<PAGE>
 
                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                            Washington, D. C. 20549

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
         For Quarter Ended March 31, 1997 Commission File Number 0-5206
                           --------------                        ------
                        EMONS TRANSPORTATION GROUP, INC.

             (Exact name of registrant as specified in its charter)

                  Delaware                     23-2441662
             ----------------------------------------------------
         (State of Incorporation) (I. R. S. Employer Identification No.)

         96 South George Street, York, Pennsylvania 17401 (717-771-1700)
       ------------------------------------------------------------------
       (Address of principal executive offices) (Zip Code) (Telephone No.)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities 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
                                   ---       ---

     Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

                               Yes  X      No
                                   ---       ---

     The number of shares of each class of common stock of the registrant issued
and outstanding as of March 31, 1997 is as follows:

                          Voting Common Stock 5,803,124
                                              ---------

                                       1
<PAGE>

                EMONS TRANSPORTATION GROUP, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                   (unaudited)

<TABLE> 
<CAPTION> 
                                                                                  March 31,              June 30,
                                                                                    1997                  1996
                                                                             ---------------       ---------------
      <S>                                                                   <C>                   <C> 
      ASSETS
           Current Assets:
              Cash and cash equivalents                                     $      1,509,054      $      1,265,373
              Accounts receivable, net                                             1,899,421             2,404,730
              Materials and supplies                                                 216,894               204,656
              Prepaid expenses                                                       290,629               339,523
              Deferred income taxes                                                   79,000                79,000
                                                                             ---------------       ---------------
                  Total current assets                                             3,994,998             4,293,282
                                                                             ---------------       ---------------

           Property, plant and equipment                                          28,561,989            26,742,868
              Less accumulated depreciation                                       (9,374,193)           (8,490,416)
                                                                             ---------------       ---------------
                  Property, plant and equipment, net                              19,187,796            18,252,452
                                                                             ---------------       ---------------

           Deferred expenses and other assets                                        549,826               244,180
                                                                             ---------------       ---------------

      TOTAL ASSETS                                                          $     23,732,620      $     22,789,914
                                                                             ===============       ===============

      LIABILITIES AND STOCKHOLDERS' EQUITY
           Current Liabilities:
              Current portion of long-term debt                             $      1,208,709      $        967,837
              Accounts payable                                                       808,962             1,806,969
              Accrued payroll and related expenses                                   896,782               876,472
              Income taxes payable                                                   127,768                84,108
              Other accrued expenses                                               1,409,851             1,203,876
                                                                             ---------------       ---------------
                  Total current liabilities                                        4,452,072             4,939,262

           Long-term debt                                                         10,794,895            10,118,172
           Other liabilities                                                         638,976               600,861
           Deferred income taxes                                                   1,714,000             1,513,000
                                                                             ---------------       ---------------
                  Total Liabilities                                               17,599,943            17,171,295
                                                                             ---------------       ---------------

           Stockholders' Equity:
              Cumulative convertible preferred stock                                 16,509                16,802
              Common stock                                                           58,031                57,037
              Additional paid-in capital                                         23,505,291            23,281,993
              Deficit                                                           (17,081,015)          (17,562,914)
                                                                            ---------------       ---------------
                                                                                  6,498,816             5,792,918
              Unearned compensation - restricted stock awards                      (366,139)             (174,299)
                                                                            ---------------       ---------------
                  Total Stockholders' Equity                                      6,132,677             5,618,619
                                                                            ---------------       ---------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $     23,732,620      $     22,789,914
                                                                            ===============       ===============
</TABLE> 


         See accompanying notes to consolidated financial statements.

                                       2
<PAGE>
               EMONS TRANSPORTATION GROUP, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                  (unaudited)

<TABLE> 
<CAPTION> 

                                                     Three Months Ended                           Nine Months Ended 
                                                         March 31,                                    March 31,
                                             ---------------------------------          ------------------------------------ 
                                                  1997                1996                   1997                  1996       
                                             -------------       -------------          --------------       ---------------  
<S>                                        <C>                 <C>                    <C>                  <C> 

 Operating revenues                        $     3,853,105     $     3,816,354        $     11,877,298     $      11,218,104  
                                          
 Operating expenses:                      
     Cost of operations                          2,866,618           2,904,939               8,313,396             7,932,215  
     Selling and administrative                    747,815             624,804               2,244,360             1,976,097  
                                             -------------       -------------          --------------       ---------------  
        Total operating expenses                 3,614,433           3,529,743              10,557,756             9,908,312 
                                             -------------       -------------          --------------       --------------- 
                                          
 Income from operations                            238,672             286,611               1,319,542             1,309,792 
                                          
 Other income (expense):                  
     Interest income                                20,220              17,609                  63,539                53,228 
     Interest expense                             (264,475)           (229,899)               (765,148)             (773,642)
     Other, net                                    172,966              23,262                 172,966                79,410   
                                             -------------       -------------          --------------       ---------------   
        Total other income (expense)               (71,289)           (189,028)               (528,643)             (641,004)  
                                             -------------       -------------          --------------       ---------------   
                                          
