%.  This decrease
was due to a decrease in the trucking operations to $2,259,535 from $5,815,516
for the corresponding period in 2000, due to the loss of the Gloucester Landfill
contract, a decrease of 61.2%.

                  Operating expenses for the nine months ended September 30,2001
were $2,578,867 compared to $5,801,277 a decrease of $3,222,410 or 55.6%. 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
85.6% for the nine months ended September 30, 2000. In 2001 operating expenses
decreased to 80.1% of operating revenues due to the larger percentage of revenue
coming from the railroad, the more profitable segment. Operating expense from
rail operations increased slightly in 2001 to approximately $463,000 from
approximately $462,000 in 2000.

       Administrative expenses increased in the nine months ended September 30,
2001, by $173,068. As a percentage of operating revenues, administrative
expenses increased to 35.1% for the nine months ended September 30, 2001, from
13.9% for the nine months ended  September  30,  2000. The increase of $173,068,
comes primarily from a reserve for possible bad debts of approximately  $315,000
and non-cash  compensation  of  approximately  $181,000  offset by a decrease in
payroll and other payroll related expenses and the costs associated with repairs
and maintenance because of the previous replacement of older equipment with
newer equipment.

      Interest expense was $168,000 for the nine months ended September 30,
2001, as compared to $953,000 for the nine months ended September 30, 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 $769,000.

      The Company recognized a net loss for the nine months ended September 30,
2001 of $586,000 versus a loss for the nine months ended September 30, 2000 of
$1,081,000.

LIQUIDITY AND CAPITAL RESOURCES

               The Company's working capital deficit at September 30, 2001 was
$4,558,639 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 nine months ended September 30, 2001 of $507,645 versus a gain from
operations for the nine months ended September 30, 2000 of $35,049 with the
decrease primarily arising from the reserve against certain assets of $315,000
and non-cash compesation of $181,000.

                                       9

<PAGE>

As of September 30, 2001 the Company had the following liabilities;

   Accounts payable and accrued expenses        $       2,427,822
   Notes payable and current maturities
    of long-term debt                                   1,558,106
   Payroll taxes payable                                1,022,737

                  Accounts payable and accrued liabilities include $355,000 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 $800,000 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 also include
approximately $882,000 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. Management expects, but cannot give assurance, that the outstanding
liabilities will be settled for a lesser amount. 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.

                  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.
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 nine months ended September 30, 2001 the Company's
operations provided $147,268 in cash, the Company acquired approximately
$121,000 of property and equipment and the Company paid down long-term debt by
approximately $109,000.

                  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. The
Company has also made efforts to reduce administrative expenses by the reduction
of its workforce and has reduced operating costs by better utilization of
manpower and equipment and other expense reductions.

                  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.


                                       10
<PAGE>

                  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.


Part II:          Other Information

Item:  1. Legal Proceedings:

The City of New York  ("plaintiff") has brought suit against the Company,  NYCH,
and its former  President in U.S.  District Court,  Eastern District of New York
for the  purpose  of  recovering  the cost of  removal  and  cleanup  of certain
hazardous  substances and petroleum.  The suit alleges that certain parties were
instructed by the Company to dispose of the substances 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 is currently in settlement negotiations with the City.

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.

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  $772,000 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.

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.


                                       11

<PAGE>

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.

NEW YORK CITY ECONOMIC DEVELOPMENT  CORPORATION - ADVERSE ABANDONMENT - NEW YORK
CROSS HARBOR  RAILROAD,  INC. By petition filed with the SURFACE  TRANSPORTATION
BOARD-STB  Docket  No.  AB-596,  on  November  2, 2001.  New York City  Economic
Development  Corporation (NYCEDC),  acting on behalf of the City of New York, NY
(City), an "adverse"  abandonment to remove NYCH, the Company's rail operations,
from the Brooklyn,  NY rail facility.  The Company intends to vigorously  defend
this proceeding.

The company is currently reviewing certain transactions by former management.

Item  2. Changes in Securities:

         None

Item  3. Defaults Upon Senior Securities:

         None

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

         None

Item  5. Other Information:

         None

Item  6. Exhibits and Reports on Form 8K:


(a)      None


(b)      Reports on Form 8K:

                  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:  December 10, 2001                 /s/RONALD W. BRIDGES

                                         RONALD W. BRIDGES, PRESIDENT & CEO

Date:  December 10, 2001
                                         /s/JOEL MARCUS

                                         JOEL MARCUS, CHIEF FINANCIAL OFFICER

                                       13