 Income before income taxes                        167,383              97,583                 790,899               668,788   
                                          
 Provision for income taxes                         65,000              35,500                 309,000               288,000   
                                             -------------       -------------          --------------       ---------------   
                                          
 Net income                                        102,383              62,083                 481,899               380,788   
                                                                                                                               
                                          
 Preferred dividend requirements                    57,851              58,808                 175,355               178,949
                                             -------------       -------------          --------------       --------------- 
                                          
 Income applicable to common shareholders  $        44,532     $         3,275        $        306,544     $         201,839
                                             =============       =============          ==============       ===============  
                                          
 Average common shares and common         
     share equivalents (Note 2)                  6,344,108           6,118,048               6,280,051             6,119,217
                                             =============       =============          ==============       =============== 
                                          
 Earnings per common share and            
     common share equivalent (Note 2)      $          0.01     $          0.00        $           0.05     $            0.03
                                             =============       =============          ==============       =============== 
</TABLE> 

See accompanying notes to consolidated financial statements.

                                       3
<PAGE>

               EMONS TRANSPORTATION GROUP, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                  (unaudited)

<TABLE> 
<CAPTION> 
                                                                   Nine Months Ended
                                                                       March 31,
                                                            ------------------------------
                                                                 1997              1996
                                                            -------------   --------------
   <S>                                                     <C>             <C>  
   Cash flow from operating activities:                              
     Net income                                            $      481,899  $       380,788
       Adjustments to reconcile net income to net
        cash provided by operating activities:
         Depreciation                                             883,777          850,357
         Amortization                                              98,240           95,233
         Gain on sale of assets                                         -          (79,410)
         Increase in deferred income taxes                        201,000          197,000
         Changes in assets and liabilities:
            Accounts receivable, materials and
              supplies and prepaid expenses                       541,965          186,271
            Accounts payable and accrued expenses                (728,062)         367,701
            Other assets and liabilities, net                    (324,421)          25,447
                                                            -------------   --------------
   Net cash provided by operating activities                    1,154,398        2,023,387
                                                            -------------   --------------
   Cash flow from investing activities:
     Proceeds from sale of assets                                   -              176,986
     Additions to property, plant and equipment               (1,819,121)       (2,276,919)
     Increase in deferred expenses                               (13,316)              -
                                                            ------------    --------------
   Net cash used in investing activities                      (1,832,437)       (2,099,933)
                                                            ------------    --------------
   Cash flow from financing activities:
     Proceeds from issuance of long-term debt                  1,748,821           780,223
     Reduction in long-term debt                                (831,226)         (559,680)
     Proceeds from issuance of common stock                        4,125               -
                                                            ------------    --------------
   Net cash provided by financing activities                     921,720           220,543
                                                            ------------    --------------

   Net increase in cash and cash equivalents                     243,681           143,997

   Cash and cash equivalents at beginning of period            1,265,373         1,232,859
                                                            ------------    --------------

   Cash and cash equivalents at end of period              $   1,509,054   $     1,376,856
                                                            ============    ==============
</TABLE> 

         See accompanying notes to consolidated financial statements.

                                       4

<PAGE>
 
                EMONS TRANSPORTATION GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    For the Nine Months Ended March 31, 1997
                                   (unaudited)


Note 1. The information furnished herein has been prepared in accordance with
        generally accepted accounting principles. In the opinion of the
        management of Emons Transportation Group, Inc. (the "Company" or "Emons
        Transportation Group"), all adjustments (which include only normal
        recurring adjustments) considered necessary to present a fair statement
        of the results for the periods covered by this report have been made.
        Results for the interim periods are not necessarily indicative of annual
        results.

Note 2. Earnings per common share is computed by dividing net earnings by the
        weighted average number of common shares and common share equivalents
        for the period. Earnings per common share for the three and nine month
        periods ended March 31, 1997 and 1996 does not include conversion of
        convertible preferred stock because the effect of such inclusion would
        be anti-dilutive.

Note 3. In November 1995, the Financial Accounting Standards Board issued
        Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
        "Accounting for Stock Based Compensation." SFAS 123 encourages, but does
        not require, accounting for stock based compensation awards on the basis
        of fair value at the date the awards are granted. Under the fair value
        based method of accounting, the fair value of awards is included as
        expense in the statement of operations. Companies that do not recognize
        compensation based upon fair value can continue to account for awards
        under APB Opinion No. 25, "Accounting for Stock Issued to Employees."
        However, they are required to disclose what net income and earnings per
        share would have been under the fair value method. SFAS 123 is effective
        for fiscal years beginning after December 15, 1996 and does not require
        disclosure in quarterly reports. The Company has elected not to adopt
        the fair value method of accounting for stock based compensation awards.

        In February 1997, the Financial Accounting Standards Board issued
        Statement of Financial Accounting Standards No. 128 ("SFAS 128")
        "Earnings per Share." SFAS 128 is effective for financial statements for
        both interim and annual periods ending after December 15, 1997, and
        requires restatement of earnings per share data for all prior periods
        presented. The Company will adopt SFAS 128 in its second quarter of
        fiscal 1998 ending December 31, 1997. The impact of the application of
        SFAS 128 for the three and nine month periods ended March 31, 1997 is
        not material.

Note 4. At the Annual Meeting of stockholders of the Company held on November
        20, 1996, the stockholders adopted the Emons Transportation Group, Inc.
        1996 Stock Option Plan (the "1996 Plan"). The 1996 Plan provides for the
        issuance of up to 500,000 shares of the Company's Common Stock to key
        employees. Under the 1996 Plan, the Company may grant either Incentive
        Options or Non-Incentive Options at an exercise price not less than 100%
        of the fair market value of the Company's Common Stock at the date of
        grant. The number of shares and other terms and conditions are to be
        determined by the Management Compensation Committee of the Board of
        Directors. Since the 1996 Plan was adopted, the Company has issued
        options to purchase 183,000 shares of Common Stock at prices ranging
        from $2.56 to $3.25 per share.

                                       5
<PAGE>
 
        At the Annual Meeting of stockholders of the Company held on November
        20, 1996, the stockholders voted to amend the Company's Certificate of
        Incorporation to increase the authorized number of shares of Common
        Stock of the Company from eleven million to fifteen million.

Note 5. Emons Transportation Group is not currently a party to any legal
        proceedings. However, Emons Industries, Inc. ("Industries"), a
        subsidiary of the Company, is currently a defendant in 898 product
        liability actions. In addition, the Company is in the process of
        remediating a fuel oil leak at its locomotive maintenance facility in
        York, Pennsylvania.

        Product Liability Actions
        -------------------------

        Prior to March 1971, under previous management, Industries (then known
        as Amfre-Grant, Inc.) was engaged in the business of distributing (but
        not manufacturing) various generic and prescription drugs. Industries
        sold and discontinued these business activities in March 1971 and
        commenced its railcar leasing and railroad operations in October 1971.
        One of the drugs which had been distributed was diethylstilbestrol
        ("DES"), which was taken by women during pregnancy to prevent
        miscarriage.

        As of March 31, 1997, Industries was one of numerous defendants
        (including many of the largest pharmaceutical manufacturers) in 898
        lawsuits in which the plaintiffs allege that DES caused adenosis,
        infertility, cancer or birth defects in the offspring or grandchildren
        of women who ingested DES during pregnancy. In these actions, liability
        is premised on the defendant's participation in the market for DES, and
        liability is several and limited to the defendant's share of the market.
        Of these lawsuits, 892 were commenced after the confirmation of
        Industries' Reorganization Plan in December 1986 (the "Plan"), while the
        remaining 6 lawsuits are claims which will be treated under the Plan. In
        one action, Industries is allegedly identified as the sole defendant.
        These actions are currently in various stages of litigation.

        During the period January 1, 1997 through March 31, 1997, 367 new
        actions were commenced in which Industries was named as a defendant. Of
        these actions, 365 were commenced in a single filing in the state court
        in Ohio shortly before the effective date of a revision to Ohio's
        product liability statute which, among other things, limits damages
        recoverable for pain and suffering.

        Industries has filed a motion in Bankruptcy Court seeking a judgment
        declaring that the 892 post-confirmation lawsuits represent claims which
        should be asserted against Industries' Chapter 11 estate and are not
        post-reorganization liabilities. In November 1994, the Bankruptcy Court,
        in the context of a motion for a preliminary injunction, held that it
        was likely that Industries would prevail on the merits of this claim.
        Counsel has advised the Company that the Bankruptcy Court should grant
        Industries' application to classify all of these cases as bankruptcy
        claims. In addition, on February 14, 1995, the Bankruptcy Court advised
        Industries that it would sign an order which would stay execution of any
        judgment rendered against Industries pending determination of
        Industries' application. The order, which was submitted to the Court in
        March 1995, has not yet been signed.

        Industries has product liability insurance and defense coverage for
        nearly all the claims which fall within the policy period 1948 to 1970
        up to varying limits by individual and in the aggregate for each policy
        year. To date, Industries has not exhausted insurance coverage in any
        policy year. During the period January 1, 1997 through March 31, 1997,
        27 lawsuits were settled or dismissed at no liability to Industries.

                                       6
<PAGE>
 
        Management intends to vigorously defend all of these actions. In the
        event that the post-reorganization lawsuits described above are not
        treated under the Plan, it is possible that Industries could ultimately
        have liability in these actions in excess of its product liability
        insurance coverage described above. However, based on Industries'
        experience in prior DES litigation, including the proceedings before the
        Bankruptcy Court, and its current knowledge of pending cases, the
        Company believes that it is unlikely that Industries' ultimate
        liability, if any, in excess of insurance coverage and existing reserves
        in the pending cases, will be in an amount sufficient to have a material
        adverse effect upon the Company's consolidated financial position or
        results of operations.

        Environmental Liability
        -----------------------

        During fiscal 1994, the Company discovered a diesel fuel oil leak at its
        locomotive maintenance facility in York, Pennsylvania resulting from the
        fueling of its locomotives. The Company is currently performing
        additional testing and is working with the Pennsylvania Department of
        Environmental Protection to remediate the contaminated area. In January
        1997, in the next phase of its testing procedures, the Company
        discovered free product in some of its monitoring wells. The Company
        estimates that the cost to remediate the free product will range from
        $100,000 to $200,000, depending upon a variety of factors which are not
        known at this time. Further remediation cost requirements, if any, are
        unknown at this time and will be dependent upon further test results.
        The Company has provided what it believes are sufficient reserves at
        this time for the anticipated remediation costs.


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                      ------------------------------------  

Liquidity and Capital Resources

     The Company's primary sources of liquidity include its cash and accounts
receivable, which aggregated $3,408,000 and $3,670,000 at March 31, 1997 and
June 30, 1996, respectively, and the remaining balance under a $750,000 Senior
Secured Term Loan Agreement (the "Agreement") issued by a local bank to a
subsidiary. The Company borrowed an additional $225,000 under this Agreement in
August 1996 to finance the acquisition of locomotives for the Pennsylvania rail
operations, leaving a $325,000 balance available which may be borrowed through
June 30, 1997. The Company intends to use the balance remaining under this
Agreement to finance other projects to generate additional business and for
other business opportunities which may arise. In addition, the Company
temporarily repaid $100,000 as of March 31, 1997 under its bank revolver
commitment which is also available.

     The Company's cash and cash equivalents increased $244,000 for the nine
month period ended March 31, 1997. The net increase includes $1,154,000 of cash
provided by operations and $918,000 of additional net borrowings, offset by
$1,819,000 of capital investments.

     The Company generated $1,154,000 of cash from operations for the nine month
period ended March 31, 1997 as compared to $2,023,000 for the corresponding
period in the prior year. Excluding changes in assets and liabilities, cash
provided by operations increased $221,000 from $1,444,000 for the nine months
ended March 31, 1996 to $1,665,000 for the nine months ended March 31, 1997,
primarily as a result of a $122,000 increase in income before income taxes. Cash
was reduced by $511,000 for changes in assets and liabilities in the nine month
period
                                       7
<PAGE>
 
ended March 31, 1997. This change includes a reduction in accounts payable and
accrued expenses, which was funded by a decrease in accounts receivable and cash
generated by operating activities, and a $363,000 increase in other assets. The
increase in other assets includes the non-current portion of a three year
railroad liability insurance policy purchased by the Company in February 1997 to
take advantage of favorable rates which was financed over a 30 month period.

            The Company invested $1,819,000 in capital expenditures during the
first nine months of fiscal 1997, including $1,491,000 of investments in
railroad track structures (net of $759,000 of government grants) in connection
with the Company's continuing extensive track rehabilitation program and in
connection with the construction of track sidings for new customers, and a
$224,000 investment in four locomotives for the Pennsylvania rail operations. As
of March 31, 1997, the Company has approximately $1 million of government grants
for track rehabilitation projects and approximately $450,000 of government
funding under no and low interest loan programs available for future track
rehabilitation projects.

            The Company's long-term debt obligations increased $918,000 during
the nine month period ended March 31, 1997 including $831,000 of scheduled debt
repayments offset by $1,749,000 of additional borrowings. Additional long-term
obligations include $225,000 of borrowings under the $750,000 Senior Secured
Term Loan to finance the acquisition of four locomotives for the Pennsylvania
rail operations, $973,000 of borrowings under government funded no and low
interest loan track rehabilitation programs, and $533,000 of borrowings to
finance a favorable three year railroad liability insurance policy renewal.


Analysis of Operations for the three months ended March 31, 1997 
      compared to the three months ended March 31, 1996

            Results of Operations

            Results for the current fiscal quarter ended March 31, 1997 include
the unfavorable impact of an anticipated sales tax assessment from the State of
Maine in the amount of $107,000, consisting of an $84,000 charge for sales taxes
relating to calendar years 1991 through 1996, and a $23,000 charge for related
interest thereon, a portion of which the Company intends to contest. Results for
the prior year quarter ended March 31, 1996 include the impact of a favorable
settlement of disputed local business taxes to the City of York, Pennsylvania in
the amount of $117,000 pertaining to fiscal years 1988 through 1995, consisting
of $85,000 of taxes and $32,000 of accrued interest thereon. These items are
hereafter referred to as the "state sales and local tax adjustments." In
addition, the Company recorded $173,000 of non-operating income in the quarter
ended March 31, 1997 relating to the unanticipated proceeds from a former
investment.

            The Company generated net income of $102,000 for the three month
period ended March 31, 1997 as compared to net income of $62,000 for the three
month period ended March 31, 1996. Operating revenues increased $37,000 and
interest and other non-operating income increased $152,000 over the prior year,
while operating expenses, interest expense and the provision for income taxes
increased $85,000, $35,000 and $29,000, respectively, over the prior year.
Excluding the impact of the state sales and local tax adjustments, income from
operations increased $121,000, or 60%, in the quarter ended March 31, 1997 as
compared to the same quarter in the prior year.

            Revenues

            Operating revenues increased $37,000, or 1%, from $3,816,000 for the
three months ended March 31, 1996 to $3,853,000 for the three month period ended
March 31, 1997. This increase consists of $143,000 additional freight and
haulage revenues (excluding intermodal

                                       8
<PAGE>
 
freight), and $8,000 additional intermodal freight and handling revenues,
partially offset by an $87,000 decrease in logistics revenues and a $27,000
decrease in other operating revenues.

            Freight and haulage revenues increased $143,000, or 5.5%, consisting
of a 2% increase in the number of carloads handled and a 3.5% increase in
average revenues per carload. Total traffic handled increased approximately 150
carloads from 8,600 for the quarter ended March 31, 1996 to 8,750 for the
quarter ended March 31, 1997. The increase includes approximately 50 additional
carloads on the Pennsylvania rail operations and approximately 100 additional
carloads on the St. Lawrence & Atlantic Railroad ("SLR") in New England.

            The net increase in Pennsylvania business includes 120 additional
carloads to an on-line paper manufacturer as a result of improved paper market
conditions, and a variety of other less significant increases in other business.
These increases were offset by 130 less agricultural carloads in York,
Pennsylvania as a result of rate increases imposed by a connecting railroad,
which have since been reduced, a decrease in coal carloads resulting from the
use of higher capacity railcars and timing of shipments, and a variety of less
significant decreases. The increase in business on SLR includes 150 carloads
attributable to a new local oil move to an on-line paper manufacturer, 190
additional carloads of building products to an on-line customer as a result of
the expansion of its operations, and an increase in a variety of other business
including the addition of four new customers, three of which are located
on-line. These increases were partially offset by a net reduction of over 200
paper related carloads as a result of business lost to competitive routes, a
decrease of 120 salt carloads to an on-line customer who lost a key supply
contract, and a variety of less significant decreases. The 3.5% increase in
average revenues per carload is attributable to rate increases on SLR and higher
rates on the local oil move on SLR which encompass truck to rail transload
services that are paid by SLR to an independent contractor.

            Logistics revenues generated by the Company's operations in York,
Pennsylvania decreased $87,000, or 25%, for the quarter ended March 31, 1997 as
compared to the prior year quarter, including a 12% decrease in the number of
railcars handled. The prior year quarter included significant transfer and
inventory storage revenues for an on-line paper manufacturer as a result of pulp
and paper supply conditions, which have improved in the current year. The
Company's lumber reload business decreased due to the relocation of its primary
customer to its own facility located on one of the Company's Pennsylvania rail
lines near the end of the current quarter. This customer intends to utilize the
new facility to expand into other building products which will benefit the
Company's Pennsylvania rail operations. Canned goods and related truck brokering
business continued to decline in the current year as the movement of this
product continues to shift to alternative modes of transportation. Increases in
business for a feed broker, which has expanded its operations, a new paper
warehousing customer, and an increase in a variety of other business partially
offset the aforementioned decreases. Despite the shortfall in logistics
carloads, freight and haulage revenues generated by the Company's logistics
operations increased slightly over the prior year.

            The Company's rail intermodal terminal, which commenced operations
on SLR in September 1994, generated an additional $8,000 of freight and
intermodal handling revenues during the quarter ended March 31, 1997 as compared
to the corresponding quarter in the prior year. Intermodal volume increased by
approximately 800 trailers and containers, or 42%, from 1,950 trailers and
containers for the prior year to 2,750 trailers and containers for the current
year. Revenues did not increase proportionately with the volume increase as a
result of the revenue arrangement with the Canadian National Railway ("CN")
which provided additional revenue support at lower volumes to assist in the
start up of this venture.

            Other operating revenues decreased $27,000 from the prior year,
consisting of a decrease in demurrage revenues partially offset by additional
railcar storage fees.

                                       9
<PAGE>
 
            Other non-operating income increased $150,000 from $23,000 in the
prior year to $173,000 in the current year. The current year amount consists of
the unanticipated proceeds from a former investment, while the prior year amount
consists of gains on sales of non-essential real estate.

            Expenses

            Operating expenses increased $85,000, or 2.4%, from $3,529,000 for
the three month period ended March 31, 1996 to $3,614,000 for the three month
period ended March 31, 1997. The increase consists of $123,000 additional
selling and administrative expenses partially offset by a $38,000 reduction in
cost of operations. Excluding the impact of the state sales and local tax
adjustments, operating expenses decreased $84,000, or 2.3%.

            Cost of operations decreased $38,000, or 1.3%, from $2,905,000 for
the three month period ended March 31, 1996 to $2,867,000 for the corresponding
period in the current year. Excluding the impact of the state sales and local
tax adjustments, cost of operations decreased $122,000, or 4.2%. This decrease
includes a $25,000 reduction in railroad operating expenses and a $120,000
reduction in logistics operating expenses, partially offset by $23,000
additional intermodal operating expenses.

            The decrease in railroad operating expenses of $25,000 is
attributable to more favorable winter weather conditions in the current year as
compared to the prior year, partially offset by additional transportation costs
associated with new business. The unusually heavy snowfall and cold temperatures
in both the Mid-Atlantic and Northeast regions of the United States in the prior
year had an unfavorable impact on all three of the Company's railroads.
Additional labor costs, fuel usage and other operating expenses were required in
order to keep the tracks clear and the train operations running. Maintenance of
way expenses decreased over $100,000 and transportation labor costs decreased
over $50,000 as a result of the more favorable winter weather conditions in the
current year. The offsetting increase in transportation expenses is primarily
attributable to the new local oil move on SLR, which accounted for in excess of
$100,000 of additional expenses including $66,000 of fees for truck to rail
transload costs paid to an independent contractor. Locomotive fuel and lubricant
costs also increased significantly as a result of substantial price increases in
the current year.

            The $120,000 decrease in logistics operating expenses includes a
reduction in labor costs, brokered freight expenses, property rent, and a
variety of other expenses as a result of the reduction in logistics business in
the current year.

            Rail intermodal operating expenses increased $23,000 due to
additional fees paid to the terminal's independent operator as a result of the
42% volume increase over the prior year.

            Selling and administrative expenses increased $123,000, or 20%, from
$625,000 for the quarter ended March 31, 1996 to $748,000 for the quarter ended
March 31, 1997. Excluding the impact of the state sales and local tax
adjustments, selling and administrative expenses increased $38,000, or 5.3%.
This increase includes normal wage and other cost increases, and additional
provisions under incentive compensation and profit sharing plans associated with
favorable operating results.

            Interest expense increased $35,000 for the three month period ended
March 31, 1997 as compared to the prior year. Excluding the impact of the state
sales and local tax adjustments, interest expense decreased $21,000, despite an
increase in the amount of long-term debt outstanding, due to the mix of debt
which includes a greater amount of no and low interest government trackwork
loans in the current year as compared to the prior year.

                                       10
<PAGE>
 
            The provision for income taxes increased $29,000, from $36,000 for
the quarter ended March 31, 1996 to $65,000 for the quarter ended March 31,
1997, as a result of a $70,000 increase in income before income taxes and the
mix of state taxable income and deferred tax requirements.


Analysis of Operations for the nine months ended March 31, 1997 compared to
            the nine months ended March 31, 1996

            Results of Operations

            Results for the nine month period ended March 31, 1997 include the
unfavorable impact of an anticipated sales tax assessment from the State of
Maine in the amount of $107,000, consisting of an $84,000 charge for sales taxes
relating to calendar years 1991 through 1996, and a $23,000 charge for related
interest thereon, a portion of which the Company intends to contest. Results for
the nine month period ended March 31, 1996 include the impact of a favorable
settlement of disputed local business taxes to the City of York, Pennsylvania in
the amount of $117,000 pertaining to fiscal years 1988 through 1995, consisting
of $85,000 of taxes and $32,000 of accrued interest thereon. These items are
hereafter referred to as the "state sales and local tax adjustments." In
addition, the Company recorded $173,000 of non-operating income in the current
year relating to the unanticipated proceeds from a former investment.

            The Company generated net income of $482,000 for the nine month
period ended March 31, 1997 as compared to net income of $381,000 for the nine
month period ended March 31, 1996. Operating revenues, interest and other
non-operating income, and operating expenses increased $659,000, $104,000 and
$649,000, respectively, over the prior year while interest expense decreased
$8,000 from the prior year. The provision for income taxes increased $21,000
over the prior year. Excluding the impact of the state sales and local tax
adjustments, income from operations increased $178,000, or 14.6%, for the first
nine months of the current year as compared to the same period in the prior
year.

            Revenues

            Operating revenues increased $659,000, or 5.9%, from $11,218,000 for
the nine month period ended March 31, 1996 to $11,877,000 for the nine month
period ended March 31, 1997. This increase consists of $717,000 additional
freight and haulage revenues (excluding intermodal freight) and $123,000
additional intermodal freight and handling revenues. These increases were
partially offset by a $148,000 reduction in logistics revenues and a $33,000
decrease in other operating revenues.

            Freight and haulage revenues increased $717,000, or 9.4%, consisting
of a 7% increase in the number of carloads handled and a 2% increase in average
revenues per carload. Total traffic handled increased approximately 1,800
carloads from 25,800 for the nine months ended March 31, 1996 to 27,600 for the
nine months ended March 31, 1997. The increase includes approximately 1,000
additional carloads on the Pennsylvania rail operations and approximately 800
additional carloads on the SLR operations in New England.

            A 950 carload increase in low revenue per car bridge traffic
accounts for the most significant portion of the 1,000 carload increase in
business for the Pennsylvania rail operations. The remainder of the increase
consists of a number of net increases and decreases in other business, including
50 additional carloads to a new on-line printer and a reduction of 250 carloads
to an on-line warehouse and distribution services customer as the result of the
relocation of product to an alternative storage location. The 800 carload
increase in business on SLR includes 370 carloads 

                                       11
<PAGE>
 
attributable to a new local oil move to an on-line paper manufacturer, 400
additional carloads to an on-line building products distributor as a result of
the expansion of its operations, 185 additional carloads to four new customers,
three of which are located on-line, and a variety of less significant increases.
These increases were partially offset by a decrease of 400 paper related
carloads as a result of lost business due to competitive routes. The 2% increase
in average revenues per carload includes a 5% increase on SLR, consisting of
rate increases and higher rates per carload for the local oil move which
encompass truck to rail transload services that are paid by SLR to an
independent contractor. This increase was partially offset by a decrease in
average revenues per carload for the Pennsylvania rail operations due to mix of
business which included a higher percentage of lower rated bridge moves.

            Logistics revenues generated by the Company's operations in York,
Pennsylvania decreased $148,000, or 14%, for the nine month period ended March
31, 1997 as compared to the prior year period, including a slight decrease in
the number of railcars handled. Canned goods transfer and related low margin
truck brokering revenues decreased over $140,000 from the prior year as the
movement of this product continues to shift to alternative modes of
transportation. Paper handling and related storage revenues decreased over
$100,000 from the prior year, which included significant transfer and inventory
storage revenues for an on-line paper manufacturer as a result of pulp and paper
supply conditions that have improved in the current year. These decreases were
partially offset by additional, more profitable, building products transfer
revenues generated by the Company's lumber reload center and bulk transfer
revenues, including additional business to a feed broker which has expanded its
operations at the Company's facilities in York. The Company's primary lumber
reload customer relocated its operations to a facility located on one of the
Company's Pennsylvania rail lines in March 1997, where it intends to expand into
other building products. While this relocation will reduce the Company's
logistics business, it will benefit the Company's Pennsylvania rail operations.

            The Company's rail intermodal terminal, which commenced operations
on SLR in September 1994, generated an additional $123,000 of freight and
intermodal handling revenues during the first nine months of fiscal 1997 as
compared to the first nine months of the prior year. Intermodal volume increased
approximately 3,200 trailers and containers, or 50%, from 6,400 trailers and
containers in the prior year to 9,600 trailers and containers in the current
year.

            Other operating revenues decreased $33,000 from the prior year.
Easement income, which includes up front fees for a crossing agreement in the
amount of $85,000, railcar storage income and third party track work revenues
increased over the prior year, but were more than offset by a decrease in
demurrage revenues of almost $250,000.

            Other non-operating income increased $94,000 from $79,000 for the
prior year to $173,000 for the current year. The current year amount consists of
the unanticipated proceeds from a former investment, while the prior year amount
consists of gains on sales of non-essential real estate.

            Expenses

            Operating expenses increased $649,000, or 6.6%, from $9,908,000 for
the nine month period ended March 31, 1996 to $10,557,000 for the nine month
period ended March 31, 1997. The increase consists of $381,000 additional cost
of operations and $268,000 additional selling and administrative expenses.
Excluding the impact of the state sales and local tax adjustments, operating
expenses increased $480,000, or 4.8%.

            Cost of operations increased $381,000, or 4.8%, from $7,932,000 for
the nine month period ended March 31, 1996 to $8,313,000 for the corresponding
period in the current year. Excluding the impact of the state sales and local
tax adjustments, cost of operations increased 

                                       12
<PAGE>
 
$297,000, or 3.8%. This increase includes $440,000 additional railroad operating
expenses and $88,000 additional intermodal operating expenses, partially offset
by a $231,000 reduction in logistics operating expenses.

            The increase in railroad operating expenses of $440,000 is primarily
attributable to additional transportation expenses and, to a lesser extent,
additional locomotive maintenance expenses, partially offset by a reduction in
maintenance of way expenses. The increase in transportation expenses includes
additional operating costs associated with the 7% increase in traffic handled.
The new local oil move on SLR accounted for in excess of $250,000 of the
increase, including $165,000 of fees for truck to rail transload costs paid to
an independent contractor. Locomotive fuel and lubricant costs also increased
significantly as a result of substantial price increases during the current
year, which have recently been reduced to more normal levels. The increase in
locomotive maintenance expenses is attributable to a higher level of locomotive
repairs required in the current year for both the Pennsylvania and New England
operations as compared to the prior year. Maintenance of way expenses decreased
over $150,000 as a result of more favorable weather conditions in the current
year as compared to the prior year, which also had a favorable impact on
transportation operating costs in the current year. The unusually heavy snowfall
and cold temperatures in both the Mid-Atlantic and Northeast regions of the
United States in the prior year had an unfavorable impact on all three of the
Company's railroads. Additional labor costs, fuel usage and other operating
expenses were required in order to keep the tracks clear and train operations
running. SLR also incurred additional maintenance of way costs in the prior year
to repair a washed out section of track after a flood in November 1995, and to
clear a fire lane as a result of summer drought conditions.

            The $231,000 decrease in logistics operating expenses includes a
reduction in labor costs, freight and brokered freight expenses, and a variety
of other expenses as a result of the reduction in logistics business in the
current year. In addition, the Company's logistics operations incurred
approximately $40,000 of costs in the prior year in connection with the
relocation of a portion of its warehousing operations.

            Rail intermodal operating expenses increased $88,000 due to
additional fees paid to the terminal's independent operator as a result of the
50% volume increase over the prior year.

            Selling and administrative expenses increased $268,000, or 13.6%,
from $1,976,000 for the nine months ended March 31, 1996 to $2,244,000 for the
nine months ended March 31, 1997. Excluding the impact of the state sales and
local tax adjustments, selling and administrative expenses increased $183,000,
or 8.9%. This net increase consists of additional professional fees and other
expenses incurred to pursue potential business opportunities, and normal wage
and other cost increases.

            Interest expense decreased $8,000 for the nine month period ended
March 31, 1997 as compared to the prior year. Interest expense decreased $63,000
excluding the impact of the state sales and local tax adjustments, despite an
increase in the amount of long-term debt outstanding, due to the mix of debt
which includes a greater amount of no and low interest government trackwork
loans in the current year as compared to the prior year.

            The provision for income taxes increased $21,000, from $288,000 for
the first nine months of fiscal 1996 to $309,000 for the first nine months of
fiscal 1997, as a result of a $122,000 increase in income before income taxes
and the mix of state taxable income and deferred tax requirements.

                                       13
<PAGE>
 
                                    PART II.

Item 1.     Legal Proceedings

            As previously reported in Item 3 of the Emons Transportation Group,
Inc. Annual Report on Form 10-K for the fiscal year ended June 30, 1996, in
which reference is hereby made, Emons Transportation Group, Inc. is not
currently a party to any legal proceedings. However, Emons Industries, Inc. is
currently a defendant in approximately 898 product liability actions.

Item 3.     Default Upon Senior Securities

            On June 19, 1996 and November 20, 1996, the Board of Directors voted
to omit the regular semi-annual dividend of $0.07 per share on its $0.14
Cumulative Convertible Preferred Stock which would have been payable on July 1,
1996 and January 2, 1997, respectively. Dividends in arrears as of the date of
this report aggregated $1,502,280.


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

      No matters were submitted to a vote of security holders during the three
            month period ended March 31, 1997.


Item 6.     Exhibits and Reports on Form 8-K

               (a)      An index to exhibits appears following the signature
                        page to this report.

               (b)      No reports on Form 8-K were filed during the three month
                        period ended March 31, 1997.

                                       14
<PAGE>
 
                                   SIGNATURES

            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.

                              EMONS TRANSPORTATION GROUP, INC.


Date:   May 13, 1997          By:   /s/Scott F. Ziegler
        ------------                ------------------------
                                             Scott F. Ziegler
                                             Vice President-Finance and
                                             Controller (signing on behalf of
                                             the registrant as both its duly
                                             authorized officer and its
                                             principal accounting officer)

                                       15
<PAGE>
 
EXHIBITS

            The following exhibits are filed as a part of this report. For
convenience of reference, exhibits are listed according to numbers assigned in
the Exhibit Table of Item 601 of Regulation S-K under the Securities Exchange
Act of 1934.

 
                                                                      Page in
Exhibit                                                             Sequentially
Number                                Exhibit                      Numbered Copy

3(a)   Certificate of Incorporation for Emons Holdings, Inc. dated
       December 19, 1986 (incorporated by reference from Emons
       Holdings, Inc. Report on Form 10-K for the year ended June
       30, 1987, Exhibit Number 3 (a))                                   --  
      
      
3(b)   Certificate of Amendment of Certificate of Incorporation
       of Emons Holdings, Inc. dated September 26, 1989
       (incorporated by reference from Emons Holdings, Inc. Report
       on Form 10-Q for the quarter ended September 30, 1989,
       Exhibit Number 3 (b))                                             --  
      
3(c)   Amended and Restated By-Laws for Emons Holdings, Inc.
       (incorporated by reference from Emons Holdings, Inc. Report
       on Form 10-Q for the quarter ended September 30, 1989,
       Exhibit Number 3 (c))                                             --  
      
3(d)   Certificate of Amendment of Certificate of Incorporation of
       Emons Holdings, Inc. dated November 18, 1993 (incorporated
       by reference from Emons Transportation Group, Inc. Report on
       Form 10-Q for the quarter ended December 31, 1993, Exhibit
       Number 3 (d))                                                     --   
      
11(a)  Earnings per share calculation                                    17
      
27(a)  Article 5 of Regulation S-X, Financial Data Schedules             --   

                                       16